BLR black range minerals limited

Mr. John Reynolds Securities and Exchange Commission July 21,...

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    Mr. John Reynolds
    Securities and Exchange Commission
    July 21, 2016
    Page 2 of 4

    Our Strategy, page 2

    1. We reissue prior comment 4. Please disclose the material terms of your supply agreement. Your revised disclosure should include, but not be limited to, the name of the utility, a range of prices per pound, any committed and non-committed quantities and when deliveries are to begin and end. Also, please provide additional analysis as to why you believe the contract is not one on which the company will be substantially dependent. We note that it is the only contract the company has entered into to date.

    Western Uranium wishes to provide the following information to explain why management continues to believe that:

    - The Company’s uranium supply agreement is not a contract on which the Company is substantially dependent, and

    - The supply agreement therefore does not need to be filed as an exhibit to, or described in, the Form 10.

    Item 601(b)(10)(i) requires the filing as an exhibit of “[e]very contract not made in the ordinary course of business which is material to the registrant and is to be performed in whole or in part at or after the filing of the registration statement … or was entered into not more than two years before such filing.”

    However, Item 601(b)(10)(ii) goes on to state that “f the contract is such as ordinarily accompanies the kind of business conducted by the registrant and its subsidiaries”—which is the case with regard to Western Uranium’s supply agreement—“it will be deemed to have been made in the ordinary course of business and need not be filed unless it falls within one or more of the following categories: … (B) Any contract upon which the registrant's business is substantially dependent, as in the case of continuing contracts to sell the major part of registrant's products [emphasis added].”

    Thus, if it can be shown that Western Uranium’s business is not substantially dependent on the Company’s uranium supply agreement, then Item 601(b)(10) does not require the agreement to be filed as an exhibit, and it follows that the terms of the agreement also do not need to be disclosed in the body of the registration statement.

    We note that the type of contract described in Item 601(b)(10)(ii)(B) as an example of a supply contract on which a company’s business would be substantially dependent is “a continuing contract to sell the major part of the registrant’s products.” Such a contract is not at all like Western Uranium’s supply agreement. The Company's supply agreement is with a U.S. utility that has an internal policy against entering into any uranium supply contract for delivery to the utility of more than 30% of the seller's anticipated annual output of uranium. Under the agreement, Western Uranium has agreed to sell to the utility a quantity of uranium that constitutes only half that amount, i.e., only 15% of the Company's total anticipated annual output. In addition, Western Uranium, like other sellers of uranium, is not required to enter into supply contracts in order to sell its uranium. There is a ready market for purchases and sales of uranium at spot, mid-term and long-term market prices without the need for any supply agreement. In fact, given the initial anticipated annual output, the Company does not need any utility as a customer as it could sell its monthly output into the spot market in a single 100,000 lbs. lot. The Company may enter into additional supply agreements in the future, but there is no need or requirement to do so. Supply agreements are more important to utilities, which, by necessity, must lock up future supplies of uranium, than they are to uranium producers. The Company entered into this supply agreement to demonstrate to the market that Western Uranium assets were commercially viable based upon the evaluation of a large, experienced and sophisticated buyer.

    Under these circumstances, we submit that no reasonable person would consider 15% to be “the major part of registrant’s products” or that the Company is otherwise substantially dependent on its supply agreement.

    Therefore, because the Company’s supply agreement is a contract that “ordinarily accompanies the kind of business conducted by the registrant and its subsidiaries” and is not a “contract upon which the registrant’s business is substantially dependent,” we respectfully submit that Item 601(b)(10) does not require the agreement to be filed as an exhibit and its terms do not need to be disclosed in the body of the Form 10.
 
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