EX-17.5 11 exhibit17-5.htm UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Western Copper Corporation

Consolidated Pro Forma Financial Statements
September 30, 2006
(unaudited)

F17.5-1

Western Copper Corporation
Consolidated Pro Forma Balance Sheet (unaudited)
(expressed in Canadian dollars)

As at September 30, 2006 |  | Western |  |  | Lumina |  |  | Pro Forma |  |  | Pro Forma |
|  | Copper |  |  | Resources |  |  | adjustments |  |  | Consolidated |
|  | Corporation |  |  | Corp. |  |  | (Note 2) |  |  |  |
|  | (unaudited) |  |  | (unaudited) |  |  |  |  |  |  |
|  | $ |  |  | $ |  |  | $ |  |  | $ |
ASSETS |
CURRENT ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | 37,938,011 |  |  | 883,752 |  |  | (343,620 | ) | a | 37,846,143 |
|  |  |  |  |  |  |  | (632,000 | ) | b |  |
Accounts receivable |  | 55,810 |  |  | 4,982 |  |  | - |  |  | 60,792 |
Prepaid expenses |  | 72,270 |  |  | 1,350 |  |  | (1,350 | ) | a | 72,270 |
|  | 38,066,091 |  |  | 890,084 |  |  | (976,970 | ) |  | 37,979,205 |
PROPERTY AND EQUIPMENT |  | 107,105 |  |  | 16,251 |  |  | (16,251 | ) | a | 107,105 |
MINERAL PROPERTIES |  | 4,523,514 |  |  | 4,766,411 |  |  | (4,766,411 | ) | a | 46,078,971 |
|  |  |  |  |  |  |  | 41,555,457 |  | a |  |
|  | 42,696,710 |  |  | 5,672,746 |  |  | 35,795,825 |  |  | 84,165,281 |
LIABILITIES |
CURRENT LIABILITIES |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  | 828,032 |  |  | 122,347 |  |  | - |  |  | 950,379 |
FUTURE INCOME TAX |  | - |  |  | 668,151 |  |  | (668,151 | ) | a | 11,231,527 |
|  |  |  |  |  |  |  | 11,231,527 |  | a |  |
TOTAL LIABIILITIES |  | 828,032 |  |  | 790,498 |  |  | 10,563,376 |  |  | 12,181,906 |
SHAREHOLDERS’ EQUITY |
SHARE CAPITAL |  | 39,150,018 |  |  | 6,118,790 |  |  | (6,118,790 | ) | c | 67,873,215 |
|  |  |  |  |  |  |  | 28,723,197 |  | a |  |
CONTRIBUTED SURPLUS |  | 21,353,610 |  |  | 268,335 |  |  | (268,335 | ) | c | 22,745,110 |
|  |  |  |  |  |  |  | 1,391,500 |  | a |  |
DEFICIT |  | (18,634,950 | ) |  | (1,504,877 | ) |  | 1,504,877 |  | c | (18,634,950 | )
|  | 41,868,678 |  |  | 4,882,248 |  |  | 25,232,449 |  |  | 71,983,375 |
|  | 42,696,710 |  |  | 5,672,746 |  |  | 35,795,825 |  |  | 84,165,281 |

The accompanying notes are an integral part of these consolidated financial statements.

F17.5-2

Western Copper Corporation
Consolidated Pro Forma Statement of Loss (unaudited)
(expressed in Canadian dollars)

Year ended December 31, 2005 |  | Western |  |  | Lumina |  |  | Pro Forma |  |  | Pro Forma |
|  | Copper |  |  | Resources |  |  | adjustments |  |  | Consolidated |
|  | Corporation |  |  | Corp. |  |  | (Note 2) |  |  |  |
|  | (Note 5) |  |  | (unaudited) |  |  |  |  |  |  |
|  |  |  |  | (Note 6a) |  |  |  |  |  |  |
|  | $ |  |  | $ |  |  | $ |  |  | $ |
EXPLORATION EXPENSES |  | 311,932 |  |  | - |  |  | - |  |  | 311,932 |
ADMINISTRATIVE EXPENSES |  | 49,483 |  |  | 338,693 |  |  |  |  |  | 388,176 |
LOSS BEFORE OTHER ITEMS |  | 361,415 |  |  | 338,693 |  |  | - |  |  | 700,108 |
OTHER ITEMS |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  | - |  |  | (21,402 | ) |  | - |  |  | (21,402 | )
LOSS FOR THE PERIOD |  | 361,415 |  |  | 317,291 |  |  | - |  |  | 678,706 |

The accompanying notes are an integral part of these consolidated financial statements.

F17.5-3

Western Copper Corporation
Consolidated Pro Forma Statement of Loss (unaudited)
(expressed in Canadian dollars)

Nine months ended |  | Western |  |  | Lumina |  |  | Pro Forma |  |  | Pro Forma |
September 30, 2006 |  | Copper |  |  | Resources |  |  | adjustments |  |  | Consolidated |
|  | Corporation |  |  | Corp. |  |  | (Note 2) |  |  |  |
|  | (unaudited) |  |  | (unaudited) |  |  |  |  |  |  |
|  |  |  |  | (Note 6b) |  |  |  |  |  |  |
|  | $ |  |  | $ |  |  | $ |  |  | $ |
EXPLORATION EXPENSES |  | 1,904,878 |  |  | - |  |  | - |  |  | 1,904,878 |
ADMINISTRATIVE EXPENSES |  |  |  |  |  |  |  |  |  |  |  |
Accounting and legal |  | 235,376 |  |  | 80,491 |  |  | - |  |  | 315,867 |
Office and administration |  | 832,136 |  |  | 307,025 |  |  | - |  |  | 1,139,161 |
Promotion and travel |  | 282,036 |  |  | 131,288 |  |  | - |  |  | 413,324 |
Regulatory and filing fees |  | 168,852 |  |  | 20,548 |  |  | - |  |  | 189,400 |
|  | 1,518,400 |  |  | 539,352 |  |  | - |  |  | 2,057,752 |
LOSS BEFORE OTHER ITEMS |  | 3,423,278 |  |  | 539,352 |  |  | - |  |  | 3,962,630 |
OTHER ITEMS |  |  |  |  |  |  |  |  |  |  |  |
Gain on sale of marketable securities |  | (1,922,340 | ) |  | - |  |  | - |  |  | (1,922,340 | )
Interest income |  | (426,032 | ) |  | (19,917 | ) |  | - |  |  | (445,949 | )
Foreign exchange |  | (9,192 | ) |  | - |  |  | - |  |  | (9,192 | )
LOSS FOR THE PERIOD |  | 1,065,714 |  |  | 519,435 |  |  | - |  |  | 1,585,149 |
Basic and diluted loss per share |  | 0.02 |  |  | - |  |  |  |  |  | 0.02 |
Weighted average number of common |  |  |  |  |  |  |  |  |  |  |  |
shares outstanding (note 4) |  | 49,503,980 |  |  | - |  |  |  |  |  | 70,780,422 |

The accompanying notes are an integral part of these consolidated financial statements.

F17.5-4

Western Copper Corporation
Notes to the Pro Forma Consolidated Financial Statements (unaudited)
(expressed in Canadian dollars)

1 | Plan of arrangement and basis of presentation
| The accompanying unaudited pro forma consolidated financial statements have been compiled for the purposes of inclusion in a Business Acquisition Report. These pro forma consolidated financial statements give effect to the acquisition of all the issued and outstanding shares of Lumina Resources Corporation (Lumina) by Western Copper Corporation (Western or the Company) on November 30, 2006. Under the terms of the plan of arrangement, Lumina shareholders exchanged each of their Lumina common shares for one common share of Western. In addition, each outstanding Lumina stock option was exchanged for a Western stock option. The stock option terms were unchanged.
| This unaudited pro forma consolidated financial information has been prepared in accordance with Canadian generally accepted accounting principles. These principles differ in certain material respects from those principles that the Company would have followed had its financial statements been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The effects of significant measurement differences between Canadian and U.S. GAAP are described in note 7.
| These pro forma consolidated financial statements are not necessarily indicative of the financial position of Western as at the time of closing the transaction referred to above, nor of the future operating results of Western as a result of the transaction.
| These pro forma consolidated financial statements include:
| a) | a pro forma consolidated balance sheet as at September 30, 2006 prepared from the September 30, 2006 unaudited consolidated balance sheet of Western and the September 30, 2006 unaudited consolidated balance sheet of Lumina. It gives effect to the acquisition of the Lumina assets and the Lumina liabilities acquired by the Company and the assumptions and adjustments described in note 2, as if the acquisition by Western had occurred on September 30, 2006.
| b) | a pro forma consolidated statement of loss for the year ended December 31, 2005 prepared from the 2005 annual audited statement of loss of Western Copper Business as described in note 5 and from the unaudited consolidated statement of operations of Lumina for the period from February 28, 2005 (date of incorporation) to December 31, 2005 prepared as described in note 6(a), as if the acquisition by Western had occurred on January 1, 2005.
| c) | a pro forma consolidated statement of loss for the nine months ended September 30, 2006 prepared from the unaudited consolidated statement of loss of Western for the nine months ended September 30, 2006 and from the unaudited consolidated statement of operations of Lumina for the nine months ended September 30, 2006 prepared as described in note 6(b), as if the acquisition by Western had occurred on January 1, 2005.
| The pro forma consolidated financial statements should be read in conjunction with the audited annual financial statements of Western Copper Business as at, and for the year ended, December 31, 2005, Western’s unaudited consolidated financial statements as at, and for the nine months ended, September 30, 2006, Lumina’s unaudited consolidated financial statements as at, and for the nine months ended December 31, 2005, Lumina’s unaudited consolidated financial statements as at, and for the six months ended, September 30, 2006, and Lumina’s audited consolidated financial statements as at, and for the year ended, March 31, 2006.

F17.5-5

Western Copper Corporation
Notes to the Pro Forma Consolidated Financial Statements (unaudited)
(expressed in Canadian dollars)

2 | Pro Forma assumptions and adjustments
| The pro forma consolidated balance sheet gives effect to the following transactions and assumptions as if they occurred on September 30, 2006:
| a) The total assumed purchase price of $30,458,317 is determined as follows:

| Lumina shares outstanding at September 30, 2006 |  | 21,276,442 |
| Exchange ratio |  | 1.0 |
| Western shares to be issued |  | 21,276,442 |
| Closing price of a Western share on November 30, 2006 | $ | 1.35 |
| Assumed fair value of Western shares issued | $ | 28,723,197 |
| Lumina stock options outstanding at September 30, 2006 |  | 1,210,000 |
| Exchange ratio |  | 1.0 |
| Western stock options to be issued |  | 1,210,000 |
| Fair value of a Western stock option1 | $ | 1.15 |
| Assumed fair value of Western stock options granted | $ | 1,391,500 |
| Estimated Western transaction expenses | $ | 343,620 |
| Estimated purchase price | $ | 30,458,317 |

1 The fair value of a Western stock option has been estimated based on the following assumptions:

Closing price of a Western share on November 30, 2006 | $1.35
Weighted average exercise price of outstanding Lumina stock options at September | $0.24
30, 2006 |
Expected stock price volatility | 89%
Expected option life, in years | 2.0
Risk free rate of return | 3.10%
Expected dividend yield | -

The determination of the amounts assigned to shares and stock options will be determined on closing and may vary from the amounts used by a significant amount.

F17.5-6

Western Copper Corporation
Notes to the Pro Forma Consolidated Financial Statements (unaudited)
(expressed in Canadian dollars)

These pro forma consolidated financial statements assume that for accounting purposes the acquisition of Lumina constitutes an acquisition of specific assets and liabilities rather than the acquisition of a business. The purchase consideration has been allocated to the estimated fair values of the assets acquired and liabilities assumed at the effective date of the purchase. These estimated fair values are based on preliminary management estimates and are subject to final valuation adjustments.

The preliminary allocation of the purchase price is as follows:

| Preliminary allocation |  | $ |
| Mineral properties |  | 41,555,457 |
| Cash and cash equivalents |  | 251,752 |
| Accounts receivable |  | 4,982 |
| Future income tax |  | (11,231,527 | )
| Accounts payable and accrued liabilities |  | (122,347 | )
|  | $ | 30,458,317 |

| b) | The incurrence of costs related to the transactions by Lumina of $632,000.
| c) | The elimination of the existing share capital, contributed surplus, and deficit of Lumina.

3 | Share capital
| After giving effect to the pro forma assumptions in note 2, the issued and fully paid share capital of Western is as follows:

|  |  | Number of |  |  | Amount |
|  |  | common shares |  |  | $ |
| Balance – September 30, 2006 |  | 49,827,413 |  |  | 39,150,018 |
| Proposed acquisition of Lumina by way of common shares (note 2a) |  | 21,276,442 |  |  | 28,723,197 |
| Pro Forma balance September 30, 2006 |  | 71,103,855 |  | $ | 67,873,215 |

F17.5-7

Western Copper Corporation
Notes to the Pro Forma Consolidated Financial Statements (unaudited)
(expressed in Canadian dollars)

4 | Loss per share
| The calculation of pro forma loss per share in the pro forma consolidated statement of loss for the nine months ended September 30, 2006 is based on the weighted average number of common shares of Western for the nine months ended September 30, 2006 plus the additional 21,276,442 Western shares that would have been outstanding for the nine months ended September 30, 2006 had the transactions described in note 1 occurred on January 1, 2005, assuming that those shares were the only ones outstanding during the period.
5 | Western Copper Corporation pro forma statement of loss
| Western Copper Corporation was incorporated on March 17, 2006 as a wholly-owned subsidiary of Western Silver Corporation (Western Silver). The Company was inactive until Glamis Gold Ltd. (Glamis) acquired all the outstanding shares of Western Silver through a Plan of Arrangement on May 3, 2006. Each Western Silver shareholder received a share of Western for each Western Silver share owned on that date.
| The Company’s statement of loss for the year ended December 31, 2005 represents the results of the related copper business of Western Silver (the Western Copper Business) for that period. Western’s statement of loss for the year ended December 31, 2005 includes the direct exploration expenses relating to the Carmacks and Almoloya mineral properties incurred by Western Silver and an allocation of Western Silver’s general and administrative expenses. The allocation of general and administrative expenses was calculated on the basis of the ratio of costs relating to the Carmacks and Almoloya mineral properties that were capitalized during the year as compared to the total costs incurred on all mineral properties that were capitalized during the year. The loss per share figures have not been calculated due to the fact that the Company had no shares outstanding at December 31, 2005.
6 | Lumina pro forma statement of loss
| a) December 31, 2005
| Lumina was incorporated as a subsidiary of Lumina Copper Corp. on February 28, 2005. Lumina remained inactive until Lumina Copper Corp. completed a reorganization, by way of a statutory plan of arrangement, on May 19, 2005. The Lumina statement of operations for the year ended December 31, 2005 includes results from Lumina’s unaudited interim consolidated statement of operations for the period from February 28, 2005 (date of incorporation) to December 31, 2005.

F17.5-8

Western Copper Corporation
Notes to the Pro Forma Consolidated Financial Statements (unaudited)
(expressed in Canadian dollars)

b) September 30, 2006

The Lumina pro forma statement of loss for the nine months ended September 30, 2006 has been prepared by subtracting the unaudited interim consolidated statement of operations for the nine months ended December 31, 2005 from the audited consolidated statement of operations for the year ended March 31, 2006 and adding the unaudited interim consolidated statement of operations for the six months ended September 30, 2006, as follows:

|  |  |  |  |  |  |  |  |  |  |  | Nine months |
|  |  |  |  |  | Nine months |  |  | Six months |  |  | ended |
|  |  |  |  |  | ended |  |  | ended |  |  | September 30, |
|  |  | Year ended |  |  | December 31, |  |  | September 30, |  |  | 2006 |
|  |  | March 31, |  |  | 2005 |  |  | 2006 |  |  | (unaudited – |
|  |  | 2006 |  |  | (unaudited) |  |  | (unaudited) |  |  | pro forma) |
| Administrative expenses: |  |  |  |  |  |  |  |  |  |  |  |
| Accounting and legal |  | 37,084 |  |  | 7,251 |  |  | 50,658 |  |  | 80,491 |
| Office and administration |  | 304,307 |  |  | 218,931 |  |  | 221,649 |  |  | 307,025 |
| Promotion and travel |  | 128,481 |  |  | 101,528 |  |  | 104,335 |  |  | 131,288 |
| Regulatory and filing fees |  | 22,650 |  |  | 10,983 |  |  | 8,881 |  |  | 20,548 |
|  |  | 492,522 |  |  | 338,693 |  |  | 385,523 |  |  | 539,352 |
| Other items: |  |  |  |  |  |  |  |  |  |  |  |
| Interest income |  | (28,385 | ) |  | (21,402 | ) |  | (12,934 | ) |  | (19,917 | )
| Loss for the period |  | 464,137 |  |  | 317,291 |  |  | 372,589 |  |  | 519,435 |

Line items presented on Lumina’s statement of operations have been reclassified for the purposes of the Western pro forma statement of loss to match Western’s classifications. Stock-based compensation has been reclassified to conform to the Company’s accounting policy of presenting stock-based compensation in the same line item as the recipients’ other forms of compensation.

F17.5-9

Western Copper Corporation
Notes to the Pro Forma Consolidated Financial Statements (unaudited)
(expressed in Canadian dollars)

7 | Material differences between Canadian and United States generally accepted accounting principles (GAAP)
| This unaudited pro forma consolidated financial information has been prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP), which differ in certain material respects from those principles that the Company would have followed had its financial statements been prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The effects of significant measurement differences between Canadian and U.S. GAAP are described below.
| Pro Forma Balance Sheet

|  |  | As at |
|  |  | September 30, |
|  |  | 2006 |
|  |  | $ |
| Mineral properties - under Canadian GAAP |  | 46,078,971 |
| Cumulative mineral property expenditures written off under U.S. |  |  |
| GAAP (a) |  | (523,514 | )
| Future income tax effect resulting from measurement differences |  |  |
| between Canadian and U.S. GAAP (b) |  |  |
| Mineral properties - under U.S. GAAP |  | 45,555,457 |
| Shareholders’ equity - under Canadian GAAP |  | 71,983,375 |
| Measurement differences |  |  |
| Cumulative mineral property expenditures written off under |  |  |
| U.S. GAAP (a) |  | (523,514 | )
| Shareholders’ equity - under U.S. GAAP |  | 71,459,861 |

F17.5-10

Western Copper Corporation
Notes to the Pro Forma Consolidated Financial Statements (unaudited)
(expressed in Canadian dollars)

Pro Forma Statements of Loss

|  |  | Nine months ended |  |  | Year ended |
|  |  | September 30, |  |  | December 31, |
|  |  | 2006 |  |  | 2005 |
|  |  | $ |  |  | $ |
| Earnings (Loss) for the period - under |  |  |  |  |  |
| Canadian GAAP |  | (1,585,149 | ) |  | (678,706 | )
| Mineral property expenditures written-off |  |  |  |  |  |
| during the period – under U.S GAAP (a) |  | (510,969 | ) |  | (2,257,186 | )
| Earnings (Loss) and comprehensive income |  |  |  |  |  |
| (loss) for the period - under U.S. GAAP |  | (2,096,118 | ) |  | (2,935,892 | )

a) Mineral property expenditures

Mineral property expenditures are accounted for in accordance with Canadian GAAP as disclosed in note 4 of the notes to the December 31, 2005 annual audited financial statements of Western Copper Business. For U.S. GAAP purposes, exploration expenditures and periodic option payments relating to mineral properties for which commercial feasibility has not yet been established and all administrative expenditures are expensed as incurred.

Mineral property acquisition costs and development expenditures incurred subsequent to the determination of the feasibility of mining operations are deferred until the property to which they relate is placed into production, sold, allowed to lapse or abandoned, or when impairment in value has been determined to have occurred.

Mineral property acquisition costs include the cash consideration and the fair value of common shares and warrants issued for mineral property interests, pursuant to the terms of the relevant agreement. Mineral properties are written off if the property is sold, allowed to lapse, abandoned, or when impairment in the value has been determined to have occurred. Mineral property sales proceeds or option payments received for exploration rights are treated as cost recoveries.

F17.5-11