Western Uranium Corporation

Western Uranium Corporation

September 11, 2007 08:30 ET

Western Uranium Corporation Provides Update on Status of Formation of Western Lithium Corporation

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 11, 2007) - Western Uranium Corporation (the "Company") (TSX VENTURE:WUC) is pleased to provide an update on the status of the proposed spin out of its lithium assets located on the Company's Kings Valley property in Nevada, into a newly incorporated, wholly owned subsidiary of the Company: Western Lithium Corporation (WLC). The current plan would be to distribute the shares of Western Lithium Corporation to WUC shareholders following the completion of a number of steps designed to meet the various regulatory requirements for a public listing on an appropriate Canadian exchange. The company is anticipating the transaction will be completed by December 2007.

The company has contracted AMEC Engineering to review and provide a NI 43-101 qualified report to verify previous work on the project that was undertaken by Chevron Resources in the early 1980's and based upon those results generate a preliminary estimate of value for the asset. The report is nearing completion and will be finalized once the confirmation drilling and metallurgical testing program is complete. The company intends to commence the drilling program within the next two weeks and has received all permits necessary to undertake this work. Drill site preparation is currently underway. This program will consist of completing 3 large diameter core holes to twin holes previously drilled by Chevron. The core samples from these holes will be used for grade verification and for metallurgical testing. Hazen Research has been contracted to undertake the metallurgical tests which will utilize a process previously developed by Chevron for extracting the lithium metal from the host rock. The lithium is hosted in bentonite or swelling clay known as hectorite where lithium ions occupy mineral sites normally held by other elements such as magnesium. In addition to the metallurgical program, six to eight holes will be drilled for condemnation drilling to ascertain that the area does not host uranium mineralization.

The lithium resources were defined by Chevron Resources in the early 1980's during an extensive drilling and metallurgical evaluation program. Chevron completed 173 holes that were a combination of auger, conventional rotary and large diameter metallurgical diamond core holes over an area approximately 40 kms by 6 kms. The lithium averages a grade of 0.279% Li over an average thickness of 40 meters with the mineralized horizon beginning at or near the surface. Using the data from this program Chevron calculated a resource of 8 billion pounds of lithium metal or 42 billion pounds of lithium carbonate were estimated that are hosted in 5 separate pods along the western portion of the McDermitt Caldera. 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 $3.60 per pound.

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 Western Lithium Corporation are not core to WUC's plans, which are focused on the development of the uranium assets in Kings Valley. The lithium assets will be conveyed to Western Lithium Corporation under an agreement which will provide that Western Lithium Corporation 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.


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. Western Lithium Corporation 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.

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 consumed approximately 80,000 tonnes in 2005 and projections suggest the market will consume 100,000 tonnes in 2008. 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; 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 nor disapproved of the contents of this press release.

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