URANIUM ENERGY CORP. (Expressed in thousands of
The following management's discussion and analysis of the Company's financial condition and results of operations 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 theSEC and, including, without limitation, this Form 10-K filing for the fiscal year endedJuly 31, 2022 , including the consolidated financial statements and related notes contained herein. 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" and Item 1A. Risk Factors herein. Introduction The following discussion summarizes the results of operations for each of our fiscal years endedJuly 31, 2022 , 2021 and 2020 and our financial condition as atJuly 31, 2022 and 2021, with a particular emphasis on Fiscal 2022, our most recently completed fiscal year. Business
We operate in a single reportable segment and, since 2004, as more fully
described under "General Business" of Item 1. Business herein, we have been
primarily engaged in uranium mining and related activities, including
exploration, pre-extraction, extraction and processing, on uranium projects
located in
We utilize ISR mining for our uranium projects 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 two ISR Mines which utilize ISR mining to extract U3O8, or yellowcake. We have two uranium processing facilities located in vicinity of ourIRS Mines , which process material from our ISR Mines into drums of U3O8 for shipping to a third-party storage and sales facility. AtJuly 31, 2022 , we had no uranium supply or off-take agreements in place. 220
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InTexas our fully-licensed and 100% owned Hobson Processing Facility forms the basis for our regional operating strategy in theState 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, which has a physical capacity to process uranium-loaded resins up to a total of two million pounds of U3O8 annually and is licensed to process up to one million pounds of U3O8 annually, acts as the central processing site (the "hub") for ourPalangana Mine , and future satellite uranium mining activities, such as ourBurke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the "spokes").
We acquired the fully permitted
OnDecember 17, 2021 , we completed the acquisition of all the issued and outstanding shares of U1A (nowUEC Wyoming Corp. ; "UEC Wyoming") for total cash consideration of$128,495 . The UEC Wyoming portfolio primarily consists of 12 projects located inWyoming , six of which are located in thePowder River Basin with four fully permitted, and six of which are located in theGreat Divide Basin (the "UEC Wyoming Portfolio"). 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, thus greatly enhancing the potential for resource expansion. The U1A Acquisition creates aWyoming hub-and-spoke operation for UEC, anchored by UEC Wyoming's Irigaray Processing Facility with a licensed capacity of 2.5 million pounds U3O8 per year. Refer to Note 3: Acquisition ofUranium One Americas, Inc. of the Consolidated Financial Statements for Fiscal 2022. OnJune 7, 2022 , UEC completed a property swap agreement (the "Property Swap") with Anfield Energy Inc. ("Anfield"), whereby the Company received Anfield's portfolio of 25 ISR uranium projects inWyoming (the "Anfield ISR Projects") in exchange for UEC's Slick Rock andLong Park projects located inColorado . The Anfield ISR Projects increase UEC'sWyoming land holdings by 50%, adding 55,119 acres of federal mining claims and state mineral leases. The Anfield ISR Projects are comprised of theCharlie Project , located immediately adjacent to UEC's Christensen Ranch property, along with nine projects in thePowder River Basin , seven projects in theGreat Divide Basin , four projects in theWind River Basin , three projects in theShirley Basin and one project inBlack Hills . Subsequent toJuly 31, 2022 , we completed the acquisition ofUEX Corporation ("UEX") through a plan of arrangement (the "UEX Acquisition"). UEX is a Canadian uranium and cobalt exploration and development company involved with an exceptional portfolio of uranium projects. UEX's directly-owned portfolio of projects is located in the eastern, western and northern perimeters of theAthabasca Basin , one of the world's richest uranium region. In addition to advancing its uranium development projects through its ownership interest in a joint venture entity, UEX is currently advancing several other uranium deposits in theAthabasca Basin which include thePaul Bay ,Ken Pen and ?rora deposits at theChristie Lake Project , the Kianna, Anne, Colette and 58B deposits at its currently 49.1%-ownedShea Creek Project , the Horseshoe and Raven deposits located on its 100%-ownedHorseshoe-Raven Project and the West Bear Uranium Deposit located at its 100%-ownedWest Bear Project . We also hold certain mineral rights in various stages in the States ofArizona ,New Mexico ,Texas andWyoming , and inCanada and in theRepublic 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 acquisition of additional uranium projects.Key Issues Since commencing uranium extraction at ourPalangana Mine inNovember 2010 , we have been focused primarily on expanding ourSouth Texas uranium mining activities. Since the completion of the U1A Acquisition inDecember 2021 , we further expanded our footprints inWyoming with ourWyoming hub-and-spoke operations. In the meantime, we continue to establish additional uranium mines through exploration and pre-extraction activities and direct acquisitions in both theU.S. andParaguay , all of which require us to manage numerous challenges, risks and uncertainties inherent in our business and operations as more fully described in Item 1A. Risk Factors herein. 221
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Our operations are capital intensive, and we will require significant additional financing to continue with our exploration and pre-extraction activities and acquire additional uranium projects. Historically, we have been reliant primarily on equity financings from the sale of our common stock and, for Fiscal 2014 and Fiscal 2013, on debt financing, in order to fund our operations. We have also relied on cash flows generated from our mining activities during Fiscal 2015, Fiscal 2013 and Fiscal 2012. In the future we may also rely on cash flows generated from the sales of our uranium inventories under our Physical Uranium Program to fund our operations. However, we have yet to achieve profitability or develop positive cash flow from operations. 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 electricity 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 inability to obtain additional financing would have a negative impact on our operations, including delays, curtailment or abandonment of any one or all of our uranium projects. We have not established proven or probable reserves through the completion of a "final" or "bankable" feasibility study for any of our mineral projects. We have established the existence of mineralized materials for certain uranium projects, including our ISR Mines. 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.The Palangana Mine has been our sole source to generate sales revenues from the sales of U3O8 during Fiscal 2015, Fiscal 2013 and Fiscal 2012. The economic viability of our mining activities, including the expected duration and profitability of our ISR Mines and of any future satellite ISR mines, such as ourBurke Hollow andGoliad Projects and recently acquired Ludeman, Antelope and Charlie Projects, 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 a 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 achieving and maintaining profitability and developing positive cash flow. Response to COVID-19 Pandemic In response to the COVID-19 pandemic for the protection of our employees, we have arranged, where and when needed from time to time, for our teams at ourVancouver ,Corpus Christi andParaguay offices to work remotely and we have implemented certain health protocols for our employees and contractors who work at the field. In the meantime, we continue to operate ourPalangana Mine and recently acquiredChristensen Mine at a reduced pace to capture residual uranium only and continue to advance our ISR projects with engineering and geologic evaluations that support the Company's extraction readiness strategy. As atJuly 31, 2022 , we had no uranium supply or off-take agreements in place. Future sales of U3O8 are therefore expected to generally occur through the uranium spot market, with any fluctuations in the market price continuing to have a direct impact on our revenues and cash flows. 222
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The table below provides the high/low/average/close for the uranium spot price for each of our last five fiscal years as obtained from UxC:
Fiscal Year Ended High Low Average Close July 31, 2022$ 63.75 $ 30.50 $ 46.56 $ 48.50 July 31, 2021 32.75 27.31 30.38 32.40 July 31, 2020 34.19 23.88 27.66 32.35 July 31, 2019 29.28 23.94 26.95 25.41 July 31, 2018 26.44 19.87 22.09 25.81 Historically, the uranium spot price has been difficult to predict and subject to significant volatility and will continue to be affected by numerous factors beyond our control. Results of Operations
During Fiscal 2022, we recorded sales and service revenue of
For Fiscal 2022, we recorded net income of$5,252 ($0.02 per share), while for Fiscal 2021 and Fiscal 2020, we recorded a net loss of$14,813 ($0.07 per share) and$14,610 ($0.08 per share), respectively. Loss from operations during Fiscal 2022, Fiscal 2021 and Fiscal 2020 totaled$22,710 ,$17,512 and$14,334 , respectively. During Fiscal 2022, we continued with our strategic plan for reduced operations at ourPalangana Mine and, since the closing of the U1A Acquisition, we continued reduced operations at theChristensen Ranch Mine , to capture residual pounds of U3O8 only. While we remain in a state of operational readiness, uranium extraction expenditures incurred at thePalangana Mine and theChristensen Ranch Mine , which are directly related to regulatory/mine permit compliance, lease maintenance obligations and maintaining a necessary labor force, are being charged to our consolidated statement of operations. As a result, no uranium concentrate was extracted at our ISR Mines and processed at theHobson and the Irigaray Processing Facilities, respectively, during Fiscal 2022 and Fiscal 2021. We established our Physical Uranium Program in Fiscal 2021. As of the date of this Annual Report, we have 3.1 million pounds of uranium inventory purchase commitments outstanding for a total purchase price of$118.8 million . Various deliveries are scheduled to occur inDecember 2022 intoDecember 2025 at a weighted average price of$38.32 per pound of uranium. During Fiscal 2022, as part of our Physical Uranium Program, we received 1,300,000 pounds of uranium concentrates with a total cost of$52,858 . As ofJuly 31, 2022 , the carrying value of our inventories was$66,570 (July 31, 2021 :$29,172 ). Sales and Service Revenue During Fiscal 2022, we recorded sales of$22,946 from the sale of 500,000 pounds of uranium concentrate inventory. In addition, we recorded revenue from toll processing services of$215 , which was generated from processing uranium resins according to a toll processing agreement resulting from the U1A Acquisition. As a result, we realized gross profit of$7,293 , representing a gross profit margin of 31.5%. No sales and service revenues were recorded during Fiscal 2021 and Fiscal 2020. 223
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The table below provides a breakdown of sales and service revenue and cost of
sales and services:
Year Ended July 31,
2022 2021 2020
Sales of purchased uranium inventory
215 - -
Total sales and service revenue
Cost of purchased uranium inventory
(179 ) - -
Total cost of sales and services
Operating Costs
Mineral Property Expenditures
Mineral property expenditures consisted of expenditures relating to permitting, property maintenance, exploration and pre-extraction activities and all other non-extraction related activities on our mineral projects.
The following table provides mineral property expenditures on a project basis during the past three fiscal years:
Year Ended July 31,
2022 2021 2020
Mineral Property Expenditures
Palangana Mine $ 1,060 $ 890 $ 1,343
Burke Hollow Project 3,647 1,446 1,130
Goliad Project 240 237 190
Anderson Project 108 79 71
Workman Creek Project 33 33 33
Reno Creek Project 821 672 597
Christensen Ranch Mine 1,257 - -
Ludeman Project 219 - -
Antelope Project 70 - -
Moore Ranch Project 143 - -
Barge Project 37 - -
Yuty Project 86 31 66
Oviedo Project 619 372 350
Alto Paraná Titanium Project 574 199 230Other Mineral Property Expenditures 1,240 520 572
$ 10,154 $ 4,479 $ 4,582 During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures included costs directly related to maintaining operational readiness and permit compliance at ourPalangana Mine and Hobson Processing Facility, which totaled$1,105 ,$924 and$1,130 , respectively. Since the closing of the U1A Acquisition, costs directly related to maintaining operational readiness and permit compliance at ourChristensen Ranch Mine and Irigaray Processing Facility totaled$1,161 . The following provides a discussion of significant mineral property expenditures on certain projects: ? Palangana Mine 224
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During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at ourPalangana Mine totaled$1,060 ,$890 and$1,343 , respectively, which were comprised of maintenance of operational readiness and permit compliance of$670 ,$609 and$772 , permitting and property maintenance of$390 ,$270 and$554 , and exploration and development costs of $Nil,$11 and$17 , respectively. ?Burke Hollow Project During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at ourBurke Hollow Project totaled$3,647 ,$1,446 and$1,130 , respectively, which were comprised of permitting and property maintenance costs of$524 ,$388 and$385 , exploration drilling costs of$1,199 ,$1,025 and$214 , and wellfield development costs of$1,924 ,$33 and$531 , respectively. During Fiscal 2022, we continued the drilling campaign initiated in Fiscal 2021 and drilled 91 holes and cased 40 wells totaling 63,682 feet. During Fiscal 2021, we initiated a drilling campaign and drilled 81 exploration holes totaling 38,785 feet. During Fiscal 2020, we drilled 26 exploration holes and 21 monitor wells totaling 21,069 feet. ?Goliad Project During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at ourGoliad Project totaled$240 ,$237 and$190 , respectively, which were comprised of permitting and property maintenance costs of$160 ,$165 and$117 , and exploration and development costs of$80 ,$72 and$73 , respectively. ?Reno Creek Project During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at ourReno Creek Project totaled$821 ,$672 and$597 , respectively, which were comprised of property maintenance costs of$508 ,$521 and$484 , and permitting and exploration costs of$313 ,$151 and$113 , respectively. ?Yuty Project
During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures
at our
?Oviedo Project During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at ourOviedo Project totaled$619 ,$372 and$350 , respectively, which were comprised of property maintenance costs of$257 ,$151 and$78 , and exploration expenditures of$362 ,$221 and$272 , respectively, primarily for an exploration drilling program conducted. ? Alto ParanáTitanium Project During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at our Alto ParanáTitanium Project totaled$574 ,$199 and$230 , respectively, which were comprised of exploration costs of$570 ,$179 and$230 , and property maintenance costs of$4 ,$20 and $Nil, respectively. During Fiscal 2022, we completed an exploration drilling program and drilled 42 holes totaling 931 feet at the Alto ParanáTitanium Project . ? UEC Wyoming Portfolio During Fiscal 2022, we completed the U1A Acquisition and acquired the UEC Wyoming Portfolio including the Irigaray Processing Facility, theChristensen Ranch Mine and the Ludeman, Antelope,Moore Ranch and Barge Projects. During Fiscal 2022, the expenditures occurred at the UEC Wyoming Portfolio totaled$2,296 , of which$1,257 was for maintenance of operational readiness, permitting and property maintenance at theChristensen Ranch Mine , with the balance of$1,039 mainly related to property maintenance expenditures for various projects of our UEC Wyoming Portfolio. 225
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Table of Contents General and Administrative
During Fiscal 2022, general and administrative expenses totaled
The following summary provides a discussion of the major expense categories, including analyses of factors that caused significant variances from year-to-year:
? during Fiscal 2022, salaries, wages and management fees totaled
increase of
the result of the corporate-wide salary increases to adjust for inflation,
payment of short-term incentive cash bonus for executive officers, as well as
additional salary expenses related to the UEC Wyoming operations. During
Fiscal 2021, salaries, wages and management fees totaled
of
of the reinstatement of salaries and management fees. During Fiscal 2020, in
response to the financial market uncertainty due to the COVID-19 pandemic, we
reduced cash outlays by implementing corporate-wide pay reductions, ceasing
cash bonuses and utilizing share compensation in lieu of cash for the
Company's employees, consultants, officers and directors salaries and fees;
? during Fiscal 2022, office, filing and listing fees, insurance, corporate
development, investor relations and travel expenses totaled
increase of
the result of increases in expenses for office, administration and insurance,
and expansion of our
and listing fees, insurance, corporate development, investor relations and
travel expenses increased by
primarily due to corporate-wide cost reductions implemented in Fiscal 2020 in
response to the COVID-19 pandemic;
? during Fiscal 2022, professional fees totaled
compared to
Fiscal 2020. Professional fees are comprised primarily of legal services
related to transactional activities, regulatory compliance and for audit,
accounting and tax compliance services;
? during Fiscal 2022, we recorded a foreign exchange loss of
resulting from foreign currency transactions, compared to
Fiscal 2021 and Fiscal 2020, respectively; and
? during Fiscal 2022, stock-based compensation expense totaled $4,540 , a
decrease of
compared to
fair value of stock options granted to optionees and the fair value of shares
of the Company issued to directors, officers, employees and consultants of the
Company under our Stock Incentive Plan. In recent years, we have utilized
equity-based payments to our directors, officers, employees and consultants as
part of our continuing efforts to reduce cash outlays. The stock-based
compensation varied from year to year primarily as a result of changes in the
amount of compensation shares and stock award expenses which were amortized on
an accelerating basis, resulting in more expenses being recorded at the
beginning of the vesting period than at the end.
Acquisition-related Costs
During Fiscal 2022, we incurred acquisition-related costs of
Depreciation, Amortization and Accretion
During Fiscal 2022, depreciation, amortization and accretion totaled$1,379 , which increased by$986 compared to$393 during Fiscal 2021, primarily due to depreciation of our plant and equipment acquired from the U1A Acquisition. During Fiscal 2021, depreciation, amortization and accretion totaled$393 , which was consistent with$310 during Fiscal 2020. Depreciation, amortization and accretion includes 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 Fiscal 2022, interest and finance costs totaled$1,519 , a decrease of$1,361 compared to$2,880 during Fiscal 2021, which decreased by$582 compared to$3,462 during Fiscal 2020. 226
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Interest and finance costs were comprised of the following:
Year Ended July 31,
2022 2021 2020
Interest paid on long-term debt $ 409 $ 1,255 $ 1,627
Amortization of debt discount 525 1,376 1,670
Surety bond premium 539 187 130
Other 46 62 35
Total $ 1,519 $ 2,880 $ 3,462
The decrease in interest on long-term debt and amortization of debt discount
resulted from the decrease in the outstanding principal amount of our long-term
debt to $Nil as at January 31, 2022 , from $10,000 as at July 31, 2021 , and from
$20,000 as at July 31, 2020 due to the principal repayments we made during the
last two fiscal years. The increases in surety bond premiums in Fiscal 2022
resulted from the surety bonds assumed as a result of the U1A Acquisition, and
the increases in Fiscal 2021 were the result of increases in surety bond premium
rates.
Income from
During Fiscal 2022, Fiscal 2021 and Fiscal 2020, income from the equity-accounted investment comprised of the following:
Year Ended July 31,
2022 2021 2020
Share of income (loss) from URC
$ 4,126 $ 5,205 $ 2,968 During Fiscal 2022 and Fiscal 2021, we recorded a gain on dilution of ownership interest of$3,973 and$4,473 , respectively, as a result of URC issuing more shares from its equity financings, which decreased our ownership interest in URC to$15 .5% atJuly 31, 2022 , from 18.1% atJuly 31, 2021 and from 19.5% atJuly 31, 2020 . During Fiscal 2020, URC completed its initial public offering and other private placements. As a result, our ownership interest in URC decreased to 19.5% atJuly 31, 2020 from 32.6% atJuly 31, 2019 , which resulted in a gain on ownership interest dilution of$3,057 being recorded.
Debt Receivable Recovery and Gain on Settlement of Debt Receivable
In connection with the U1A Acquisition, we acquired certain indebtedness totaling$18,342 due from Anfield, which was owed to U1A prior to the closing of the U1A Acquisition (the "Anfield Debt"). We assigned a value of $Nil to the Anfield Debt net of the expected credit loss on the preliminary purchase price allocation given that the probability of the Anfield Debt being collectable was remote atDecember 17, 2021 . OnApril 19, 2022 , we entered into a debt settlement agreement (the "Settlement Agreement") and a property swap agreement (the "Swap Agreement"; and together with the Settlement Agreement, the "Anfield Agreements") with Anfield to settle the Anfield Debt. Pursuant to the Anfield Agreements, the Anfield Debt was settled by the payment by Anfield to UEC of$9,171 in cash and the issuance by Anfield to UEC in units of Anfield (each, an "Anfield Unit") with a deemed value of$9,171 , with each such Anfield Unit being comprised of one common share in the capital of Anfield (each, an "Anfield Common Share") and one Anfield Common Share purchase warrant (each whole such warrant being an "Anfield Warrant"). Each Anfield Warrant entitles UEC to acquire one Anfield Common Share at a price of CA$0.18 untilMay 12, 2027 (collectively, the "Anfield Debt Settlement"). Completion of the Anfield Agreements was contingent on Anfield raising additional financing. OnJune 7, 2022 , we closed the Anfield Debt Settlement whereby we received$9,171 in cash and Anfield Units, being comprised of 96,272,918 Anfield Common Shares with a fair value of$7,702 and 96,272,918 Anfield Warrants with a fair value of$3,249 . As a result, UEC owns approximately 16% of Anfield's outstanding shares. 227
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Consequently, we reversed the entire expected credit loss on the debt receivable and recognized a recovery on debt receivable of$18,342 on our consolidated statements of operations and comprehensive income. The fair value of the cash and the Anfield Common Shares and Anfield Warrants totaled$20,122 , which exceeded the amounts of$18,342 previously written off at the date of U1A Acquisition by$1,780 , resulting in a gain on settlement of the Anfield Debt receivable on our consolidated statements of operations and comprehensive income. Refer to Note 4: Anfield Debt Settlement and Property Swap to our Consolidated Financial Statements for Fiscal 2022 contained herein. Gain on Disposition of Assets Concurrent with the Anfield Debt Settlement, we completed the Swap Agreement whereby we have received from Anfield 25 ISR uranium projects with a fair value of$6,500 located inWyoming in exchange for theCompany's Slick Rock Project andLong Park Project located inColorado with a total carrying value of$92 . As a result, we recorded a gain of$6,408 on disposition of assets on our consolidated statements of operations and comprehensive income. Refer to Note 4: Anfield Debt Settlement and Property Swap to our Consolidated Financial Statements for Fiscal 2022 contained herein.
Unrealized Loss on
As atJuly 31, 2022 , our investments in certain equity securities are re-evaluated using the market values at period end, which resulted in an unrealized loss totaling$1,898 , which was comprised of$1,925 in unrealized loss from re-valuation of our investment in the Anfield Shares and$1,105 in unrealized loss from a re-valuation of the Anfield Warrants, offset by an unrealized gain of$1,132 from a re-valuation of our investment in UEX. Refer to Note 17: Unrealized Loss onEquity Securities contained herein.
Liquidity and Capital Resources
July 31, 2022 July 31, 2021
Cash and cash equivalents $ 32,536 $ 44,313
Current assets 102,191 75,045
Current liabilities 8,498 13,269
Working capital 93,693 61,776
During Fiscal 2022, we received net proceeds of $163,755 from the 2021 ATM
Offerings and $4,259 from the exercises of stock options and share purchase
warrants, which significantly strengthened our working capital position. As at
July 31, 2022 , we had a working capital of $93,693 , an increase of $31,917 from
$61,776 as at July 31, 2021 .
Subsequent to July 31, 2022 , we received additional cash proceeds of $14,808
under our 2021 ATM Offering, $7,178 from sales of uranium inventory, and we
entered into agreements to sell an additional 600,000 pounds of uranium
inventory for gross proceeds of $30,675 . We believe our existing cash resources,
if necessary, and the cash generated from the sale of the Company's liquid
assets, will provide sufficient funds to carry out our planned operations for
the next 12 months from the date that this Annual Report is issued.
Although our planned principal operations commenced in Fiscal 2012, from which
significant revenues from U3O8 sales were realized, our revenues generated from
sales of produced U3O8 have been inconsistent and we have yet to achieve
consistent profitability. We have a history of operating losses resulting in an
accumulated deficit balance since inception. Although we recorded net income
totaling $5,252 in Fiscal 2022, we recorded net losses in all prior years
(Fiscal 2021: $14,813 ; Fiscal 2020: $14,610 ) and we had an accumulated deficit
balance of $286,373 as at July 31, 2022 . During Fiscal 2022, net cash used in
operating activities totaled $52,987 , which included $37,206 net cash used for
the purchase of uranium concentrates. Furthermore, we may not 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 on debt financing in order to fund our operations. As
detailed in the preceding paragraph, we have also relied to a limited extent on
cash flows generated from our mining activities during Fiscal 2015, Fiscal 2013
and Fiscal 2012, however, we have yet to achieve consistent profitability or
develop positive cash flow from operations. In the future, we may also rely on
cash flows generated from the sales of our uranium concentrates to fund our
operations. 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 and
including, but not limited to, the market price of uranium, the continuing
public support of nuclear power as a viable source of electricity 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.
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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. For our fiscal year endingJuly 31, 2023 ("Fiscal 2023"), we estimate that a total of up to$3.7 million will be incurred on our mineral projects for permitting, exploration and pre-extraction activities. We hold mineral rights in the States ofArizona ,New Mexico ,Texas andWyoming , inCanada and in theRepublic of Paraguay , with annual land-related payments totaling$4.2 million to maintain these rights in good standing. Our anticipated operations, including exploration and pre-extraction activities, however, 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. 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 market price of uranium weakens; ? if the market price of our common stock weakens;
? if the COVID-19 pandemic worsens or continues over an extended period and
causes further financial market uncertainty; and
? if a nuclear incident, such as the event that occurred in
were to occur, continuing public support of nuclear power as a viable source
of electricity generation may be adversely affected, which may result in
significant and adverse effects on both the nuclear and uranium industries.
Our continuation as a going concern beyond 12 months from the date this Annual Report is filed will be dependent upon our ability to obtain adequate additional financing, as our operations are capital intensive and future capital expenditures are expected to be substantial. Our long-term success, including the recoverability of the carrying values of our assets and our ability to acquire additional uranium projects and 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. Equity Financings OnFebruary 21, 2020 , we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by theSEC onMarch 3, 2020 (the "2020 Shelf") providing for the public offer and sale of certain securities of the Company from time to time, at our discretion, of up to an aggregate offering amount of$100 million . As a result of the 2020 Shelf, ourMarch 10, 2017 Form S-3 registration statement was then deemed terminated and, as a consequence, our thenApril 9, 2019 ATM Offering Agreement (the "April 2019 ATM Offering Agreement") withH.C. Wainwright & Co, LLC (as the lead manager) and the co-managers as set forth in theApril 2019 ATM Offering Agreement (collectively, the ATM Managers") and its related offering terminated unless renewed under the 2020 Shelf. 229
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OnMarch 19, 2020 , we entered into an Amending Agreement to theApril 2019 ATM Offering Agreement with the ATM Managers under which the Company may, from time to time, sell shares of its common stock having an aggregate offering price of up to$30 million through the ATM Managers through the 2020 Shelf (the "2020 ATM Offering"). OnSeptember 23, 2020 , and under our 2020 Shelf, we completed an offering of 12,500,000 units at a price of$1.20 per unit for gross proceeds of$15,000 (the "September 2020 Offering"). Each unit was comprised of one share of the Company and one-half of one share purchase warrant, and each whole warrant entitles its holder to acquire one share at an exercise price of$1.80 per share exercisable immediately upon issuance and expiring 24 months from the date of issuance. In connection with theSeptember 2020 Offering, we also issued compensation share purchase warrants to agents as part of share issuance costs to purchase 583,333 shares of our Company exercisable at an exercise price of$1.80 per share and expiring 24 months from the date of issuance.
During Fiscal 2021, we issued 13,668,906 shares of the Company's common stock
under our 2020 ATM Offering for net cash proceeds of
On
OnApril 8, 2021 , and under our 2020 Shelf, we completed an offering of 3,636,364 shares of the Company's common stock at a price of$3.30 per share for net proceeds of$11,316 (the "April 2021 Offering"). In connection with theApril 2021 Offering, we also issued, on a private placement basis, 181,818 Agent Warrants to the agent as partial compensation, and each Agent Warrant entitles its holder to acquire one share of common stock at an exercise price of$4.125 per share and expiring five years from the date of issuance. OnMay 17, 2021 , we filed a Form S-3 shelf registration statement under the Securities Act, which was declared effective by theSEC onJune 1, 2021 , providing for the public offer and sale of certain securities of the Company from time to time, at our discretion, of up to an aggregate offering amount of$200 million (the "2021 Shelf"), which included an at-the-market offering agreement prospectus (the "May 2021 ATM Offering") covering the offering, issuance and sale of up to a maximum offering of$100 million as part of the$200 million under the 2021 Shelf. OnMay 14, 2021 , we entered into an at-the-market offering agreement (the "2021 ATM Offering Agreement") withH.C. Wainwright & Co., LLC and certain co-managers (collectively, the "2021 ATM Managers") as set forth in the 2021 ATM Offering Agreement under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to$100 million through the 2021 ATM Managers selected by us. OnNovember 26, 2021 , we filed a prospectus supplement to our 2021 Shelf with respect to the continuation of theMay 2021 ATM Offering Agreement with the ATM Managers under which we may, if eligible, from time to time, sell shares of our common stock having an aggregate offering price of up to$100 million through the ATM Managers selected by us (the "November 2021 ATM Offering"; and, collectively withMay 2021 ATM Offering, the "2021 ATM Offerings").
During Fiscal 2021, we issued 2,265,700 shares of the Company's common stocks
under our
During Fiscal 2022, we issued 47,507,536 shares of the Company's common stocks
under our 2021 ATM Offerings for net cash proceeds of
Subsequent to
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Table of Contents Credit Facility OnDecember 5, 2018 , we entered into the Third Amended and Restated Credit Agreement to our credit facility (the "Credit Facility") with our lenders (each, a "Lender"), whereby we and the Lenders agreed to certain further amendments to our Credit Facility, under which initial funding of$10,000 was received by the Company upon closing of the Credit Facility onJuly 30, 2013 , and additional funding of$10,000 was received by the Company upon closing of the amended Credit Facility onMarch 13, 2014 . The Third Credit Amended and Restated Agreement superseded, in their entirety, the Company's prior Second Amended and Restated Credit Agreement, dated and effectiveFebruary 9, 2016 , the Amended and Restated Credit Agreement, dated and effectiveMarch 13, 2014 , and the Credit Agreement dated and effectiveJuly 30, 2013 , with our Lenders. During Fiscal 2021, we made voluntary payments totaling$10,000 to certain Lenders, and during Fiscal 2022, we made payment of$10,000 to the remaining Lender, which decreased the principal balance outstanding to $Nil as atJuly 31, 2022 under the Credit Facility. Pursuant to the terms of the Third Amended and Restated Credit Agreement, during Fiscal 2022, we issued 161,594 shares with a fair value of$600 , during Fiscal 2021, we issued an aggregate of 1,249,039 shares with a fair value of$1,170 , and during Fiscal 2020, we issued an aggregate of 1,743,462 shares to our Lenders, with a fair value of$1,400 , as payment of anniversary fees to our Lenders.
Refer to Note 11: Long-Term Debt to our Consolidated Financial Statements herein.
Operating Activities During Fiscal 2022 and Fiscal 2021, net cash used in operating activities totaled$52,987 and$41,470 , respectively, of which$37,206 and$28,961 , respectively, was for purchases of uranium concentrates. Other significant operating expenditures included mineral property expenditures, general and administrative expenses and interest payments. During Fiscal 2020, net cash used in operating activities totaled$12,870 , primarily for maintaining production readiness, mineral property expenditures and general and administrative expenses. Financing Activities During Fiscal 2022, net cash provided from financing activities totaled$157,266 , primarily from net cash of$163,755 from the 2021 ATM Offerings and$4,259 from the exercises of stock options and share purchase warrants, offset by the payments of$557 for tax withholding amounts related to the issuance of RSU and PRSU shares, the principal payment of$10,000 to our remaining Lender under the Credit Facility and$191 for a promissory note. During Fiscal 2021, net cash provided by financing activities totaled$84,458 , primarily from net cash of$89,932 from various offerings, and$5,504 from the exercises of stock options and share purchase warrants, offset by the payments of$833 for tax withholding amounts related to the issuance of RSU shares, the principal payment of$10,000 to certain Lenders under the Credit Facility and$145 for a promissory note and a government loan. During Fiscal 2020, net cash provided by financing activities totaled$307 from certain government loans. Investing Activities During Fiscal 2022, net cash used by investing activities totaled$110,843 , comprised of net cash used in the U1A Acquisition of$113,588 , cash used in investment in equity securities of$15,215 , cash used for investment in mineral rights and properties of$590 and cash used for the purchase of property, plant and equipment of$620 , offset by cash proceeds of$9,980 from sales of equity securities,$9,171 from recovery of the Anfield Debt receivable and$19 from the disposition of assets. During Fiscal 2021, net cash used by investing activities totaled$3,625 , primarily for cash used in investment in term deposits of$10,000 , cash used in the acquisition of URC shares of$3,397 , cash used in the investment in mineral rights and properties of$80 and cash used in the purchase of property, plant and equipment of$148 , offset by cash received from the redemption of term deposits of$10,000 . During Fiscal 2020, net cash provided by investing activities totaled$11,671 , primarily from cash received from the redemption of term deposits totaling$11,832 , offset by cash used in the investment in mineral rights and properties of$80 and cash used in the purchase of property, plant and equipment of$84 . 231
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Table of Contents Stock Options and Warrants As atJuly 31, 2022 , the Company had 8,880,527 stock options outstanding at a weighted-average exercise price of$1.58 per share, and 3,615,454 share purchase warrants outstanding at a weighted-average exercise price of$1.92 per share. As atJuly 31, 2022 , outstanding stock options and share purchase warrants, which were all in-the-money, represented a total 12,495,981 shares issuable for gross proceeds of approximately$21.0 million should these stock options and share purchase warrants be exercised in full. The exercise of these stock options and share purchase warrants is at the discretion of the respective holders and, accordingly, there is no assurance that any of these stock options or share purchase warrants will be exercised in the future. Plan of Operations For Fiscal 2023, uranium extraction at PAA-1, 2 and 3 of ourPalangana Mine and at the recently acquiredChristensen Ranch Mine is expected to continue being operated at a reduced pace, including the deferral of major pre-extraction expenditures, and to remain in a state of operational readiness in anticipation of a recovery in uranium prices. In addition, we will continue the drilling program at ourBurke Hollow Project . Material Commitments
As at
Payment Due by Period
Less Than 1 More Than 5
Contractual Obligations Total Year 1-3 Years 3-5 Years Years
Asset Retirement Obligations
$ 4,998 $ 20,755 Operating Lease Obligations 1,656 291 217 173 975 Uranium Inventory Purchase Obligations 130,962 65,309 62,033 3,620 - Other Loan Obligations - Principal and Interests 66 66 - - - Total$ 161,423 $ 65,880 $ 65,022
$ 8,791 $ 21,730 As atJuly 31, 2022 , we were renting or leasing office premises inTexas ,Arizona andWyoming ,U.S. ,Vancouver, British Columbia , Canada, andParaguay for total monthly payments of$28 . Office lease agreements for theU.S. andCanada expire betweenJuly 2023 andMarch 2027 .
Commitments for Management Services
As at
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 herein.
The preparation of financial statements in conformity withU.S. GAAP requires management to make judgements, estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reported periods. Areas requiring significant judgements, estimates and assumptions include the valuation of acquired mineral rights and properties, existence of impairment indicators for the Company's long-lived assets, valuation and measurement of impairment losses on mineral rights and properties, valuation of recoverability of a credit loss, valuation of stock-based compensation and valuation of asset retirement obligations. Other areas requiring estimates include allocations of expenditures to inventories, depletion and amortization of mineral rights and properties and depreciation of property, plant and equipment. Actual results could differ significantly from those estimates and assumptions. The following summary provides a description of our critical accounting policies. 232
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Mineral Rights and Exploration Stage
Acquisition costs of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time proven or probable reserves are established for that project. We have established the existence of mineralized materials for certain uranium projects, including our ISR Mines. However, we have not established proven or probable reserves for any of our uranium projects, including our ISR Mines. Furthermore, we have no plans to establish proven or probable reserves for any of our uranium projects for which we plan on utilizing ISR mining. As a result, and despite the fact that we commenced extraction of mineralized materials at our ISR Mines, we remain in the Exploration Stage and will continue to remain in the Exploration Stage until such time proven or probable reserves have been established. Companies in the Production Stage that have 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. Since we are in the Exploration Stage, it has resulted in our reporting of larger losses than if we had been in the Production Stage due to the expensing, instead of capitalization, of expenditures relating to ongoing mine development activities. Additionally, there would be no corresponding amortization allocated to our future reporting periods 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 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 and 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 market valuation method uses prices paid for a similar asset by other purchasers in the market, normalized for any differences between the assets. 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. 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 arise. Equity Investments Investments in an entity in which our ownership is greater than 20% but less than 50%, or where other facts and circumstances indicate that we have the ability to exercise significant influence over the operating and financing policies of an entity, are accounted for using the equity method in accordance with ASC 323: Investments -Equity Method and Joint Ventures . Equity-accounted investments are recorded initially at cost and adjusted subsequently to recognize our share of the earnings, losses or other changes in capital of the investee entity after the date of acquisition. We periodically evaluate whether declines in fair values of our equity investments below the carrying value are other-than-temporary, and if so, whether an impairment loss is required. Additionally, we hold certain equity investments in entities that we do not have the ability to exercise significant influence. These equity investments represent our ownership interests in certain entities, and therefore meet the definition of an equity security under ASC 321 Investments -Equity Securities and are measured at fair value at each period end, with unrealized holding gains or losses recorded to earnings. 233
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Impairment of Long-lived Assets
Long-lived assets including mineral rights and property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. Management applies judgment to assess whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable giving rise to the requirement to conduct an impairment test. Circumstances which could trigger an impairment test include, but are not limited to: (i) significant decreases in the market price of the asset; (ii) significant adverse changes in the business climate or legal factors including significant decreases in uranium prices; (iii) significant increase in reclamation costs and accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; (iv) current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and (v) current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. Recoverability of these assets is measured by comparing the carrying value to the future undiscounted cash flows expected to be generated by the assets. When the carrying value of an asset exceeds the related undiscounted cash flows, an impairment loss is recorded by writing down the carrying value of the related asset to its estimated fair value, which is determined using discounted future cash flows or other measures of fair value.
Restoration and Remediation Costs (Asset Retirement Obligations)
Various federal and state mining laws and regulations require our Company to reclaim the surface areas and restore underground water quality to the pre-existing quality or class of use after the completion of mining. We recognize the present value of the future restoration and remediation costs as an asset retirement obligation (each, an "ARO") in the period in which we incur an obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. AROs consist of estimated final well closure, plant and equipment decommissioning and removal and environmental remediation costs to be incurred by our Company in the future. The AROs are estimated based on the current costs escalated at an inflation rate and discounted at a credit adjusted risk-free rate. The AROs are capitalized as part of the costs of the underlying assets and amortized over its remaining useful life. The AROs are accreted to an undiscounted value until they are settled. The accretion expenses are charged to earnings and the actual retirement costs are recorded against the AROs when incurred. Any difference between the recorded AROs and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement. Stock-based Compensation We measure stock-based awards at fair value on the date of the grant and expense the awards in our Consolidated Statements of Operations and Comprehensive Loss over the requisite service period of employees or consultants. The fair value of stock options is determined using the Black-Scholes Valuation Model. The fair value of RSUs is determined using the share price of the Company at the date of grant. The fair value of PRSUs is determined using a Monte Carlo Simulation Model. Stock-based compensation expense related to stock awards is recognized over the requisite service period on a graded vesting basis. Forfeitures are accounted for as they occur. Subsequent Events OnJune 13, 2022 , we entered into of a definitive UEX Agreement with UEX pursuant to which UEC would acquire all of the issued and outstanding common shares of UEX in an all-share transaction by way of statutory plan of arrangement (the UEX Acquisition). OnJune 21, 2022 , under the UEX Agreement, we completed a private placement in UEX, whereby UEC acquired 11,627,907 UEX common shares at a price of CA$0.43 per UEX common share for total consideration of$3,867 . Subsequently, UEC acquired an additional 6,844,000 UEX common shares for total consideration of$1,914 by making purchases through the facilities of theToronto Stock Exchange subject to and in accordance with applicable laws. As ofJuly 31, 2022 , we owned 18,471,907 UEX common shares, representing a 3% interest in UEX, with a fair value of$6,914 . The investment in UEX was accounted for as investment in equity securities with a change in fair value of$1,132 recorded as unrealized gain in our consolidated statements of operations and comprehensive income. 234
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Subsequent toJuly 31, 2022 , we closed the UEX Acquisition under theCanada Business Corporations Act, pursuant to which UEC acquired all of the issued and outstanding common shares of UEX that we did not already own. The UEX Acquisition was approved at a special meeting of UEX securityholders held onAugust 15, 2022 , and was subsequently approved by theSupreme Court of British Columbia onAugust 18, 2022 . Pursuant to the terms of the UEX Acquisition, UEX shareholders received 0.090 common shares of UEC for each UEX common share held. As a result, we issued 48,518,745 shares of UEC in exchange for the common shares of UEX that UEC did not already own. The UEX shares we owned before closing the UEX Acquisition were returned to treasury.
Subsequent to
Subsequent toJuly 31, 2022 , we issued 3,510,100 shares of the Company's common stock under our 2021 ATM Offerings for net cash proceeds of$14,808 and received cash proceeds of$6,141 from the exercise of share purchase warrants. 235
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