UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of September 2020

Commission File Number: 001-35075

WESTERN COPPER AND GOLD CORPORATION
(Translation of registrant's name into English)

15th Floor – 1040 West Georgia Street,
Vancouver, BC V6E 4H1

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

[   ] Form 20-F   [ x ]  Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [           ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [           ]


SUBMITTED HEREWITH

Exhibits

Exhibit   Description
   
99.1   Condensed Interim Consolidated Financial Statements for the period ended September 30, 2020
99.2   Management Discussion and Analysis for the period ended September 30, 2020
99.3   Form 52-109F2 - Certification of Interim Filings - CEO
99.4   Form 52-109F2 - Certification of Interim Filings - CFO


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

  Western Copper and Gold Corporation
  (Registrant)
     
Date: November 5, 2020 By: /s/ Paul West-Sells
    Paul West-Sells
     
  Title: Chief Executive Officer



 

Western Copper and Gold Corporation

(An exploration stage company)

 

Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2020

(Unaudited and expressed in Canadian dollars)


Western Copper and Gold Corporation
Condensed Interim Consolidated Financial Statements

(Unaudited and expressed in Canadian dollars)

CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS

      September 30, 2020     December 31, 2019  
  Note   $     $  
ASSETS              
               
Cash and cash equivalents     2,946,363     1,641,721  
Marketable securities 3   348,100     160,500  
Other assets     429,287     281,517  
CURRENT ASSETS     3,723,750     2,083,738  
               
Exploration and evaluation assets 4   53,222,045     48,375,025  
               
ASSETS     56,945,795     50,458,763  
               
LIABILITIES              
               
Accounts payable and accrued liabilities     1,164,569     372,790  
Flow-through premium liability 5   4,244     89,775  
               
CURRENT LIABILITIES     1,168,813     462,565  
               
SHAREHOLDERS' EQUITY              
               
Share capital 6   123,882,929     116,908,713  
Contributed surplus     34,374,532     33,942,501  
Deficit     (102,480,479 )   (100,855,016 )
               
SHAREHOLDERS' EQUITY     55,776,982     49,996,198  
               
LIABILITIES AND SHAREHOLDERS' EQUITY     56,945,795     50,458,763  

Approved by the Board of Directors

  /s/ Kenneth Williamson     Director      /s/ Klaus Zeitler      Director

                        


Western Copper and Gold Corporation
Condensed Interim Consolidated Financial Statements

(Unaudited and expressed in Canadian dollars)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

             
    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
    $     $
(Restated - Note 2c)
    $     $
(Restated - Note 2c)
 
                         
Filing and regulatory fees   8,929     6,709     197,594     188,623  
Office and administration   51,490     68,849     162,749     185,421  
Professional fees   28,815     17,344     112,360     69,236  
Rent and utilities   31,544     23,830     91,633     91,059  
Share-based payments (note 8, 9)   164,225     134,299     331,078     295,575  
Shareholder communication and travel   73,861     97,320     198,837     316,189  
Wages and benefits (note 9)   273,699     227,912     847,099     752,208  
                         
CORPORATE EXPENSES   632,563     576,263     1,941,350     1,898,311  
                         
Foreign exchange loss (gain)   (4,262 )   1,518     3,547     823  
Interest income   (440 )   (10,726 )   (6,303 )   (51,069 )
Flow-through premium recovery (note 5)   (30,484 )   (483,979 )   (125,531 )   (716,829 )
Unrealized (gain) loss on marketable securities (note 3)   (158,400 )   39,600     (187,600 )   116,700  
                         
LOSS AND COMPREHENSIVE LOSS   438,977     122,676     1,625,463     1,247,936  
                         
Basic and diluted loss per share   0.00     0.00     0.01     0.01  
                         
Weighted average number of common shares outstanding   115,264,262     105,657,468     111,970,399     103,050,840  


Western Copper and Gold Corporation
Condensed Interim Consolidated Financial Statements

(Unaudited and expressed in Canadian dollars)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended September 30,     2020     2019  
      $     $
(Restated - Note 2c)
 
Cash flows provided by (used in) Note            
               
OPERATING ACTIVITIES              
Loss and comprehensive loss     (1,625,463 )   (1,247,936 )
               
ITEMS NOT AFFECTING CASH              
 Share-based payments     331,078     295,575  
 Unrealized (gain) loss on marketable securities     (187,600 )   116,700  
 Flow-through premium recovery     (125,531 )   (716,829 )
      17,947     (304,554 )
NON-CASH WORKING CAPITAL ITEMS              
Change in accrued interest     -     (6,202 )
Change in other assets     (55,530 )   81,392  
Change in accounts payable and accrued liabilities related to operations     (30,957 )   (23,239 )
      (86,487 )   51,951  
               
OPERATING ACTIVITIES     (1,694,003 )   (1,500,539 )
               
FINANCING ACTIVITIES              
               
Private placement proceeds 6   6,430,000     3,354,300  
Private placement issuance costs 6   (179,147 )   (341,660 )
Exercise of stock options 7   806,834     47,000  
               
FINANCING ACTIVITIES     7,057,687     3,059,640  
               
INVESTING ACTIVITIES              
Redemption of short-term investments     -     1,000,000  
Mineral property expenditures     (4,059,042 )   (3,549,986 )
Purchase Canadian Creek claims 4   -     (38,913 )
               
INVESTING ACTIVITIES     (4,059,042 )   (2,588,899 )
               
CHANGE IN CASH AND CASH EQUIVALENTS     1,304,642     (1,029,798 )
               
Cash and cash equivalents - Beginning     1,641,721     3,026,385  
               
CASH AND CASH EQUIVALENTS - ENDING     2,946,363     1,996,587  


Western Copper and Gold Corporation
Condensed Interim Consolidated Financial Statements

(Unaudited and expressed in Canadian dollars)

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

    Number of
Shares
    Share
Capital
    Contributed
Surplus
    Deficit     Shareholders'
Equity
 
          $     $     $     $  
                               
DECEMBER 31, 2018   100,784,001     111,891,213     33,484,162     (99,088,568 )   46,286,807  
                               
Shares issued - Acquisition of mineral claims (note 6b)   3,000,000     2,760,000     -     -     2,760,000  
Private Placement (note 6c)                              
  Gross proceeds   3,727,000     3,354,300     -     -     3,354,300  
  Flow-through premium (note 5)   -     (857,210 )   -     -     (857,210 )
  Issuance costs   -     (341,660 )   -     -     (341,660 )
Exercise of stock options   75,000     67,117     (20,117 )   -     47,000  
Share-based payments   -     -     357,939     -     357,939  
Loss and comprehensive loss   -     -     -     (1,247,936 )   (1,247,936 )
                               
SEPTEMBER 30, 2019
(Restated - Note 2c)
  107,586,001     116,873,760     33,821,984     (100,336,504 )   50,359,240  
                               
                               
Exercise of stock options   50,000     34,953     (9,953 )   -     25,000  
Share-based payments   -     -     130,470     -     130,470  
Loss and comprehensive loss   -     -     -     (518,512 )   (518,512 )
                               
DECEMBER 31, 2019   107,636,001     116,908,713     33,942,501     (100,855,016 )   49,996,198  
                               
Private Placement (note 6c)                              
  Gross Proceeds   3,000,000     1,950,000     -     -     1,950,000  
  Issuance costs   -     (104,490 )   -     -     (104,490 )
  Allocation of warrant value   -     (351,000 )   351,000     -     -  
Private Placement (note 6c)                              
  Gross proceeds   4,000,000     4,480,000     -     -     4,480,000  
  Flow-through premium (note 5)   -     (40,000 )   -     -     (40,000 )
  Issuance costs   -     (74,657 )   -     -     (74,656 )
Exercise of stock options   1,083,334     1,114,363     (307,529 )   -     806,834  
Share-based payments   -     -     388,560     -     388,560  
Loss and comprehensive loss   -     -     -     (1,625,463 )   (1,625,464 )
                               
SEPTEMBER 30, 2020   115,719,335     123,882,929     34,374,532     (102,480,479 )   55,776,982  


Western Copper and Gold Corporation

Notes to the Consolidated Financial Statements

As at and for the three and nine months ended September 30, 2020

(Unaudited and 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 15th Floor - 1040 West Georgia 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.

COVID-19

In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic.  The contagious disease outbreak, which has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies and financial markets globally, potentially leading to an economic downturn.  It is not possible for the Company to predict the duration or magnitude of the adverse results of the outbreak and its effects on the Company's business or ability to raise funds.

2. BASIS OF PRESENTATION

a. Statement of compliance

These condensed interim consolidated financial statements have been prepared in accordance with IFRS applicable to the preparation of interim financial statements, as issued by the International Accounting Standards Board ("IASB"), including International Accounting Standard 34 - Interim Financial Reporting. The condensed interim consolidated financial statements should be read in conjunction with the Company's annual consolidated financial statements for the year ended December 31, 2019, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB. 

These financial statements were approved for issue by the Company's board of directors on November 5, 2020.

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 reporting period.  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. 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.


Western Copper and Gold Corporation

Notes to the Consolidated Financial Statements

As at and for the three and nine months ended September 30, 2020

(Unaudited and expressed in Canadian dollars)

c. Restatement of previously issued interim financial statements

In relation to the private placement completed on April 29, 2019, the Company did not recognise a flow through premium liability and a flow through premium recovery in the condensed consolidated interim financial statements for the three and nine months ended September 30, 2019. However, these adjustments were recognised in the audited financial statements for the year ended December 31, 2019.

A summary of the requisite adjustments on the financial statements for the three and nine months period ended September 30, 2019 is set forth in the table below:

 

Three months ended September 30, 2019

Nine months ended

September 30, 2019

Loss from operations (as previously reported)

$606,655

$1,964,765

Flow through premium recognised to statement of loss

$(483,979)

$(716,829)

Loss from operations (Restated)

$122,676

$1,247,936

Loss per share (as previously reported

$0.01

$0.02

Loss per share (Restated)

$0.00

$0.01


 

As at September 30, 2019

(as previously reported)

As at September 30, 2019

(as restated)

Share Capital

$117,730,970

$116,873,760

Shareholders' Equity

$50,449,621

$50,359,240

3. MARKETABLE SECURITIES

As at September 30, 2020, the Company held marketable securities with an aggregate market value of $348,100 (December 31, 2019 - $160,500), consisting of 2.5 million common shares of NorthIsle Copper and Gold Inc. with a market value of $325,000 (December 31, 2019 - $150,000) and 420,000 common shares of Copper North Mining Corp. with a market value of $23,100 (December 31, 2019 - $10,500).


Western Copper and Gold Corporation

Notes to the Consolidated Financial Statements

As at and for the three and nine months ended September 30, 2020

(Unaudited and expressed in Canadian dollars)

4. EXPLORATION AND EVALUATION ASSETS

a. Casino (100% - Yukon, Canada)

The Casino Project is a copper-gold porphyry deposit located in Yukon, Canada. 

All claims comprising the Casino Project are subject to a 2.75% net smelter returns royalty on the future sale of any metals and minerals derived therefrom.  As part of a separate agreement, Western is required to make a payment of $1 million upon making a production decision on the Casino Project.

On August 28, 2019, the Company acquired the mineral claims that comprise the Canadian Creek Property from Cariboo Rose Resources Ltd ("Cariboo Rose").  The Canadian Creek Property lies directly adjacent to the Casino Project. 

The total consideration paid to Cariboo Rose consisted of 3 million common shares of the Company with a fair value of $2,760,000.  The Company also incurred $38,913 in closing costs.

b. Exploration and evaluation expenditures

    Total  
    $  
       
DECEMBER 31, 2018   41,946,079  
       
Acquisition costs   2,798,913  
Claims maintenance   4,963  
Engineering   93,307  
Exploration and camp support   3,003,005  
Permitting   185,845  
Salary and wages   260,903  
Share-based payments   82,010  
       
DECEMBER 31, 2019   48,375,025  
       
Claims maintenance   25,575  
Engineering   89,100  
Exploration and camp support   4,396,961  
Permitting   105,929  
Salary and wages   171,973  
Share-based payments   57,482  
       
SEPTEMBER 30, 2020   53,222,045  

 


Western Copper and Gold Corporation

Notes to the Consolidated Financial Statements

As at and for the three and nine months ended September 30, 2020

(Unaudited and expressed in Canadian dollars)

5. FLOW THROUGH PREMIUM LIABILITY

The flow-through premium liability balance as at September 30, 2020 of $4,244 (December 31, 2019 - $89,775) arose in connection with the flow-through share offering the Company completed on June 1, 2020. The reported amount is the remaining balance of the premium from issuing the flow-through shares.  The flow-through premium liability will be derecognized with a recovery in the statement of loss pro-rata with the amount of qualifying flow-through expenditures that are incurred by the Company.

The Company is committed to incurring on or before December 31, 2021 qualifying Canadian exploration expenses as defined under the Income Act, Canada ("Qualifying CEE") in the amount of $4,480,000 with respect to the flow-through share financing completed on June 1, 2020. None of the Qualifying CEE will be available to the Company for future deduction from taxable income.

As at September 30, 2020, the Company had incurred approximately $4,004,643 of Qualifying CEE and accordingly, recognized flow-through premium recoveries of $30,484 and $125,531 during the three and nine months ended September 30, 2020 respectively ($483,979 and $716,829 during the three and nine month ended September 30, 2019 respectively).  As at September 30, 2020 the Company reduced its commitment to $475,357.

On May 17, 2019, the Company completed a flow-through share offering and recorded a flow-through premium liability of $857,210 and committed to incur Qualifying CEE in the amount of $3,354,300.  As at September 30, 2020, the Company had incurred all committed expenditures and no longer had a flow-through premium liability associated with this flow-through share offering.

6. 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. Acquisition of mineral claims

On August 28, 2019, Western acquired the 311 mineral claims that comprise the Canadian Creek Property from Cariboo Rose.  The Company issued 3 million common shares to Cariboo Rose valued at $0.92 per common share for an aggregate value of $2,760,000.

c. Financing

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 5.

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. 


Western Copper and Gold Corporation

Notes to the Consolidated Financial Statements

As at and for the three and nine months ended September 30, 2020

(Unaudited and expressed in Canadian dollars)

The fair value assigned to the warrants was calculated using the Black-Scholes option pricing model and the following inputs and assumptions:

Warrants issued

1,500,000

Exercise price

$0.85

Market price

$0.73

Expected term (years)

5.0

Expected share price volatility

61.3%

Average risk-free interest rate

1.07%

Expected dividend yield

-

 

 

FAIR VALUE ASSIGNED

$351,000

On May 17, 2019, Western completed a brokered private placement of FT Shares.  The Company issued a total of 3,727,000 FT Shares, comprised of (i) 3,333,333 FT Shares pursuant to the base offering and (ii) 393,667 FT Shares pursuant to the agent's exercise of its option, at a price of $0.90 per FT Share for aggregate gross proceeds of $3,354,300.  Issuance costs related to the private placement totaled $341,660.  A flow through premium liability of $875,210 was recognized. Refer note 5.

7. WARRANTS AND STOCK OPTIONS

a. Warrants

A summary of the Company's warrants outstanding, including changes for the periods then ended, is presented below:

    Number of
warrants
    Weighted average
exercise price
 
          $  
DECEMBER 31, 2019   1,452,533     1.75  
             
Issued   1,500,000     0.85  
Expired   (1,452,533 )   1.75  
             
SEPTEMBER 30, 2020   1,500,000     0.85  

Warrants outstanding are as follows:

Warrant outstanding,
by exercise price
  Number of
warrants
    Weighted average exercise price     Average remaining contractual life  
          $     years  
$0.85   1,500,000     0.85     4.42  
                   
SEPTEMBER 30, 2020   1,500,000     0.85     4.42  


Western Copper and Gold Corporation

Notes to the Consolidated Financial Statements

As at and for the three and nine months ended September 30, 2020

(Unaudited and expressed in Canadian dollars)

b. Stock options

Based on the Company's stock option plan, most recently approved by the Company's shareholders at the annual general meeting held on May 30, 2018, Western may issue stock options for the purchase of up to 10% of issued capital.  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 September 30, 2020 the Company could issue an additional 4,646,933 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:

    Number of
stock options
    Weighted average
exercise price
 
          $  
DECEMBER 31, 2018   5,200,001     0.98  
             
Granted   2,075,000     0.87  
Exercised   (125,000 )   0.58  
Expired   (850,000 )   0.90  
Forfeited   (150,000 )   1.20  
             
DECEMBER 31, 2019   6,150,001     0.96  
             
Granted   2,150,000     1.61  
Exercised   (1,083,334 )   0.74  
Cancelled/Forfeited   (191,667 )   1.40  
Expired   (100,000 )   0.67  
             
SEPTEMBER 30, 2020   6,925,000     1.19  

The average fair value of Company's share price corresponding with the exercise of stock options was $1.64.  During the year ended December 31, 2019, the average fair value of Company's share price was $0.84.

Stock options outstanding are as follows:

Stock options outstanding,
          by exercise price
  Number of
Stock options
    Weighted average exercise price     Average remaining contractual life  
          $     years  
$0.75 - $0.90   1,950,000     0.87     3.68  
$0.96   1,150,000     0.96     0.95  
$1.11   200,000     1.11     4.69  
$1.20   1,800,000     1.20     2.39  
$1.66   1,825,000     1.66     4.82  
                   
SEPTEMBER 30, 2020   6,925,000     1.19     3.22  


Western Copper and Gold Corporation

Notes to the Consolidated Financial Statements

As at and for the three and nine months ended September 30, 2020

(Unaudited and expressed in Canadian dollars)

Of the total stock options outstanding, 3,583,327 were vested and exercisable at September 30, 2020.  The weighted average exercise price of vested stock options is $1.06 and the average remaining contractual life is 2.16 years.

8. SHARE-BASED PAYMENTS

The following is a summary of stock options granted by the Company in 2020 and 2019 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.               

    July 27,     June 11,     June 18,     April 23,  
Inputs and assumptions   2020     2020     2019     2019  
                         
Stock options granted   1,950,000     200,000     1,675,000     400,000  
Exercise price $ 1.66   $ 1.11   $ 0.90   $ 0.75  
                         
Market price $ 1.61   $ 1.11   $ 0.78   $ 0.72  
Expected option term (years)   3.0     3.0     3.0     3.0  
Expected stock price volatility   56.6%     49.7%     51.8%     51.6%  
Average risk-free interest rate   0.29%     0.27%     1.36%     1.56%  
Expected forfeiture rate   -     -     -     -  
Expected dividend yield   -     -     -     -  
                         
FAIR VALUE ASSIGNED $ 1,159,000   $ 75,000   $ 409,000   $ 100,000  

9. 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:

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
    $     $     $     $  
Salaries and director fees   193,402     205,569     647,753     626,394  
Share-based payments   160,936     125,077     309,956     263,966  
                         
KEY MANAGEMENT COMPENSATION   354,338     330,646     957,709     890,360  

Share-based payments represent the grant-date fair value of stock options previously granted to directors and officers that was recognized in the Company's consolidated financial statements during the periods presented above.

10. 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. 

11. CAPITAL MANAGEMENT

There has been no change in the Company's approach to capital management during the three and nine months ended September 30, 2020.  Western has no debt and does not pay dividends.  The Company is not subject to any externally imposed capital.


Western Copper and Gold Corporation

Notes to the Consolidated Financial Statements

As at and for the three and nine months ended September 30, 2020

(Unaudited and expressed in Canadian dollars)

12. 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.  The Company deposits cash and cash equivalents in Canadian chartered banks and purchases short-term investments that are guaranteed by Canadian governments or by Canadian chartered banks. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents Western's maximum exposure to credit risk.

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.




WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

MANAGEMENT'S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020

The following management discussion and analysis of Western Copper and Gold Corporation (together with its subsidiaries, "Western" or the "Company") is dated November 5, 2020, and provides an analysis of the Company's results of operations for the three and nine months ended September 30, 2020.

This discussion is intended to provide investors with a reasonable basis for assessing the financial performance of the Company as well as certain forward looking statements relating to its potential future performance.  The information should be read in conjunction with Western's condensed interim consolidated financial statements for the three and nine months ended September 30, 2020, and Western's audited consolidated financial statements for the year ended December 31, 2019, and the notes thereto prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board.  The Company's accounting policies are described in note 3 to the audited consolidated financial statements for the year ended December 31, 2019.  All of the financial information presented herein is expressed in Canadian dollars, unless otherwise indicated.

Western is listed on the Toronto Stock Exchange ("TSX") and the NYSE American under the symbol WRN. Additional information relating to the Company, including the Company's Annual Information Form for the year ended December 31, 2019 ("AIF"), is filed with Canadian regulators on SEDAR at www.sedar.com.  This information, along with Western's annual report on Form 40-F, filed with the United States Securities and Exchange Commission (the "SEC"), is also available at edgar.sec.gov/edgar.shtml

The operations of the Company are speculative due to the high-risk nature of the mining industry.  Western faces risks that are generally applicable to its industry and others that are specific to its operations.  Certain key risks affecting the Company's current and future operations are discussed in its AIF and Form 40-F.  This list is not exhaustive.  Additional risks not currently known to the Company, or that the Company currently deems immaterial, may also impair the Company's operations.  Such risk factors could materially affect the value of the Company's assets and future operating results, and could cause actual results to differ materially from those described in the forward looking statements contained in this management discussion and analysis.  Reference is made to the discussion of forward-looking statements at the end of this document.

DESCRIPTION OF BUSINESS

Western Copper and Gold Corporation and its wholly-owned subsidiary, Casino Mining Corp. ("Casino Mining"), are focused on advancing the Casino project ("Casino" or "Casino Project") towards production.  The Casino Project is located in Yukon, Canada and hosts one of the largest undeveloped copper-gold deposits in Canada.

CORPORATE DEVELOPMENT

Private Placement

On June 1, 2020, the Company 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.

On February 28, 2020, the Company completed a private placement, wherein strategic investor and director Michael Vitton purchased 3,000,000 units at a price of $0.65 per unit for gross proceeds of $1,950,000. Each unit consists of one common share of the Company and half of one warrant (each whole warrant, a "Warrant").  Each Warrant entitles the holder to purchase one additional share at a price of $0.85 until February 28, 2025. 


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

Director Changes

Mr. Michael Vitton was elected to the board of directors at the Company's recent Annual General Meeting ("AGM") held on June 10, 2020.  Longtime board member Robert Gayton did not stand for re-election at this year's AGM.

Mr. Vitton is the former Executive Managing Director, Head, US Equity Sales, Bank of Montreal Capital Markets (BMO Capital Markets) where he originated and placed more than USD $200 billion through public and secondary offerings and M&A transactions across all sectors.

Mr. Vitton was the co-founder of MMX Minerals e Metalicos SA (Brazil) ("MMX") and LLX Logistica SA (Brazil). MMX sold Minas Rio and Amapa assets to Anglo American Corporation for USD $5.5 billion in cash in December 2008, returning USD $8.8 billion in cash or stock distributions to MMX shareholders, offering six times return from IPO. LLX Logistica (Acu Port) was sold to EIG (Energy Infrastructure Group). Additionally, he co-founded Petro Rio SA, one of the leading Brazilian public oil and gas producers, producing over 35,000 bbls per day.

Recently, Mr. Vitton acted as seed investor and capital markets advisor to Newmarket Gold Inc., which was sold to Kirkland Lake Gold Ltd. for CAD $ 1 billion, combining to form a CAD $2.4 billion company. He acted as investor and capital markets advisor to ASX-listed Gold Road Resources Ltd., raising AUD $57 million, and bringing the Gruyere gold mine into production jointly with Gold Fields SA. He currently acts as advisor to Cardinal Resources Ltd.  Mr. Vitton is a partner and member of P5 Infrastructure, operating in partnership with EQT Infrastructure/CMA CGM, where EQT Infrastructure/P5 Infrastructure acquired 90% of Global Gateway South Terminal, a deep sea terminal in Long Beach Harbor, CA.

Mr. Vitton is a graduate of the University of Michigan Business School, former Seat Holder, NYSE, and former President, New York Society of Metals Analysts.

On August 17, 2020, Archie Lang resigned from the board of directors of the Company.

CASINO PROJECT UPDATE

Updated Resource Estimate

On July 14, 2020, Western reported an updated resource estimate for its wholly owned Casino copper-gold project.  The measured & indicated resource increased to 2.4 billion tonnes, measured & indicated gold increased to 14.5 million ounces plus 6.6 million ounces inferred and measured & indicated copper increased to 7.6 billion pounds plus 3.3 billion pounds inferred.

The new resource estimate is the first estimate since 2010 and includes results from the 2019 drilling campaign, and drilling performed from 2010 through 2012 that was not available when the 2010 model was developed.  It also incorporates an updated geologic model.

The Mill Resource, consisting of the supergene oxide, supergene sulfide, and hypogene zones, increased significantly from the December 2010 estimate (see Table 1).  Measured and indicated Mill Resource tonnes increased 106% from the prior estimate to 2.2 billion tonnes, primarily due to the upgrade of inferred resource to indicated.  Copper and gold contained in the new measured and indicated estimate also increased significantly to 7.4 billion pounds of copper and 12.7 million ounces of gold.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

Table 1: Mill Resource in 2020 and 2010

July 2020 Mill Resource at $5.70 NSR Cut-Off

Class

Tonnes

Copper

Gold

Moly

Silver

CuEq

Copper

Gold

Moly

Silver

M

(%)

(g/t)

(%)

(g/t)

(%)

(M lb)

(M oz)

(M lb)

(M oz)

Measured

145.3

0.31

0.40

0.025

2.1

0.74

986

1.9

80.6

9.8

Indicated

2,028.0

0.14

0.17

0.016

1.4

0.33

6,448

10.9

731.0

90.4

M+I

2,173.3

0.16

0.18

0.017

1.4

0.36

7,434

12.7

811.6

100.2

Inferred

1,430.2

0.10

0.14

0.010

1.2

0.24

3,240

6.4

322.8

53.5

December 2010 Combined Supergene Oxide, Supergene Sulfide, and Hypogene Zones at 0.25% CuEQ Cut-Off

Class

Tonnes

Copper

Gold

Moly

Silver

CuEq

Copper

Gold

Moly

Silver

M

(%)

(g/t)

(%)

(g/t)

(%)

(M lb)

(M oz)

(M lb)

(M oz)

Measured

94

0.34

0.43

0.027

2.21

0.81

695

1.3

56

6.7

Indicated

963

0.19

0.21

0.022

1.66

0.43

3,991

6.6

466

51.3

M+I

1,057

0.20

0.23

0.022

1.71

0.42

4,686

7.9

522

58.0

Inferred

1,696

0.15

0.16

0.019

1.37

0.34

5,440

8.8

720

74.7

The heap leach resource also increased from the 2010 estimate and is now 217 million tonnes at a gold grade of 0.27 g/t AuEq (see Table 2), containing 1.8 million ounces of gold, 13.3 million ounces of silver, and 167 million pounds of copper.

Table 2: Heap Leach Resource at $5.46 NSR Cut-Off

Class

Tonnes

Copper

Gold

Silver

AuEq

Copper

Gold

Silver

M

(%)

(g/t)

(g/t)

(g/t)

(M lb)

(M oz)

(M oz)

Measured

37.2

0.05

0.45

2.8

0.48

39.3

0.5

3.3

Indicated

180.2

0.03

0.21

1.7

0.23

127.2

1.2

10.0

M+I

217.4

0.03

0.25

1.9

0.27

166.5

1.8

13.3

Inferred

31.1

0.03

0.17

1.7

0.18

17.2

0.2

1.7

The 2020 resource estimate was developed by Independent Mining Consultants, Inc. of Tucson, Arizona ("IMC") and is based on a block model developed by IMC during June 2020.  The Measured, Indicated, and Inferred Mineral Resources reported herein are contained within a floating cone pit shell to demonstrate "reasonable prospects for eventual economic extraction" to meet the definition of Mineral Resources in NI 43-101.

On November 2, 2020, the Company filed an independent technical report titled "Western Copper and Gold Corporation, Casino Project, Updated Mineral Resource Statement, Form 43-101F1 Technical Report, Yukon, Canada" dated effective July 3, 2020 and issued on October 26, 2020, prepared by Daniel Roth, P.E., P.Eng., Michael Hester, FAusIMM, Laurie Tahija, MMSA-QP; Carl Schulze, P. Geo. and Caroline Vallat, P. Geo. supporting the mineral resource estimate on its flagship Casino Project.

2020 Drilling and Exploration Program

On June 4, 2020, the Company announced it's 2020 drilling and exploration program.  The 2020 drill program tested the High Gold Zone, Northern Porphyry and Canadian Creek Targets identified by last year's program.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

The High Gold Zone was recognized last year during the infill drill program when a number of greater than 2 grams per tonne ("g/t") gold intercepts were found including hole DH19-21 that returned 55.1 g/t gold over 2.97 m at a depth of 147.98 m (see news release dated September 24, 2019).  Additional intercepts include hole DH19-10 that returned 4.78 g/t gold over 1.0 m at a depth of 174.0 m and hole DH19-13 that returned 3.55 g/t gold over 2.0 m at a depth of 129.0 m.  Within the High Gold Zone the drilling was designed to confirm the controls, general continuity and variability of grade in the gold bearing structures.

The Northern Porphyry is associated with a satellite intrusive and breccia complex located near the main Casino intrusion and represents a new deposit on the north side of the main Casino deposit.  At surface, the Northern Porphyry appears to be at a higher erosional level in porphyry system than the main Casino deposit and suggests potential for improving copper and gold grades at depth. 

The Canadian Creek drilling tested two primary targets on ground acquired in 2019 referred to as the Casino West extension and the Ana Target.

The Casino West target is an 800 by 500 m area immediately west of the Casino deposit. The four closest historical holes east of the target have leach capping or incipient leaching, weak enrichment and hypogene copper-gold-molybdenum mineralization typical of what is expected at the outer edges of a porphyry copper-gold- molybdenum deposit. 

At the Ana Target, drilling tested for porphyry copper-gold mineralization near surface and at depth. Past exploration shows an untested IP chargeability and copper-in-soil anomaly surrounded by historical holes with moderate to strong propylitic to potassic alteration associated with low levels of copper, gold and molybdenum.  Associated with this peripheral alteration are small bodies of intrusion breccia and Patton Porphyry, both closely associated with mineralization at the Casino deposit.  Many of the logs of the historical drill holes mention late pyrite veining in fault and shear zones.

Drilling has concluded and the Company is currently waiting for assays to be completed.

COVID-19 Policy

The Company has implemented a COVID-19 Policy to reduce the spread of COVID-19 at its exploration camp, and in the Yukon.  The Company will continue to follow the guidance issued by the Federal and Territorial governments for the operation of remote camps and mining operations.  All policies can be found on the Company's website.

Permitting

In November 2018, the Company completed the Best Available Tailings Technology ("BATT") Study, a major component of the environmental assessment application for the Casino Project.  The BATT Study was the culmination of an 18-month collaborative process that included participation by First Nations, the Yukon Environmental and Socio-economic Assessment Board ("YESAB") , and the Yukon Government. 

Traditional Land Use Studies have now been completed for all First Nations identified by YESAB as being potentially impacted by the Casino Project.  These studies, which took place over the past two years, are central to the assessment of effects of the Casino Project and are therefore a critical step in the completion of the Environmental and Socio-Economic ("ESE") Statement.

The Company has initiated engineering activities to incorporate the outcomes of the BATT Study into the Facility design, but there is no timeline for submission of the ESE Statement.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

Infrastructure

In 2017, the Federal and Yukon Governments announced commitments to fund the upgrade for a portion of the existing access road to standards required for the Casino Project, as well as to fund a section of the additional 126 km of new access road to the Casino site.

On April 8, 2019, the Yukon Government and Little Salmon/Carmacks First Nation reached an agreement (the "Agreement") for the first section of the Casino Project access road: the proposed Carmacks Bypass.

This Agreement represents the first project agreement for the Yukon Resource Gateway Project (the "Gateway Project").  The Gateway Project includes funding for upgrading the initial 82 km of the existing access road to standards required for the Casino Project and 30% funding for the additional 126 km of new access road to the Casino site secured through commitments from the Yukon Government and the Federal Government.

The Yukon Government indicated that it recently completed geotechnical investigations on the Carmacks Bypass and engineering is underway with a goal to start construction as soon as possible.  It is also in discussions with the Little Salmon/Carmacks First Nation for an agreement on the remainder of the initial 82 km of the access road.

Exploration and evaluation expenditures

Western's recent activities have focused on exploration and drilling of the Casino Project. Capitalized expenditures for the periods presented were as follows:

For the nine months ended September 30,   2020     2019  
    $     $  
Acquisition costs   -     2,798,913  
Claims maintenance   25,575     4,963  
Engineering   89,100     80,522  
Exploration and camp support   4,396,961     2,827,877  
Permitting   105,929     168,251  
Salary and wages   171,973     204,981  
Share-based payments   57,482     62,364  
             
TOTAL   4,847,020     6,147,871  

Royalties and production payments

All claims comprising the Casino Project are subject to a 2.75% net smelter returns royalty (the "NSR Royalty") on the future sale of any metals and minerals derived therefrom.

As part of a separate agreement, Western is required to make a payment of $1 million upon achieving commercial production at the Casino Project.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

SELECTED QUARTERLY FINANCIAL INFORMATION

The following quarterly information has been extracted from the Company's unaudited condensed interim consolidated financial statements.

As at and for the quarter ended   30-Sep-20     30-Jun-20     31-Mar-20     31-Dec-19  
    $     $     $     $  
Loss and comprehensive loss   438,977     425,392     761,094     518,512  
Loss per share - basic and diluted   0.00     0.00     0.01     0.00  
Cash and short-term investments   2,946,363     5,974,801     2,809,957     1,641,721  
Exploration and evaluation assets   53,222,045     49,617,686     48,724,375     48,375,025  
Total assets   56,945,795     55,967,850     51,801,705     50,458,763  

As at and for the quarter ended   30-Sep-19     30-Jun-19     31-Mar-19     31-Dec-18  
    $
(Restated)
    $
(Restated)
    $     $  
Loss and comprehensive loss   122,676     438,364     686,896     664,384  
Loss per share - basic and diluted   0.00     0.00     0.01     0.01  
Cash and short-term investments   2,507,950     5,297,396     3,640,957     4,531,546  
Exploration and evaluation assets   48,093,950     43,106,620     42,082,913     41,946,079  
Total assets   50,918,610     48,883,659     46,087,857     46,889,013  

Items that resulted in significant differences in the quarterly figures presented above are explained in the following narrative.

Loss and comprehensive loss

The scale and nature of the Company's corporate and administrative activity have remained relatively consistent over the periods presented above.  Quarterly fluctuations in loss and comprehensive loss figures have mainly been driven by gains and losses related to foreign exchange and marketable securities, flow-through premium recovery and variances in stock-based compensation expense. 

Exploration and evaluation assets

Expenditures incurred by the Company relating to its mineral properties are capitalized.  As a result, the carrying value of exploration and evaluation assets generally increases from period to period.

During the three months ended September 30, 2020, exploration and evaluation assets increased as the Company undertook a significant drilling and exploration program.

During the three months ended September 30, 2019, exploration and evaluation assets increased as the Company acquired 311 mineral claims that comprise the Canadian Creek Property and the Company completed field work for its 2019 drill campaign.

Cash, cash equivalents, and short-term investments

Cash is used to fund ongoing operations.  Unless there is a significant financing transaction, total cash, cash equivalents and short-term investments are expected to decrease from one period to the next.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

RESULTS OF OPERATIONS

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
    $     $     $     $  
Filing and regulatory fees   8,929     6,709     197,594     188,623  
Office and administration   51,490     68,849     162,749     185,421  
Professional fees   28,815     17,344     112,360     69,236  
Rent and utilities   31,544     23,830     91,633     91,059  
Share-based payments   164,225     134,299     331,078     295,575  
Shareholder communication and travel   73,861     97,320     198,837     316,189  
Wages and benefits   273,699     227,912     847,099     752,208  
                         
CORPORATE EXPENSES   632,563     576,263     1,941,350     1,898,311  
                         
Foreign exchange (gain) loss   (4,262 )   1,518     3,547     823  
Interest income   (440 )   (10,726 )   (6,303 )   (51,069 )
Flow-through premium recovery   (30,484 )   (483,979 )   (125,531 )   (716,829 )
Unrealized (gain) loss on marketable securities   (158,400 )   39,600     (187,600 )   116,700  
                         
LOSS AND COMPREHENSIVE LOSS   438,977     122,676     1,625,463     1,247,936  

THREE MONTHS ENDED SEPTEMBER 30, 2020

Western incurred a loss of $438,977 (0.00 per common share) for the three months ended September 30, 2020, compared to a loss of $122,676 ($0.00 per common share) over the same period in 2019.  The scale and nature of the Company's administrative activity have remained generally consistent throughout these periods, but a few items led to differences in the comparative figures, as follows: 

Share-based payments increased by $29,926 during the three months ended September 30, 2020, compared to the same period in 2019 due to timing, valuation, and recognition differences relating to the underlying stock option grants.

Shareholder communication and travel decreased by $23,459 during the three months ended September 30, 2020, compared to the same period in 2019 due to limited travel and promotion as a result of the COVID-19 pandemic.

Wages and benefits increased by $45,787 during the three months ended September 30, 2020, compared to the same period in 2019 due to increased employee wages and benefits costs.

During the three months ended September 30, 2020, the Company recorded a flow-through premium recovery of $30,484 compared to a flow-through premium recovery of $483,979 during the three months ended September 30, 2019. 

The Company recorded an unrealized gain on marketable securities of $158,400 during the three months ended September 30, 2020, compared to an unrealized loss of $39,600 during the same period in 2019 as a result of variances in the share price of the marketable securities held by Western at each period end date.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

NINE MONTHS ENDED SEPTEMBER 30, 2020

Western incurred a loss of $1,625,463 ($0.01 per common share) for the nine months ended September 30, 2020, compared to a loss of $1,247,936 ($0.01 per common share) over the same period in 2019.  The scale and nature of the Company's administrative activity have remained generally consistent throughout these periods, but a few items led to differences in the comparative figures, as follows: 

During the nine months ended September 30, 2020, professional fees increased by $43,124 compared to the same period in 2019 largely due to a general increase in legal activity.

Share-based payments increased by $35,503 during the nine months ended September 30, 2020, compared to the same period in 2019 due to timing, valuation, and recognition differences relating to the underlying stock option grants.

Shareholder communication and travel decreased by $117,352 during the nine months ended September 30, 2020, compared to the same period in 2019 due to the COVID-19 pandemic, which resulted in limited travel and promotion.

Wages and benefits increased by $94,891 during the nine months ended September 30, 2020, compared to the same period in 2019 as the Company approved and paid employee bonuses related to 2019 and incurred higher costs related to employee wages and benefits.

During the nine months ended September 30, 2020, the Company recorded a flow-through premium recovery of $125,531 compared to a flow-through premium recovery of $716,829 during the nine months ended September 30, 2019. 

Differences in the unrealized gains and losses on marketable securities are a result of variances in the share price of the marketable securities held by Western at each period end date.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

Restatement of previously issued interim financial statements

In relation to the private placement completed on April 29, 2019, the Company did not recognise flow through premium liability and flow through premium recovery in the condensed consolidated interim financial statements for the three and nine months ended September 30, 2019. However, these adjustments were recognised in the audited financial statements for the year ended December 31, 2019.

A summary of the requisite adjustments on the financial statements for the three and nine months period ended September 30, 2019 is set forth in the table below:

 

Three months ended

September 30, 2019

Nine months ended

September 30, 2019

Loss from operations (as previously reported)

$606,655

$1,964,765

Flow through premium recognised to statement of loss

$(483,979)

$(716,829)

Loss from operations (Restated)

$122,676

$1,247,936

Loss per share (as previously reported)

$0.01

$0.02

Loss per share (Restated)

$0.00

$0.01


 

As at September 30, 2019

(as previously reported)

As at September 30, 2019

(as restated)

Share Capital

$117,730,970

$116,873,760

Shareholders' Equity

$50,449,621

$50,359,240

LIQUIDITY AND CAPITAL RESOURCES

For the nine months ended September 30,   2020     2019  
    $     $  
CASH PROVIDED BY (USED IN)            
Operating activities   (1,694,003 )   (1,500,539 )
Financing activities   7,057,687     3,059,640  
Investing activities   (4,059,042 )   (2,588,899 )
             
CHANGE IN CASH AND EQUIVALENTS   1,304,642     (1,029,798 )
             
Cash and cash equivalents - beginning   1,641,721     3,026,385  
             
CASH AND CASH EQUIVALENTS   2,946,363     1,996,587  

Cash and cash equivalents totaled $2.9 million as at September 30, 2020 (December 31, 2019 - $1.6 million).  Western's net working capital as at September 30, 2020 totaled $2.4 million (December 31, 2019 - $1.6 million). 

Western is an exploration stage company.  As at the date of this report, the Company has not earned any production revenue.  It depends heavily on its working capital balance and its ability to raise funds through capital markets to finance its operations.  Although the Company expects that the current working capital balance will be sufficient to fund anticipated operating activities in the next twelve months, it will require significant additional funding to complete the development and construction of the Casino mine. 


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company's ability to continue as a going concern is substantially dependent on its ability to raise funds necessary to acquire assets, perform exploration and development activities, and conduct its corporate affairs primarily through the issuance of its common shares. There is a risk that in the future the Company may not be able to raise the capital required to fund operations.

Operating activities

The significant components of operating activities are discussed in the Results of Operations section above. 

Financing activities

During the nine months ended September 30, 2020, the Company completed private placements for aggregate proceeds of $6.4 million.  During the nine months ended September 30, 2019, the Company completed a brokered private placement for aggregate proceeds of $3.35 million. 

During the nine months ended September 30, 2020, the Company received $806,834 from the exercise of stock options.  During the nine months ended September 30, 2019, the Company received $47,000 from the exercise of stock options. 

Investing activities

Investing activities include both mineral property expenditures, and purchases and redemptions of short-term investments.  Investments with an original maturity of greater than three months are considered short-term investments for accounting purposes.  Purchases and redemptions of short-term investments are mainly driven by cash requirements and available interest rates.

During the nine months ended September 30, 2020, Western spent $4 million on exploration and evaluation expenditures.  During the nine months ended September 30, 2019, Western expended $3.5 million on mineral property activities. 

The majority of the mineral property expenditures incurred during the nine months ended September 30, 2020, relate to the Company's exploration program.  A summary of activities relating to the Casino Project is available under the Casino Project Update section at the beginning of this report.

OUTSTANDING SHARE DATA

As at the date of this report, the Company has 115,769,335 common shares outstanding. The Company also has 6,875,000 stock options outstanding with exercises prices ranging from $0.75 to $1.66 and 1,500,000 warrants with an exercise price of $0.85.

CONTRACTUAL OBLIGATIONS

The Company must spend $4,480,000 on qualifying Canadian exploration expenditures by December 31, 2021.  Otherwise, Western is required to pay the investors who purchased flow-through shares the difference between the amount of tax they would have realized had the Company incurred all expenditures renounced in March 2021 by December 31, 2021, and the amount that the investors actually realized.  As at September 30, 2020 the Company had incurred $4,004,643 in qualifying Canadian exploration expenditures and reduced its commitment to $475,357.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

The Company has no off-balance sheet arrangements, no lease agreements with non-cancellable terms and no long-term obligations other than those described throughout this document, or in the description of exploration and evaluation assets contained in the notes to the consolidated financial statements.

KEY MANAGEMENT COMPENSATION

The Company's related parties also include its directors and officers, who are the key management of the Company.  The remuneration of directors and officers during the periods presented was follows:

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2020     2019     2020     2019  
    $     $     $     $  
Salaries and director fees   193,402     205,569     647,753     626,394  
Share-based payments   160,936     125,077     309,956     263,966  
                         
KEY MANAGEMENT COMPENSATION   354,338     330,646     957,709     890,360  

Share-based payments represent the fair value of stock options previously granted to directors and officers that was recognized during the years presented above.

SIGNIFICANT ACCOUNTING ESTIMATES

Use of estimates

The preparation of financial statements in conformity with IFRS requires 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 reporting period. Actual results could differ from those estimates.  Differences may be material.

Exploration and evaluation assets

The carrying amount of the Company's exploration and evaluation assets represents costs net of write-downs and recoveries to date and does not necessarily reflect present or future values.  Recovery of capitalized costs is dependent on successful development of economic mining operations or the disposition of the related mineral properties. 

The Company's assets are reviewed for indication of impairment at each balance sheet date.  If indication of impairment exists, the assets' recoverable amount is estimated.  If the assets' carrying amount exceeds the recoverable amount then an impairment loss is recognized in the statement of loss. The Company's review did not identify any indication of impairment.

Environmental site reclamation

The Company has not recognized an amount for environmental site reclamation, however, minimum standards for site reclamation have been established by various governmental agencies that affect certain operations of the Company.  The determination of reclamation costs requires assumptions with respect to future expected costs and legislation in effect at that time.  Changes in these assumptions could have a material effect on the amount required to be recognized as an environmental reclamation provision.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

DISCLOSURE CONTROLS AND PROCEDURES

Management is responsible for designing, establishing, and maintaining a system of disclosure controls and procedures.  Disclosure controls and procedures are designed to provide reasonable assurance that material information relating to the Company is made known to management, particularly during the period in which the annual filings are being prepared and that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation.

The Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of the Company's disclosure controls and procedures as of December 31, 2019.  As a result of the material weakness identified during the assessment of internal control over financial reporting, as described below, management has also concluded that its disclosure controls and procedures were not effective as at September 30, 2020.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for designing, establishing, and maintaining a system of internal control over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in Canada.

In making this assessment, the Company's management used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Internal Control-Integrated Framework.

The Chief Executive Officer and the Chief Financial Officer assessed the design and the operating effectiveness of the Company's internal control over financial reporting as of December 31, 2019.

Based on that assessment, management concluded that, as at December 31, 2019, the Company's internal control over financial reporting was not effective 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's development, the Company does not have sufficient size and scale to warrant the hiring of additional staff to correct the weakness at this time.

There has been no significant change in internal control over financial reporting or in disclosure controls and procedures from January 1 to September 30, 2020 that has materially affected, or is reasonably likely to affect, the Company's internal control over financial reporting or its disclosure controls and procedures.

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.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

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.

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.  The Company deposits cash and cash equivalents in Canadian chartered banks and purchases short-term investments that are guaranteed by Canadian governments or by Canadian chartered banks. The carrying amount of financial assets recorded in the financial statements, net of any allowance for losses, represents Western's maximum exposure to credit risk.

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.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

FORWARD-LOOKING STATEMENTS

This management discussion and analysis ("MD&A") and certain information incorporated by reference in this MD&A contain certain forward-looking statements concerning Western's strategy, projects, plans or future financial or operating performance.  All statements that are not statements of historical fact are "forward-looking statements" as that term is defined in the United States Private Securities Litigation Reform Act of 1995 and "forward looking information" as that term is defined in National Instrument 51-102 ("NI 51-102") of the Canadian Securities Administrators (collectively, "forward-looking statements"). Certain forward looking information may also be considered future-oriented financial information ("FOFI") as that term is defined in NI 51-102.  The purpose of disclosing FOFI is to provide a general overview of management's expectations regarding the anticipated results of operations and capital expenditures and readers are cautioned that FOFI may not be appropriate for other purposes. Forward-looking statements are frequently, but not always, identified by words such as "expects", "anticipates", "believes", "intends", "estimates", "potential", "possible", "targets", "plans", "goals" and similar expressions, or statements that events, conditions or results "will", "may", "could", "should" or "would" occur or be achieved. Such forward-looking statements are set forth, among other places, under the heading "Casino Project Update" and elsewhere in the MD&A and may include, but are not limited to, statements regarding perceived merit of properties; mineral reserve and resource estimates; capital expenditures; feasibility study results (including projected economic returns, operating costs and capital costs in connection with the Casino Project); cash flow forecasts; exploration results at the Company's property; budgets; work programs; permitting or other timelines; the Company's engagement with local communities to manage the COVID-19 pandemic; estimated timing for construction of, and production from, any new projects; strategic plans, including without limitation Western's strategy and plans in respect of environmental and social governance issues; market price of precious and base metals; expectations regarding future price assumptions, financial performance and other outlook or guidance or other statements that are not statements of historical fact.

Forward-looking statements are necessarily based upon a number of estimates and assumptions, including material estimates and assumptions related to the factors set forth below that, while considered reasonable by the Company as at the date of this MD&A in light of management's experience and perception of current conditions and expected developments, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The material assumptions used to develop the forward-looking statements herein include assumptions that (1) prevailing and projected market prices and foreign exchange rates, exploitation and exploration estimates will not change in a materially adverse manner, (2) requisite capital and financing will be available on acceptable terms, (3) equipment and personnel required for permitting, construction and operations will be available on a continual basis, (4) no unforeseen delays, unexpected geological or other effects, equipment failures, or permitting or other delays, and (5) general economic, market or business conditions will not change in a materially adverse manner and as more specifically disclosed throughout this document, and in the AIF and Form 40-F. 

Forward-looking statements are statements about the future and are inherently uncertain, and actual results, performance or achievements of Western and its subsidiaries may differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements due to a variety of risks, uncertainties and other known or unknown factors. Such risks and other factors include, among others, risks involved in fluctuations in gold, copper and other commodity prices and currency exchange rates; the speculative nature of mineral exploration and development; uncertainties relating to interpretation of drill results and the geology, continuity and grade of mineral deposits; uncertainty of estimates of capital and operating costs, recovery rates, production estimates and estimated economic return; changes in project parameters as plans continue to be refined; risks associated with projects in the early stages of evaluation and for which additional engineering and other analysis is required; the benefits expected from recent transactions being realized; failure to comply with environmental and health and safety laws and regulations; risks related to cooperation of government agencies and First Nations in the exploration and development of the property and the issuance of required permits; risks related to the need to obtain additional financing to develop the property and uncertainty as to the availability and terms of future financing; the possibility of delay in exploration or development programs or in construction projects and uncertainty of meeting anticipated program milestones; increased costs, delays, suspensions and technical challenges associated with the construction of capital projects; operating or technical difficulties in connection with mining or development activities, including geotechnical challenges and disruptions in the maintenance or provision of required infrastructure and information technology systems; uncertainty as to timely availability of permits and other approvals; non-renewal of key licenses by governmental authorities; the impact of global liquidity and credit availability on the timing of cash flows and the values of assets and liabilities based on projected future cash flows; adverse changes in the Company's credit ratings; the impact of inflation; changes in national and local government legislation, taxation, controls or regulations and/or changes in the administration of laws, policies and practices, expropriation or nationalization of property and political or economic developments in Canada, the United States and other jurisdictions in which the Company or its affiliates do or may carry on business in the future; risks associated with illegal and artisanal mining; risks associated with new diseases, epidemics and pandemics, including the effects and potential effects of the global COVID-19 pandemic; the possibility that future exploration results will not be consistent with the Company's expectations; risks that exploration data may be incomplete and considerable additional work may be required to complete further evaluation, including but not limited to drilling, engineering and socioeconomic studies and investment; risk of loss due to acts of war, terrorism, sabotage and civil disturbances; litigation and legal and administrative proceedings; contests over title to properties, particularly title to undeveloped properties, or over access to water, power and other required infrastructure; business opportunities that may be presented to, or pursued by, the Company; the Company's ability to successfully integrate acquisitions or complete divestitures; employee relations including loss of key employees; increased costs and physical risks, including extreme weather events and resource shortages, related to climate change; and other risks and uncertainties disclosed in Western's AIF and Form 40-F, and other information released by Western and filed with the applicable regulatory agencies. Western also cautions that its 2020 guidance, projections, plans and strategy may be impacted by the unprecedented business and social disruption caused by the spread of COVID-19.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

All of the forward-looking statements made in this MD&A are qualified by these cautionary statements. Specific reference is made to the most recent Form 40-F/Annual Information Form on file with the SEC and Canadian provincial securities regulatory authorities for a more detailed discussion of some of the factors underlying forward-looking statements and the risks that may affect the Company's ability to achieve the expectations set forth in the forward-looking statements contained in this MD&A.

Western's forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and Western does not assume, and expressly disclaims, any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by applicable securities legislation. For the reasons set forth above, investors should not place undue reliance on forward-looking statements. Readers are cautioned that forward-looking statements are not guarantees of future performance.


WESTERN COPPER AND GOLD CORPORATION  MANAGEMENT DISCUSSION AND ANALYSIS
  Three and nine months ended September 30, 2020
(Expressed in Canadian dollars, unless otherwise indicated)  

CAUTIONARY NOTE TO U.S. INVESTORS REGARDING RESOURCE AND RESERVE ESTIMATES

The MD&A has been prepared in accordance with the requirements of the securities laws in effect in Canada as of the date of this MD&A, which differ in certain material respects from the disclosure requirements of United States securities laws.  The terms "mineral reserve", "proven mineral reserve" and "probable mineral reserve" are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") - CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended.  NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.  The definitions of these terms differ from the definitions of such terms for purposes of the disclosure requirements of the SEC and contained in Industry Guide 7 of the SEC.  Under Industry Guide 7 standards, a "final" or "bankable" feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are defined in NI 43-101 and required by NI 43-101 to be used for disclosure of mineral resources.  These terms, however, are not defined terms under Industry Guide 7 and are not permitted to be used in reports and registration statements of United States companies filed with the SEC.  Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves.  "Inferred mineral resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category.  Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases.  Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable.  Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations.  In contrast, the SEC only permits U.S. companies to report mineralization that does not constitute "reserves" by SEC standards as in place tonnage and grade without reference to unit measures.

Accordingly, information contained and incorporated by reference into this MD&A that describes the Company's mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

 



Form 52-109F2 - Certification of Interim Filings

I, Paul West-Sells, Chief Executive Officer of Western Copper and Gold Corporation, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Western Copper and Gold Corporation (the "issuer") for the interim period ended September 30, 2020.

2.  No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5. Design:  Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)  designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)  designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 Control framework:  The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is the Internal Control-Integrated Framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. 

5.2 ICFR - material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a)  a description of the material weakness;

(b)  the impact of the material weakness on the issuer's financial reporting and its ICFR; and

(c)  the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 N/A


Form 52-109F2 - Certification of Interim Filings

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on July 1, 2020 and ended on September 30, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: November 5, 2020

(signed) Paul West-Sells

 

Paul West-Sells

Chief Executive Officer



Form 52-109F2 - Certification of Interim Filings

I, Varun Prasad, Chief Financial Officer of Western Copper and Gold Corporation, certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Western Copper and Gold Corporation (the "issuer") for the interim period ended September 30, 2020.

2.  No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.

5. Design:  Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a)  designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b)  designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.

5.1 Control framework:  The control framework the issuer's other certifying officer(s) and I used to design the issuer's ICFR is the Internal Control-Integrated Framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. 

5.2 ICFR - material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a)  a description of the material weakness;

(b)  the impact of the material weakness on the issuer's financial reporting and its ICFR; and

(c)  the issuer's current plans, if any, or any actions already undertaken, for remediating the material weakness.

5.3 N/A


Form 52-109F2 - Certification of Interim Filings

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on July 1, 2020 and ended on September 30, 2020 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: November 5, 2020

(signed) Varun Prasad

 

Varun Prasad

Chief Financial Officer