Item 1. Financial
Statements
URANIUM ENERGY
CORP.
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE NINE MONTHS
ENDED APRIL 30, 2016
(Unaudited)
URANIUM
ENERGY CORP.
CONDENSED CONSOLIDATED
BALANCE SHEETS
(Unaudited)
|
|
|
|
|
April 30, 2016
|
|
|
July 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
$
|
10,086,805
|
|
|
$
|
10,092,408
|
|
Inventories
|
|
|
|
|
|
|
251,999
|
|
|
|
251,999
|
|
Prepaid expenses and deposits
|
|
|
|
|
|
|
751,598
|
|
|
|
444,500
|
|
Other current assets
|
|
|
|
|
|
|
24,730
|
|
|
|
18,711
|
|
|
|
|
|
|
|
|
11,115,132
|
|
|
|
10,807,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MINERAL RIGHTS AND PROPERTIES
|
|
|
3
|
|
|
|
38,163,086
|
|
|
|
38,437,967
|
|
PROPERTY, PLANT AND EQUIPMENT
|
|
|
4
|
|
|
|
7,020,860
|
|
|
|
6,948,647
|
|
RECLAMATION DEPOSITS
|
|
|
5
|
|
|
|
1,706,026
|
|
|
|
1,706,025
|
|
OTHER LONG-TERM ASSET
|
|
|
6
|
|
|
|
1,553,388
|
|
|
|
-
|
|
|
|
|
|
|
|
$
|
59,558,492
|
|
|
$
|
57,900,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
$
|
2,113,018
|
|
|
$
|
2,538,544
|
|
Due to related parties
|
|
|
7
|
|
|
|
897
|
|
|
|
14,660
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
-
|
|
|
|
1,666,667
|
|
Current portion of asset retirement
obligations
|
|
|
|
|
|
|
-
|
|
|
|
340,827
|
|
|
|
|
|
|
|
|
2,113,915
|
|
|
|
4,560,698
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEFERRED INCOME TAX LIABILITIES
|
|
|
|
|
|
|
653,154
|
|
|
|
676,064
|
|
LONG-TERM DEBT
|
|
|
8
|
|
|
|
18,913,370
|
|
|
|
18,090,811
|
|
OTHER LONG-TERM LIABILITY
|
|
|
6
|
|
|
|
315,519
|
|
|
|
-
|
|
ASSET RETIREMENT OBLIGATIONS
|
|
|
9
|
|
|
|
3,932,073
|
|
|
|
3,586,019
|
|
|
|
|
|
|
|
|
25,928,031
|
|
|
|
26,913,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock $0.001 par value: 750,000,000 shares
authorized, 116,092,655 shares issued and outstanding
(July 31, 2015 - 97,834,087)
|
|
|
10
|
|
|
|
116,093
|
|
|
|
97,841
|
|
Additional paid-in capital
|
|
|
|
|
|
|
239,105,949
|
|
|
|
222,927,529
|
|
Accumulated deficit
|
|
|
|
|
|
|
(205,576,668
|
)
|
|
|
(192,024,074
|
)
|
Accumulated other comprehensive
loss
|
|
|
|
|
|
|
(14,913
|
)
|
|
|
(14,631
|
)
|
|
|
|
|
|
|
|
33,630,461
|
|
|
|
30,986,665
|
|
|
|
|
|
|
|
$
|
59,558,492
|
|
|
$
|
57,900,257
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
14
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral
part of these condensed consolidated financial statements
URANIUM
ENERGY CORP
.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
|
|
|
|
Three Months Ended April 30,
|
|
|
Nine Months Ended April 30,
|
|
|
|
Notes
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
SALES
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mineral property expenditures
|
|
3, 9
|
|
|
725,968
|
|
|
|
1,045,842
|
|
|
|
3,408,813
|
|
|
|
4,560,241
|
|
General and administrative
|
|
7,10
|
|
|
2,005,465
|
|
|
|
3,167,896
|
|
|
|
7,086,669
|
|
|
|
9,711,933
|
|
Depreciation, amortization and accretion
|
|
3, 4, 9
|
|
|
205,488
|
|
|
|
374,082
|
|
|
|
680,573
|
|
|
|
1,440,808
|
|
Impairment loss on mineral properties
|
|
3
|
|
|
-
|
|
|
|
-
|
|
|
|
86,535
|
|
|
|
-
|
|
|
|
|
|
|
2,936,921
|
|
|
|
4,587,820
|
|
|
|
11,262,590
|
|
|
|
15,712,982
|
|
LOSS FROM OPERATIONS
|
|
|
|
|
(2,936,921
|
)
|
|
|
(4,587,820
|
)
|
|
|
(11,262,590
|
)
|
|
|
(15,712,982
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSES)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
|
|
7,221
|
|
|
|
1,640
|
|
|
|
14,470
|
|
|
|
9,646
|
|
Interest expenses and finance costs
|
|
8
|
|
|
(710,767
|
)
|
|
|
(764,761
|
)
|
|
|
(2,278,230
|
)
|
|
|
(2,270,104
|
)
|
Loss on disposition of assets
|
|
|
|
|
-
|
|
|
|
2,400
|
|
|
|
(2,186
|
)
|
|
|
(498
|
)
|
Realized loss on available-for-sale securities
|
|
|
|
|
-
|
|
|
|
(3,023
|
)
|
|
|
-
|
|
|
|
(3,023
|
)
|
Loss on settlement of current liabilities
|
|
7,13
|
|
|
(46,968
|
)
|
|
|
-
|
|
|
|
(46,968
|
)
|
|
|
-
|
|
|
|
|
|
|
(750,514
|
)
|
|
|
(763,744
|
)
|
|
|
(2,312,914
|
)
|
|
|
(2,263,979
|
)
|
LOSS BEFORE INCOME TAXES
|
|
|
|
|
(3,687,435
|
)
|
|
|
(5,351,564
|
)
|
|
|
(13,575,504
|
)
|
|
|
(17,976,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEFERRED INCOME TAX BENEFIT
|
|
|
|
|
8,380
|
|
|
|
3,835
|
|
|
|
22,910
|
|
|
|
27,465
|
|
NET LOSS FOR THE PERIOD
|
|
|
|
|
(3,679,055
|
)
|
|
|
(5,347,729
|
)
|
|
|
(13,552,594
|
)
|
|
|
(17,949,496
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE
LOSS (INCOME),
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET OF INCOME TAXES
|
|
|
|
|
136
|
|
|
|
207
|
|
|
|
(282
|
)
|
|
|
(1,465
|
)
|
TOTAL
COMPREHENSIVE LOSS FOR THE PERIOD
|
|
|
|
$
|
(3,678,919
|
)
|
|
$
|
(5,347,522
|
)
|
|
$
|
(13,552,876
|
)
|
|
$
|
(17,950,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
PER SHARE, BASIC AND DILUTED
|
|
11
|
|
$
|
(0.03
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.20
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING, BASIC AND DILUTED
|
|
|
|
|
109,710,985
|
|
|
|
92,034,908
|
|
|
|
102,588,834
|
|
|
|
91,683,568
|
|
The accompanying notes are an integral
part of these condensed consolidated financial statements
URANIUM
ENERGY CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
Nine Month Ended April
30,
|
|
|
|
Notes
|
|
|
2016
|
|
|
2015
|
|
CASH PROVIDED BY (USED IN):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
|
|
|
|
$
|
(13,552,594
|
)
|
|
$
|
(17,949,496
|
)
|
Adjustments to reconcile net loss to cash flows in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
10
|
|
|
|
2,487,651
|
|
|
|
4,628,544
|
|
Depreciation, amortization and accretion
|
|
|
3,4,9
|
|
|
|
680,573
|
|
|
|
1,440,808
|
|
Amortization of long-term debt discount
|
|
|
8
|
|
|
|
960,807
|
|
|
|
994,668
|
|
Re-valuation of asset retirement obligations
|
|
|
3,9
|
|
|
|
(184,381
|
)
|
|
|
-
|
|
Impairment loss on mineral properties
|
|
|
3
|
|
|
|
86,535
|
|
|
|
-
|
|
Loss on disposition of assets
|
|
|
|
|
|
|
2,186
|
|
|
|
498
|
|
Realized loss on available-for-sale securities
|
|
|
|
|
|
|
-
|
|
|
|
3,023
|
|
Loss on settlement of current liabilities
|
|
|
7,13
|
|
|
|
46,968
|
|
|
|
-
|
|
Deferred income tax benefit
|
|
|
|
|
|
|
(22,910
|
)
|
|
|
(27,465
|
)
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
|
|
|
|
-
|
|
|
|
(244,045
|
)
|
Prepaid expenses and deposits
|
|
|
|
|
|
|
(303,294
|
)
|
|
|
(94,035
|
)
|
Other current assets
|
|
|
|
|
|
|
(6,301
|
)
|
|
|
(478
|
)
|
Accounts payable and accrued liabilities
|
|
|
|
|
|
|
(460,536
|
)
|
|
|
(513,926
|
)
|
NET CASH
FLOWS USED IN OPERATING ACTIVITIES
|
|
|
|
|
|
|
(10,265,296
|
)
|
|
|
(11,761,904
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issuance for cash, net of issuance costs
|
|
|
10
|
|
|
|
10,324,264
|
|
|
|
435,590
|
|
Due to related parties
|
|
|
|
|
|
|
-
|
|
|
|
19,394
|
|
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
|
|
|
|
|
|
|
10,324,264
|
|
|
|
454,984
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in asset acquisition
|
|
|
6
|
|
|
|
(46,084
|
)
|
|
|
-
|
|
Investment in mineral rights and properties
|
|
|
|
|
|
|
-
|
|
|
|
(73,624
|
)
|
Purchase of property, plant and equipment
|
|
|
|
|
|
|
(19,304
|
)
|
|
|
(10,905
|
)
|
Proceeds from disposition of assets
|
|
|
|
|
|
|
818
|
|
|
|
2,400
|
|
Cash proceeds from the release of reclamation deposits
|
|
|
|
|
|
|
-
|
|
|
|
5,663,158
|
|
Payment of collateral for surety bonds
|
|
|
|
|
|
|
-
|
|
|
|
(1,690,208
|
)
|
Decrease in reclamation deposits
|
|
|
|
|
|
|
(1
|
)
|
|
|
(346
|
)
|
NET CASH
FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES
|
|
|
|
|
|
|
(64,571
|
)
|
|
|
3,890,475
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET CASH FLOWS
|
|
|
|
|
|
|
(5,603
|
)
|
|
|
(7,416,445
|
)
|
CASH AND
CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
|
|
|
|
10,092,408
|
|
|
|
8,839,892
|
|
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
|
|
|
|
|
$
|
10,086,805
|
|
|
$
|
1,423,447
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
8,13
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral
part of these condensed consolidated financial statements
URANIUM
ENERGY CORP.
CONDENSED CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional Paid-
|
|
|
Accumulated
|
|
|
Comprehensive
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
in Capital
|
|
|
Deficit
|
|
|
Loss
|
|
|
Equity
|
|
Balance, July 31, 2015
|
|
|
97,834,087
|
|
|
$
|
97,841
|
|
|
$
|
222,927,529
|
|
|
$
|
(192,024,074
|
)
|
|
$
|
(14,631
|
)
|
|
$
|
30,986,665
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued for equity financing, net of issuance costs
|
|
|
12,364,704
|
|
|
|
12,365
|
|
|
|
9,972,152
|
|
|
|
-
|
|
|
|
-
|
|
|
|
9,984,517
|
|
Issued for exercise of stock options
|
|
|
682,167
|
|
|
|
682
|
|
|
|
224,433
|
|
|
|
-
|
|
|
|
-
|
|
|
|
225,115
|
|
Issued for credit facility
|
|
|
1,711,933
|
|
|
|
1,712
|
|
|
|
1,698,288
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,700,000
|
|
Issued for asset acquisition
|
|
|
1,333,560
|
|
|
|
1,334
|
|
|
|
1,225,541
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,226,875
|
|
Issued for settlement of current liabilities
|
|
|
487,574
|
|
|
|
487
|
|
|
|
452,957
|
|
|
|
-
|
|
|
|
-
|
|
|
|
453,444
|
|
Stock-based compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for consulting services
|
|
|
1,370,843
|
|
|
|
1,370
|
|
|
|
1,336,721
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,338,091
|
|
Common stock issued for compensation
|
|
|
307,787
|
|
|
|
302
|
|
|
|
279,028
|
|
|
|
-
|
|
|
|
-
|
|
|
|
279,330
|
|
Stock options issued to consultants
|
|
|
-
|
|
|
|
-
|
|
|
|
66,317
|
|
|
|
-
|
|
|
|
-
|
|
|
|
66,317
|
|
Stock options issued to management
|
|
|
-
|
|
|
|
-
|
|
|
|
640,789
|
|
|
|
-
|
|
|
|
-
|
|
|
|
640,789
|
|
Stock options issued to employees
|
|
|
-
|
|
|
|
-
|
|
|
|
163,124
|
|
|
|
-
|
|
|
|
-
|
|
|
|
163,124
|
|
Warrants extension for mineral property
|
|
|
-
|
|
|
|
-
|
|
|
|
14,155
|
|
|
|
-
|
|
|
|
-
|
|
|
|
14,155
|
|
Warrants extension for credit facility
|
|
|
-
|
|
|
|
-
|
|
|
|
104,915
|
|
|
|
-
|
|
|
|
-
|
|
|
|
104,915
|
|
Net loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(13,552,594
|
)
|
|
|
-
|
|
|
|
(13,552,594
|
)
|
Other comprehensive loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(282
|
)
|
|
|
(282
|
)
|
Balance, April 30, 2016
|
|
|
116,092,655
|
|
|
$
|
116,093
|
|
|
$
|
239,105,949
|
|
|
$
|
(205,576,668
|
)
|
|
$
|
(14,913
|
)
|
|
$
|
33,630,461
|
|
The accompanying notes are an integral
part of these condensed consolidated financial statements
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
|
NOTE 1:
|
NATURE
OF OPERATIONS AND GOING CONCERN
|
Uranium Energy Corp. was incorporated
in the State of Nevada on May 16, 2003. Uranium Energy Corp. and its subsidiary companies and a controlled partnership (collectively,
the “Company”) are engaged in uranium mining and related activities, including exploration, pre-extraction, extraction
and processing of uranium concentrates, on projects located in the United States and Paraguay.
Although planned principal operations
have commenced from which significant revenues from sales of uranium concentrates were realized for the fiscal years ended July
31, 2015 (“Fiscal 2015”), 2013 (“Fiscal 2013”) and 2012 (“Fiscal 2012”), the Company has yet
to achieve profitability and has had a history of operating losses resulting in an accumulated deficit balance since inception.
No revenue from uranium sales was realized for the nine months ended April 30, 2016 and the fiscal year ended July 31, 2014 (“Fiscal
2014”). Historically, the Company has been reliant primarily on equity financings from the sale of its common stock and,
during Fiscal 2014 and Fiscal 2013, on debt financing in order to fund its operations, and this reliance is expected to continue
for the foreseeable future.
At April 30, 2016, the Company had a working
capital of $9.0 million including cash and cash equivalents of $10.1 million. As the Company does not expect to achieve and maintain
profitability in the near term, the continuation of the Company as a going concern is dependent upon its ability to obtain adequate
additional financing which the Company has successfully secured since its inception, including those from asset divestitures.
However, there is no assurance that the Company will be successful in securing any form of additional financing in the future
when required and on terms favorable to the Company; therefore substantial doubt exist as to whether the Company’s cash
resources and working capital will be sufficient to enable the Company to continue as a going concern for the next twelve months.
The continued operations of the Company, including the recoverability of the carrying values of its assets, are dependent ultimately
on the Company’s ability to achieve and maintain profitability and positive cash flow from its operations.
These consolidated financial statements
have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and
liabilities that may be necessary in the event the Company can no longer continue as a going concern.
|
NOTE 2:
|
BASIS
OF PRESENTATION
|
The accompanying unaudited interim condensed
consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with U.S. generally accepted
accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the
information and footnotes required under U.S. GAAP for complete financial statements. These unaudited interim condensed consolidated
financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s
Annual Report on Form 10-K for the fiscal year ended July 31, 2015. In the opinion of management, all adjustments of a normal
recurring nature and considered necessary for a fair presentation have been made. Operating results for the nine months ended
April 30, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2016.
Certain comparative figures have been
reclassified to conform to the current year’s presentation.
Exploration Stage
The Company has established
the existence of mineralized materials for certain uranium projects, including the Palangana Mine. The Company has not established
proven or probable reserves, as defined by the United States Securities and Exchange Commission (the “SEC”) under
Industry Guide 7, through the completion of a “final” or “bankable” feasibility study for any of its uranium
projects, including the Palangana Mine. Furthermore, the Company has no plans to establish proven or probable reserves for any
of its uranium projects for which the Company plans on utilizing in-situ recovery (“ISR”) mining, such as the Palangana
Mine. As a result, and despite the fact that the Company commenced extraction of mineralized materials at the Palangana Mine in
November 2010, the Company remains in the Exploration Stage as defined under Industry Guide 7, and will continue to remain in
the Exploration Stage until such time proven or probable reserves have been established.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
Since the Company commenced extraction
of mineralized materials at the Palangana Mine without having established proven or probable reserves, any mineralized materials
established or extracted from the Palangana Mine should not in any way be associated with having established or produced from
proven or probable reserves.
In accordance with U.S. GAAP, expenditures
relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures
are expensed as incurred until such time the Company exits the Exploration Stage by establishing proven or probable reserves.
Expenditures relating to exploration activities such as drill programs to establish mineralized materials are expensed as incurred.
Expenditures relating to pre-extraction activities such as the construction of mine wellfields, ion exchange facilities and disposal
wells are expensed as incurred until such time proven or probable reserves are established for that project, after which expenditures
relating to mine development activities for that particular project are capitalized as incurred.
Companies in the Production Stage as defined
under Industry Guide 7, having established proven and probable reserves and exited the Exploration Stage, typically capitalize
expenditures relating to ongoing development activities, with corresponding depletion calculated over proven and probable reserves
using the units-of-production method and allocated to future reporting periods to inventory and, as that inventory is sold, to
cost of goods sold. The Company is in the Exploration Stage which has resulted in the Company reporting larger losses than if
it had been in the Production Stage due to the expensing, rather than capitalization, of expenditures relating to ongoing mill
and mine development activities. Additionally, there would be no corresponding amortization allocated to future reporting periods
of the Company since those costs would have been expensed previously, resulting in both lower inventory costs and cost of goods
sold and results of operations with higher gross profits and lower losses than if the Company had been in the Production Stage.
Any capitalized costs, such as expenditures relating to the acquisition of mineral rights, are depleted over the estimated extraction
life using the straight-line method. As a result, the Company’s consolidated financial statements may not be directly comparable
to the financial statements of companies in the Production Stage.
Recently Issued Accounting Pronouncement
In March 2016, the Financial Accounting
Standards Board issued Accounting Standards Update No. 2016-09, Improvement to Employee Share-Based Payment Accounting (“ASU
2016-09”) as part of its simplification initiative. ASU 2016-09 allows an entity to make an entity-wide accounting policy
election to either estimate the number of awards that are expected to vest (current U.S. GAAP) or account for forfeitures when
they occur. For public business entities, ASU 2016-09 is effective for annual periods ending after December 15, 2016, and interim
periods thereafter, with early adoption permitted. The Company plans to make an election to account for forfeitures when they
occur for the fiscal year ending July 31, 2017, and doesn’t expect that this election would have a significant impact on
the Company’s consolidated financial statements.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
|
NOTE 3:
|
MINERAL
RIGHTS AND PROPERTIES
|
Mineral Rights
At April 30, 2016, the Company had mineral
rights in the States of Arizona, Colorado, New Mexico, Texas and Wyoming and in the Republic of Paraguay. These mineral rights
were acquired through staking, purchase or lease agreements and are subject to varying royalty interests, some of which are indexed
to the sale price of uranium. At April 30, 2016, annual maintenance payments of approximately $2,500,000 were required to maintain
these mineral rights.
Mineral rights and property acquisition costs consisted of
the following:
|
|
April 30, 2016
|
|
|
July 31, 2015
|
|
Mineral Rights and Properties
|
|
|
|
|
|
|
|
|
Palangana Mine
|
|
$
|
6,562,348
|
|
|
$
|
6,587,135
|
|
Goliad Project
|
|
|
8,689,127
|
|
|
|
8,689,127
|
|
Burke Hollow Project
|
|
|
1,495,750
|
|
|
|
1,495,750
|
|
Longhorn Project
|
|
|
116,870
|
|
|
|
116,870
|
|
Salvo Project
|
|
|
14,905
|
|
|
|
14,905
|
|
Nichols Project
|
|
|
154,774
|
|
|
|
154,774
|
|
Anderson Project
|
|
|
9,154,268
|
|
|
|
9,154,268
|
|
Workman Creek Project
|
|
|
1,472,008
|
|
|
|
1,472,008
|
|
Los Cuatros Project
|
|
|
257,250
|
|
|
|
257,250
|
|
Slick Rock Project
|
|
|
615,650
|
|
|
|
661,271
|
|
Yuty Project
|
|
|
11,947,144
|
|
|
|
11,947,144
|
|
Coronel Oviedo Project
|
|
|
1,133,412
|
|
|
|
1,133,412
|
|
Other Property Acquisitions
|
|
|
244,827
|
|
|
|
285,741
|
|
|
|
|
41,858,333
|
|
|
|
41,969,655
|
|
Accumulated Depletion
|
|
|
(3,929,884
|
)
|
|
|
(3,929,884
|
)
|
|
|
|
37,928,449
|
|
|
|
38,039,771
|
|
|
|
|
|
|
|
|
|
|
Databases
|
|
|
2,410,038
|
|
|
|
2,410,038
|
|
Accumulated Amortization
|
|
|
(2,314,890
|
)
|
|
|
(2,166,966
|
)
|
|
|
|
95,148
|
|
|
|
243,072
|
|
|
|
|
|
|
|
|
|
|
Land Use Agreements
|
|
|
404,310
|
|
|
|
390,155
|
|
Accumulated Amortization
|
|
|
(264,821
|
)
|
|
|
(235,031
|
)
|
|
|
|
139,489
|
|
|
|
155,124
|
|
|
|
$
|
38,163,086
|
|
|
$
|
38,437,967
|
|
The Company has not established proven
or probable reserves, as defined by the SEC under Industry Guide 7, for any of its mineral projects. The Company has established
the existence of mineralized materials for certain uranium projects, including the Palangana Mine. Since the Company commenced
uranium extraction at the Palangana Mine without having established proven or probable reserves, there may be greater inherent
uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.
During the nine months ended April 30,
2016, the asset retirement obligations (“ARO”) of the Palangana Mine were revised due to changes in the estimated
timing of restoration and reclamation of the Palangana Mine, resulting in the corresponding mineral rights and properties being
reduced by $24,787, and a credit amount of re-valuation of ARO totaling $184,381 being recorded against the mineral property expenditures
for the Palangana Mine. Refer to Note 9. Asset Retirement Obligations.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
During the nine months ended April 30,
2016, the Company abandoned certain mineral interests at projects located in Colorado and New Mexico having a combined acquisition
cost of $86,535. As a result, an impairment loss on mineral properties of $86,535 was reported on the consolidated statement of
operations for the nine months ended April 30, 2016.
During the three and nine months ended
April 30, 2016, the Company continued with the strategic plan for reduced operations implemented in Fiscal 2014 and further reduced
operations at the Palangana Mine to capture residual uranium only. As a result, no depletion for the Palangana Mine was recorded
on the Company’s consolidated financial statements for the three and nine months ended April 30, 2016.
Mineral property expenditures incurred
by major projects were as follows:
|
|
Three Months Ended April 30,
|
|
|
Nine Months Ended April 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Mineral Property Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palangana Mine
|
|
$
|
280,345
|
|
|
$
|
500,535
|
|
|
$
|
1,031,625
|
|
|
$
|
1,621,391
|
|
Goliad Project
|
|
|
26,848
|
|
|
|
25,631
|
|
|
|
71,679
|
|
|
|
79,924
|
|
Burke Hollow Project
|
|
|
48,409
|
|
|
|
94,702
|
|
|
|
974,661
|
|
|
|
1,235,250
|
|
Longhorn Project
|
|
|
247
|
|
|
|
22,276
|
|
|
|
4,620
|
|
|
|
52,999
|
|
Salvo Project
|
|
|
4,622
|
|
|
|
16,751
|
|
|
|
21,697
|
|
|
|
39,590
|
|
Anderson Project
|
|
|
3,564
|
|
|
|
50,142
|
|
|
|
170,780
|
|
|
|
173,564
|
|
Workman Creek Project
|
|
|
418
|
|
|
|
-
|
|
|
|
32,109
|
|
|
|
31,300
|
|
Slick Rock Project
|
|
|
-
|
|
|
|
2,924
|
|
|
|
53,861
|
|
|
|
52,708
|
|
Yuty Project
|
|
|
89,246
|
|
|
|
41,274
|
|
|
|
291,788
|
|
|
|
301,035
|
|
Coronel Oviedo Project
|
|
|
136,031
|
|
|
|
132,315
|
|
|
|
422,763
|
|
|
|
428,077
|
|
Other Mineral Property Expenditures
|
|
|
136,238
|
|
|
|
159,292
|
|
|
|
517,611
|
|
|
|
544,403
|
|
Re-valuation of Asset Retirement Obligations
|
|
|
-
|
|
|
|
-
|
|
|
|
(184,381
|
)
|
|
|
-
|
|
|
|
$
|
725,968
|
|
|
$
|
1,045,842
|
|
|
$
|
3,408,813
|
|
|
$
|
4,560,241
|
|
|
NOTE 4:
|
PROPERTY,
PLANT AND EQUIPMENT
|
Property, plant and equipment consisted of the following:
|
|
April 30, 2016
|
|
|
July 31, 2015
|
|
|
|
|
|
|
Accumulated
|
|
|
Net Book
|
|
|
|
|
|
Accumulated
|
|
|
Net Book
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Value
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Value
|
|
Hobson Processing Facility
|
|
$
|
6,819,088
|
|
|
$
|
(773,933
|
)
|
|
$
|
6,045,155
|
|
|
$
|
6,819,088
|
|
|
$
|
(773,933
|
)
|
|
$
|
6,045,155
|
|
Mining Equipment
|
|
|
2,440,105
|
|
|
|
(2,202,485
|
)
|
|
|
237,620
|
|
|
|
2,452,572
|
|
|
|
(2,019,996
|
)
|
|
|
432,576
|
|
Logging Equipment and Vehicles
|
|
|
1,962,895
|
|
|
|
(1,785,206
|
)
|
|
|
177,689
|
|
|
|
1,962,895
|
|
|
|
(1,714,908
|
)
|
|
|
247,987
|
|
Computer Equipment
|
|
|
585,434
|
|
|
|
(549,175
|
)
|
|
|
36,259
|
|
|
|
615,064
|
|
|
|
(573,355
|
)
|
|
|
41,709
|
|
Furniture and Fixtures
|
|
|
172,215
|
|
|
|
(167,598
|
)
|
|
|
4,617
|
|
|
|
182,802
|
|
|
|
(176,726
|
)
|
|
|
6,076
|
|
Land
|
|
|
519,520
|
|
|
|
-
|
|
|
|
519,520
|
|
|
|
175,144
|
|
|
|
-
|
|
|
|
175,144
|
|
|
|
$
|
12,499,257
|
|
|
$
|
(5,478,397
|
)
|
|
$
|
7,020,860
|
|
|
$
|
12,207,565
|
|
|
$
|
(5,258,918
|
)
|
|
$
|
6,948,647
|
|
During the three and nine months ended
April 30, 2016, no uranium concentrate was processed at the Hobson Processing Facility due to the further reduced operations at
the Palangana Mine. As a result, no depreciation for the Hobson Processing Facility was recorded on the consolidated financial
statements for the three and nine months ended April 30, 2016.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
NOTE
5:
|
RECLAMATION
DEPOSITS
|
Reclamation deposits include interest
and non-interest bearing deposits issued in the States of Arizona, Texas and Wyoming relating to exploration, pre-extraction,
extraction and reclamation activities in the respective states where the deposits are held.
Reclamation deposits consisted of the
following:
|
|
April 30, 2016
|
|
|
July 31, 2015
|
|
Palangana Mine
|
|
$
|
1,102,981
|
|
|
$
|
1,102,981
|
|
Hobson Processing Facility
|
|
|
587,228
|
|
|
|
587,228
|
|
Arizona
|
|
|
15,000
|
|
|
|
15,000
|
|
Wyoming
|
|
|
817
|
|
|
|
816
|
|
|
|
$
|
1,706,026
|
|
|
$
|
1,706,025
|
|
NOTE
6:
|
OTHER
LONG-TERM ASSET AND LIABILITY
|
On March 4, 2016, the Company entered
into a share purchase and option agreement (the “SPOA”) with CIC Resources Inc. (the “Vendor”) pursuant
to which the Company acquired (the “Acquisition”) all of the issued and outstanding shares of JDL Resources Inc. (“JDL”),
a wholly-owned subsidiary of the Vendor, and was granted an option to acquire all of the issued and outstanding shares of CIC
Resources (Paraguay) Inc. (“CIC”; the “Option”), another wholly-owned subsidiary of the Vendor. JDL’s
principal assets include a piece of land located in the department of Alto Parana in the Republic of Paraguay. CIC is the
beneficial owner of Paraguay Resources Inc. which is the 100% owner of certain mineral property concessions (the “Property”),
which are located in the departments of Alto Parana and Canindeyú in the Republic of Paraguay.
Pursuant to the SPOA, the Company issued
1,333,560 restricted common shares in the capital of the Company and paid $50,000 in cash to complete the Acquisition. If the
Company has paid or caused to have paid on the Vendor’s behalf certain maintenance payments and assessment work required
to keep the Property in good standing as directed by the Vendor, during the one-year period following completion of the Acquisition
(the “Option Period”), the Company may elect in its discretion to exercise the Option at any time, or if, in accordance
with the SPOA, the Vendor satisfied certain conditions precedent to exercise, the Company will be deemed to have exercised the
Option. Upon exercise of the Option the Company is required to pay, subject to certain adjustments, $250,000 in cash to
the Vendor and to grant to the Vendor a 1.5% net smelter returns royalty (the “Royalty”) on the Property as contemplated
by a proposed net smelter returns royalty agreement (the “Royalty Agreement”) to be executed by the parties upon exercise
of the Option. Pursuant to the proposed Royalty Agreement, the Company has the right, exercisable at any time for a period
of six years following exercise of the Option, to acquire one-half percent (0.5%) of the Royalty at a purchase price of $500,000.
In accordance with Accounting Standard
Codification (“ASC”) 360, Property, Plant and Equipment, the acquisition of JDL was accounted for as an asset acquisition
as it was determined that JDL’s operations do not meet the definition of a business as defined in ASC 805 Business Combinations.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
The fair value of the consideration paid
and its allocation to the identifiable assets acquired and liabilities assumed are summarized as follows:
Consideration paid
|
|
|
|
|
1,333,560 UEC common shares at $0.92 per share
|
|
$
|
1,226,875
|
|
Cash consideration
|
|
|
50,000
|
|
Cash payable upon exercise the Option
|
|
|
250,000
|
|
Transaction costs
|
|
|
63,090
|
|
|
|
$
|
1,589,965
|
|
|
|
|
|
|
Assets acquired and liabilities assumed
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
3,916
|
|
Prepaid expenses
|
|
|
3,804
|
|
Land
|
|
|
344,376
|
|
Other long-term asset (Option to acquire CIC)
|
|
|
1,553,388
|
|
Due to CIC
|
|
|
(315,519
|
)
|
|
|
$
|
1,589,965
|
|
The Company holds a variable interest
in CIC as a result of the Option; however, it is not the primary beneficiary due to the fact that the Company does not have the
power over decisions that significantly affect CIC’s economic performance. Accordingly, UEC does not consolidate the results
of CIC. Therefore, the other long-term asset effectively represents the amount paid in advance ($1,303,388) and to be paid upon
the exercise of the option ($250,000) for the acquisition of CIC.
The Company’s maximum exposure to
loss from the unconsolidated variable interest entity at April 30, 2016, which would arise if UEC is unable to exercise the Option,
was approximately $1.3 million, representing the value of the Option (allocated fair value of $1,553,388), net of cash payable
of $250,000 upon exercise of the Option.
The $250,000 cash payment which UEC will
be required to make upon exercise of the Option has been recorded as a liability within Accounts Payable and Accrued Liabilities,
and included in the consideration paid as it was determined to be probably that this payment will be made.
The liability of $315,519 represents the
net amount due from JDL and its subsidiary to CIC and its subsidiary (formerly these entities were both part of the Vendor’s
consolidated group). The amount has been classified as non-current as it has no stated terms of interest or repayment, and not
expected to be settled within the next twelve months.
NOTE
7:
|
DUE
TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS
|
During the three and nine months ended
April 30, 2016, the Company incurred $30,134 and $128,727 (three and nine months ended April 30, 2015: $45,443 and $118,101),
respectively, in general and administrative costs paid to a company controlled by a direct family member of a director and officer
of the Company.
During the three months ended April 30,
2016, the Company issued 117,998 restricted common shares with a fair value of $109,738 as settlement of amounts owed to this
company totaling $98,371. As a result, a loss on settlement of current liabilities of $11,367 was recognized in the condensed
consolidated statements of operations and comprehensive loss. During the nine months ended April 30, 2015, the Company issued
15,000 restricted shares of common stock with a fair value of $18,150 to this company for consulting services included in general
and administrative costs.
URANIUM
ENERGY CORP
.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
At April 30, 2016, amounts owed to related
parties totaled $897 (July 31, 2015: $14,660). These amounts are unsecured, non-interest bearing and due on demand.
On February 9, 2016, the Company entered
into a second amended and restated credit agreement (the “Second Amended and Restated Credit Agreement”) with its
lenders, Sprott Resource Lending Partnership, CEF (Capital Markets) Limited and Resource Income Partners Limited Partnership (collectively,
the “Lenders”), whereby the Company and the Lenders agreed to certain further amendments to the $20,000,000 senior
secured credit facility (the “Credit Facility”), including the following terms:
|
·
|
extension
of the maturity date from July 31, 2017 to January 1, 2020;
|
|
·
|
deferral
of the monthly principal payments (each of which is equal to one-twelfth of the principal
balance then outstanding) commencement date from July 31, 2016 to February 1, 2019;
|
|
·
|
re-pricing
and extension of the existing bonus warrants comprised of 2,600,000 share purchase warrants,
each warrant exercisable for one share of common stock of the Company at an exercise
price reduced from $2.50 to $1.35 per share until expiry, extended by a further one and
a half years from July 30, 2018 to January 30, 2020, subject to accelerated exercise
whereby, upon notification by the Company, the warrant holders will have 30 days to exercise
their warrants should the ten trading-day volume-weighted average price of the Company’s
shares equal or exceed $2.70;
|
|
·
|
issuance
of second extension fee shares equal to 4% of the principal balance outstanding or $800,000
paid to the Lenders by way of the issuance of 959,613 shares of common stock of the Company
with a price per share based on a 10% discount to the five trading-day volume-weighted
average price of the Company’s shares;
|
|
·
|
payment
of second extension anniversary fees to the Lenders on each of February 1, 2017, 2018
and 2019, of 5.5%, 4.5% and 4.5%, respectively, of the principal balance then outstanding,
if any, payable at the option of the Company in cash or shares of the Company with a
price per share calculated as a 10% discount to the five trading-day volume-weighted
average price of the Company’s shares immediately prior to the applicable date;
and
|
|
·
|
maintenance
at all times of a working capital ratio of not less than 1:1. Working capital ratio is
calculated by dividing current assets by current liabilities, excluding the effects of
principal payments on the determination of working capital.
|
Under the terms of the Second Amended
and Restated Credit Agreement, the non-revolving Credit Facility has an interest rate of 8% per annum, with the underlying effective
interest rate being 14.28%.
The Second Amended and Restated Credit
Agreement supersedes, in their entirety, the prior Amended and Restated Credit Agreement dated and effective March 13, 2014 and
the prior Credit Agreement dated and effective July 30, 2013.
The incremental value associated with
the re-pricing and extension of the bonus warrants was determined to be $104,915 and has been recorded as an additional discount
on long-term debt. The incremental value was determined using the Black-Scholes option pricing model with the following assumptions:
Expected Life in Years
|
|
|
3.98
|
|
Expected Annual Volatility
|
|
|
71.10
|
%
|
Expected Risk Free Interest Rate
|
|
|
1.00
|
%
|
Expected Dividend Yield
|
|
|
0.00
|
%
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
As at April 30, 2016, long-term debt consisted
of the following:
|
|
April 30, 2016
|
|
|
July 31, 2015
|
|
Principal amount
|
|
$
|
20,000,000
|
|
|
$
|
20,000,000
|
|
Unamortized discount
|
|
|
(1,086,630
|
)
|
|
|
(242,522
|
)
|
Long-term debt, net of unamortized discount
|
|
|
18,913,370
|
|
|
|
19,757,478
|
|
For the three and nine months ended April
30, 2016 and 2015, the amortization of debt discount totaled $277,417 and $960,807 (three and nine months ended April 30, 2015:
$336,362 and $994,668), respectively, which was recorded as interest expense and included in the condensed consolidated statements
of operations and comprehensive loss.
During the nine months ended April 30,
2016, prior to the execution of the Second Amended and Restated Credit Agreement, and pursuant to the terms of the Amended and
Restated Credit Agreement dated and effective March 13, 2014, the Company paid bonus shares to its lenders through the issuance
of 752,320 restricted shares with a fair value of $900,000, representing 4.5% of the $20,000,000 principal balance outstanding
at July 31, 2015, which was recorded as a discount on long-term debt to be amortized using the effective interest rate over the
life of the long-term debt.
The aggregate yearly maturities of long-term debt based on
principal amounts outstanding at April 30, 2016 are as follows:
Fiscal 2016
|
|
$
|
-
|
|
Fiscal 2017
|
|
|
-
|
|
Fiscal 2018
|
|
|
-
|
|
Fiscal 2019
|
|
|
10,000,000
|
|
Fiscal 2020
|
|
|
10,000,000
|
|
Total
|
|
$
|
20,000,000
|
|
NOTE
9:
|
ASSET
RETIREMENT OBLIGATIONS
|
The Company’s asset retirement obligations
relate to future remediation and decommissioning activities at the Palangana Mine and Hobson Processing Facility.
Balance, July 31, 2015
|
|
$
|
3,926,846
|
|
Revision in estimate of asset retirement obligations
|
|
|
(209,168
|
)
|
Accretion
|
|
|
214,395
|
|
Balance, April 30, 2016
|
|
$
|
3,932,073
|
|
During the nine months ended April 30,
2016, the ARO for the Palangana Mine were revised due to changes in the estimated timing of restoration and reclamation of the
Palangana Mine. As a result, ARO liabilities associated with the Palangana Mine were reduced by $209,168, the corresponding mineral
rights and properties were reduced by $24,787, and a credit amount of re-valuation of ARO totaling $184,381 was recognized as
a result of a downward adjustment to fully depleted underlying mineral rights and properties, which was recorded against the mineral
property expenditures for the Palangana Mine.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
The estimated amounts and timing of cash
flows and assumptions used for ARO estimates are as follows:
|
|
April 30, 2016
|
|
|
July 31, 2015
|
|
Undiscounted amount of estimated cash flows
|
|
$
|
6,650,255
|
|
|
$
|
6,600,868
|
|
|
|
|
|
|
|
|
|
|
Payable in years
|
|
|
2.1 to 15
|
|
|
|
2.5 to 15
|
|
Inflation rate
|
|
|
0.90% to 2.25
|
%
|
|
|
2.02% to 2.25
|
%
|
Discount rate
|
|
|
5.15% to 8.00
|
%
|
|
|
6.56% to 8.00
|
%
|
The undiscounted amounts of estimated
cash flows for the next five fiscal years and beyond are as follows:
Fiscal 2016
|
|
$
|
-
|
|
Fiscal 2017
|
|
|
139,052
|
|
Fiscal 2018
|
|
|
414,058
|
|
Fiscal 2019
|
|
|
667,984
|
|
Fiscal 2020
|
|
|
620,673
|
|
Remaining balance
|
|
|
4,808,488
|
|
|
|
$
|
6,650,255
|
|
Equity Financing
During Fiscal 2014, the Company filed
a Form S-3 “Shelf” Registration Statement effective January 10, 2014 (the “2014 Shelf”) providing for
the public offer and sale of certain securities of the Company from time to time, at its discretion, up to an aggregate offering
of $100 million.
On March 10, 2016, the Company completed
a registered offering of 12,364,704 units at a price of $0.85 per unit for gross proceeds of $10,510,000 pursuant to a prospectus
supplement to the 2014 Shelf. Each unit is comprised of one share of the Company and half of one share purchase warrant, with
each whole warrant being exercisable at a price of $1.20 to purchase one share of the Company totaling 6,182,351 for a three year
period from the date of issuance. The Company issued share purchase warrants to agents as part of share issuance costs to purchase
411,997 shares of the Company exercisable at a price of $1.20 per share also for a three year period from the date of issuance.
The shares were valued at the Company’s
closing price of $0.81 per share at March 10, 2016. The share purchase warrants were valued using the Black-Scholes option pricing
model with the following assumptions:
Expected Risk Free Interest Rate
|
|
|
1.11
|
%
|
Expected Annual Volatility
|
|
|
74.34
|
%
|
Expected Contractual Life in Years
|
|
|
3.00
|
|
Expected Annual Dividend Yield
|
|
|
0.00
|
%
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
The net proceeds from the 2014 Shelf equity
financing were allocated to the fair values of the shares and share purchase warrants as presented below:
Fair Value of Shares
|
|
$
|
10,015,410
|
|
Fair Value of Share Purchase Warrants
|
|
|
1,938,995
|
|
Total Fair Value Before Allocation to Net Proceeds
|
|
$
|
11,954,405
|
|
|
|
|
|
|
Gross Proceeds
|
|
$
|
10,510,000
|
|
Share Issuance Costs - Cash
|
|
|
(525,482
|
)
|
Net Cash Proceeds Received
|
|
$
|
9,984,518
|
|
|
|
|
|
|
Relative Fair Value Allocation to:
|
|
|
|
|
Shares
|
|
$
|
8,365,038
|
|
Share Purchase Warrants
|
|
|
1,619,480
|
|
|
|
$
|
9,984,518
|
|
At April 30, 2016, a total of $35.1 million
of the 2014 Shelf was utilized through the following registered offerings and sales of units, with a remaining available balance
of $64.9 million under the 2014 Shelf.
|
·
|
on
June 25, 2015: $10.0 million in gross proceeds through an offering of units consisting
of the Company’s shares and share purchase warrants and $6.7 million representing
the aggregate exercise price of those share purchase warrants and agents’ share
purchase warrants should they be exercised in full; and
|
|
·
|
on
March 10, 2016: $10.5 million in gross proceeds through an offering of units consisting
of the Company’s shares and share purchase warrants and $7.9 million representing
the aggregate exercise price of those share purchase warrants and agents’ share
purchase warrants should they be exercised in full.
|
Share Transactions
A summary of the Company’s share transactions for the
three and nine months ended April 30, 2016 are as follows:
|
|
Common
|
|
|
Value per Share
|
|
|
Issuance
|
|
Period / Description
|
|
Shares Issued
|
|
|
Low
|
|
|
High
|
|
|
Value
|
|
Balance, July 31, 2015
|
|
|
97,834,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bonus Shares for Credit Facility
|
|
|
752,320
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
|
$
|
900,000
|
|
Consulting Services
|
|
|
274,982
|
|
|
|
1.03
|
|
|
|
1.38
|
|
|
|
305,594
|
|
Share Compensation
|
|
|
33,315
|
|
|
|
1.00
|
|
|
|
1.12
|
|
|
|
35,264
|
|
Balance, October 31, 2015
|
|
|
98,894,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting Services
|
|
|
581,421
|
|
|
|
0.72
|
|
|
|
1.12
|
|
|
|
608,179
|
|
Share Compensation
|
|
|
71,588
|
|
|
|
1.06
|
|
|
|
1.08
|
|
|
|
76,236
|
|
Options Exercised
|
|
|
682,167
|
|
|
|
0.33
|
|
|
|
0.33
|
|
|
|
225,115
|
|
Balance, January 31, 2016
|
|
|
100,229,880
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Extension Fee Shares for Credit Facility
|
|
|
959,613
|
|
|
|
0.83
|
|
|
|
0.83
|
|
|
|
800,000
|
|
Settlement of Current Liabilities
|
|
|
487,574
|
|
|
|
0.93
|
|
|
|
0.93
|
|
|
|
453,444
|
|
Equity Financing
|
|
|
12,364,704
|
|
|
|
0.85
|
|
|
|
0.85
|
|
|
|
10,510,000
|
|
Asset Acquisition
|
|
|
1,333,560
|
|
|
|
0.92
|
|
|
|
0.92
|
|
|
|
1,226,875
|
|
Consulting Services
|
|
|
514,440
|
|
|
|
0.73
|
|
|
|
0.93
|
|
|
|
424,316
|
|
Share Compensation
|
|
|
202,884
|
|
|
|
0.75
|
|
|
|
0.96
|
|
|
|
167,830
|
|
Balance, April 30, 2016
|
|
|
116,092,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
Share Purchase Warrants
A summary of share purchase warrants outstanding and exercisable
at April 30, 2016 are as follows:
Weighted
Average
Exercise Price
|
|
|
Number of Warrants
Outstanding
|
|
|
Expiry Date
|
|
Weighted Average
Remaining Contractual
Life (Years)
|
|
$
|
1.20
|
|
|
|
6,594,348
|
|
|
March 10, 2019
|
|
|
2.86
|
|
|
1.35
|
|
|
|
2,600,000
|
|
|
January 30, 2020
|
|
|
3.75
|
|
|
1.95
|
|
|
|
50,000
|
|
|
June 3, 2018
|
|
|
2.09
|
|
|
2.12
|
|
|
|
2,850,000
|
|
|
June 25, 2018
|
|
|
2.15
|
|
|
2.60
|
|
|
|
1,859,524
|
|
|
October 23, 2016
|
|
|
0.48
|
|
$
|
1.61
|
|
|
|
13,953,872
|
|
|
|
|
|
2.56
|
|
Stock Options
At April 30, 2016, the Company had one
stock option plan, the 2015 Stock Incentive Plan (the “2015 Plan”). The 2015 Plan provides for up to 9,600,250 shares
of the Company that may be issued pursuant to awards that may be granted together with an additional 10,569,301 shares of the
Company that may be issued pursuant to stock options previously granted under the Company’s prior 2014 Stock Incentive Plan
(the “2014 Plan”). The 2015 Plan supersedes and replaces the Company’s prior 2014 Plan, which superseded and
replaced the Company’s prior 2013, 2009 and 2006 Stock Incentive Plans, such that no further shares are issuable under those
prior plans.
A summary of stock options granted by
the Company during the nine months ended April 30, 2016, including corresponding grant date fair values and assumptions using
the Black Scholes option pricing model is as follows:
|
|
Options
|
|
|
Exercise
|
|
|
Term
|
|
|
Fair
|
|
|
Expected
|
|
|
Risk-Free
|
|
|
Dividend
|
|
|
Expected
|
|
Date
|
|
Issued
|
|
|
Price
|
|
|
(Years)
|
|
|
Value
|
|
|
Life (Years)
|
|
|
Interest Rate
|
|
|
Yield
|
|
|
Volatility
|
|
August 7, 2015
|
|
|
105,000
|
|
|
$
|
1.32
|
|
|
|
5
|
|
|
$
|
68,824
|
|
|
|
2.90
|
|
|
|
1.04
|
%
|
|
|
0.00
|
%
|
|
|
77.17
|
%
|
October 14, 2015
|
|
|
1,000,000
|
|
|
|
1.14
|
|
|
|
5
|
|
|
|
563,195
|
|
|
|
2.90
|
|
|
|
0.81
|
%
|
|
|
0.00
|
%
|
|
|
77.01
|
%
|
January 12, 2016
|
|
|
300,000
|
|
|
|
0.98
|
|
|
|
5
|
|
|
|
145,902
|
|
|
|
2.90
|
|
|
|
1.15
|
%
|
|
|
0.00
|
%
|
|
|
76.96
|
%
|
Total
|
|
|
1,405,000
|
|
|
|
|
|
|
|
|
|
|
$
|
777,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A continuity schedule of outstanding stock
options for the underlying common shares for the nine months ended April 30, 2016 is as follows:
|
|
Number of Stock Options
|
|
|
Weighted Average Exercise Price
|
|
Balance, July 31, 2015
|
|
|
10,581,975
|
|
|
$
|
1.38
|
|
Issued
|
|
|
1,105,000
|
|
|
|
1.16
|
|
Forfeited
|
|
|
(5,000
|
)
|
|
|
1.32
|
|
Balance, October 31, 2015
|
|
|
11,681,975
|
|
|
|
1.36
|
|
Issued
|
|
|
300,000
|
|
|
|
0.98
|
|
Exercised
|
|
|
(682,167
|
)
|
|
|
0.33
|
|
Forfeited
|
|
|
(180,000
|
)
|
|
|
1.32
|
|
Expired
|
|
|
(1,950
|
)
|
|
|
5.90
|
|
Balance, January 31, 2016
|
|
|
11,117,858
|
|
|
|
1.42
|
|
Forfeited
|
|
|
(72,500
|
)
|
|
|
1.81
|
|
Balance, April 30, 2016
|
|
|
11,045,358
|
|
|
$
|
1.41
|
|
At April 30, 2016, the aggregate intrinsic
value under the provisions of ASC 718 of all outstanding stock options was estimated at $439,068 (vested: $439,068 and unvested:
$Nil).
At April 30, 2016, unrecognized stock-based
compensation expense related to the unvested portion of stock options granted under the Company’s 2015 Plan totaled $226,003
to be recognized over the next 0.76 years.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
A summary of stock options outstanding and exercisable at April
30, 2016 is as follows:
|
|
Options Outstanding
|
|
|
Options Exercisable
|
|
|
|
|
|
|
Weighted
|
|
|
Weighted Average
|
|
|
|
|
|
Weighted
|
|
|
Weighted Average
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
Range of
|
|
Outstanding at
|
|
|
Exercise
|
|
|
Contractual Term
|
|
|
Exercisable at
|
|
|
Exercise
|
|
|
Contractual Term
|
|
Exercise Prices
|
|
April 30, 2016
|
|
|
Price
|
|
|
(Years)
|
|
|
April 30, 2016
|
|
|
Price
|
|
|
(Years)
|
|
$0.45 to $0.96
|
|
|
1,269,634
|
|
|
$
|
0.47
|
|
|
|
1.56
|
|
|
|
1,269,634
|
|
|
$
|
0.47
|
|
|
|
1.56
|
|
$0.97 to $2.45
|
|
|
8,840,000
|
|
|
|
1.35
|
|
|
|
3.54
|
|
|
|
8,057,500
|
|
|
|
1.37
|
|
|
|
3.44
|
|
$2.46 to $5.70
|
|
|
935,724
|
|
|
|
3.29
|
|
|
|
4.09
|
|
|
|
935,724
|
|
|
|
3.29
|
|
|
|
4.09
|
|
|
|
|
11,045,358
|
|
|
$
|
1.41
|
|
|
|
3.36
|
|
|
|
10,262,858
|
|
|
$
|
1.44
|
|
|
|
3.27
|
|
Stock-Based Compensation
A summary of stock-based compensation
expense is as follows:
|
|
Three Months Ended April 30
|
|
|
Nine Months Ended April 30
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Stock-Based Compensation for Consultants
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued for consulting services
|
|
$
|
470,549
|
|
|
$
|
502,854
|
|
|
$
|
1,429,324
|
|
|
$
|
1,380,279
|
|
Stock options issued to consultants
|
|
|
(4,461
|
)
|
|
|
346,995
|
|
|
|
66,317
|
|
|
|
721,430
|
|
|
|
|
466,088
|
|
|
|
849,849
|
|
|
|
1,495,641
|
|
|
|
2,101,709
|
|
Stock-Based Compensation for Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to management
|
|
|
45,299
|
|
|
|
-
|
|
|
|
81,495
|
|
|
|
-
|
|
Stock options issued to management
|
|
|
195,464
|
|
|
|
263,306
|
|
|
|
640,789
|
|
|
|
1,424,585
|
|
|
|
|
240,763
|
|
|
|
263,306
|
|
|
|
722,284
|
|
|
|
1,424,585
|
|
Stock-Based Compensation for Employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock issued to employees
|
|
|
76,299
|
|
|
|
-
|
|
|
|
106,602
|
|
|
|
-
|
|
Stock options issued to employees
|
|
|
15,710
|
|
|
|
204,723
|
|
|
|
163,124
|
|
|
|
1,102,250
|
|
|
|
|
92,009
|
|
|
|
204,723
|
|
|
|
269,726
|
|
|
|
1,102,250
|
|
|
|
$
|
798,860
|
|
|
$
|
1,317,878
|
|
|
$
|
2,487,651
|
|
|
$
|
4,628,544
|
|
The following table reconciles the weighted
average number of shares used in the calculation of the basic and diluted loss per share:
|
|
Three Months Ended April 30,
|
|
|
Nine Months Ended April 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss for the Period
|
|
$
|
(3,679,055
|
)
|
|
$
|
(5,347,729
|
)
|
|
$
|
(13,552,594
|
)
|
|
$
|
(17,949,496
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted Average Number of Shares
|
|
|
109,710,985
|
|
|
|
92,034,908
|
|
|
|
102,588,834
|
|
|
|
91,683,568
|
|
Dilutive Stock Options and Warrants
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Diluted Weighted Average Number of Shares
|
|
|
109,710,985
|
|
|
|
92,034,908
|
|
|
|
102,588,834
|
|
|
|
91,683,568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per Share, Basic and Diluted
|
|
$
|
(0.03
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.20
|
)
|
For the three and nine months ended April
30, 2016 and 2015, all outstanding stock options and share purchase warrants were excluded from the calculation of the diluted
loss per share since the Company reported net losses for those periods and their effects would be anti-dilutive.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
NOTE
12:
|
SEGMENTED
INFORMATION
|
The Company currently operates in a single
reportable segment and is focused on uranium mining and related activities, including exploration, pre-extraction, extraction
and processing of uranium concentrates.
At April 30, 2016, long-term assets located
in the U.S. totaled $33,436,732, or 69% of the Company’s total long-term assets of $48,443,360.
The table below provides a breakdown of
the Company’s long-term assets by geographic segments:
|
|
April 30, 2016
|
|
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Items
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Mineral Rights and Properties
|
|
$
|
13,369,394
|
|
|
$
|
10,891,861
|
|
|
$
|
821,276
|
|
|
$
|
-
|
|
|
$
|
13,080,555
|
|
|
$
|
38,163,086
|
|
Property, Plant and Equipment
|
|
|
6,648,175
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,965
|
|
|
|
355,720
|
|
|
|
7,020,860
|
|
Reclamation Deposits
|
|
|
1,690,209
|
|
|
|
15,000
|
|
|
|
817
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,706,026
|
|
Other Long-Term Assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,553,388
|
|
|
|
1,553,388
|
|
Total Long-Term Assets
|
|
$
|
21,707,778
|
|
|
$
|
10,906,861
|
|
|
$
|
822,093
|
|
|
$
|
16,965
|
|
|
$
|
14,989,663
|
|
|
$
|
48,443,360
|
|
|
|
July 31, 2015
|
|
|
|
United States
|
|
|
|
|
Balance Sheet Items
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Mineral Rights and Properties
|
|
$
|
13,555,492
|
|
|
$
|
10,891,861
|
|
|
$
|
910,059
|
|
|
$
|
-
|
|
|
$
|
13,080,555
|
|
|
$
|
38,437,967
|
|
Property, Plant and Equipment
|
|
|
6,926,682
|
|
|
|
-
|
|
|
|
-
|
|
|
|
7,502
|
|
|
|
14,463
|
|
|
|
6,948,647
|
|
Reclamation Deposits
|
|
|
1,690,209
|
|
|
|
15,000
|
|
|
|
816
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,706,025
|
|
Total Long-Term Assets
|
|
$
|
22,172,383
|
|
|
$
|
10,906,861
|
|
|
$
|
910,875
|
|
|
$
|
7,502
|
|
|
$
|
13,095,018
|
|
|
$
|
47,092,639
|
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
The tables below provide a breakdown of
the Company’s operating results by geographic segments for the three and nine months ended April 30, 2016. All intercompany
transactions have been eliminated.
|
|
Three Months Ended April 30, 2016
|
|
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mineral property expenditures
|
|
|
495,830
|
|
|
|
3,982
|
|
|
|
881
|
|
|
|
-
|
|
|
|
225,275
|
|
|
|
725,968
|
|
General and administrative
|
|
|
1,426,110
|
|
|
|
66,534
|
|
|
|
989
|
|
|
|
514,853
|
|
|
|
(3,021
|
)
|
|
|
2,005,465
|
|
Depreciation, amortization and accretion
|
|
|
200,732
|
|
|
|
-
|
|
|
|
750
|
|
|
|
2,385
|
|
|
|
1,621
|
|
|
|
205,488
|
|
|
|
|
2,122,672
|
|
|
|
70,516
|
|
|
|
2,620
|
|
|
|
517,238
|
|
|
|
223,875
|
|
|
|
2,936,921
|
|
Loss from operations
|
|
|
(2,122,672
|
)
|
|
|
(70,516
|
)
|
|
|
(2,620
|
)
|
|
|
(517,238
|
)
|
|
|
(223,875
|
)
|
|
|
(2,936,921
|
)
|
Other income (expenses)
|
|
|
(745,888
|
)
|
|
|
(4,663
|
)
|
|
|
-
|
|
|
|
31
|
|
|
|
6
|
|
|
|
(750,514
|
)
|
Loss before income taxes
|
|
$
|
(2,868,560
|
)
|
|
$
|
(75,179
|
)
|
|
$
|
(2,620
|
)
|
|
$
|
(517,207
|
)
|
|
$
|
(223,869
|
)
|
|
$
|
(3,687,435
|
)
|
|
|
Three Months Ended April 30, 2015
|
|
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mineral property expenditures
|
|
|
786,935
|
|
|
|
50,119
|
|
|
|
35,199
|
|
|
|
-
|
|
|
|
173,589
|
|
|
|
1,045,842
|
|
General and administrative
|
|
|
2,400,403
|
|
|
|
51,889
|
|
|
|
4,368
|
|
|
|
707,481
|
|
|
|
3,755
|
|
|
|
3,167,896
|
|
Depreciation, amortization and accretion
|
|
|
368,448
|
|
|
|
-
|
|
|
|
501
|
|
|
|
2,741
|
|
|
|
2,392
|
|
|
|
374,082
|
|
|
|
|
3,555,786
|
|
|
|
102,008
|
|
|
|
40,068
|
|
|
|
710,222
|
|
|
|
179,736
|
|
|
|
4,587,820
|
|
Loss from operations
|
|
|
(3,555,786
|
)
|
|
|
(102,008
|
)
|
|
|
(40,068
|
)
|
|
|
(710,222
|
)
|
|
|
(179,736
|
)
|
|
|
(4,587,820
|
)
|
Other income (expenses)
|
|
|
(759,273
|
)
|
|
|
(4,640
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
169
|
|
|
|
(763,744
|
)
|
Loss before income taxes
|
|
$
|
(4,315,059
|
)
|
|
$
|
(106,648
|
)
|
|
$
|
(40,068
|
)
|
|
$
|
(710,222
|
)
|
|
$
|
(179,567
|
)
|
|
$
|
(5,351,564
|
)
|
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
|
|
Nine Months Ended April 30, 2016
|
|
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mineral property expenditures
|
|
|
2,347,348
|
|
|
|
213,885
|
|
|
|
133,031
|
|
|
|
-
|
|
|
|
714,549
|
|
|
|
3,408,813
|
|
General and administrative
|
|
|
5,074,713
|
|
|
|
141,526
|
|
|
|
2,652
|
|
|
|
1,865,839
|
|
|
|
1,939
|
|
|
|
7,086,669
|
|
Depreciation, amortization and accretion
|
|
|
667,080
|
|
|
|
-
|
|
|
|
2,250
|
|
|
|
6,017
|
|
|
|
5,226
|
|
|
|
680,573
|
|
Impairment loss on mineral properties
|
|
|
-
|
|
|
|
-
|
|
|
|
86,535
|
|
|
|
-
|
|
|
|
-
|
|
|
|
86,535
|
|
|
|
|
8,089,141
|
|
|
|
355,411
|
|
|
|
224,468
|
|
|
|
1,871,856
|
|
|
|
721,714
|
|
|
|
11,262,590
|
|
Loss from operations
|
|
|
(8,089,141
|
)
|
|
|
(355,411
|
)
|
|
|
(224,468
|
)
|
|
|
(1,871,856
|
)
|
|
|
(721,714
|
)
|
|
|
(11,262,590
|
)
|
Other income (expenses)
|
|
|
(2,299,582
|
)
|
|
|
(14,198
|
)
|
|
|
-
|
|
|
|
849
|
|
|
|
17
|
|
|
|
(2,312,914
|
)
|
Loss before income taxes
|
|
$
|
(10,388,723
|
)
|
|
$
|
(369,609
|
)
|
|
$
|
(224,468
|
)
|
|
$
|
(1,871,007
|
)
|
|
$
|
(721,697
|
)
|
|
$
|
(13,575,504
|
)
|
|
|
Nine Months Ended April 30, 2015
|
|
|
|
United States
|
|
|
|
|
|
|
|
|
|
|
Statement of Operations
|
|
Texas
|
|
|
Arizona
|
|
|
Other States
|
|
|
Canada
|
|
|
Paraguay
|
|
|
Total
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Mineral property expenditures
|
|
|
3,431,826
|
|
|
|
207,586
|
|
|
|
191,718
|
|
|
|
-
|
|
|
|
729,111
|
|
|
|
4,560,241
|
|
General and administrative
|
|
|
7,456,500
|
|
|
|
148,766
|
|
|
|
18,393
|
|
|
|
2,069,664
|
|
|
|
18,610
|
|
|
|
9,711,933
|
|
Depreciation, amortization and accretion
|
|
|
1,420,996
|
|
|
|
-
|
|
|
|
1,968
|
|
|
|
9,238
|
|
|
|
8,606
|
|
|
|
1,440,808
|
|
|
|
|
12,309,322
|
|
|
|
356,352
|
|
|
|
212,079
|
|
|
|
2,078,902
|
|
|
|
756,327
|
|
|
|
15,712,982
|
|
Loss from operations
|
|
|
(12,309,322
|
)
|
|
|
(356,352
|
)
|
|
|
(212,079
|
)
|
|
|
(2,078,902
|
)
|
|
|
(756,327
|
)
|
|
|
(15,712,982
|
)
|
Other income (expenses)
|
|
|
(2,249,325
|
)
|
|
|
(15,018
|
)
|
|
|
-
|
|
|
|
(120
|
)
|
|
|
484
|
|
|
|
(2,263,979
|
)
|
Loss before income taxes
|
|
$
|
(14,558,647
|
)
|
|
$
|
(371,370
|
)
|
|
$
|
(212,079
|
)
|
|
$
|
(2,079,022
|
)
|
|
$
|
(755,843
|
)
|
|
$
|
(17,976,961
|
)
|
NOTE
13:
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
During the nine months ended April 30,
2016 and 2015, the Company issued 1,370,843 and 891,273 restricted shares with a fair value of $1,338,091 and $1,380,279, respectively,
for consulting services.
During the nine months ended April 30,
2016, the Company issued 307,787 shares with a fair value of $279,330 as compensation to certain management, employees and consultants
of the Company under the 2015 Plan.
During the nine months ended April 30,
2016 and 2015, the Company paid $1,217,778 and $1,213,333, respectively, in cash for interest on its long-term debt.
During the nine months ended April 30,
2016, the Company issued 487,574 shares with a fair value of $453,444 as settlement of certain of the Company’s accounts
payable totaling $406,476.
During the nine months ended April 30,
2016, the Company entered into a SPOA with CIC Resources Inc., pursuant to which the Company acquired all of the issued and outstanding
shares of JDL Resources Inc. As consideration, the Company issued 1,333,560 restricted common shares and paid $50,000 in cash.
URANIUM
ENERGY CORP
.
NOTES TO THE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
NOTE
14:
|
COMMITMENTS
AND CONTINGENCIES
|
The Company is renting or leasing various
office or storage space located in the United States, Canada and Paraguay with total monthly payments of $18,484. Office lease
agreements expire between May 2017 and March 2021 for the United States and Canada.
The aggregate minimum payments over the next five fiscal years
are as follows:
Fiscal 2016
|
|
$
|
55,307
|
|
Fiscal 2017
|
|
|
217,867
|
|
Fiscal 2018
|
|
|
199,722
|
|
Fiscal 2019
|
|
|
88,979
|
|
Fiscal 2020
|
|
|
89,614
|
|
All subsequent years
|
|
|
59,743
|
|
|
|
$
|
711,232
|
|
The Company is committed to pay its key
executives a total of $750,000 per year for various management services.
The Company is subject to ordinary routine
litigation incidental to its business. Except as disclosed below, the Company is not aware of any material legal proceedings pending
or that have been threatened against the Company.
On or about March 9, 2011, the Texas Commission
on Environmental Quality (the “TCEQ”) granted the Company’s applications for a Class III Injection Well Permit,
Production Area Authorization and Aquifer Exemption for its Goliad Project. On or about December 4, 2012, the U.S. Environmental
Protection Agency (the “EPA”) concurred with the TCEQ issuance of the Aquifer Exemption permit (the “AE”).
With the receipt of this concurrence, the final authorization required for uranium extraction, the Goliad Project achieved fully-permitted
status. On or about May 24, 2011, a group of petitioners, inclusive of Goliad County, appealed the TCEQ action to the 250
th
District
Court in Travis County, Texas. A motion filed by the Company to intervene in this matter was granted. The petitioners’
appeal lay dormant until on or about June 14, 2013, when the petitioners filed their initial brief in support of their position.
On or about January 18, 2013, a different group of petitioners, exclusive of Goliad County, filed a petition
for review with the Court of Appeals for the Fifth Circuit in the United States (the “Fifth Circuit”) to appeal the
EPA’s decision. On or about March 5, 2013, a motion filed by the Company to intervene in this matter was granted. The
parties attempted to resolve both appeals, to facilitate discussions and avoid further legal costs. The parties jointly agreed,
through mediation initially conducted through the Fifth Circuit on or about August 8, 2013, to abate the proceedings in the State
District Court. On or about August 21, 2013, the State District Court agreed to abate the proceedings. The EPA subsequently
filed a motion to remand without vacatur with the Fifth Circuit wherein the EPA's stated purpose was to elicit additional public
input and further explain its rationale for the approval. In requesting the remand without vacatur, which would allow the
AE to remain in place during the review period, the EPA denied the existence of legal error and stated that it was unaware of
any additional information that would merit reversal of the AE. The Company and the TCEQ filed a request to the Fifth Circuit
for the motion to remand without vacatur, and if granted, to be limited to a 60-day review period. On December 9, 2013,
by way of a procedural order from a three-judge panel of the Fifth Circuit, the Court granted the remand without vacatur and initially
limited the review period to 60 days. In March of 2014, at the EPA’s request, the Fifth Circuit extended the EPA’s
time period for review and additionally, during that same period, the Company conducted a joint groundwater survey of the site,
the result of which reaffirmed the Company’s previously filed groundwater direction studies. On or about June 17, 2014,
the EPA reaffirmed its earlier decision to uphold the granting of the Company’s existing AE, with the exception of a northwestern
portion containing less than 10% of the uranium resource which was withdrawn, but not denied, from the AE area until additional
information is provided in the normal course of mine development. On or about September 9, 2014, the petitioners filed a status
report with the State District Court which included a request to remove the stay agreed to in August 2013 and to set a briefing
schedule (the “Status Report”). In that Status Report, the petitioners also stated that they had decided not to pursue
their appeal at the Fifth Circuit. The Company continues to believe that the pending appeal is without merit and is
continuing as planned towards uranium extraction at its fully-permitted Goliad Project.
URANIUM ENERGY CORP.
|
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
April 30, 2016
|
(Unaudited)
|
|
On or about April 3, 2012, the Company
received notification of a lawsuit filed in the State of Arizona, in the Superior Court for the County of Yavapai, by certain
petitioners (the “Plaintiffs”) against a group of defendants, including the Company and former management and board
members of Concentric Energy Corp. (“Concentric”). The lawsuit asserts certain claims relating to the Plaintiffs’
equity investments in Concentric, including allegations that the former management and board members of Concentric engaged in
various wrongful acts prior to and/or in conjunction with the merger of Concentric. The lawsuit originally further alleged that
the Company was contractually liable for liquidated damages arising from a pre-merger transaction which the Company previously
acknowledged and recorded as an accrued liability, and which portion of the lawsuit was settled in full by a cash payment of $149,194
to the Plaintiffs and subsequently dismissed. The court dismissed several other claims set forth in the Plaintiffs’ initial
complaint, but granted the Plaintiffs leave to file an amended complaint. The court denied a subsequent motion to dismiss
the amended complaint, finding that the pleading met the minimal pleading requirements under the applicable procedural rules.
In October 2013, the Company filed a formal response denying liability for any of the Plaintiffs’ remaining claims.
The court set the case for a four-week jury trial that was to take place in Yavapai County, Arizona, in April 2016. In November
2015, after the completion of discovery, the Company and the remaining defendants filed motions for summary judgment, seeking
to dismiss all of the Plaintiffs’ remaining claims. While those motions were pending, the parties reached a settlement
agreement with respect to all claims asserted by the Plaintiffs in that lawsuit. A formal settlement and release agreement
was subsequently executed, pursuant to which all of the Plaintiffs’ claims in the Arizona lawsuit were dismissed with prejudice.
Pursuant to the terms of the settlement agreement, the Defendants collectively paid $500,000 to the Plaintiffs, of which $50,000
will be paid by the Company.
On June 1, 2015, the Company received
notice that Westminster Securities Corporation (“Westminster”) filed a suit in the United States District Court for
the Southern District of New York, alleging a breach of contract relating to certain four-year warrants issued by Concentric in
December 2008. Although the Concentric warrants expired by their terms on December 31, 2012, Westminster bases its claim
upon transactions allegedly occurring prior to UEC’s merger with Concentric. The Company believes that this claim
lacks merit and intends to vigorously defend the same.
On or about June 29, 2015, Heather M.
Stephens filed a class action complaint against the Company and two of its executive officers in the United States District Court,
Southern District of Texas, with an amended class action complaint filed on November 16, 2015, (the “Securities Case”)
seeking unspecified damages and alleging the defendants violated Section 17(b) of the Securities Act of 1933 and Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934. The Company has filed a motion to dismiss.
On or about September 10, 2015, John Price
filed a stockholder derivative complaint on behalf of the Company against the Company’s Board of Directors, executive management
and three of its vice presidents in the United States District Court, Southern District of Texas, with an amended stockholder
derivative complaint filed on December 4, 2015, (the “Federal Derivative Case”) seeking unspecified damages on behalf
of the Company against the defendants for allegedly breaching their fiduciary duties to the Company with respect to the allegations
in the Securities Case. The Company has filed a motion to dismiss.
On or about October 2, 2015, Marnie W.
McMahon filed a stockholder derivative complaint on behalf of the Company against the Company’s Board of Directors, executive
management and three of its vice presidents in the District Court of Nevada (the “Nevada Derivative Case”) (collectively
with the Federal Derivative Case, the “Derivative Cases”) seeking unspecified damages on behalf of the Company against
the defendants for allegedly breaching their fiduciary duties to the Company with respect to the allegations in the Securities
Case. On January 21, 2016, the court granted the Company’s motion to stay the Nevada Derivative Case pending the outcome
of the Federal Derivative Case.
The Company believes that the Securities
Case and the Derivative Cases are without merit and intends to defend vigorously against them.
URANIUM
ENERGY CORP.
NOTES TO THE CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
April 30, 2016
(Unaudited)
The Company’s Board of Directors received
a shareholder demand letter dated September 10, 2015 relating to the allegations in the Securities Case (the “Shareholder
Demand”). The letter demands that the Board of Directors initiate an action against the Company’s Board of Directors
and two of its executive officers to recover damages allegedly caused to the Company. The Board of Directors is reviewing the
Shareholder Demand to determine the appropriate course of action.
At any given time, the Company may enter
into negotiations to settle outstanding legal proceedings and any resulting accruals will be estimated based on the relevant facts
and circumstances applicable at that time. The Company does not expect that such settlements will, individually or
in the aggregate, have a material effect on its financial position, results of operation.
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The following management’s discussion
and analysis of the Company’s financial condition and results of operations (“MD&A”) contain forward-looking
statements that involve risks, uncertainties and assumptions including, among others, statements regarding our capital needs,
business plans and expectations. In evaluating these statements, you should consider various factors, including the risks, uncertainties
and assumptions set forth in reports and other documents we have filed with or furnished to the SEC, including, without limitation,
this Form 10-Q Quarterly Report for the three and nine months ended April 30, 2016 and our Form 10-K Annual Report for the fiscal
year ended July 31, 2015 including the consolidated financial statements and related notes contained therein. These factors, or
any one of them, may cause our actual results or actions in the future to differ materially from any forward-looking statement
made in this document. Refer to “Cautionary Note Regarding
Forward-Looking Statements” as disclosed in our
Form 10-K Annual Report for the fiscal year ended July 31, 2015 and Item 1A. Risk Factors under Part II - Other Information of
this Quarterly Report.
Introduction
This MD&A is focused on material changes
in our financial condition from July 31, 2015, our most recently completed year-end, to April 30, 2016 and our results of operations
for the three and nine months ended April 30, 2016 and 2015, and should be read in conjunction with Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations as contained in our Form 10-K Annual Report for the fiscal
year ended July 31, 2015.
Business
We operate in a single reportable segment
and since 2004, as more fully described in our Form 10-K Annual Report for the fiscal year ended July 31, 2015, we have been engaged
in uranium mining and related activities, including exploration, pre-extraction, extraction and processing on uranium projects
located in the United States and Paraguay.
We utilize in-situ recovery (“ISR”)
mining where possible which we believe, when compared to conventional open pit or underground mining, requires lower capital and
operating expenditures with a shorter lead time to extraction and a reduced impact on the environment. We have one uranium mine
located in the State of Texas, the Palangana Mine, which utilizes ISR mining and commenced extraction of uranium concentrates
(“U
3
O
8
”), or yellowcake, in November 2010. We have one uranium processing facility located in
the State of Texas, the Hobson Processing Facility, which processes material from the Palangana Mine into drums of U
3
O
8
,
our only sales product and source of revenue, for shipping to a third-party storage and sales facility. At April 30, 2016, we
had no uranium supply or “off-take” agreements in place.
Our fully-licensed and 100%-owned Hobson
Processing Facility forms the basis for our regional operating strategy in the State of Texas, specifically the South Texas Uranium
Belt where we utilize ISR mining. We utilize a “hub-and-spoke” strategy whereby the Hobson Processing Facility acts
as the central processing site (the “hub”) for our Palangana Mine and future satellite uranium mining activities,
such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the “spokes”). The Hobson
Processing Facility has a physical capacity to process uranium-loaded resins up to a total of two million pounds of U
3
O
8
annually and is licensed to process up to one million pounds of U
3
O
8
annually.
We also hold certain mineral rights in
various stages in the States of Arizona, Colorado, New Mexico, Texas and Wyoming and in the Republic of Paraguay, many of which
are located in historically successful mining areas and have been the subject of past exploration and pre-extraction activities
by other mining companies. We do not expect, however, to utilize ISR mining for all of our mineral rights in which case we would
expect to rely on conventional open pit and/or underground mining techniques.
Our operating and strategic framework
is based on expanding our uranium extraction activities, which includes advancing certain uranium projects with established mineralized
materials towards uranium extraction and establishing additional mineralized materials on our existing uranium projects or through
the acquisition of additional uranium projects.
During the three and nine months ended
April 30, 2016, uranium extraction at PAA-1, 2 and 3 of the Palangana Mine continued to operate at a reduced pace since implementing
our strategic plan in September 2013, to align our operations to a weak uranium market in a challenging post-Fukushima environment.
This strategy has included the deferral of major pre-extraction expenditures and remaining in a state of operational readiness
in anticipation of a recovery in uranium prices.
During the nine months ended April 30,
2016, the Company
|
·
|
entered
into the Second Amended and Restated Agreement with its lenders and extended the $20,000,000
senior secured credit facility by deferring required principal payments to February 1,
2019 and by extending the maturity date to January 1, 2020;
|
|
·
|
completed a registered offering of 12,364,704 units at a price of $0.85 per unit for gross proceeds
of $10,510,000;
|
|
·
|
completed
an asset acquisition through issuance of 1,333,560 restricted common shares and payment
of $50,000 in cash;
|
|
·
|
continued
to advance development of Production Area Authorization (“PAA”) 4 of the
Palangana Mine;
|
|
·
|
continued
to advance exploration and permitting activities at the Burke Hollow Project;
|
|
·
|
continued
permitting work at the Anderson Project;
|
|
·
|
appointed
former United States Energy Secretary Spencer Abraham as Executive Chairman of the Company’s
Board of Directors; and
|
|
·
|
appointed
Pat Obara as the Company’s Chief Financial Officer.
|
Mineral Rights and Properties
The following is a summary of significant
activities by project for the nine months ended April 30, 2016:
Texas: Palangana Mine
During the nine months ended April 30,
2016, we continued with our strategic plan for reduced operations implemented in Fiscal 2014 and continued reduced operations
at the Palangana Mine to capture residual pounds of U
3
O
8
only.
Wellfield design for the first module
at PAA-4, which is fully-permitted for uranium extraction, continued to advance. At April 30, 2016, a total of 214 drill holes
have been completed relating to PAA-4 for mineral trend exploration, delineation and monitor wells.
Texas: Burke Hollow Project
During the nine months ended April 30,
2016, 49 exploration holes totaling 25,020 feet were drilled at the Burke Hollow Project to depths ranging from 420 feet to 640
feet, with an average depth of 511 feet. At April 30, 2016, a total of 575 exploration holes, including 30 regional baseline monitor
wells, totaling 271,520 feet have been drilled to depths ranging from160 feet to 1,100 feet, with an average depth of 472 feet.
With the recent issuance of two Class
I disposal well permits, permitting activities continued on the Mine Area, Aquifer Exemption and Radioactive Material License
applications, which remain under technical review. An ecological assessment for the eastern trend extension was scheduled for
the spring of 2016 anticipating wellfield expansion of the eastern trend.
Arizona: Anderson Project
During the nine months ended April 30,
2016, the Company completed work on the Bureau of Land Management (“BLM”) Notice of Intent permit, which was submitted
for review in December 2015, and approved by the BLM in March 2016.
Asset Acquisition
On March 4, 2016, the Company entered
into a share purchase and option agreement (the “SPOA”) with CIC Resources Inc. (the “Vendor”) pursuant
to which the Company acquired (the “Acquisition”) all of the issued and outstanding shares of JDL Resources Inc. (“JDL”),
a wholly-owned subsidiary of the Vendor, and was granted an option to acquire all of the issued and outstanding shares of CIC
Resources (Paraguay) Inc. (“CIC”; the “Option”), another wholly-owned subsidiary of the Vendor. JDL’s
principal assets include a piece of land located in the department of Alto Parana in the Republic of Paraguay. CIC is the
beneficial owner of Paraguay Resources Inc.
which
is
the 100% owner of certain mineral property concessions (the “Property”), which are located in the departments of Alto
Parana and Canindeyú in the Republic of Paraguay.
Pursuant to the SPOA, the Company issued
1,333,560 restricted common shares in the capital of the Company and paid $50,000 in cash to complete the Acquisition. If the
Company has paid or caused to have paid on the Vendor’s behalf certain maintenance payments and assessment work required
to keep the Property in good standing as directed by the Vendor, during the one-year period following completion of the Acquisition
(the “Option Period”), the Company may elect in its discretion to exercise the Option at any time, or if, in accordance
with the SPOA, the Vendor satisfied certain conditions precedent to exercise, the Company will be deemed to have exercised the
Option. Upon exercise of the Option the Company is required to pay, subject to certain adjustments, $250,000 in cash to
the Vendor and to grant to the Vendor a 1.5% net smelter returns royalty (the “Royalty”) on the Property as contemplated
by a proposed net smelter returns royalty agreement (the “Royalty Agreement”) to be executed by the parties upon exercise
of the Option. Pursuant to the proposed Royalty Agreement, the Company has the right, exercisable at any time for a period
of six years following exercise of the Option, to acquire one-half percent (0.5%) of the Royalty at a purchase price of $500,000.
Refer to Note 6: Other Long-Term Asset
and Liability of the Notes to the Consolidated Financial Statements for the three and nine months ended April 30, 2016.
Results of Operations
For the three and nine months ended April
30, 2016, we recorded net losses of $3,679,055 ($0.03 per share) and $13,552,594 ($0.13 per share), respectively. Costs and expenses
during the three and nine months ended April 30, 2016 were $2,936,921 and $11,262,590, respectively.
For the three and nine months ended April
30, 2015, we recorded a net loss of $5,347,729 ($0.06 per share) and $17,949,496 ($0.20 per share), respectively. Costs and expenses
during the three and nine months ended April 30, 2015 were $4,587,820 and $15,712,982, respectively.
Uranium Extraction Activities
During the three and nine months ended
April 30, 2016, we continued with our strategic plan for reduced operations implemented in Fiscal 2014 and continued reduced operations
at the Palangana Mine to capture residual pounds of U
3
O
8
only. As a result, no U
3
O
8
extraction or processing costs were capitalized to inventories during the three and nine months ended April 30, 2016.
During the three and nine months ended
April 30, 2015, the Palangana Mine extracted 2,000 and 13,000 pounds of U
3
O
8
, respectively, while the Hobson
Processing Facility processed 3,000 and 14,000 pounds of U
3
O
8
, respectively.
At April 30, 2016, the total value of
inventories was $251,999, which remained unchanged from July 31, 2015.
Costs and Expenses
For the three and nine months ended April
30, 2016, costs and expenses totaled $2,936,921 and $11,262,590, comprised of mineral property expenditures of $725,968 and $3,408,813,
general and administrative expenditures of $2,005,465 and $7,086,669, depreciation, amortization and accretion of $205,488 and
$680,573, and impairment loss on mineral properties of $Nil and $86,535, respectively. During the three and nine months ended
April 30, 2016, no sales of U
3
O
8
were generated, therefore no corresponding cost of sales were recorded.
For the three and nine months ended April
30, 2015, costs and expenses totaled $4,587,820 and $15,712,982, comprised of mineral property expenditures of $1,045,842 and
$4,560,241, general and administrative of $3,167,896 and $9,711,933 and depreciation, amortization and accretion of $374,082 and
$1,440,808, respectively. No impairment loss on mineral property was recorded. During the three and nine months ended April 30,
2015, no sales of U
3
O
8
were generated, therefore no corresponding cost of sales were recorded.
Mineral Property Expenditures
During the three and nine months ended
April 30, 2016, mineral property expenditures totaled $725,968 and $3,408,813, respectively, comprised of expenditures relating
to permitting, property maintenance, exploration and pre-extraction activities and all other non-extraction related activities
on our uranium projects. During the three and nine months ended April 30, 2016, a credit amount due to re-valuation of ARO totaling
$184,381 was recognized as a result of a descending ARO adjustment to fully depleted underlying mineral rights and properties,
which was recorded against the mineral property expenditures.
During the three and nine months ended
April 30, 2016, mineral property expenditures included expenditures directly related to maintaining operational readiness and
permitting compliance of $349,367 and $1,270,165, respectively, for the Palangana Mine and Hobson Processing Facility.
During the three and nine months ended
April 30, 2015, mineral property expenditures totaled $1,045,842 and $4,560,241 respectively, comprised of expenditures relating
to permitting, property maintenance, exploration, pre-extraction and all other non-extraction related activities on our uranium
projects. Additionally, these amounts include uranium extraction expenditures directly related to maintaining operational readiness
and permitting compliance of $497,846 and $1,456,206, respectively, for the Palangana Mine and Hobson Processing Facility.
The following table provides mineral property
expenditures on our projects for the periods indicated:
|
|
Three Months Ended April 30,
|
|
|
Nine Months Ended April 30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Mineral Property Expenditures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Palangana Mine
|
|
$
|
280,345
|
|
|
$
|
500,535
|
|
|
$
|
1,031,625
|
|
|
$
|
1,621,391
|
|
Goliad Project
|
|
|
26,848
|
|
|
|
25,631
|
|
|
|
71,679
|
|
|
|
79,924
|
|
Burke Hollow Project
|
|
|
48,409
|
|
|
|
94,702
|
|
|
|
974,661
|
|
|
|
1,235,250
|
|
Longhorn Project
|
|
|
247
|
|
|
|
22,276
|
|
|
|
4,620
|
|
|
|
52,999
|
|
Salvo Project
|
|
|
4,622
|
|
|
|
16,751
|
|
|
|
21,697
|
|
|
|
39,590
|
|
Anderson Project
|
|
|
3,564
|
|
|
|
50,142
|
|
|
|
170,780
|
|
|
|
173,564
|
|
Workman Creek Project
|
|
|
418
|
|
|
|
-
|
|
|
|
32,109
|
|
|
|
31,300
|
|
Slick Rock Project
|
|
|
-
|
|
|
|
2,924
|
|
|
|
53,861
|
|
|
|
52,708
|
|
Yuty Project
|
|
|
89,246
|
|
|
|
41,274
|
|
|
|
291,788
|
|
|
|
301,035
|
|
Coronel Oviedo Project
|
|
|
136,031
|
|
|
|
132,315
|
|
|
|
422,763
|
|
|
|
428,077
|
|
Other Mineral Property Expenditures
|
|
|
136,238
|
|
|
|
159,292
|
|
|
|
517,611
|
|
|
|
544,403
|
|
Re-valuation of Asset Retirement Obligations
|
|
|
-
|
|
|
|
-
|
|
|
|
(184,381
|
)
|
|
|
-
|
|
|
|
$
|
725,968
|
|
|
$
|
1,045,842
|
|
|
$
|
3,408,813
|
|
|
$
|
4,560,241
|
|
General and Administrative
During the three and nine months ended
April 30, 2016, general and administrative expenses totaled $2,005,465 and $7,086,669 (three and nine months ended April 30, 2015:
$3,167,896 and $9,711,933), respectively.
The following summary provides a discussion
of the major expense categories, including analyses of the factors that caused significant variances compared to the same period
last year:
|
·
|
for
the three and nine months ended April 30, 2016, salaries, management and consulting fees
totaled $422,951 and $1,724,341, respectively, which decreased by $250,719 and $299,608,
respectively, compared with $673,670 and $1,953,949 for the three and nine months ended
April 30, 2015. This decrease was the result of pay reductions and other strategies implemented
by the Company during the three months ended April, 2016;
|
|
·
|
for
the three and nine months ended April 30, 2016, office, investor relations, communications
and travel expenses totaled $614,401 and $1,915,412, respectively, which decreased by
$185,981 and $307,520, respectively, compared with $800,382 and $2,222,932 for the three
and nine months ended April 30, 2015. This decrease reflects our continuing efforts to
monitor and control these costs and reduce expenses wherever possible;
|
|
·
|
for
the three months ended April 30, 2016, professional fees totaled $169,253, which decreased
by $206,712 compare with $375,965 for the three months ended April 30, 2015. For the
nine months ended April 30, 2016, professional fees totaled $959,265, which have remained
consistent compared with $906,508 for the nine months ended April 30, 2015. Professional
fees are comprised primarily of legal services related to regulatory compliance and ongoing
legal claims, in addition to audit and taxation services; and
|
|
·
|
for
the three and nine months ended April 30, 2016, stock-based compensation totaled $798,860
and $2,487,651, respectively, which decreased by $519,019 and $2,140,893, respectively,
compared with $1,317,879 and $4,628,544 for the three and nine months ended April 30,
2015. Stock-based compensation includes the fair value of stock options granted to optionees
and the fair value of shares of the Company’s common stock issued to consultants
and employees. During the three and nine months ended April 30, 2016 and 2015, we continued
to utilize equity-based payments for certain consulting services as part of our continuing
efforts to reduce cash outlays. In September 2014, stock options to purchase 7,540,000
shares of the Company’s common stock were granted to certain directors, officers,
employees and consultants of the Company. The fair value of these stock options has been
amortized on an accelerated basis over the vesting period of the options, resulting in
a higher stock-based compensation expense being recognized at the beginning of the vesting
periods than at the end of the vesting periods.
|
Depreciation, Amortization and Accretion
During the three and nine months ended
April 30, 2016, depreciation, amortization and accretion totaled $205,488 and $680,573, respectively, which decreased by $168,594
and $760,235, respectively, compared with $374,082 and $1,440,808 for the three and nine months ended April 30, 2015. This decrease
was primarily the result of the discontinuation of depletion and/or depreciation of the Palangana Mine and Hobson Processing Facility
due to further reduced operations, combined with the effects of certain property and equipment reaching full depletion and/or
depreciation. Depreciation, amortization and accretion include depreciation and amortization of long-term assets acquired in the
normal course of operations and accretion of asset retirement obligations.
Other Income and Expenses
Interest and Finance Costs
During the three and nine months ended
April 30, 2016, interest and finance costs totaled $710,767 and $2,278,230, respectively, which have remained consistent compared
to $764,761 and $2,270,104 for the three and nine months ended April 30, 2015.
For the three and nine months ended April
30, 2016, interest and finance costs were primarily comprised of, amortization of debt discount of $277,417 and $960,807, interest
paid on long-term debt of $400,000 and $1,217,778 and amortization of annual surety bond premium of $28,687 and $85,447, respectively.
For the three and nine months ended April
30, 2015, interest and finance costs were primarily comprised of: amortization of debt discount of $336,262 and $994,669, interest
paid on long-term debt of $395,555 and $1,213,333 and amortization of annual surety bond premium of $28,304 and $47,084, respectively.
Summary of Quarterly Results
|
|
For the Quarters Ended
|
|
|
|
April 30, 2016
|
|
|
January 31, 2016
|
|
|
October 31, 2015
|
|
|
July 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
3,080,000
|
|
Net loss
|
|
|
(3,679,055
|
)
|
|
|
(4,801,505
|
)
|
|
|
(5,072,034
|
)
|
|
|
(5,412,432
|
)
|
Total comprehensive loss
|
|
|
(3,678,919
|
)
|
|
|
(4,801,724
|
)
|
|
|
(5,072,233
|
)
|
|
|
(5,412,059
|
)
|
Basic and diluted loss per share
|
|
|
(0.03
|
)
|
|
|
(0.05
|
)
|
|
|
(0.05
|
)
|
|
|
(0.06
|
)
|
Total assets
|
|
|
59,558,492
|
|
|
|
49,982,462
|
|
|
|
53,130,380
|
|
|
|
57,900,257
|
|
|
|
For the Quarters Ended
|
|
|
|
April 30, 2015
|
|
|
January 31, 2015
|
|
|
October 31, 2014
|
|
|
July 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net loss
|
|
|
(5,347,729
|
)
|
|
|
(5,875,540
|
)
|
|
|
(6,726,227
|
)
|
|
|
(6,219,172
|
)
|
Total comprehensive loss
|
|
|
(5,347,522
|
)
|
|
|
(5,876,988
|
)
|
|
|
(6,726,451
|
)
|
|
|
(6,219,156
|
)
|
Basic and diluted loss per share
|
|
|
(0.06
|
)
|
|
|
(0.06
|
)
|
|
|
(0.07
|
)
|
|
|
(0.07
|
)
|
Total assets
|
|
|
52,171,028
|
|
|
|
55,315,547
|
|
|
|
59,608,374
|
|
|
|
64,655,888
|
|
Liquidity and Capital Resources
|
|
April 30, 2016
|
|
|
July 31, 2015
|
|
Cash and cash equivalents
|
|
$
|
10,086,805
|
|
|
$
|
10,092,408
|
|
Current assets
|
|
|
11,115,132
|
|
|
|
10,807,618
|
|
Current liabilities
|
|
|
2,113,915
|
|
|
|
4,560,698
|
|
Working capital
|
|
|
9,001,217
|
|
|
|
6,246,920
|
|
At April 30, 2016, we
had a working capital of $9,001,217, an increase of $2,754,297 from our working capital of $6,246,920 at July 31, 2015. Current
assets include $10,086,805 in cash and cash equivalents, the largest component of current assets. As a result, our working capital
balance will fluctuate significantly as we utilize our cash and cash equivalents to fund our operations including exploration
and pre-extraction activities.
As the Company does not expect to achieve
and maintain profitability in the near term, the continuation of the Company as a going concern is dependent upon our ability
to obtain adequate additional financing which we have successfully secured since inception, including those from asset divestitures.
However, there is no assurance that we will be successful in securing any form of additional financing in the future when required
and on terms favorable to the Company, therefore substantial doubt exists as to whether our cash resources and/or working capital
will be sufficient to enable the Company to continue its operations for the next twelve months. The continued operations of the
Company, including the recoverability of the carrying values of its assets, are dependent ultimately on the Company’s ability
to achieve and maintain profitability and positive cash flow from its operations. Refer to Note 1: Nature of Operations and Going
Concern of the Notes to the Consolidated Financial Statements for the three and nine months ended April 30, 2016.
During the three and nine months ended
April 30, 2016, uranium extraction at PAA-1, 2 and 3 of the Palangana Mine continued to operate at a reduced pace since implementing
our strategic plan in September 2013 to align our operations to a weak uranium market in a challenging post-Fukushima environment.
This strategy has included the deferral of major pre-extraction expenditures and remaining in a state of operational readiness
in anticipation of a recovery in uranium prices.
Although our planned principal operations
commenced in Fiscal 2012 from which significant revenues from U
3
O
8
sales have been realized historically,
our revenues generated from U
3
O
8
sales have been inconsistent and we have yet to achieve profitability.
We have a history of operating losses resulting in an accumulated deficit balance since inception. During the nine months ended
April 30, 2016, no revenue from U
3
O
8
sales was realized and our net loss totaled $13,552,594, resulting
in an accumulated deficit balance of $205,576,668 at April 30, 2016. During the nine months ended April 30, 2016 and 2015, net
cash flows decreased by $5,603 and $7,416,445, respectively. Furthermore, we do not expect to achieve and maintain profitability
or develop positive cash flow from our operations in the near term.
Historically, we have been reliant primarily
on equity financings from the sale of our common stock and, during Fiscal 2014 and 2013, on debt financing in order to fund our
operations. We have also relied to a limited extent, on cash flows generated from our mining activities during Fiscal 2015, 2013
and 2012, however, we have yet to achieve profitability or develop positive cash flow from operations, and we do not expect to
achieve profitability or develop positive cash flow from operations in the near term. Our reliance on equity and debt financings
is expected to continue for the foreseeable future, and their availability whenever such additional financing is required will
be dependent on many factors beyond our control including, but not limited to, the market price of uranium, the continuing public
support of nuclear power as a viable source of electrical generation, the volatility in the global financial markets affecting
our stock price and the status of the worldwide economy, any one of which may cause significant challenges in our ability to access
additional financing, including access to the equity and credit markets. We may also be required to seek other forms of financing,
such as asset divestitures or joint venture arrangements to continue advancing our uranium projects which would depend entirely
on finding a suitable third party willing to enter into such an arrangement, typically involving an assignment of a percentage
interest in the mineral project. However, there is no assurance that we will be successful in securing any form of additional
financing when required and on terms favorable to us.
Our operations are capital intensive and
future capital expenditures are expected to be substantial. We will require significant additional financing to fund our operations,
including continuing with our exploration and pre-extraction activities and acquiring additional uranium projects. In the absence
of such additional financing, we would not be able to fund our operations, including continuing with our exploration and pre-extraction
activities, which may result in delays, curtailment or abandonment of any one or all of our uranium projects.
Our anticipated operations including exploration
and pre-extraction activities, will be dependent on and may change as a result of our financial position, the market price of
uranium and other considerations, and such change may include accelerating the pace or broadening the scope of reducing our operations
as originally announced on September 5, 2013. Our ability to secure adequate funding for these activities will be impacted by
our operating performance, other uses of cash, the market price of uranium, the market price of our common stock and other factors
which may be beyond our control. Specific examples of such factors include, but are not limited to:
|
·
|
if
the weakness in the market price of uranium experienced in Fiscal 2015 continues or weakens
further during Fiscal 2016;
|
|
·
|
if
the weakness in the market price of our common stock experienced in Fiscal 2015 continues
or weakens further during Fiscal 2016;
|
|
·
|
if
we default on making scheduled payments of fees and complying with the restrictive covenants
as required under the Second Amended Credit Facility during Fiscal 2016, and it results
in accelerated repayment of our indebtedness and/or enforcement by the Lenders against
our key assets securing our indebtedness; and
|
|
·
|
if
another nuclear incident, such as the events that occurred at Fukushima in March 2011,
were to occur during Fiscal 2016, continuing public support of nuclear power as a viable
source of electrical generation may be adversely affected, which may result in significant
and adverse effects on both the nuclear and uranium industries.
|
Our long-term success, including the recoverability
of the carrying values of our assets and our ability to acquire additional uranium projects and to continue with exploration and
pre-extraction activities and mining activities on our existing uranium projects, will depend ultimately on our ability to achieve
and maintain profitability and positive cash flow from our operations by establishing ore bodies that contain commercially recoverable
uranium and to develop these into profitable mining activities. The economic viability of our mining activities, including the
expected duration and profitability of the Palangana Mine and of any future satellite ISR mines, such as the Burke Hollow and
Goliad Projects, located within the South Texas Uranium Belt, has many risks and uncertainties. These include, but are not limited
to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing and/or selling uranium
concentrates; (iii) significantly higher than expected capital costs to construct the mine and/or processing plant; (iv) significantly
higher than expected extraction costs; (v) significantly lower than expected uranium extraction; (vi) significant delays, reductions
or stoppages of uranium extraction activities; and (vii) the introduction of significantly more stringent regulatory laws and
regulations. Our mining activities may change as a result of any one or more of these risks and uncertainties and there is no
assurance that any ore body that we extract mineralized materials from will result in profitable mining activities.
Debt Financing
On February 9, 2016, the Company and its
Lenders entered into the Second Amended and Restated Credit Agreement, which supersedes in their entirety, the prior Amended and
Restated Credit Agreement dated and effective March 13, 2014 and the prior Credit Agreement dated and effective July 30, 2013.
Pursuant to the Second Amended and Restated Credit Agreement, the Company and the Lenders agreed to extend the $20,000,000 senior
secured credit facility by deferring required principal payments to February 1, 2019 and by extending the maturity date of the
Second Amended Credit Facility to January 1, 2020. Under the terms of the Second Amended and Restated Credit Agreement, the Credit
Facility Amount remains non-revolving with interest calculated at a rate of 8% per annum, compounded and payable on a monthly
basis, with the underlying effective interest rate being 14.28%.
Refer to Note 8: Long-Term Debt of the
Notes to the Consolidated Financial Statements for the three and nine months ended April 30, 2016.
Equity Financings
We filed a 2014 Shelf effective January
10, 2014 providing for the public offer and sale of certain securities of the Company from time to time, at its discretion, up
to an aggregate offering of $100 million.
On March 10, 2016, the Company completed
a registered offering of 12,364,704 units at a price of $0.85 per unit for gross proceeds of $10,510,000 pursuant to a prospectus
supplement to the 2014 Shelf. Each unit was comprised of one share of common stock of the Company and one-half of one share purchase
warrant, with each whole warrant being exercisable at a price of $1.20 to purchase one share to of common stock of the Company
for a three year period from the date of issuance.
At April 30, 2016, a total of $35.1 million
of the 2014 Shelf was utilized through the following registered offerings and sales of units, with a remaining available balance
of $64.9 million under the 2014 Shelf:
|
·
|
on
June 25, 2015: $10.0 million in gross proceeds through an offering of units consisting
of the Company’s shares and share purchase warrants and $6.7 million representing
the aggregate exercise price of those share purchase warrants and agents’ share
purchase warrants should they be exercised in full; and
|
|
·
|
on
March 10, 2016: $10.5 million in gross proceeds through an offering of units consisting
of the Company’s shares and share purchase warrants and $7.9 million representing
the aggregate exercise price of those share purchase warrants and agents’ share
purchase warrants should they be exercised in full.
|
Operating Activities
Net cash used in operating activities
during the nine months ended April 30, 2016 was $10,265,296 (nine months ended April 30, 2015: $11,761,904). Significant operating
expenditures included mineral property expenditures, general and administrative expenses and interest payments.
Financing Activities
Net cash provided by financing activities
during the nine months ended April 30, 2016 was $10,324,264, resulting from net cash of $10,099,149 from the share issuance for
equity financing and net cash of $225,115 received from the exercise of stock options. Net cash provided by financing activities
during the nine months ended April 30, 2015 was $454,984 resulting from net cash of $435,590 received from the share issuance
for an equity financing and the exercise of stock options, and an increase of $19,394 in amounts due to related parties.
Investing Activities
Net cash used in investing activities
during the nine months ended April 30, 2016 was $64,571, resulting primarily from net cash of $ 46,084 used in asset acquisition
and purchase of property, plant and equipment of $19,304. Net cash provided by investing activities during the nine months ended
April 30, 2015 was $3,890,475, resulting primarily from gross proceeds of $5,663,158 received from the release of reclamation
deposits, offset by the payment of collateral for the surety bonds of $1,690,208, acquisition of mineral rights and properties
of $73,624 and purchase of property, plant and equipment of $10,905.
Stock Options and Warrants
At April 30, 2016, the Company had stock
options outstanding representing 11,045,358 common shares at a weighted-average exercise price of $1.41 per share and share purchase
warrants outstanding representing 13,953,872 common shares at a weighted-average exercise price of $1.61 per share. At April 30,
2016, outstanding stock options and warrants represented a total 24,999,230 shares issuable for gross proceeds of approximately
$41,701,000 should these stock options and warrants be exercised in full. At April 30, 2016, outstanding in-the-money stock options
and warrants represented a total 1,219,634 common shares exercisable for gross proceeds of approximately $549,000 should these
in-the-money stock options and warrants be exercised in full. The exercise of these stock options and warrants is at the discretion
of the respective holders and, accordingly, there is no assurance that any of these stock options or warrants will be exercised
in the future.
Transactions with a Related Party
During the three and nine months ended
April 30, 2016, the Company incurred $30,134 and $128,727 (three and nine months ended April 30, 2015: $45,443 and $118,101),
respectively, in general and administrative costs paid to a company controlled by a direct family member of a director and officer
of the Company.
During the three months ended April 30,
2016, the Company issued 117,998 restricted common shares with fair value of $109,738 as settlement of amounts owed to this company
totaling $98,371. As a result, a loss on settlement of current liabilities of $11,367 was recognized and included in the consolidated
statements of operations. During the nine months ended April 30, 2015, the Company issued 15,000 restricted shares of common stock
with a fair value of $18,150 to this company for consulting services included in general and administrative costs.
At April 30, 2016, amounts owed to related
parties totaled $897 (July 31, 2015: $14,660). These amounts are unsecured, non-interest bearing and due on demand.
Material Commitments
Long-Term Debt Obligations
At April 30, 2016, we have made all scheduled
payments and complied with all of the covenants under the Second Amended and Restated Credit Agreement dated and effective February
9, 2016, and we expect to continue complying with all scheduled payments and covenants during our fiscal year ending July 31,
2016.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
For a complete summary of all of our significant
accounting policies, refer to Note 2: Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements
as presented under Item 8. Financial Statements and Supplementary Data in our Form 10-K Annual Report for the fiscal year ended
July 31, 2015.
Refer to “Critical Accounting Policies”
under Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-K Annual
Report for the fiscal year ended July 31, 2015.