UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
or
For the transition period from _____ to _____
Commission File Number:
URANIUM ENERGY CORP.
(Exact name of registrant as specified in its charter)
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| (State or other jurisdiction of incorporation of organization) | (I.R.S. Employer Identification No.) | |
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| (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☐ Large accelerated filer | ☐ Accelerated filer |
| ☒ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
CAUTIONARY NOTE TO U.S. RESIDENTS CONCERNING DISCLOSURE OF MINERAL RESOURCES
The Company is a U.S. Domestic Issuer for United States Securities and Exchange Commission (“SEC”) purposes, most of its shareholders are U.S. residents, the Company is required to report its financial results under U.S. generally accepted accounting principles and its only trading market is the NYSE American. However, because the Company is a reporting issuer in Canada, certain regulatory filings required of the Company in Canada contain or incorporate by reference therein certain disclosure that satisfies the additional requirements of Canadian securities laws, which differ from the requirements of United States’ securities laws. Unless otherwise indicated, all Company resource estimates included in those Canadian filings, and in the documents incorporated by reference therein, have been prepared in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum classification system. NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.
Canadian standards, including NI 43-101, differ significantly from the requirements of SEC Industry Guide 7, as defined in the Glossary of Technical Terms (“Industry Guide 7”). Thus, resource information contained, or incorporated by reference, in our Canadian filings, and in the documents incorporated by reference therein, may not be comparable to similar information disclosed by companies reporting “reserve” and resource information under SEC Industry Guide 7. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserve” under SEC Industry Guide 7. Under SEC Industry Guide 7 standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report “reserves”; the three-year historical average price, to the extent possible, is used in any “reserve” or cash flow analysis to designate “reserves”; and the primary environmental analysis or report must be filed with the appropriate governmental authority.
SEC Industry Guide 7 disclosure standards historically have not permitted the inclusion of information concerning “Measured Mineral Resources”, “Indicated Mineral Resources” or “Inferred Mineral Resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by SEC Industry Guide 7 standards. United States investors should also understand that “Inferred Mineral Resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an “Inferred Mineral Resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “Inferred Mineral Resources” may not form the basis of feasibility or pre-feasibility studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into mineral “reserves” as defined by SEC Industry Guide 7. Investors are cautioned not to assume that all or any part of an “Inferred Mineral Resource” exists or is economically or legally mineable. The Company does not have any mineral “reserves” within the meaning of SEC Industry Guide 7.
Disclosure of “contained pounds” or “contained ounces” in a resource estimate is permitted and typical disclosure under Canadian regulations; however, SEC Industry Guide 7 historically only permitted issuers to report mineralization that does not constitute “reserves” by SEC standards as in-place tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of reserves are also not the same as those of SEC Industry Guide 7, and reserves reported by the Company in compliance with NI 43-101 may not qualify as “reserves” under SEC Industry Guide 7 standards. Accordingly, information concerning mineral deposits may not be comparable to information made public by companies that report in accordance with SEC Industry Guide 7 standards.
On October 31, 2018, the SEC adopted the Modernization of Property Disclosures for Mining Registrants (the “New Rule”), introducing significant changes to the existing mining disclosure framework to better align it with international industry and regulatory practice, including NI 43-101. The New Rule became effective as of February 25, 2019, and issuers are required to comply with the New Rule as of the annual report for their first fiscal year beginning on or after January 1, 2021, and earlier in certain circumstances. The Company does not anticipate needing to comply with the New Rule until the filing of our annual report for the fiscal year ending July 31, 2022 and, at this time, the Company does not know the full effect of the New Rule on its mineral resources and, therefore, the disclosure related to the Company’s mineral resources may be significantly different when computed using the requirements set forth in the New Rule.
URANIUM ENERGY CORP.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | 4 | |
| Item 1. | Financial Statements | 4 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 28 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 37 |
| Item 4. | Controls and Procedures | 37 |
| PART II – OTHER INFORMATION | 37 | |
| Item 1. | Legal Proceedings | 37 |
| Item 1A. | Risk Factors | 38 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 49 |
| Item 3. | Defaults Upon Senior Securities | 49 |
| Item 4. | Mine Safety Disclosures | 50 |
| Item 5. | Other Information | 50 |
| Item 6. | Exhibits | 50 |
| SIGNATURES | 51 | |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
URANIUM ENERGY CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JANUARY 31, 2022
(Unaudited – Expressed in U.S. Dollars)
| URANIUM ENERGY CORP. |
|||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited – Expressed in U.S. Dollars) |
| Note(s) | January 31, 2022 | July 31, 2021 | ||||||||||
| CURRENT ASSETS | ||||||||||||
| Cash and cash equivalents | 3,7 | $ | $ | |||||||||
| Inventories | 3,4 | |||||||||||
| Prepaid expenses and deposits | 3 | |||||||||||
| Other current assets | ||||||||||||
| TOTAL CURRENT ASSETS | ||||||||||||
| MINERAL RIGHTS AND PROPERTIES | 3,5 | |||||||||||
| PROPERTY, PLANT AND EQUIPMENT | 3,6 | |||||||||||
| RESTRICTED CASH | 3,7 | |||||||||||
| EQUITY-ACCOUNTED INVESTMENT | 8 | |||||||||||
| OTHER NON-CURRENT ASSETS | 3 | |||||||||||
| TOTAL ASSETS | $ | $ | ||||||||||
| CURRENT LIABILITIES | ||||||||||||
| Accounts payable and accrued liabilities | 9 | $ | $ | |||||||||
| Other current liabilities | 3,12 | |||||||||||
| Current portion of long-term debt | 10 | |||||||||||
| TOTAL CURRENT LIABILITIES | ||||||||||||
| ASSET RETIREMENT OBLIGATIONS | 3,11 | |||||||||||
| OTHER NON-CURRENT LIABILITIES | 3,12 | |||||||||||
| DEFERRED TAX LIABILITIES | ||||||||||||
| TOTAL LIABILITIES | ||||||||||||
| STOCKHOLDERS' EQUITY | ||||||||||||
| Capital stock | ||||||||||||
| Common stock $ par value: shares authorized, shares issued and outstanding (July 31, 2021 - ) | 13 | |||||||||||
| Additional paid-in capital | ||||||||||||
| Share issuance obligation | ||||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||||
| Accumulated other comprehensive income | ||||||||||||
| TOTAL EQUITY | ||||||||||||
| TOTAL LIABILITIES AND EQUITY | $ | $ | ||||||||||
| SUBSEQUENT EVENTS | 4,7,13,14 | |||||||||||
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 – Expressed in U.S. Dollars) |
| Three Months Ended January 31, |
Six Months Ended January 31, |
|||||||||||||||||||
| Note(s) |
2022 |
2021 |
2022 |
2021 |
||||||||||||||||
| SALES AND SERVICE REVENUE |
14 | $ | $ | $ | $ | |||||||||||||||
| COST OF SALES AND SERVICES |
14 | ( |
) | ( |
) | |||||||||||||||
| GROSS PROFIT |
||||||||||||||||||||
| OPERATING COSTS |
||||||||||||||||||||
| Mineral property expenditures |
5 | |||||||||||||||||||
| General and administrative |
9,13 | |||||||||||||||||||
| Acquisition-related costs |
3 | |||||||||||||||||||
| Depreciation, amortization and accretion |
5,6,11 | |||||||||||||||||||
| TOTAL OPERATING COSTS |
||||||||||||||||||||
| LOSS FROM OPERATIONS |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| OTHER INCOME (EXPENSES) |
||||||||||||||||||||
| Interest income |
||||||||||||||||||||
| Interest expenses and finance costs |
10 | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
| Income (loss) from equity-accounted investment |
8 | ( |
) | |||||||||||||||||
| Gain on loan extinguishment |
||||||||||||||||||||
| Realized gain on available-for-sale security |
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| Other income |
||||||||||||||||||||
| Gain on disposition of assets |
||||||||||||||||||||
| OTHER INCOME (EXPENSES) |
( |
) | ( |
) | ||||||||||||||||
| LOSS BEFORE INCOME TAXES |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| DEFERRED TAX BENEFIT |
||||||||||||||||||||
| NET LOSS FOR THE PERIOD |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| OTHER COMPREHENSIVE INCOME (LOSS) |
||||||||||||||||||||
| Translation (loss) gain |
8 | ( |
) | ( |
) | |||||||||||||||
| TOTAL OTHER COMPREHENSIVE INCOME (LOSS) |
( |
) | ( |
) | ||||||||||||||||
| TOTAL COMPREHENSIVE LOSS FOR THE PERIOD |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||||||
| NET LOSS PER SHARE, BASIC AND DILUTED |
15 | $ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
| URANIUM ENERGY CORP. |
|
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited – Expressed in U.S. Dollars) |
| Six Months Ended January 31 |
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| Note(s) |
2022 |
2021 |
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| NET CASH PROVIDED BY (USED IN): |
||||||||||||
| OPERATING ACTIVITIES |
||||||||||||
| Net loss for the period |
$ | ( |
) | $ | ( |
) | ||||||
| Adjustments to reconcile net loss to cash flows in operating activities |
||||||||||||
| Stock-based compensation |
13 | |||||||||||
| Depreciation, amortization and accretion |
5,6,11 | |||||||||||
| Amortization of long-term debt discount |
10 | |||||||||||
| Gain on disposition of assets |
( |
) | ||||||||||
| Gain on loan extinguishment |
( |
) | ||||||||||
| (Income) loss from equity-accounted investment |
8 | ( |
) | |||||||||
| Deferred tax benefits |
( |
) | ( |
) | ||||||||
| Realized gain on available-for-sale security |
( |
) | ||||||||||
| Foreign exchange loss |
||||||||||||
| Changes in operating assets and liabilities |
||||||||||||
| Inventories |
4 | ( |
) | |||||||||
| Prepaid expenses and deposits |
( |
) | ( |
) | ||||||||
| Other current assets |
||||||||||||
| Accounts payable and accrued liabilities |
( |
) | ||||||||||
| Other liabilities |
||||||||||||
| NET CASH USED IN OPERATING ACTIVITIES |
( |
) | ( |
) | ||||||||
| FINANCING ACTIVITIES |
||||||||||||
| Proceeds from share issuances, net of issuance costs |
13 | |||||||||||
| Repayments of long-term debt |
10 | ( |
) | ( |
) | |||||||
| Repayments of other loans |
( |
) | ( |
) | ||||||||
| NET CASH PROVIDED BY FINANCING ACTIVITIES |
||||||||||||
| INVESTING ACTIVITIES |
||||||||||||
| Net cash used in U1A Acquisition |
3 | ( |
) | |||||||||
| Investment in mineral rights and properties |
5 | ( |
) | ( |
) | |||||||
| Purchase of property, plant and equipment |
( |
) | ( |
) | ||||||||
| Investment in other assets |
( |
) | ||||||||||
| Investment in term deposits |
( |
) | ||||||||||
| Proceeds from redemption of term deposits |
||||||||||||
| Proceeds from disposition of assets |
||||||||||||
| Investment in available-for-sale security |
( |
) | ||||||||||
| Proceeds from sale of available-for-sale security |
||||||||||||
| NET CASH USED IN INVESTING ACTIVITIES |
( |
) | ( |
) | ||||||||
| NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH |
( |
) | ||||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD |
||||||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD |
7 | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| URANIUM ENERGY CORP. |
||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited – Expressed in U.S. Dollars) |
| Common Stock |
Additional Paid- |
Share Issuance |
Accumulated |
Accumulated Other Comprehensive |
Stockholders' |
|||||||||||||||||||||||
| Shares |
Amount |
in Capital | Obligation | Deficit | Income (Loss) | Equity | ||||||||||||||||||||||
| Balance, July 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
| Common stock |
||||||||||||||||||||||||||||
| Issued under ATM offering, net of issuance costs |
- | - | - | |||||||||||||||||||||||||
| Issued upon exercise of stock options |
- | - | - | |||||||||||||||||||||||||
| Issued upon exercise of warrants |
- | - | - | |||||||||||||||||||||||||
| Issued for acquisition of mineral properties |
- | - | - | |||||||||||||||||||||||||
| Stock-based compensation |
||||||||||||||||||||||||||||
| Common stock issued for consulting services |
- | - | - | |||||||||||||||||||||||||
| Common stock issued under Stock Incentive Plan |
- | - | - | |||||||||||||||||||||||||
| Amortization of stock-based compensation |
- | - | - | - | - | |||||||||||||||||||||||
| Net loss for the period |
- | - | - | - | ( |
) | - | ( |
) | |||||||||||||||||||
| Other comprehensive income |
- | - | - | - | - | |||||||||||||||||||||||
| Balance, October 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
| Common stock |
||||||||||||||||||||||||||||
| Issued as anniversary fees for credit facility |
||||||||||||||||||||||||||||
| Issued under ATM offering, net of issuance costs |
||||||||||||||||||||||||||||
| Issued upon exercise of stock options |
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| Issued upon exercise of warrants |
||||||||||||||||||||||||||||
| Issued for acquisition of mineral properties |
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| Stock-based compensation |
||||||||||||||||||||||||||||
| Common stock issued for consulting services |
||||||||||||||||||||||||||||
| Common stock issued under Stock Incentive Plan |
||||||||||||||||||||||||||||
| Amortization of stock-based compensation |
- | |||||||||||||||||||||||||||
| Net loss for the period |
- | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive loss |
- | ( |
) | ( |
) | |||||||||||||||||||||||
| Balance, January 31, 2022 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| URANIUM ENERGY CORP. |
|||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited – Expressed in U.S. Dollars) |
| Common Stock |
Additional Paid- |
Share Issuance |
Accumulated |
Accumulated Other Comprehensive |
Stockholders' |
|||||||||||||||||||||||
| Shares |
Amount |
in Capital | Obligation | Deficit | Income (Loss) | Equity | ||||||||||||||||||||||
| Balance, July 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Common stock |
||||||||||||||||||||||||||||
| Issued for equity financing, net of issuance costs |
- | - | - | |||||||||||||||||||||||||
| Issued upon exercise of stock options |
- | - | - | |||||||||||||||||||||||||
| Stock-based compensation |
||||||||||||||||||||||||||||
| Common stock issued under Stock Incentive Plan |
- | - | ||||||||||||||||||||||||||
| Amortization of stock-based compensation |
- | - | - | - | - | |||||||||||||||||||||||
| Warrants |
||||||||||||||||||||||||||||
| Issued for equity financing |
- | - | - | - | - | |||||||||||||||||||||||
| Issued for equity financing as issuance costs |
- | - | - | - | - | |||||||||||||||||||||||
| Net loss for the period |
- | - | - | - | ( |
) | - | ( |
) | |||||||||||||||||||
| Other comprehensive income |
- | - | - | - | - | |||||||||||||||||||||||
| Balance, October 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||
| Common stock |
||||||||||||||||||||||||||||
| Issued under ATM offering, net of issuance costs |
- | - | - | |||||||||||||||||||||||||
| Issued as anniversary fees for credit facility |
||||||||||||||||||||||||||||
| Issued upon exercise of stock options |
||||||||||||||||||||||||||||
| Issued upon exercise of warrants |
- | - | - | |||||||||||||||||||||||||
| Stock-based compensation |
||||||||||||||||||||||||||||
| Common stock issued for consulting services |
- | - | ||||||||||||||||||||||||||
| Common stock issued under Stock Incentive Plan |
( |
) | ||||||||||||||||||||||||||
| Amortization of stock-based compensation |
- | |||||||||||||||||||||||||||
| Net loss for the period |
- | ( |
) | ( |
) | |||||||||||||||||||||||
| Other comprehensive income |
- | |||||||||||||||||||||||||||
| Balance, January 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | $ | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
URANIUM ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022
(Unaudited – Expressed in U.S. Dollars)
| NOTE 1: | NATURE OF OPERATIONS |
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” or “we” or “UEC”) are engaged in uranium and titanium mining and related activities, including exploration, pre-extraction, extraction and processing of uranium concentrates and titanium minerals, on projects located in the United States, Canada and the Republic of Paraguay.
As at January 31, 2022, we had working capital of $
Historically, we have been reliant primarily on equity financings from the sale of our common stock and on debt financing in order to fund our operations, and this reliance is expected to continue for the foreseeable future. Our continued operations, including the recoverability of the carrying values of our assets, are dependent ultimately on our ability to achieve and maintain profitability and positive cash flow from our operations.
| NOTE 2: | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) for interim financial information and are presented in U.S. dollars. 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 our Annual Report on Form 10-K for the year ended July 31, 2021 (“Fiscal 2021”). 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 six months ended January 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2022 (“Fiscal 2022”).
Certain comparative figures have been reclassified to conform to the current year’s presentation.
Exploration Stage
We have established the existence of mineralized materials for certain uranium projects, including our Palangana and recently acquired Christensen Ranch Mines (collectively, the “ISR Mines”). We have not established proven or probable reserves, as defined by the SEC, through the completion of a final or bankable feasibility study for any of our uranium projects. Furthermore, we have no plans to establish proven or probable reserves for any of our uranium projects for which we plan on utilizing in-situ recovery (“ISR”) mining. As a result, we remain in the Exploration Stage, as defined by the SEC, and will continue to remain in the Exploration Stage until such time that proven or probable reserves have been established.
Since we commenced the extraction of mineralized materials at our ISR Mines without having established proven or probable reserves, any mineralized materials established or extracted from the ISR Mines should not in any way be associated with having established or produced from proven or probable reserves.
URANIUM ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022
(Unaudited – Expressed in U.S. Dollars)
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 we exit the Exploration Stage by establishing proven or probable reserves. Expenditures relating to exploration activities such as drilling 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 by the SEC, 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 inventory and, as that inventory is sold, to cost of goods sold. We are in the Exploration Stage which has resulted in us reporting larger losses than if we had been in the Production Stage due to the expensing, rather than capitalizing, of expenditures relating to ongoing mine development activities. Additionally, there would be no corresponding amortization allocated to future reporting periods of our Company since those costs would have been expensed previously, resulting in both lower produced inventory costs and cost of goods sold and results of operations with higher gross profits and lower losses than if we 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, our consolidated financial statements may not be directly comparable to the financial statements of companies in the Production Stage.
Business Combination
We recognize and measure the assets acquired and liabilities assumed in a business combination based on their estimated fair values at the acquisition date, while transaction costs related to business combinations are expensed as incurred. An income, market or cost valuation method may be utilized to estimate the fair value of the assets acquired, liabilities assumed, if any, in a business combination. The income valuation method represents the present value of future cash flows over the life of the asset using: (i) discrete financial forecasts, which rely on management’s estimates of resource quantities and exploration potential, costs to produce and develop resources, revenues, and operating expenses; (ii) appropriate discount rates; and (iii) expected future capital requirements (the “income valuation method”). The market valuation method uses prices paid for a similar asset by other purchasers in the market, normalized for any differences between the assets (the “market valuation method”). The cost valuation method is based on the replacement cost of a comparable asset at the time of the acquisition adjusted for depreciation and economic and functional obsolescence of the asset (the “cost valuation method”). If the initial accounting for the business combination is incomplete by the end of the reporting period in which the acquisition occurs, an estimate will be recorded. Subsequent to the acquisition date, and not later than one year from the acquisition date, we will record any material adjustments to the initial estimate based on new information obtained that would have existed as of the date of the acquisition. Any adjustment that arises from information obtained that did not exist as of the date of the acquisition will be recorded in the period the adjustments arises.
| NOTE 3: | ACQUISITION OF URANIUM ONE AMERICAS, INC. |
On December 17, 2021, we completed the acquisition of all the issued and outstanding shares of Uranium One Americas, Inc. (“U1A”), a Nevada corporation, from Uranium One Investments Inc., a subsidiary of Uranium One Inc., for total cash consideration of $
The UEC Wyoming’s portfolio of projects (the “UEC Wyoming Portfolio”) primarily consists of 12 projects located in Wyoming, six of which are located in the Powder River Basin with four fully permitted, and six of which are located in the Great Divide Basin. The U1A Acquisition creates a Wyoming hub-and-spoke operation for UEC, which is anchored by UEC Wyoming’s Irigaray processing facility.
The U1A Acquisition was accounted for as a business combination with UEC identified as the acquirer. The Company’s assumption that the U1A Acquisition is a business combination is based on the Company’s assessment that substantially all the fair value of the assets are not concentrated in a single asset or group of similar assets. In accordance with the acquisition method of accounting, the purchase price has been allocated to the assets acquired and liabilities assumed, based on their estimated fair values at the acquisition date. In connection with the U1A Acquisition, we incurred acquisition-related costs of $
URANIUM ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022
(Unaudited – Expressed in U.S. Dollars)
As of January 31, 2022, we had not yet completed the analysis to assign fair values to all assets acquired and liabilities assumed and, therefore the purchase price allocation for the U1A Acquisition is preliminary. The preliminary purchase price allocation may be subject to further refinement and adjustments which may result in material changes to the estimated fair value of assets acquired and liabilities assumed. The purchase price allocation adjustments can be made throughout the end of UEC’s measurement period, which is not to exceed one year from the acquisition date.
The table below sets forth the consideration paid and the preliminary purchase price allocation to the fair value of the assets acquired and liabilities assumed for the U1A Acquisition:
| Consideration paid | ||||
| Cash | $ | |||
| Working capital adjustment (1) | ||||
| Total consideration paid | $ | |||
| Assets acquired and liabilities assumed | ||||
| Cash & cash equivalents (1) | $ | |||
| Prepaid expenses and deposits (1) | ||||
| Other current assets (1) | ||||
| Inventories (1) | ||||
| Mineral rights and properties (2) | ||||
| Property, plant and equipment (3) | ||||
| Restricted cash | ||||
| Other non-current assets (4) | ||||
| Total assets | ||||
| Accounts payable and accrued liabilities (1) | ||||
| Other liabilities (4) | ||||
| Asset retirement obligations (5) | ||||
| Total liabilities | ||||
| Total net assets | $ |
Notes:
| (1) | Working capital adjustment represents the working capital of UEC Wyoming at the date of acquisition, which was comprised of: (i) cash and cash equivalents of (ii) prepaid expenses and deposits of (iii) other current assets of (iv) inventories of and (v) accounts payable and accrued liabilities of $ |
| (2) | Preliminary fair value of mineral rights and properties was determined using a discounted cash flow model (being the net present value of expected future cash flows). Expected future cash flows are based on estimates of future uranium prices and projected future revenues, estimated quantities of mineral resources and production, expected future production costs, and capital expenditures based on the life of mine plans as at the acquisition date. |
| (3) | Preliminary fair value of property, plant and equipment was determined using a replacement cost approach. |
| (4) | Other non-current assets included certain material and supply inventories classified as non-current and right-of-use (“ROU”) assets associated with UEC Wyoming’s operating leases. The preliminary fair value of long-term inventory was determined to approximate its carrying value. ROU assets and lease liabilities for operating leases are measured based on the present value of the future lease payments over the remaining lease terms at the acquisition date. |
URANIUM ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022
(Unaudited – Expressed in U.S. Dollars)
| (5) | Preliminary fair value of asset retirement obligations was measured based on the expected costs and timing for final well closure, plant and equipment decommissioning and removal, and environmental remediation, which are discounted to present value using credit adjusted risk-free rates. |
Since it has been consolidated from December 17, 2021, UEC Wyoming’s losses totaling $
The following unaudited proforma financial information presents consolidated results assuming the U1A Acquisition occurred on August 1, 2020.
| Three Months Ended January 31, | Six Months Ended January 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Sales and Service Revenue | $ | $ | $ | $ | ||||||||||||
| Net Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| NOTE 4: | INVENTORIES |
During the six months ended January 31, 2022, we received
As at January 31, 2022, costs of inventories consisted of the following:
| January 31, 2022 | July 31, 2021 | |||||||
| Material and supplies | $ | $ | ||||||
| Uranium concentrates from production | ||||||||
| Purchased uranium inventories | ||||||||
| $ | $ | |||||||
As of January 31, 2022, our uranium inventory purchase commitments for the next five fiscal years are as the follows:
| Purchase Commitments in Pounds | Total Purchase Price | |||||||
| Fiscal 2022 | $ | |||||||
| Fiscal 2023 | ||||||||
| Fiscal 2024 | ||||||||
| Fiscal 2025 | ||||||||
| Fiscal 2026 | ||||||||
| Total | $ | |||||||
Subsequent to January 31, 2022, we received
URANIUM ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022
(Unaudited – Expressed in U.S. Dollars)
Subsequent to January 31, 2022, we entered into agreements to purchase
| NOTE 5: | MINERAL RIGHTS AND PROPERTIES |
Mineral Rights
During the three months ended January 31, 2022, in connection with the U1A Acquisition, we acquired the UEC Wyoming Portfolio, which primarily consists of 12 projects located in Wyoming, six of which are located in the Powder River Basin with four fully permitted, and six of which are located in the Great Divide Basin. The UEC Wyoming Portfolio also consists of dozens of under-explored, mineralized brownfield projects, backed by detailed databases of historic uranium exploration and development programs. Refer to Note 3: Acquisition of Uranium One Americas, Inc.
As of January 31, 2022, the preliminary fair value allocated to the UEC Wyoming Portfolio was $
As at January 31, 2022, we had mineral rights in the States of Arizona, Colorado, New Mexico, Wyoming and Texas, in Canada 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 and titanium. As of January 31, 2022, annual maintenance payments of approximately $
As at January 31, 2022, the carrying value of our mineral rights and properties, including the recently acquired UEC Wyoming Portfolio, were as follows:
| January 31, 2022 | July 31, 2021 | |||||||
| Mineral Rights and Properties | ||||||||
| Palangana Mine | $ | $ | ||||||
| Goliad Project | ||||||||
| Burke Hollow Project | ||||||||
| Longhorn Project | ||||||||
| Salvo Project | ||||||||
| Anderson Project | ||||||||
| Workman Creek Project | ||||||||
| Los Cuatros Project | ||||||||
| Slick Rock Project | ||||||||
| Reno Creek Project | ||||||||
| UEC Wyoming Portfolio | ||||||||
| Diabase Project | ||||||||
| Yuty Project | ||||||||
| Oviedo Project | ||||||||
| Alto Paraná Titanium Project | ||||||||
| Other Property Acquisitions | ||||||||
| Accumulated Depletion | ( | ) | ( | ) | ||||
| Databases and Land Use Agreements | ||||||||
| Accumulated Amortization | ( | ) | ( | ) | ||||
| $ | $ | |||||||
We have not established proven or probable reserves, as defined by the SEC, for any of our mineral projects. We have established the existence of mineralized materials for certain mineral projects. Since we commenced uranium extraction at our ISR Mines 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.
URANIUM ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022
(Unaudited – Expressed in U.S. Dollars)
During the six months ended January 31, 2022, we entered into property purchase agreements, whereby we acquired
During the three and six months ended January 31, 2022 and 2021, we continued with reduced operations at our ISR Mines to capture residual uranium only. As a result, depletion for the ISR Mines was recorded on our condensed consolidated financial statements for the three and six months ended January 31, 2022 and 2021.
Mineral property expenditures incurred on our projects, including $
| Three Months Ended January 31, | Six Months Ended January 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Mineral Property Expenditures | ||||||||||||||||
| Palangana Mine | $ | $ | $ | $ | ||||||||||||
| Goliad Project | ||||||||||||||||
| Burke Hollow Project | ||||||||||||||||
| Longhorn Project | ||||||||||||||||
| Salvo Project | ||||||||||||||||
| Anderson Project | ||||||||||||||||
| Workman Creek Project | ||||||||||||||||
| Slick Rock Project | ||||||||||||||||
| Reno Creek Project | ||||||||||||||||
| Allemand Ross Project | ||||||||||||||||
| Christensen Ranch Mine | ||||||||||||||||
| Ludeman Project | ||||||||||||||||
| Moore Ranch Project | ||||||||||||||||
| Yuty Project | ||||||||||||||||
| Oviedo Project | ||||||||||||||||
| Alto Paraná Titanium Project | ||||||||||||||||
| Other Mineral Property Expenditures | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| NOTE 6: | PROPERTY, PLANT AND EQUIPMENT |
During the three months ended January 31, 2022, in connection with the U1A Acquisition, we acquired a satellite plant located at the Christensen Ranch Mine (the “Christensen Plant”), a central processing plant (the “Irigaray Processing Facility”), and various equipment with a total fair value of $
URANIUM ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022
(Unaudited – Expressed in U.S. Dollars)
As at January 31, 2022, property, plant and equipment consist of the following:
| January 31, 2022 | July 31, 2021 | |||||||||||||||||||||||
| Cost | Accumulated | Net Book | Cost | Accumulated | Net Book | |||||||||||||||||||
| Plant and Processing Facilities | $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Mining Equipment | ( | ) | ( | ) | ||||||||||||||||||||
| Logging Equipment and Vehicles | ( | ) | ( | ) | ||||||||||||||||||||
| Computer Equipment | ( | ) | ( | ) | ||||||||||||||||||||
| Furniture and Fixtures | ( | ) | ( | ) | ||||||||||||||||||||
| Buildings | ( | ) | ( | ) | ||||||||||||||||||||
| Land | ||||||||||||||||||||||||
| $ | $ | ( | ) | $ | $ | $ | ( | ) | $ | |||||||||||||||
| NOTE 7: | RESTRICTED CASH |
Restricted cash includes cash and cash equivalents and money market funds pledged as collateral for various bonds posted in favor of applicable state regulatory agencies in Arizona, Texas and Wyoming, and for estimated reclamation costs associated with our plants, processing facilities and various projects. Restricted cash will be released upon the completion of reclamation of a plant or a mineral property or the restructuring of a surety and collateral arrangement.
As at January 31, 2022, restricted cash consisted of the following:
| January 31, 2022 | July 31, 2021 | |||||||
| Restricted cash, beginning of period | $ | $ | ||||||
| Restricted cash received from U1A Acquisition | ||||||||
| Additional surety bond collateral | ||||||||
| Interest received | ||||||||
| Restricted cash, end of period | $ | $ | ||||||
Cash, cash equivalents and restricted cash are included in the following accounts as at January 31, 2022 and 2021:
| January 31, 2022 | January 31, 2021 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Total cash, cash equivalents and restricted cash | $ | $ | ||||||
Subsequent to January 31, 2022, we received $
| NOTE 8: | EQUITY-ACCOUNTED INVESTMENT |
As at January 31, 2022, we owned
URC is a public company listed on the TSX Venture Exchange with the trading symbol “URC.V” and on NASDAQ with the trading symbol “UROY”. As at January 31, 2022, the fair value of our investment in URC was approximately $
URANIUM ENERGY CORP.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2022
(Unaudited – Expressed in U.S. Dollars)
During the six months ended January 31, 2022, the change in carrying value of the equity-accounted investment is summarized as follows:
| Balance, July 31, 2021 | $ | |||
| Share of income from URC | ||||
| Gain on dilution of ownership interest | ||||
| Translation loss | ( | ) | ||
| Balance, January 31, 2022 | $ |
For the three and six months ended January 31, 2022 and 2021, income (loss) from our equity-accounted investment consisted of the following:
| Three Months Ended January 31, | Six Months Ended January 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Share of income (loss) from URC | $ | |||||||||||||||