Azarga Uranium : Condensed Consolidated Interim Financials for the Six Months Ended June 30, 2020

Azarga Uranium Corp.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

June 30, 2020

(Unaudited - Expressed in U.S. Dollars)

Notice to Reader

These condensed consolidated interim financial statements of Azarga Uranium Corp. have been prepared by management and approved by the Audit Committee of the Board of Directors of the Company. In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its external auditors have not reviewed these condensed consolidated interim financial statements, notes to the financial statements or the related quarterly Management's Discussion and Analysis.

TABLE OF CONTENTS

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS Condensed Consolidated Interim Statements of Financial Position

Condensed Consolidated Interim Statements of ChangesLoss andinOtherEquityComprehensive Loss Condensed Consolidated Interim Statements of Cash Flows

Page4 5 6 7

1.	Corporate information and going concern	8
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS	9
2.	Basis of presentation
3.	Summary of significant accounting policies	10
4.	Segmented information	10
5.	Exploration and evaluation assets	11
6.	Loans payable	11
7.	Equity	12
8.	Share option reserve	14
9.	Administrative expenses	16
10.	Related party transactions and balances	16
11.	Financial instruments and risk management	17
12.	Commitments	19
13.	Supplemental cash flow information	20
14.	Subsequent events	20

AZARGA URANIUM CORP.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited - Expressed in U.S. Dollars)

				As at
				June 30,		December 31,
		Notes		2020		2019
ASSETS			$	620,374	$	184,447
Cash
urrent assets				37,993		23,913
Other assets
Total current assets				658,367		208,360
Restricted cash				22,716		22,716
Non-current assets	5		41,776,271		41,440,616
Exploration and evaluation assets
Property, plant and equipment				66,419		67,577
Right-of-use assets				89,712		111,357
Total assets			$	41,955,118	$	41,642,266
Total non-current assets
LIABILITIES AND EQUITY			$	565,041	$	793,864
Trade and other payables
Current liabilities	6		350,670		-
Loans payable
Operating lease obligations				30,757		45,014
Total current liabilities				946,468		838,878
Trade and other payables				60,000		70,000
Non-current liabilities				3,112,193		3,112,193
Deferred income tax liabilities
Decommissioning liabilities				259,268		251,550
Operating lease obligations				63,548		70,445
Warrant liabilities				453,160		265,029
Total liabilities				3,948,169		3,769,217
Total non-current liabilities				4,894,637		4,608,095
Common shares	7		61,240,518		60,303,924
Equity	7		1,168,722		1,117,679
Contributed surplus
Share option reserve	8		2,965,765		2,809,429
Accumulated deficit				(27,656,157)		(26,988,501)
Total liabilities nd equity	1	$	37,718,848	$	37,242,531
Corporate information and going concern	42,613,485	41,850,626
Total equity
Subsequent events	14
Approved by the Audit Committee of the Board of Directors of the Company:
"Joseph L. Havlin", Director		"Matthew O'Kane", Director

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

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AZARGA URANIUM CORP.

Condensed Consolidated Interim Statements of Loss and Other Comprehensive Loss

(Unaudited - Expressed in U.S. Dollars)

						Three months ended June 30,		Six months ended June 30,
					Notes		2020		2019		2020		2019
Administrative expenses		9	$	(453,714)	$	(380,143)	$	(808,862)	$	(795,455)
Foreign exchange gain (loss)			(1,288)		20,999		14,263		13,981
Finance costs						(455,002)		(359,144)		(794,599)		(781,474)
					(9,273)		(2,549)		(15,876)		(4,938)
Loss from operations				3,537		(10,839)		142,819		239,064
Unrealized gain (loss) on warrant liabilities
Net	loss from		operations			(460,738)		(372,532)		(667,656)		(547,348)
	discontinued				-		(4,119,832)		-		(4,137,120)
t s		continuing				(460,738)		(4,492,364)		(667,656)		(4,684,468)
Net loss
Equity holders of the Company			(460,738)		(4,199,110)		(667,656)		(4,386,028)
Net loss attributable to:				-		(293,254)		-		(298,440)
Non-controlling interest
Net loss					$	(460,738)	$	(4,492,364)	$	(667,656)	$	(4,684,468)
Basicanddilutedloss per share from continuing operations	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.00)
operations		loss per share		$	-	$	(0.03)	$	-	$	(0.03)
Basic and diluted loss per share from discontinued
Basic and diluted loss per share		$	(0.00)	$	(0.03)	$	(0.00)	$	(0.03)
Weighted average number of common shares			195,313,925		183,616,851		190,683,534		177,715,106
outstanding
Other comprehensive income (loss)		$	(460,738)	$	(4,492,364)	$	(667,656)	$	(4,684,468)
Net loss
Item that may be reclassified subsequently as			-		42,323		-		(47,175)
Foreign currency translation adjustment
profit or loss				$	(460,738)	$	(4,450,041)	$	(667,656)	$	(4,731,643)
Total other comprehensive loss
Other comprehensive income (loss)			-		29,627		-		(33,022)
Equity holders of the Company
attr butable to:				-		12,696		-		(14,153)
Non-controlling interest			$	$	$	$
						-	42,323	-	(47,175)
Other comprehensive income (loss)

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

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AZARGA URANIUM CORP.

Condensed Consolidated Interim Statements of Changes in Equity

(Unaudited - Expressed in U.S. Dollars)

						Attributable to equity holders of the Company
										Foreign currency
			Number of		Common	Contributed	Share option		translation	Accumulated			Non-controlling
			shares		shares		surplus		reserve		reserve		deficit	Total equity			interest		Total equity
Balan	s, December 31, 2019	185,543,926	$	60,303,924	$	1,117,679	$	2,809,429	$		-	$ (26,988,501)	$	37,242,531	$	-	$	37,242,531
Issuance of shares for private placement	10,933,333		816,383		-		-			-	-		816,383			-		816,383
Issuance of shares to settle ESPP	719,186		92,711		(92,711)		-			-	-		-			-		-
Compensation to be settled by equity	-		-		171,254		-			-	-		171,254			-		171,254
Issuance of shares to	DSA	260,170		27,500		(27,500)		156,336			-	-		-			-		-
Share-based compensation		-		-		-					156,336				156,336
Net loss for the period		-		-		-		-			-	(667,656)		(667,656)			-		(667,656)
Balances, June 30, 2020		197,456,615	$	61,240,518	$	1,168,722	$	2,965,765	$		-	$ (27,656,157)	$	37,718,848	$	-	$	37,718,848
						Attributable to equity holders of the Company
								Share option	Foreign currency
			Number of		Common	Contributed		translation	Accumulated			Non-controlling
			shares		shares		surplus		reserve		reserve		deficit	Total equity			interest		Total equity
Balan	s, December 31, 2018	169,833,806	$	57,976,321	$	1,001,818	$	2,500,078	$	(863,092)	$ (18,973,266)	$	41,641,859	$	(494,477)	$	41,147,382
Issuance of shares for private placement	13,106,046		1,871,110		-		-			-	-		1,871,110			-		1,871,110
Issuance of shares to settle ESPP	620,656		107,586		(107,586)		-			-	-		-			-		-
Compensation to be settled by equity	-		-		133,255		-			-	-		133,255			-		133,255
Issuance of shares to	DSA	158,639		27,500		(27,500)		200,648			-	-		-			-		-
Share-based compensation		-		-		-					200,648				200,648
NCI adjustment on acquisition of 23.1% of UrAsia	-		-		-		-		(202,249)	(551,162)		(753,411)			753,411		-
Net loss for the period		-	$	-	$	-	$	-	$		-	(4,386,028)	$	(4,386,028)	$	(298,440)	$	(4,684,468)
Other comprehensive loss for the period	183,719,147	59,982,517	999,987	2,700,726	(1,098,363)	$ (23,910,456)	38,674,411	(53,659)	38,620,752
-		-		-		-		(33,022)	-		(33,022)			(14,153)		(47,175)

Balances, June 30, 2019

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

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AZARGA URANIUM CORP.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited - Expressed in U.S. Dollars)

				Six months ended June 30,
	Notes		2020		2019
Net loss from continuing operations			$	(667,656)	$	(547,348)
OPERATING ACTIVITIES
Adjustments for:		9		22,803		20,543
Depreciation
Share-based compensation		8		156,336		157,214
Unrealized gain on warrant liabilities				(142,819)		(239,064)
Equity compensation expense				171,254		133,255
Finance costs				15,876		4,938
Unrealized foreign exchange gain				(4,011)		(20,916)
Operating cash flows before changes in non-cash working capital items			(448,217)		(491,378)
Change in other assets				(14,080)		(2,348)
Change in trade and other payables				(264,292)		(521,112)
Net cash used in operating activities of discontinued operations			(726,589)		(1,014,838)
Net cash used in operating activities of continuing operations				-		(47,900)
Expenditures on exploration and evaluation assets		5		(327,937)		(453,763)
INVESTING ACTIVITIES				-		1,057
Sale of property, plant and equipment
Reclamation bonds				-		99,000
Net cash generated by investing activities of discontinued				(327,937)		(353,706)
Net cash used in investing activities of continuing operations
operations				-		70,029
Proceeds from issuance of common shares		7		1,165,998		2,266,169
FINANCING ACTIVITIES		7		(24,380)		(16,553)
Share issue costs
Loan proceeds		6		345,714		-
Effect of foreign exchange rate changes on cash				1,487,332		2,249,616
			3,121		24,677
Net ash generated by fin ncing activities of continuing operations
Increase in cash from discontinued operations				435,927		905,749
Cash, beginning of period				-		22,129
Increase in cash from continuing operations				184,447		352,001
Cash, end of period
Supplemental cash flow information, see Note 13			$	620,374	$	1,279,879

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

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

1. CORPORATE INFORMATION AND GOING CONCERN

Azarga Uranium Corp. ("Azarga Uranium") was incorporated on February 10, 1984 under the laws of the Province of British Columbia, Canada. Azarga Uranium's common shares are publicly traded on the Toronto Stock Exchange ("TSX") (Symbol: AZZ), the Frankfurt Stock Exchange (Symbol: P8AA), and the OTCQB Venture Market (Symbol: AZZUF). Azarga Uranium, together with its subsidiaries (collectively referred to as the "Company"), is an integrated uranium exploration and development company.

The Company controls uranium properties located in the United States of America ("USA") with a primary focus of developing in-situ recovery uranium projects. The Company's Dewey Burdock Project, located in South Dakota, USA, is the Company's initial development priority. The Company also owns uranium projects in Wyoming, Colorado, and Utah.

The Company's corporate and registered and records office address is Unit 1 - 15782 Marine Drive, White Rock, BC, V4B 1E6.

These condensed consolidated interim financial statements have been prepared on a going concern basis, which contemplates that the Company will continue operations for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business as they fall due. To date, the Company has not generated revenues from operations and is currently in the exploration and development stage. As at June 30, 2020, the Company had a working capital deficit of $288,101 and an accumulated deficit of $27,656,157 and will continue incurring losses for the foreseeable future. Additional funding will be required by the Company to complete its strategic objectives and continue as a going concern. There is no certainty that additional financing, at terms that are acceptable to the Company, will be available. The Company has successfully raised financing in the past and will continue to assess available alternatives; however, there is no assurance that the Company will be able to raise additional funds in the future. These material uncertainties cast significant doubt on the Company's ability to continue as a going concern.

In March 2020, the World Health Organization declared COVID-19 a global pandemic. This contagious disease outbreak, which has continued to spread, has adversely affected workforces, economies, and financial markets globally. It is not possible for the Company to predict the duration or magnitude of the adverse impacts of the outbreak and its effects on the Company's business or ability to raise funds.

These condensed consolidated interim financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

2. BASIS OF PRESENTATION

1. Statement of compliance
   These condensed consolidated interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" using accounting policies in compliance with International Financial Reporting Standards ("IFRS") and interpretations issued by the International Accounting Standards Board and interpretations of the IFRS Interpretations Committee.
   These condensed consolidated interim financial statements for the six months ended June 30, 2020 were approved and authorized for issue by the Company's Audit Committee on August 12, 2020.
2. Basis of presentation
   These condensed consolidated interim financial statements do not include all of the disclosures required for annual financial statements, and therefore should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019.
   These condensed consolidated interim financial statements have been prepared on a historical cost basis, except for financial instruments, which are measured at fair value. The Company's financial instruments are further disclosed in Note 11.
3. Presentation and functional currency
   The condensed consolidated interim financial statements are presented in United States Dollars, unless otherwise indicated. All references to $ refer to the United States Dollar and all references to C$ refer to the Canadian Dollar.
   The functional currency of each entity is determined by the currency of the primary economic environment in which the entity operates. The functional currency of each entity is the United States Dollar.

2.4	Significant accounting judgments and estimates	accounting policies that have the
	Information about judgments and estimates in applying
	most significant effect on the amounts recognized in the	Company's consolidated financial
	statements are included in Note 2.4 to the Company's	December 31, 2019 consolidated
	annual financial statements. There were no material changes to the significant accounting
	judgments and estimates from December 31, 2019.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3.1 Signifiaccountingant accounting policies

Thepolicies applied by the Company in these condensed consolidated interim financial statements are the same as those applied by the Company as at and for the year ended December 31, 2019.

3.2	omparative figures
	Certain comparative figures may have been reclassified to conform with current year's
	presentation.
3.3	Standards issu d but not yet effective	standards and interpretations are not yet
	A number of new standards, amendments to
	effective as of June 30, 2020 and have not been	applied in preparing these condensed
	consolidated interim financial statements. These standards are not expected to materially
	impact the Company's financial position or results of operations.

4. SEGMENTED INFORMATION

The Company operates in one business and geographical segment being the exploration and development of uranium properties in the USA. The total assets attributable to the geographical location relate primarily to exploration and evaluation assets and have been disclosed in Note 5.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

5. EXPLORATION AND EVALUATION ASSETS

Projects		Balance,		Salaries and		License fees	Decommissioning		Balance,
	December 31,				June 30,
		consulting			liabilities
		2019						2020
Dewey Burdock $	27,750,988	$	147,599	$	78,689	$	-	$	27,977,276
South Dakota		8,832,441		42,294		960		4,905		8,880,600
Gas Hills
Wyoming		2,822,377		5,780		1,920		-		2,830,077
Juniper Ridge
Other		1,098,011		20,169		3,801		-		1,121,981
JB		446,594		7,000		-		-		453,594
Colorado		490,205		19,725		-		2,813		512,743
Ticaboo
Utah	$	41,440,616	$	242,567	$	85,370	$	7,718	$	41,776,271
Total

Details on the Company's exploration and evaluation assets are found in Note 6 of the December 31, 2019 consolidated financial statements and only material differences are disclosed.

6. LOANS PAYABLE

In February 2020, the Company received third party loans of $245,089 (C$325,000) that bear interest at 12% per annum, are unsecured, and mature November 4, 2020, as amended.

In May 2020, the Company received a loan under the USA Payroll Protection Plan ("PPP") of $100,650 that bears interest at 1% per annum and matures May 3, 2022. In accordance with the terms of the PPP, the Company can apply for the loan to be forgiven.

During the three and six months ended June 30, 2020, the Company recorded interest expense of $7,174 and $11,561, respectively.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

7. EQUITY

7.1 Authorized share capital

The Company has authorized the issuance of an unlimited number of common and preferred shares with no par value. As at June 30, 2020 and December 31, 2019, the Company had 197,456,615 and 185,543,926 common shares outstanding, respectively, and no preferred shares were outstanding.

7.2	Issued share capital
	During the six months ended June 30, 2020, the Company completed the following equity
	transactions:
		In April 2020, the Company closed a non-brokered private placement for gross proceeds
	•	of $1,165,998 (C$1,640,000) through the issuance of 10,933,333 units at a price of C$0.15
		per unit. Each unit consists of one common share and one-half of one share purchase
		warrant. Each whole warrant entitles the holder thereof to purchase one common share
		at a price of C$0.20 per share until April 17, 2023.
		The warrants were valued on a relative fair value basis at $325,235 using the Black-
		Scholes option pricing model with the following assumptions: a risk-free interest rate of
		0.36%; an expected volatility of 72.4%; an expected life of 3 years; a forfeiture rate of
		zero; an expected dividend of zero; and an exchange rate of $/C$ 1.4037.
	•	The Company paid cash finder's fees of $24,380.
		During the six months ended June 30, 2020, the Company issued 719,186 common shares
		to settle $92,711 owing pursuant to the Company's employee share purchase plan
		("ESPP") and 260,170 common shares to settle $27,500 owing pursuant to the Company's
		director services agreements ("DSA").

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

7. EQUITY (Continued)

7.3	Share purchase warrants
	The continuity of share purchase warrants for the six months ended June 30, 2020 is as
	follows:	Exercise		Balance,									Balance,
			price	December 31,									June 30,
	Expiry date		C$		2019		Issued	Exercised		Expired		2020
	July 27, 2020	$	0.36		2,333,968		-		-			-		2,333,968
	December 22, 2020	$	0.35		1,567,500		-		-			-		1,567,500
	March 20, 2022	$	0.31		6,553,022		-		-			-		6,553,022
	April 17, 2023	$	0.20		-		5,466,665		-			-		5,466,665
					10,454,490		5,466,665		-			-		15,921,155
	Weighted average exercise price (C$)	$	0.33	$	0.20	$		-	$	-	$	0.28
	The weighted average remaining contractual life is 1.73 years.

7.4 Equity settled compensation arrangements

ESPP

In 2015, the Company adopted an ESPP, as amended. The Company is authorized to issue up to 9,000,000 common shares pursuant to the terms and conditions of the ESPP. Employees, who elect to participate in the ESPP, can contribute up to 50% of their salary (the "Employee Contribution"). The Company will then match 66.67% of the Employee's Contribution (the "Matching Contribution"). The purchase price of the common shares is calculated based on the five-day volume weighted average trading price of the common shares on the TSX immediately preceding the end of each calendar quarter. The Employee Contribution and the Matching Contribution are expensed in the period in which they are incurred with the offsetting amount being recorded in contributed surplus until the common shares are issued. For the three and six months ended June 30, 2020, Employee Contributions totaled $43,125 and $86,250, respectively, and Matching Contributions totaled $28,752 and $57,504, respectively. For the three and six months ended June 30, 2019, Employee Contributions totaled $31,175 and $63,450, respectively, and Matching Contributions totaled $20,787 and $42,305, respectively. As at June 30, 2020, a cumulative total of 5,781,876 common shares have been issued pursuant to the ESPP. Subsequent to June 30, 2020, the Company issued additional common shares pursuant to the ESPP, see Note 14.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

7. EQUITY (Continued)

7.4 Equity settled compensation arrangements (Continued)

DSA

In 2015, the Company adopted the DSA, as amended. The Company is authorized to issue up to 3,500,000 common shares pursuant to the terms and conditions of the DSA. Directors who elect to participate in the DSA contribute 50% of their director fee/salary to the ESPP and the remaining 50% of their director fee/salary is settled through the issuance of common shares in accordance with the DSA. The purchase price of the common shares is calculated based on the five-day volume weighted average trading price of the common shares on the TSX immediately preceding the end of each calendar quarter. Amounts settled in accordance with the DSA are expensed in the period in which they are incurred with the offsetting amount being recorded in contributed surplus until the common shares are issued.

For the three and six months ended June 30, 2020, $13,750 and $27,500, respectively, were expensed under the DSA. For the three and six months ended June 30, 2019, $13,750 and $27,500, respectively, were expensed under the DSA. As at June 30, 2020, a cumulative total of 1,816,764 common shares had been issued pursuant to the DSA. Subsequent to June 30, 2020, the Company issued additional common shares pursuant to the DSA, see Note 14.

8. SHARE OPTION RESERVE

8.1 Stock option plan

The Company has a rolling stock option plan, which permits the Board of Directors of the Company to grant stock options for up to 10% of the outstanding common shares of the Company. The exercise price of an option shall not be less than the discounted market price at the time of granting as prescribed by the policies of the TSX. The maximum term of the stock options is ten years from the grant date. Vesting terms are at the discretion of the Board of Directors.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

8. SHARE OPTION RESERVE (Continued)

8.2	Stock option c	ntinuity
	The continuity of stock options for the six months ended June 30, 2020 is as follows:
				Exercise		Balance,						Expired/		Balance,
			Expiry date		price	December 31,		Issued	Exercised		June 30,
				C$		2019		Forfeited		2020
			May 19, 2020	$	0.335		930,000		-		-			(930,000)			-
			May 19, 2021	$	0.36		1,130,000		-		-			(20,000)		1,110,000
			May 16, 2022	$	0.32		1,995,000		-		-			(20,000)		1,975,000
			August 22, 2023	$	0.24		3,692,500		-		-			(30,000)		3,662,500
			May 23, 2024	$	0.23		2,395,000		-		-			-		2,395,000
			May 19, 2025	$	0.175		-		2,787,000		-			-		2,787,000
			March 14, 2027	$	0.075		4,480,000		-		-			-		4,480,000
							14,622,500		2,787,000		-		(1,000,000)		16,409,500
			Weighted average exercise price (C$)	$	0.21	$	0.18	$		-	$	0.33	$		0.20
		As at June 30, 2020, 12,532,333 stock options were exercisable.
			The weighted average remaining contractual life is 4.22 years.

8.3 Share-based compensation

During the three and six months ended June 30, 2020, the Company recognized share-based compensation expense of $112,299 and $156,336, respectively, all of which has been allocated to administrative expenses.

During the three and six months ended June 30, 2019, the Company recognized share-based compensation expense of $140,072 and $200,648, respectively, of which $110,110 and $157,214, respectively has been allocated to administrative expenses and $29,962 and $43,434, respectively has been allocated to exploration and evaluation assets.

In May 2020, the Company granted 2,787,000 stock options to officers, employees, directors and other eligible persons at an exercise price of C$0.175 with an expiry date of May 19, 2025. The weighted average fair value of the stock options granted was estimated at C$0.10 per stock option at the grant date using the Black-Scholes option pricing model with the following assumptions: a risk-free interest rate of 0.37%; an expected volatility of 67.3%; an expected life of 5 years; a forfeiture rate of zero; an expected dividend of zero; and an exchange rate of $/C$ 1.389.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

9. ADMINISTRATIVE EXPENSES

Three months ended June 30,	Six months ended June 30,
2020	2019	2020	2019

Salaries and benefits Consulting and professional fees Corporate administration Depreciationequipment of property, plant and Depreciation of right-of-use assets Share-based compensation

$	164,485	$	131,608	$	327,206	$	295,714
	75,315		70,394		131,768		179,991
	90,214		56,529		170,749		141,993
	579		11,502		1,158		20,543
$	10,822	$	-	$	21,645	$	-
453,714	380,143	808,862	795,455
	112,299		110,110		156,336		157,214

10. RELATED PARTY TRANSACTIONS AND BALANCES

10.1 Key management personnel compensation

The remuneration of the Company's directors and other key management personnel, who have the authority and responsibility for planning, directing and controlling the activities of the Company, consisted of the following:

	Three months ended June 30,		Six months ended June 30,
		2020		2019		2020		2019
Salaries and benefits *	$	164,780	$	173,544	$	338,319	$	347,083
Consulting and professional fees		33,101		33,150		66,219		65,782
Share-based compensation		84,617		96,604		114,636		135,347
	$	282,498	$	303,298	$	519,174	$	548,212

* Salaries and benefits are included in administrative expenses (Note 9) and exploration andevaluation assets (Note 5).

10.2 Related party liabilities

		As at
Trade and other payables - current		June 30,	December 31,
	2020		2019
$	193,684	$	276,042
Trade and other payables - non-current	$	253,684	$	346,042
	60,000		70,000

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

11.1 Categories of financial instruments

Financial instruments are classified into one of the following categories: fair value through profit or loss; fair value through other comprehensive income (loss); or, at amortized cost. The carrying values of the Company's financial instruments are classified into the following categories:

		As at	December 31,
		June 30,
Financial assets		2020		2019
Cash	$	620,374	$	184,447
Amortized cost		22,716		22,716
Restricted cash
	$	643,090	$	207,163

		As at
Financial liabilities		June 30,		December 31,
	2020		2019
Trade andother payables	$	625,041	$	863,864
Amortized cost		350,670		-
Loans payable
Decommissioning liabilities		259,268		251,550
Operating lease obligations		94,305		115,459
Warrant liabilities		453,160		265,029
Fair v lue through profit or loss	$	1,782,444	$	1,495,902

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

11. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (Continued)

11.2 Fair value
The fair value of financial assets and financial liabilities measured at amortized cost is
determined in accordance with generally accepted pricing models based on discounted cash
flow analysis or using prices from observable current market transactions. The Company
considers that the carrying amount of all its financial assets and financial liabilities measured
at amortized cost approximates their fair value.
The Company's financial instruments recorded at fair value require disclosure about how the
fair value was determined based on significant levels of inputs described in the following
•
hierarchy:
•	Level 1 fair value measurements are those derived from quoted prices in active
	markets for identical assets or liabilities.
•	Level 2 fair value measurements are those derived from inputs other than quoted
	prices included within Level 1, that are observable either directly or indirectly.

Level 3 fair value measurements are those derived from valuation techniques that include inputs that are not based on observable market data.

The fair value of the Company's warrant liabilities is recorded at fair value using Level 3 of the fair value hierarchy. The carrying value of the warrant liabilities is determined using the Black-Scholes option pricing model.

The carrying values of cash, trade and other payables and loans payable approximate their fair values because of the short-term nature of these financial instruments and are classified as financial assets and liabilities at amortized cost and are reported at amortized cost.

The carrying values of restricted cash, decommissioning liabilities, and operating lease obligations approximate their fair values and are classified as financial assets and liabilities at amortized cost and are reported at amortized cost.

11.3 Financial risk management objectives and policies

The Company's risk management objectives and policies are consistent with those disclosed by the Company for the year ended December 31, 2019.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

12. COMMITMENTS

	Within 1 year		2-4 years	Over 4 years		Total
Annual license payments *	$	552,011	$	466,595	$	1,734,863	$	2,753,469
Dewey Burdock option		-		-		3,165,000		3,165,000
Centennial option
agreement **		62,500		322,500		1,540,000		1,925,000
agreements
	$	614,511	$	789,095	$	6,439,863	$	7,843,469
* annual license payments include lease and mineral claim payments
** the contingent payments are payable upon receipt of regulatory permits and licenses
allowing uranium production on the area of the Centennial Project pertaining to these
uranium interests. Further, since the required licenses and permits were not received by
September 27, 2019, the uranium rights, at the option of the seller, can be transferred back
to the seller. The Company is attempting to renegotiate the Centennial Project option
agreement.
Certain of the Company's commitments may provide the Company with the ability to avoid
funding those commitments; however, the Company discloses the contractual maturities of
the Company's commitments based on management's intent.

13. SUPPLEMENTAL CASH FLOW INFORMATION
During the six months ended June 30, 2020, the Company completed the following non-cash
investing and financing activities:
•	Issued 719,186 common shares to settle $92,711 owing pursuant to the Company's
•	ESPP;
•	Issued 260,170 common shares to settle $27,500 owing pursuant to the Company's
	DSA;
•	Issued 5,466,665 share purchase warrants valued at $325,235 as part of the April
	2020 financing; and
	No cash interest or income taxes were paid.

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AZARGA URANIUM CORP.

ForNotesthe sixto themonthsCondensedended JuneConsolidated30, 2020 Interim Financial Statements (Unaudited - Expressed in U.S. Dollars)

13. SUPPLEMENTAL CASH FLOW INFORMATION (Continued)

During the six months ended June 30, 2019, the Company completed the following non-cash investing and financing activities:

Issued 620,656 common shares to settle $107,586 owing pursuant to the Company's

• ESPP;

Issued 158,639 common shares to settle $27,500 owing pursuant to the Company's

• DSA;

Issued 6,553,022 share purchase warrants valued at $378,506 as part of a financing;

• and

• No cash interest or income taxes were paid.

14.	SUBSEQUENT EVENTS
	•
	Subsequent to June 30, 2020, the Company completed the following transactions:
		In July 2020, the Company issued 1,750,000 common shares to settle $267,845 of
	•	outstanding employee remuneration;
	•	In July 2020, the Company issued 200,000 common shares to settle debt of C$35,000.
	•	In July 2020, 2,333,968 warrants expired unexercised.
		In August 2020, the Company issued 1,227,389 common shares to settle $199,920 owing
		pursuant to the Company's ESPP and 112,205 common shares to settle $13,750 owing
	•	pursuant to the Company's DSA.
		In August 2020, the Company received third party loans of $1,000,000 that bear interest
		at 12% per annum, are unsecured, and mature February 5, 2021. The loan proceeds will

be used to fund financial assurance bonds related to Environmental Protection Agency permits for the Dewey Burdock project.

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