Western Copper and Gold Corporation
(An exploration stage company)
Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
Responsibility for Financial Reporting
The accompanying consolidated financial statements of Western Copper and Gold Corporation (the
“Company”) have been prepared by management and are in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
Management has developed and maintains a system of internal control to provide reasonable assurance
that assets are safeguarded and financial information is accurate and reliable. Further information on the
Company’s internal control over financial reporting and its disclosure controls is available in management’s
report on internal control, which follows.
The Board of Directors approves the consolidated financial statements and ensures that management
discharges its financial reporting responsibilities. The Board’s review is accomplished primarily through the
Audit Committee, which is composed of non-executive directors. The Audit Committee meets periodically
with management and the auditors to review financial reporting and control matters.
The Company’s independent auditors, PricewaterhouseCoopers LLP, have audited the Company’s
consolidated financial statements on behalf of the shareholders and their report follows.
/s/ Paul West-Sells
Paul West-Sells
President and Chief Executive Officer
/s/ Varun Prasad
Varun Prasad
Chief Financial Officer
March 24, 2022
Vancouver, Canada
- 2 -
Management’s Report on Internal Control over Financial Reporting
Management of Western Copper and Gold Corporation (the “Company”) is responsible for establishing and
maintaining adequate internal control over financial reporting. The Securities and Exchange Act of 1934,
in Rule 13a-15(f) and 15d-15(f) thereunder, defines this as a process designed by, or under the supervision
of, the Company’s principal executive and principal financial officers and effected by the Company’s Board
of Directors, management and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles, and includes those policies and procedures that:
Pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the
transactions of the Company;
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with International Financial Reporting Standards as issued by the
International Accounting Standards Board, and that receipts and expenditures of the Company are
made only in accordance with authorizations of management and directors of Company; and
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use
or disposition of the Company’s assets that may have a material effect on the Company’s consolidated
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all
misstatements on a timely basis. Also, projections of any evaluation of effectiveness of internal control
over financial reporting to future periods are subject to risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2021, based on the criteria established by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in its Internal Control - Integrated Framework (2013). Management
also assessed the effectiveness of its disclosure controls and procedures.
Based on these assessments, management concludes that the Company’s internal control over financial
reporting and its disclosure controls and procedures was not effective as of December 31, 2021 due to the
existence of a material weakness. A material weakness existed in the design of internal control over
financial reporting caused by a lack of adequate segregation of duties in the financial close process. The
Chief Financial Officer is responsible for preparing, authorizing, and reviewing information that is key to the
preparation of financial reports. He is also responsible for preparing and reviewing the resulting financial
reports. This weakness has the potential to result in material misstatements in the Company’s financial
statements and should also be considered a material weakness in its disclosure controls and procedures.
Management has concluded, and the Audit Committee has agreed, that taking into account the present
stage of Western Copper and Gold Corporation’s development, the Company does not have sufficient size
and scale to warrant the hiring of additional staff to correct the material weakness at this time.
/s/ Paul West-Sells
Paul West-Sells
President and Chief Executive Officer
/s/ Varun Prasad
Varun Prasad
Chief Financial Officer
March 24, 2022
Vancouver, Canada
- 3 -
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of Western Copper and Gold Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Western Copper and Gold Corporation and its
subsidiaries (together, the Company) as of December 31, 2021 and 2020, and the related consolidated statements of
loss and comprehensive loss, cash flows and changes in shareholders' equity for the years then ended, including the
related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated
financial statements present fairly, in all material respects, the financial position of the Company as of December 31,
2021 and 2020, and its financial performance and its cash flows for the years then ended in conformity with
International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s consolidated financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our
audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we
express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures
included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that
our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Vancouver, Canada
March 24, 2022
We have served as the Company’s auditor since 2006.
PricewaterhouseCoopers LLP
PricewaterhouseCoopers Place, 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada V6C 3S7
T: +1 604 806 7000, F: +1 604 806 7806
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
4
Western Copper and Gold Corporation
Consolidated Financial Statements
(Expressed in Canadian dollars)
CONSOLIDATED BALANCE SHEETS
ASSETS
Cash and cash equivalents
Short-term investments
Marketable securities
Other assets
CURRENT ASSETS
Right-of-use assets
Exploration and evaluation assets
ASSETS
LIABILITIES
Accounts payable and accrued liabilities
Current portion of lease obligation
Flow-through premium liability
CURRENT LIABILITIES
Lease obligations
LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
Contributed surplus
Deficit
Note
December 31, 2021
$
December 31, 2020
$
4
5
6
7
8
30,688,210
16,073,639
1,104,400
860,529
48,726,778
413,047
66,348,061
28,647,190
-
736,960
677,905
30,062,055
-
53,748,013
115,487,886
83,810,068
2,228,673
171,167
759,525
3,159,365
262,151
1,181,866
-
1,408
1,183,274
-
3,421,516
1,183,274
183,190,992
35,472,638
(106,597,260)
150,897,421
34,617,746
(102,888,373)
SHAREHOLDERS’ EQUITY
112,066,370
82,626,794
LIABILITIES AND SHAREHOLDERS’ EQUITY
115,487,886
83,810,068
Approved by the Board of Directors
/s/ Ken Williamson Director /s/ Klaus Zeitler Director
The accompanying notes are an integral part of these consolidated financial statements
- 5 -
Western Copper and Gold Corporation
Consolidated Financial Statements
(Expressed in Canadian dollars)
CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
For the year ended December 31,
Depreciation
Filing and regulatory fees
Office and administration
Professional fees
Rent and utilities
Share-based payments
Shareholder communication and travel
Wages and benefits
CORPORATE EXPENSES
Foreign exchange loss
Interest income
Flow-through premium recovery
Unrealized gain on marketable securities
Note
10b
11
7
5
2021
$
103,261
271,405
598,300
371,168
-
1,240,229
778,266
1,807,788
2020
$
-
204,967
230,577
150,210
120,178
557,101
306,227
1,175,802
5,170,417
2,745,062
11,153
(207,960)
(897,283)
(367,440)
7,237
(14,115)
(128,367)
(576,460)
LOSS AND COMPREHENSIVE LOSS
3,708,887
2,033,357
Basic and diluted loss per share
0.03
0.02
Weighted average number of common shares outstanding
144,266,435
114,929,140
The accompanying notes are an integral part of these consolidated financial statements
- 6 -
Western Copper and Gold Corporation
Consolidated Financial Statements
(Expressed in Canadian dollars)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended December 31,
Cash flows provided by (used in)
Note
2021
$
2020
$
OPERATING ACTIVITIES
Loss and comprehensive loss
ITEMS NOT AFFECTING CASH
Depreciation
Finance costs
Flow-through premium recovery
Unrealized gain on marketable securities
Share-based payments
(3,708,887)
(2,033,357)
103,261
25,620
(897,283)
(367,440)
1,240,229
104,387
-
-
(128,367)
(576,460)
557,101
(147,726)
Change in non-cash working capital items
12
(264,989)
(188,509)
OPERATING ACTIVITIES
FINANCING ACTIVITIES
Private placement proceeds
Private placement issuance costs
Exercise of stock options
Lease payments
Equity offering
Equity offering costs
(3,869,489)
(2,369,592)
8
8
10a
8
8
33,634,423
(1,560,618)
1,348,500
(108,610)
-
-
6,430,000
(179,147)
854,834
-
28,751,035
(1,170,636)
FINANCING ACTIVITIES
33,313,695
34,686,086
INVESTING ACTIVITIES
Purchase of short-term investments
Mineral property expenditures
(16,000,000)
(11,403,186)
-
(5,311,025)
INVESTING ACTIVITIES
(27,403,186)
(5,311,025)
CHANGE IN CASH AND CASH EQUIVALENTS
2,041,020
27,005,469
Cash and cash equivalents – Beginning
28,647,190
1,641,721
CASH AND CASH EQUIVALENTS - ENDING
30,688,210
28,647,190
The accompanying notes are an integral part of these consolidated financial statements
- 7 -
Western Copper and Gold Corporation
Consolidated Financial Statements
(Expressed in Canadian dollars)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Number of
Shares
Share
Capital
$
Contributed
Surplus
$
Deficit
$
Shareholders’
Equity
$
DECEMBER 31, 2019
107,636,001
116,908,713
33,942,501
(100,855,016) 49,996,198
Private Placement (note 8b)
Gross proceeds
Issuance costs
Allocation of warrant value
Private Placement (note 8b)
Gross proceeds
Flow-through premium (note 7)
Issuance costs
Equity offering (note 8b)
Equity offering costs
Exercise of stock options
Share-based payments
Loss and comprehensive loss
3,000,000
-
-
4,000,000
-
-
19,828,300
-
1,133,334
-
-
1,950,000
(104,490)
(351,000)
-
-
351,000
4,480,000
(40,000)
(74,657)
28,751,035
(1,803,636)
1,181,456
-
-
-
-
-
-
-
(326,622)
650,867
-
-
-
-
-
-
-
-
-
-
-
(2,033,357)
1,950,000
(104,490)
-
4,480,000
(40,000)
(74,657)
28,751,035
(1,803,636)
854,834
650,867
(2,033,357)
DECEMBER 31, 2020
135,597,635
150,897,421
34,617,746
(102,888,373) 82,626,794
Private Placement (note 8b)
Gross proceeds
Issuance costs
Private Placement (note 8b)
Gross proceeds
Flow-through premium (note 7)
Issuance costs
Exercise of stock options
Share-based payments
Loss and comprehensive loss
11,808,490
-
25,624,423
(865,829)
-
-
-
-
25,624,423
(865,829)
2,670,000
-
-
1,350,000
-
-
8,010,000
(1,655,400)
(694,788)
1,875,165
-
-
-
-
-
(526,665)
1,381,557
-
-
-
-
-
-
(3,708,887)
8,010,000
(1,655,400)
(694,788)
1,348,500
1,381,557
(3,708,887)
DECEMBER 31, 2021
151,426,125
183,190,992
35,472,638
(106,597,260) 112,066,370
The accompanying notes are an integral part of these consolidated financial statements
- 8 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
1. NATURE OF OPERATIONS
Western Copper and Gold Corporation (together with its subsidiaries, “Western” or the “Company”) is an
exploration stage company that is directly engaged in exploration and development of the Casino mineral
property located in Yukon, Canada (the “Casino Project”).
The Company is incorporated in British Columbia, Canada. Its head office is located at 1200 – 1166 Alberni
Street, Vancouver, British Columbia.
The Company will need to raise additional funds to complete the development of the Casino Project. While
Western has been successful in raising sufficient capital to fund its operations in the past, there can be no
assurance that it will be able to do so in the future.
2. BASIS OF PRESENTATION
a. Statement of compliance
These financial statements have been prepared in accordance with International Financial Reporting
Standards as issued by the International Accounting Standards Board (“IFRS”). The financial
statements are prepared under the historical cost convention.
These financial statements were approved for issue by the Company’s board of directors on March 24,
2022.
b. Accounting estimates and judgments
The preparation of financial statements in conformity with IFRS requires management to exercise
judgement in the process of applying its accounting policies and to make estimates that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and contingent liabilities
at the date of the financial statements and the reported amounts of income and expenses during the
year. Actual results could differ from those estimates. Differences may be material.
Judgment is required in assessing whether certain factors would be considered an indicator of
impairment for the exploration and evaluation assets. We consider both internal and external
information to determine whether there is an indicator of impairment present and accordingly, whether
impairment testing is required. Where an impairment test is required, calculating the estimated
recoverable amount of the cash generating units for non-current asset impairment tests requires
management to make estimates and assumptions with respect to estimated recoverable reserves or
resources, estimated future commodity prices, expected future operating and capital costs, and
discount rates. Changes in any of the assumptions or estimates used in determining the recoverable
amount could impact the impairment analysis. Management did not identify any impairment indicators
for the year ended December 31, 2021 and December 31, 2020.
- 9 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
3. ACCOUNTING POLICIES
a. Summary of significant accounting policies
The Company’s principal accounting policies are outlined below:
(i)
Basis of consolidation
The Company consolidates an entity when it has power over that entity, is exposed, or has rights,
to variable returns from its involvement with that entity and has the ability to affect those returns
through its power over that entity. The financial statements of subsidiaries are consolidated from
the date that control commences until the date that control ceases. All significant intercompany
transactions and balances are eliminated.
The consolidated financial statements of the Company include Western Copper and Gold Corp.,
Casino Mining Corp., and Ravenwolf Resource Group Ltd.
(ii)
Presentation currency
The Company’s presentation currency is the Canadian dollar (“$”). The functional currency of
Western and its significant subsidiaries is the Canadian dollar.
(iii) Foreign currency translation
In preparing the financial statements of the individual entities, transactions in currencies other
than the entity’s functional currency (“foreign currencies”) are recorded at the rates of exchange
prevailing at the dates of the transactions. At each balance sheet date, foreign currency
denominated monetary assets and liabilities are translated using the period end foreign exchange
rate. Non-monetary assets and liabilities are translated using the historical rate on the date of
the transaction. All gains and losses on translation of these foreign currency transactions are
included in the statement of loss.
(iv) Share-based payments
The Company grants stock options, restricted share units (“RSUs”) and deferred share units
(“DSUs”) to buy common shares of the Company to directors, officers, employees and
consultants. The fair value of stock options granted by the Company is treated as compensation
costs in accordance with IFRS 2 - Share-based Payments. The fair value of stock options is
calculated using the Black-Scholes option pricing model and the fair value of RSUs and DSUs are
determined based on the closing price of the shares on the day of grant. These costs are charged
to the statement of loss or, if appropriate, are capitalized to exploration and evaluation assets
over the stock option vesting period with an offsetting entry to contributed surplus. The
Company’s allocation of share-based payments is consistent with its treatment of other types of
compensation for each recipient.
If the stock options are exercised, the value attributable to the stock options is transferred to
share capital.
- 10 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
(v)
Income taxes
Income tax expense consists of current and deferred tax expense. Income tax expense is
recognized in the statement of loss.
Current tax expense is the expected tax payable on the taxable income for the period, using tax
rates enacted or substantively enacted at year end, adjusted for amendments to tax payable
with regards to the previous year.
Deferred taxes are recorded using the liability method. Under the liability method, deferred tax
assets and liabilities are recognized for future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their
respective tax bases (i.e. timing differences). Deferred tax assets and liabilities are measured
using the enacted or substantively enacted tax rates expected to apply when the asset is realized
or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in the statement of loss in the period that the substantive enactment occurs.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will
be available against which the asset can be utilized.
(vi) Flow-through shares
Canadian income tax legislation permits an enterprise to issue securities, referred to as flow-
through shares, whereby the investor can claim the tax deductions arising from the renunciation
of the related qualifying resource expenditures. The Company accounts for flow-through
premium, i.e. the price paid for the flow-through shares in excess of the market value of the
shares without flow-through features is credited to other liabilities. Flow-through premium is
recognized in other income when qualifying expenditures are incurred.
(vii) Loss per share
Basic loss per share is computed by dividing the net loss available to common shareholders by
the weighted average number of shares outstanding during the reporting period. Diluted loss
per share is computed in the same way as basic loss per share except that the weighted average
number of shares outstanding is increased to include additional shares for the assumed exercise
of all stock options and warrants, if dilutive. Given the loss situation, potential shares are
antidilutive.
(viii) Long-lived assets
1. Exploration and evaluation assets
Direct costs related to the acquisition and exploration of mineral properties held or controlled
by the Company are capitalized on an individual property basis until the property is put into
production, sold, abandoned, or determined to be impaired. Administration costs and
general exploration costs are expensed as incurred. When a property is placed into
commercial production, deferred costs will be depleted using the units-of-production method.
- 11 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
The Company classifies its mineral properties as exploration and evaluation assets until
technical feasibility and commercial viability of extracting a mineral resource are
demonstrable. At this point, the exploration and evaluation assets are transferred to property
and equipment. The establishment of technical feasibility and commercial viability of a
mineral property is assessed based on a combination of factors, such as the extent of
established mineral reserves, the results of feasibility and technical evaluations, and the
status of mining leases or permits.
Proceeds received from the sale of royalties, tax credits, or government assistance programs
are recognized as a reduction in the carrying value of the related asset when the proceeds
are more likely than not to be received. If proceeds received is in excess of the carrying
value of the related asset after impairment the amount received is recorded as a credit in
the statement of loss in the period in which the payment is more likely than not to be
received.
Although we have taken steps to verify title to mineral properties in which we have an
interest, in accordance with industry standards for the current stage of exploration of such
properties, these procedures do not guarantee our title. Property title may be subject to
unregistered prior agreements or transfers, and may be affected by undetected defects.
2. Leases
Leases are recognized as a right-of-use asset and a corresponding liability at the date at
which the leased asset is available for use by the Company. Each lease payment is allocated
between the liability and finance expense. The finance expense is charged to the statements
of operations over the lease period. The right-of-use asset is depreciated over the shorter of
the asset's useful life or the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value of lease
payments. The lease payments are discounted using the interest rate implicit in the lease,
if that rate can be determined, or the Company’s incremental borrowing rate.
3. Impairment
The Company’s exploration and evaluation assets are reviewed for indication of impairment
at each balance sheet date in accordance with IFRS 6 – Exploration for and evaluation of
mineral resources. If any such indication exists, an estimate of the recoverable amount is
undertaken. Recoverable amount is the higher of an asset’s fair value less costs of disposal
and value in use (“VIU”). If the asset’s carrying amount exceeds its recoverable amount then
an impairment loss is recognized in the statement of loss.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. The fair value
of mineral assets is generally determined as the present value of the estimated future cash
flows expected to arise from the continued use of the asset, including any expansion
prospects.
VIU is determined as the present value of the estimated future cash flows expected to arise
from the continued use of the asset in its present form and from its ultimate disposal.
- 12 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
Impairment is normally assessed at the level of cash-generating units, which are identified
as the smallest identifiable group of assets that generates cash inflows that are largely
independent of the cash inflows from other assets.
4. Reversal of impairment
An impairment loss is reversed if there is an indication that there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only
to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of amortization, if no impairment loss had been recognized.
(ix) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits in banks and highly liquid
investments with an original maturity of three months or less.
(x)
Financial instruments
1. Classification and measurement
Financial instruments are recognized when the Company becomes party to a contractual
obligation. At initial recognition, the Company classifies its financial instruments as one the
following categories: at fair value through profit and loss (“FVTPL”), at fair value through
other comprehensive income (“FVTOCI”), or at amortized cost according to the financial
instruments’ contractual cash flow characteristics and the business models under which they
are held.
Financial assets are measured at amortized cost if they are held for the collection of
contractual cash flows where those cash flows solely represent payments of principal and
interest. The Company’s intent is to hold these financial assets in order to collect contractual
cash flows and the contractual terms give rise to cash flows on specified dates that are solely
payments of principal and interest on the principal amount outstanding.
Financial assets are measured at FVTOCI if they are held for the collection of contractual
cash flows and for selling the financial assets, where the assets’ cash flows represent solely
payments of principal and interest. The Company initially recognizes these financial assets
at their fair value with subsequent changes to fair values recognized in OCI. When the
financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is
reclassified from equity to the statement of loss.
Financial assets are measured at FVTPL if they do not qualify as financial assets at amortized
cost or FVTOCI. The Company initially recognizes these financial assets at their fair value
with subsequent changes to fair values recognized in the statement of loss.
Financial liabilities are measured at amortised cost unless they are required to be measured
at FVTPL.
The Company classifies its financial instruments as follows:
- 13 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
Financial assets/liabilities
Cash and cash equivalents
Short-term investments
Marketable securities
Other assets
Accounts payable and accrued liabilities
Classification
Amortized cost
Amortized cost
FVTPL
Amortized cost
Amortized cost
2. Impairment of financial assets
At each reporting date, the Company assesses the expected credit loss associated with its
financial assets carried at amortized cost and FVTOCI. The impairment methodology applied
depends on whether there has been a significant increase in credit risk. Allowances are
recognized as impairment gains or losses on the statement of loss.
3. Derecognition
Financial assets are derecognized when the rights to receive cash flows from the financial
assets have expired or have been transferred and the Company has transferred substantially
all the risks and rewards of ownership. Financial liabilities are derecognized when, and only
when, the Company’s obligations are discharged, cancelled or they expire.
(xi) Provisions
Provisions are recorded when a present legal or constructive obligation exists as a result of past
events where it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation, and a reliable estimate of the amount of the obligation can be
made.
The amount recognized as a provision is the best estimate of the consideration required to settle
the present obligation at the balance sheet date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the present value of those cash flows.
4. SHORT-TERM INVESTMENTS
As at December 31, 2021, the Company had $16,000,000 (December 31, 2020 - $nil) invested in Canadian
dollar denominated guaranteed investment certificates plus accrued interest of $73,639 (December 31,
2020 - $nil).
5. MARKETABLE SECURITIES
As at December 31, 2021, the Company held marketable securities with an aggregate market value of
$1,104,400 (December 31, 2020 - $736,960), consisting of 2.5 million common shares of NorthIsle Copper
and Gold Inc. with a market value of $1,075,000 (December 31, 2020 - $700,000) and 168,000 common
shares of Granite Creek Copper Ltd. with a market value of $29,400 (December 31, 2020 - $36,960).
- 14 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
6. EXPLORATION AND EVALUATION ASSETS
a. Casino (100% - Yukon, Canada)
The Casino Project is a copper-gold porphyry deposit located in Yukon, Canada.
Certain portions of the Casino property remain subject to certain royalties. The surviving royalties and
agreements are as follows:
• 2.75% NSR on the claims comprising the Casino project in favour of Osisko Gold Royalties Ltd.
(“Osisko Gold”) pursuant to the Royalty Assignment and Assumption Agreement dated July 31, 2017
when 8248567 Canada Limited assigned to Osisko Gold all of its rights, title and interest in the 2.75%
NSR.
b. Exploration and evaluation expenditures
Total
$
DECEMBER 31, 2019
48,375,025
Claims maintenance
Engineering
Exploration and camp support
Permitting
Salary and wages
Share-based payments
25,597
168,002
4,693,598
128,968
263,057
93,766
DECEMBER 31, 2020
53,748,013
Claims maintenance
Engineering
Exploration and camp support
Permitting
Salary and wages
Share-based payments
22,270
3,180,020
7,648,920
1,326,058
281,452
141,328
DECEMBER 31, 2021
66,348,061
- 15 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
7. FLOW THROUGH PREMIUM LIABILITY
The flow-through premium liability balance as at December 31, 2021 of $759,525 (December 31, 2020
– $1,408) arose in connection with the flow-through share offering the Company completed on July
29, 2021. The reported amount is the remaining balance of the premium from issuing the flow-through
shares. The flow-through premium is recognized in the statement of loss based on the amount of
qualifying flow-through expenditures incurred by the Company.
The Company is committed to incurring on or before December 31, 2022 qualifying Canadian
exploration expenses as defined under the Income Act, Canada ("Qualifying CEE") in the amount of
$8,010,000 with respect to the flow-through share financing completed on July 29, 2021. None of the
Qualifying CEE will be available to the Company for future deduction from taxable income.
As at December 31, 2021, the Company had incurred $4,334,879 of Qualifying CEE and accordingly,
recognized flow-through premium recoveries of $897,283 (December 31, 2020 - $128,367). As at
December 31, 2021 the Company has a remaining commitment to incur Qualifying CEE of $3,675,121.
On June 1, 2020, the Company completed a flow-through share offering and recorded a flow-through
premium liability of $40,000 and committed to incur Qualifying CEE in the amount of $4,480,000. As
at December 31, 2021, the Company had incurred all committed expenditures and no longer had a
flow-through premium liability associated with this flow-through share offering.
8. SHARE CAPITAL
a. Authorized share capital
The Company is authorized to issue an unlimited number of common shares without par value and an
unlimited number of preferred shares without par value.
b. Financing
On July 29, 2021, Western completed a brokered private placement of flow-through common shares
(the “FT Shares”). The Company issued a total of 2,670,000 FT Shares at a price of $3.00 per FT Share
for aggregate gross proceeds of $8,010,000. Issuance costs related to the private placement totaled
$694,788. A flow through premium liability of $1,655,400 was recognized. Refer note 8.
On May 31, 2021, Rio Tinto Canada Inc. (“Rio Tinto”) completed a strategic investment in Western by
way of a private placement of the Company’s common shares. The Company sold 11,808,490 common
shares at a price of $2.17 per common for gross proceeds of $25,624,423. The Company incurred
$865,829 in costs associated with the private placement.
On November 24, 2020, Western completed an offering of common shares of the Company (the
“Offering”). The Company sold 19,828,300 common shares at a price of $1.45 per common share for
gross proceeds of $28,751,035. The Company incurred $1,803,636 in costs associated with the
Offering.
On June 1, 2020, Western completed a non-brokered private placement of flow-through common
shares (the “FT Shares”). The Company issued a total of 4,000,000 FT Shares at a price of $1.12 per
FT Share for aggregate gross proceeds of $4,480,000. Issuance costs related to the private placement
totaled $74,656. A flow through premium liability of $40,000 was recognized. Refer note 6.
- 16 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
On February 28, 2020, Western issued 3,000,000 units at a price of $0.65 per unit for aggregate gross
proceeds of $1,950,000. Each unit consisted of one common share and half of a non-transferable
warrant. Each whole warrant entitles the holder to purchase one additional common share at a price
of $0.85 until February 28, 2025. Issuance costs related to the financing totaled $104,490.
The fair value assigned to the warrants was calculated using the Black-Scholes option pricing model
and the following inputs and assumptions:
Warrants issued
Exercise price
Market price
Expected term (years)
Expected share price volatility
Average risk-free interest rate
Expected dividend yield
1,500,000
$0.85
$0.73
5.0
61.3%
1.07%
-
FAIR VALUE ASSIGNED
$351,000
9. WARRANTS
a. Warrants
A summary of the Company’s warrants outstanding, including changes for the years then ended, is
presented below:
Number of
warrants
Weighted average
exercise price
$
DECEMBER 31, 2019
Issued
Expired
1,452,533
1,500,000
(1,452,533)
DECEMBER 31, 2020 and DECEMBER 31, 2021
1,500,000
1.75
0.85
1.75
0.85
Warrants outstanding are as follows:
Warrant outstanding,
by exercise price
Number of
warrants
Weighted average
exercise price
$0.85
1,500,000
DECEMBER 31, 2021
1,500,000
$
0.85
0.85
Average
remaining
contractual life
years
3.16
3.16
- 17 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
10. EQUITY INCENTIVE PLANS
The Company has three equity incentive plans consisting of a stock option plan (the “Option Plan”), a
restricted share unit plan (the “RSU Plan”) and a deferred share unit plan (the “DSU Plan”) (collectively
the “Equity Incentive Plans”). Pursuant to the Company’s annual general meeting held on June 17,
2021, it was approved that the maximum aggregate number of common shares issuable under the
Equity Incentive Plans cannot exceed 10% of number of commons shares issued and outstanding.
a. Stock Options
Under the Option Plan, the exercise price of the stock options must be greater than, or equal to, the
market value of the Company’s common shares on the last trading day immediately preceding the date
of grant. Stock options vest over a two year period from the date of grant unless otherwise determined
by the directors. The maximum stock option term is 10 years. At December 31, 2021, the Company
could issue an additional 4,455,688 stock options under the terms of the stock option plan.
A summary of the Company’s stock options outstanding and the changes for the periods then ended,
is presented below:
DECEMBER 31, 2019
Granted
Exercised
Cancelled
Forfeited
Expired
DECEMBER 31, 2020
Granted
Exercised
DECEMBER 31, 2021
Number of
stock options
6,150,001
2,350,000
(1,133,334)
(125,000)
(66,667)
(100,000)
7,075,000
310,000
(1,350,000)
6,035,000
Weighted average
exercise price
$
0.96
1.59
0.75
1.66
0.90
0.67
1.19
2.10
1.00
1.28
During year ended December 31, 2021 the Company recognized $707,417 in the statement of loss
and comprehensive loss (December 31, 2020 - $650,867) and $141,328 was capitalized (December
31, 2020 - $93,766) in the exploration and evaluation assets in relation to stock options.
- 18 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
Stock options outstanding are as follows:
Stock options outstanding,
by exercise price
Number of
Stock options
Weighted average
exercise price
$0.75 - $0.90
$1.11 - $1.20
$1.41
$1.66
$1.85 - $2.22
1,925,000
1,775,000
200,000
1,825,000
310,000
DECEMBER 31, 2021
6,035,000
$
0.87
1.19
1.41
1.66
2.10
1.28
Average
remaining
contractual life
years
2.43
1.40
3.86
3.57
4.61
2.63
Average share price for options exercised during the year was $2.02 (December 31, 2020 - $1.23).
Of the total stock options outstanding, 4,308,326 were vested and exercisable at December 31, 2021.
The weighted average exercise price of vested stock options is $1.12 and the average remaining
contractual life is 2.17 years.
b. Share-based payments
The following is a summary of stock options granted by the Company in 2021 and 2020 and fair value
assigned to each grant. The fair value was calculated at the time of grant using the Black-Scholes
option pricing model and the following inputs and assumptions.
Inputs and assumptions
October 1,
2021
July 19,
2021
November 9,
2020
July 27,
2020
Stock options granted
Exercise price
100,000
$1.85
210,000
$2.22
200,000
$1.41
1,950,000
$1.66
Market price
Expected option term (years)
Expected stock price volatility
Average risk-free interest rate
Expected forfeiture rate
Expected dividend yield
$1.85
3.0
62.2%
0.65%
-
-
$2.17
3.0
62.1%
0.57%
-
-
$1.41
3.0
58.0%
0.31%
-
-
$1.61
3.0
56.6%
0.29%
-
-
June 11,
2020
200,000
$1.11
$1.11
3.0
49.7%
0.27%
-
-
FAIR VALUE ASSIGNED
$77,000
$186,000
$109,000
$1,159,000
$75,000
- 19 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
c. Restricted Share Units
During the year, the Company granted RSUs in accordance with the RSU plan approved in the
shareholders meeting. These RSUs vest in three equal tranches: Tranche one - on completion of 12
months from grant date, Tranche two – on completion of eighteen months from the grant date and
Tranche three – on completion of twenty-four months from grant date. These RSUs are classified as
equity-settled as these awards will be settled by issuing the shares and are valued at the market price
of the Company shares on the date of grant. As at December 31, 2021, the Company could issue an
additional 2,106,313 RSUs under the RSU Plan. A summary of the Company’s RSUs outstanding and
the changes for the years then ended, is presented below:
DECEMBER 31, 2019 and 2020
RSUs Granted
DECEMBER 31, 2021
Number of shares
issued or issuable on
vesting
-
239,100
239,100
In relation to RSUs, the Company recognized an expense of $170,422 during the year ended
December 31, 2021, (December 31, 2020 – Nil) in the statements of loss and comprehensive loss.
d. Deferred Share Units
Only directors of the Company are eligible for DSUs and each DSU vests immediately and is redeemed
upon a director ceasing to be a director of the Company. DSUs are classified as equity-settled as
these awards will be settled by issuing the shares and are valued at the market price of the Company
shares on the date of grant. As at December 31, 2021, the Company could issue an additional
1,787,511 DSUs under the DSU Plan.
DECEMBER 31, 2019 and 2020
DSUs Granted
DECEMBER 31, 2021
Number of shares
issuable
-
167,000
167,000
In relation to DSUs, the Company recognized an expense of $362,390 during the year ended December
31, 2021, (December 31, 2020 – Nil) in the statements of loss and comprehensive loss.
- 20 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
11. KEY MANAGEMENT COMPENSATION
The Company’s related parties include its directors and officers, who are the key management of the
Company. The remuneration of key management was as follows:
For the year ended December 31,
Salaries and director fees
Share-based payments
2021
$
1,580,676
1,128,330
2020
$
968,769
520,255
KEY MANAGEMENT COMPENSATION
2,709,006
1,489,024
Share-based payments represent the fair value of stock options previously granted to directors and officers
that was recognized in the statement of loss and comprehensive loss during the years presented above.
During the year ended December 31, 2020, a director of the Company was indirectly paid $270,000 for
marketing and financial advisory services.
12. SUPPLEMENTAL CASH FLOW INFORMATION
Non-cash working capital items
For the year ended December 31,
Change in other assets
Change in accrued interest
Change in accounts payable and accrued liabilities related to operations
2021
$
26,203
(73,639)
(217,553)
2020
$
(329,382)
-
140,819
CHANGE IN NON-CASH WORKING CAPITAL ITEMS
(264,989)
(188,509)
13. SEGMENTED INFORMATION
The Company’s operations are in one segment: the acquisition, exploration, and future development of
mineral resource properties. All interest income is earned in Canada and all assets are held in Canada.
- 21 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
14. INCOME TAXES
a. Rate reconciliation
The income tax expense or recovery reported by the Company differs from the amounts obtained by
applying statutory rates to the loss and comprehensive loss. A reconciliation of the income tax provision
computed at statutory rates to the reported income tax provision is provided below:
For the year ended December 31,
2021
2020
Statutory tax rate
Loss before taxes
27.00%
27.00%
3,708,888
2,033,357
Income tax recovery calculated at statutory rate
1,001,400
549,006
Non-deductible expenditures
Flow-through premium
Other
Unrecognized tax benefit
INCOME TAX
(335,976)
242,266
218,046
(1,125,736)
(151,318)
34,659
149,972
(582,319)
-
-
b. Deferred income tax asset and liabilities
The significant components of the Company’s net deferred income tax asset and liabilities are as
follows:
As at December 31,
Deferred tax assets:
Operating losses carried forward
Share issuance costs
Other items
2021
$
2020
$
7,153,971
703,456
403,439
5,978,083
564,935
253,319
DEFERRED TAX ASSET
8,260,866
6,796,337
Deferred tax liabilities
Mineral property interests
Marketable securities
1,999,946
96,647
927,624
47,042
DEFERRED TAX LIABILITY
2,096,593
974,666
Unrecognized Deferred tax assets
6,170,273
5,821,671
UNRECOGNIZED DEFERRED INCOME TAX ASSET
6,170,273
5,821,671
- 22 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
c. Non-capital losses
The Company has incurred non-capital losses that may be carried forward and used to reduce taxable
income of future years. These losses totaled $26.5 million as at December 31, 2021 (2020 - $22.1
million) and will expire between 2030 and 2040.
15. CAPITAL MANAGEMENT
The Company considers capital to be equity attributable to common shareholders, comprised of share
capital, contributed surplus, and deficit. It is the Company’s objective to safeguard its ability to continue
as a going concern so that it can continue to explore and develop mineral resource properties.
The Company monitors its cash position on a regular basis to determine whether sufficient funds are
available to meet its short-term and long-term corporate objectives, and makes adjustments to its plans
for changes in economic conditions, capital markets and the risk characteristics of the underlying assets.
To maintain its objectives, the Company may attempt to issue new shares, seek debt financing, acquire or
dispose of assets or change the timing of its planned exploration and development projects. There is no
assurance that these initiatives will be successful.
There was no change in the Company’s approach to capital management during the year. Western has no
debt and does not pay dividends. The Company is not subject to any externally imposed capital restrictions.
16. FINANCIAL INSTRUMENT RISK
The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk
management framework. The Company has exposure to liquidity, credit, and market risk from the use of
financial instruments. Financial instruments consist of cash and cash equivalents, short-term investments,
marketable securities, certain other assets, and accounts payable and accrued liabilities.
a. Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its financial obligations as they come
due. The Company uses cash forecasts to ensure that there is sufficient cash on hand to meet short-
term business requirements. Cash is invested in highly liquid investments which are available to
discharge obligations when they come due. The Company does not maintain a line of credit.
b. Credit risk
Financial instruments that potentially subject the Company to credit risk consist primarily of cash and
cash equivalents and short-term investments. These financial instruments are at risk to the extent that
the institutions issuing or holding them cannot redeem amounts when they are due or requested. To
limit its credit risk, the Company uses a restrictive investment policy. Cash and cash equivalents and
short-term investments are in Canadian chartered banks. The carrying amount of financial assets
recorded in the financial statements represents Western’s maximum exposure to credit risk.
- 23 -
Western Copper and Gold Corporation
Notes to the Consolidated Financial Statements
For the years ended December 31, 2021 and 2020
(Expressed in Canadian dollars)
c. Market risk
The Company is exposed to market risk because of the fluctuating values of its publicly traded
marketable securities. The Company has no control over these fluctuations and does not hedge its
investments. Marketable securities are adjusted to fair value at each balance sheet date.
As at December 31, 2021 and 2020, the carrying amounts of cash and cash equivalents, short-term
investments, certain other assets, and accounts payable and accrued liabilities are considered to be
reasonable approximations of their fair values due to the short-term nature of these instruments. The
fair value of the marketable securities is determined by reference to published price quotations in an
active market (classified as level 1 in the fair value hierarchy).
- 24 -