Western Uranium Corporation
TSX VENTURE : WUC

Western Uranium Corporation

May 02, 2007 08:30 ET

Western Uranium Corporation Announces Proposed Spin-Out of Lithium Assets

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 2, 2007) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Western Uranium Corporation (TSX VENTURE:WUC) announced today its intention to spin out its lithium resources located in the Company's Kings Valley property, into a newly incorporated, wholly owned subsidiary of the Company ("Newco"). Upon completion of the conveyance of the lithium assets, shares of Newco will be distributed to WUC shareholders. Application will also be made to list the shares of Newco on the appropriate exchange.

The Transaction

The spin-out transaction will be completed pursuant to a plan of arrangement and will be subject to regulatory approval and approval by not less than two-thirds of the votes cast at a special meeting of the shareholders of the Company that will be called to approve the transaction. Full details of the proposed transaction will be included in the information circular to be sent to WUC shareholders in connection with the special meeting.

The Kings Valley lithium assets to be conveyed to Newco are not core to WUC's plans, which are focused on the development of the uranium assets in Kings Valley. The assets will be conveyed to Newco under an agreement which will provide that Newco will have the right to explore for, develop and mine the lithium assets, subject to the Company's rights to develop the uranium resource, which will have priority.

The Company has engaged Haywood Securities Inc. as its financial advisors to assist with the spin-out transaction and to provide advice with respect to the structure and financing of the new entity.

Financing

In conjunction with the listing of the shares of the newly incorporated entity, it is intended that Haywood will be engaged as agent in respect of an equity financing, by private placement. Newco management may arrange a rights offering, allowing WUC shareholders to participate in the initial financing of WUC. Funds raised will be used for exploration, development, market research and general corporate purposes. The financing is expected to be in the range of $10 million and is also subject to regulatory approval.

Kings Valley, Nevada

The Company currently controls over 80,000 acres within the region of the McDermitt Caldera through approximately 3800 Federal Lode mining claims. The lithium resources are contained within a portion of these claims and were defined by Chevron Resources in the early 1980's during an extensive drilling and metallurgical evaluation program focused on delineating the lithium potential of the area concurrent with its ongoing uranium exploration program. 173 holes that were a combination of auger, conventional rotary and large diameter metallurgical diamond core holes were drilled. The lithium averages a grade of 0.279% Li over an average thickness of 40 meters. Using the data from this program and a cut off grade of 3.0 meters over 0.1% Li, a resource of 8 billion pounds of lithium metal or 42 billion pounds of lithium carbonate were estimated at the time. This is a historical resource figure calculated by Chevron Resources. A qualified person has not done sufficient work to classify the historical estimate as current mineral resources, the issuer is not treating the historical estimate as current mineral resources and the historical estimate should not be relied upon. The resource is not considered NI 43-101 compliant. Chevron conducted extensive metallurgical tests as part of a scoping study and succeeded in achieving recoveries that averaged 85%. Lithium carbonate is currently priced at approximately $2.00 per pound.

The lithium mineralization is hosted in a clay-rich unit in a sequence of volcaniclastic sediments found within the caldera. Lithium was precipitated as a stratabound, massive layer of lithium-rich claystone associated with a specific clay species known as hectorite clays. These rare magnesium-lithium clays also have commercial value as suspending agents, binders and stabilizers in the cosmetics, chemical and pharmaceutical industries. Chevron had determined that it was possible to recover the lithium metal from the clays and be able to market both products. The mineralized horizon occurs within 0-15 meters of the surface and is relatively flat lying.

Lithium Supply and Demand

One of the primary uses of lithium today is in lithium ion batteries for cell phones, laptop computers and other electronic devices that require maximum storage capacity with minimum weight. The overall lithium carbonate market is projected to grow at approximately 10% per year and rise from some 80,000 tonnes in 2005 to approximately 100,000 tonnes in 2010.

Longer-term growth will depend on the market penetration achieved by hybrid and electric cars over the next decade as lithium-ion batteries are currently the battery of choice in these applications. Toyota Motors, the largest hybrid car manufacturer plans to increase sales of hybrid vehicles to over 1 million units by 2010 and to replace nickel metal hydride batteries by lithium ion products by the end of the decade.

The industry is currently characterized by a high degree of concentration of production with over two-thirds of world production coming from Chile and Australia. SQM of Chile, produced 27,800 tonnes of lithium carbonate in 2005 which was approximately 35% of world production.

About the Company

Western Uranium Corporation is a mineral exploration company with a focus on uranium. The Company has exploration properties in Kings Valley, Nevada, Treeline, New Mexico and in the Thelon Basin, Nunavut and the Northwest Territories. The Company has its head office in Vancouver, Canada; and its executive management team is based in Reno, Nevada.

The contents of this press release were reviewed by Pamela Klessig and Victor Calloway. Both Mr. Calloway and Ms. Klessig have sufficient experience to review this release and are both Qualified Persons as defined by NI 43-101.

On behalf of the Board of Western Uranium Corporation

Pamela J. Klessig, President & CEO

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless an exemption from such registration is available.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved or disapproved of the contents of this press release.

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