URANIUM ENERGY CORP (UEC)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Expressed in thousands of U.S. dollars, except per share amounts)

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 the SEC and, including, without limitation, this Form 10-K filing for the fiscal year ended July 31, 2024, 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 ended July 31, 2024, 2023 and 2022 and our financial condition as at July 31, 2024 and 2023, with a particular emphasis on Fiscal 2024, our most recently completed fiscal year.

Business

We have been primarily engaged in uranium mining and related activities, including exploration, pre-extraction, extraction and processing, on uranium projects located in the United States, Canada and the Republic of Paraguay.

During the fourth quarter of Fiscal 2024, we revised the financial information which our Chief Executive Officer, who is our chief operating decision maker ("CODM"), uses to evaluate performance and allocate resources. As a result, the Company’s reportable segments have been changed from one reportable segment to the following:

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 the vicinity of our ISR Mines, which process material from our ISR Mines into drums of U3O8 for shipping to a third-party storage and sales facility.  At July 31, 2024, we had no uranium supply or off-take agreements in place.

On January 16, 2024, we announced restarting uranium extraction at our fully permitted, and past producing, Christensen Ranch Mine ISR operation in Wyoming. The first extraction is expected prior to the end of our next quarter and will be funded with existing cash on the Company's balance sheet.

Uranium recovered from the Christensen Ranch Mine ISR Project will be processed at our Irigaray CPP. The Irigaray CPP is the hub central to our four fully permitted ISR projects located in the Powder River Basin of Wyoming, including our Christensen Ranch Mine, Reno Creek, Moore Ranch and Ludeman Projects. An application to increase the licensed capacity of the Irigaray CPP from the 2.5 million pounds of U3O8 per year to 4.0 million pounds of U3O8 per year was submitted to the WDEQ in November 2023; and approval is expected later in 2024. During August of 2024 we commenced the process for uranium extraction which is being funded with existing cash on the Company’s balance sheet.

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To enable a faster extraction restart, extensive preparations at the Christensen Ranch Mine wellfields and satellite processing plant were completed in 2023.  This included the reinstallation of equipment, re-attachment of piping and a variety of electrical testing, repairs and upgrades to the existing facilities. Since that time, additional work has progressed, including the hiring of additional operational personnel, preparation of a detailed wellfield startup plan, final preparations for plant and wellfield operations and the installation of cased wells in two new wellfield header houses in Mine Unit 10 (Modules 10-7 and 10-8).

In Texas, our fully-licensed and 100% owned Hobson Processing Facility forms the basis for our regional operating strategy in the State of Texas, specifically the South Texas Uranium Belt where we utilize ISR mining.  We utilize a “hub-and-spoke” strategy whereby the Hobson Processing Facility, which has a physical capacity to process uranium-loaded resins up to a total of 2.0 million pounds of U3O8 annually and is licensed to process up to four million pounds of U3O8 annually, acts as the central processing site (the “hub”) for our Palangana Mine, and future satellite uranium mining activities, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the “spokes”).

On August 4, 2023, we acquired a portfolio of exploration-stage projects in the Athabasca Basin for CA$1.5 million from Rio Tinto Exploration Canada Inc., a subsidiary of Rio Tinto Inc.  With this acquisition, we added an additional 44,444 acres of prospective ground in the Athabasca Basin to our existing portfolio.

We also hold certain mineral rights in various stages in the States of Arizona, New Mexico, Texas and Wyoming, and in Canada and in the Republic of Paraguay, many of which are located in historically successful mining areas and have been the subject of past exploration and pre-extraction activities by other mining companies.

Our operating and strategic framework is to become a leading low-cost North American focused uranium supplier 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

With the completion of the U1A Acquisition in December 2021, we expanded our footprint in Wyoming with our Wyoming hub-and-spoke operations. The acquisition of UEX in August 2022, and the acquisition of Roughrider Mineral Holdings Inc. in October 2022, further expanded our footprint in Canada and, in particular, the Athabasca Basin in Saskatchewan. In the meantime, we continue to establish additional uranium mines through exploration and pre-extraction activities and direct acquisitions in both the U.S. and Paraguay, 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.

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 in order to fund our operation.  For the years ended July 31, 2023 and 2022, we have also relied on cash flows generated from the sales of our purchased uranium inventories under our Physical Uranium Program to fund our operations, which resulted in total of $57.0 million in gross profits.  However, we did not sell any of our purchased uranium during Fiscal 2024. We have yet to achieve consistent profitability or develop consistent 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 additional 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 the mineral projects we operate.  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 economic viability of our mining activities, including the expected duration and profitability of our ISR Mines, of any future satellite ISR mines, such as our Burke Hollow, Goliad, Ludeman, Antelope and Charlie Projects, and of our recently acquired traditional uranium mines in Athabasca Basin, in Saskatchewan, Canada, 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.

As at July 31, 2024, 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.

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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:

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 2024, we recorded sales and service revenue of $224 and realized gross profit of $37.  For Fiscal 2023, we recorded sales and service revenue of $164,389 and realized gross profit of $49,670.  For Fiscal 2022, we recorded sales and service revenue of $23,161 and realized gross profit of $7,293.

We recorded a net loss of $29,221 ($0.07 per share) for Fiscal 2024 and $3,307 ($0.01 per share) for Fiscal 2023, respectively, while we recorded a net income of $5,252 ($0.02 per share) for Fiscal 2022.  Income (loss) from operations during Fiscal 2024, Fiscal 2023 and Fiscal 2022 was $(56,402), $8,867 and $(22,710), respectively.

While we remain in a state of operational readiness, uranium extraction expenditures incurred at our ISR Mines, 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.

We established our physical uranium program to purchase drummed uranium at prevailing spot prices which are below most global industry mining costs in Fiscal 2021.  As of July 31, 2024, we have 700,000 pounds of uranium inventory purchase commitments outstanding for a total purchase price of $26,740. Various deliveries are scheduled to occur from Fiscal 2025 into Fiscal 2026 at a weighted average price of $38.20 per pound of uranium.

During Fiscal 2024, as part of our Physical Uranium Program, we purchased 1,295,000 pounds of uranium concentrates with a total cost of $69.6 million.  As of July 31, 2024, the carrying value of our uranium inventories was $75,440 (July 31, 2023: $5,801).

Sales and Service Revenue

During Fiscal 2024, we recorded sales of $Nil from the sale of uranium concentrate inventory, which decreased by $163,950 and $22,946 compared to Fiscal 2023 and Fiscal 2022, respectively.  In addition, we recorded revenue from toll processing services of $224 in Fiscal 2024, which was generated from processing uranium resins according to a toll processing agreement resulting from the U1A Acquisition, compared to $439 in Fiscal 2023 and $215 in Fiscal 2022.  As a result, we realized gross profit of $37, representing a gross profit margin of 16.5% in Fiscal 2024, compared to $49,670 in Fiscal 2023 and $7,293 in Fiscal 2022.

The table below provides a breakdown of sales and service revenue and 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 the nature of mineral property expenditures during the past three fiscal years:

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During Fiscal 2024, the exploration expenditures, such as drilling and preliminary economic assessments, were primarily spent on the following projects:

During Fiscal 2024, the production readiness expenditures were primarily spent on the following projects:

During Fiscal 2024, the property maintenance expenditures were primarily spent on the following projects:

General and Administrative

During Fiscal 2024, general and administrative (“G&A”) expenses totaled $21,873, compared to $20,064 in Fiscal 2023 and $15,026 in Fiscal 2022.  G&A expenses were comprised of the following:

The following summary provides a discussion of the major expense categories, including analyses of factors that caused significant variances from year-to-year:

Acquisition-related Costs

During Fiscal 2023, the acquisition-related costs of UEX and the Roughrider Project were capitalized in our consolidated balance sheets as both the UEX and Roughrider Project acquisitions were accounted for as asset acquisitions under US GAAP. During Fiscal 2022, we incurred acquisition-related costs of $3,444 in our statement of operations in connection with the U1A Acquisition, as it was accounted for as a business combination.

Depreciation, Amortization and Accretion

During Fiscal 2024, depreciation, amortization and accretion totaled $2,183, which increased by $176 compared to $2,007 during Fiscal 2023.  During Fiscal 2023, depreciation, amortization and accretion totaled $2,007, which increased by $628 compared to $1,379 during Fiscal 2022, primarily due to a full-year depreciation of our plant and equipment acquired from the U1A Acquisition compared to seven months of depreciation in Fiscal 2022.  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.

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Other Income and Expenses

Interest and Finance Costs

Interest and finance costs were comprised of the following:

During Fiscal 2024, surety bond premium was $772 compared to $760 during Fiscal 2023 and $539 during Fiscal 2022.  The surety bond premiums resulted from the surety bonds assumed as a result of the U1A Acquisition.  During Fiscal 2023, 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.

Income from Equity-Accounted Investment

During Fiscal 2024, Fiscal 2023 and Fiscal 2022, income from the equity-accounted investment comprised of the following:

During Fiscal 2024, Fiscal 2023 and Fiscal 2022, we recorded a gain on dilution of ownership interest in Uranium Royalty Corp. (“URC”) of $425, $654 and $3,973, respectively, as a result of URC issuing more shares from its equity financings, which decreased our ownership interest in URC to 14.8% at July 31, 2024, from 14.9% at July 31, 2023 and from 15.5% at July 31, 2022.

During Fiscal 2024, Fiscal 2023 and Fiscal 2022, we recorded a share of URC’s income of $2,032, $414 and $153, respectively.  During Fiscal 2024 and Fiscal 2023, we also recorded a share of JCU’s loss of $1,440 and $2,062, respectively, since the acquisition of UEX which owns 50% of JCU.

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 at December 17, 2021.

On April 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 until May 12, 2027 (collectively, the “Anfield Debt Settlement”).  Completion of the Anfield Agreements was contingent on Anfield raising additional financing.

On June 7, 2022, we closed the Anfield Debt Settlement whereby we received $9,171 in cash and the 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.

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 in Fiscal 2022.  The fair value of the cash and the Anfield Units 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.

Gain on Disposition of Assets

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 in Fiscal 2022.  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.

Fair value gain (loss) on Equity Securities

As at July 31, 2024, our investments in certain equity securities are re-evaluated using the market values at period end, which resulted in fair value gain totaling $27,506 compared to fair value losses of $13,083 in Fiscal 2023 and $1,351 in Fiscal 2022.  Refer to Note 19: Fair Value Gain (Loss) on Equity Securities of the Consolidated Financial Statements for the year ended July 31, 2024 contained herein.

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Liquidity and Capital Resources

During Fiscal 2024, we received net proceeds of $176,708 from equity financing and from exercises of stock options and share purchase warrants.  As at July 31, 2024, we had a working capital of $206,022. The increase in accounts payable and accrued liabilities from July 31, 2023 to July 31, 2024 is primarily attributable to the purchase of uranium inventory amounting to $8.9 million at the end of Fiscal 2024, which had no impact on the working capital as at July 31, 2024.

We have a history of operating losses resulting in an accumulated deficit balance since inception.  Although we recorded net income in Fiscal 2022, we recorded net losses in Fiscal 2024 and all prior years, and we had an accumulated deficit balance of $318,901 as at July 31, 2024.  During Fiscal 2024, net cash used in operating activities totaled $106,487.  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.  We have yet to achieve consistent profitability or develop consistent positive cash flow from operations.  In recent years, we also rely on cash flows generated from the sales of our purchased 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.

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.

We hold mineral rights in the States of Arizona, New Mexico, Texas and Wyoming, in Canada and in the Republic of Paraguay, with annual land-related payments totaling $3.8 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:

We believe our existing cash resources and, if necessary, cash generated from the sale of the Company’s liquid assets, will provide sufficient funds to carry out our planned operations for 12 months from the date that this Annual Report is issued.  Our continuation as a going concern for a period beyond those 12 months will be dependent upon our ability to generate cash flow from the sales of our uranium inventories under our Physical Uranium Program and 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

On May 17, 2021, we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by the SEC on June 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.

On May 14, 2021, we entered into an at-the-market offering agreement (the “2021 ATM Offering Agreement”) with H.C. Wainwright & Co., LLC and certain co-managers (collectively, the “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 ATM Managers selected by us.

On November 26, 2021, we filed a prospectus supplement to our 2021 Shelf with respect to the continuation of the May 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 an additional $100 million for a total of $200 million through the ATM Managers selected by us (the “November 2021 ATM Offering”; and, collectively with the May 2021 ATM Offering, the “2021 ATM Offering”).

On November 16, 2022, we filed a Form S-3 automatic shelf registration statement under the Securities Act, which became effective upon filing, providing for the public offer and sale of certain securities of the Company from time to time, at our discretion, of an undetermined dollar value of common stock, debt securities, warrants to purchase common stock or debt securities, subscription receipts for and units which include common stock, debt securities, warrants or any combination thereof (the “2022 Shelf”), which included an at-the-market offering agreement prospectus (the “2022 ATM Offering”; and, collectively, with the 2021 ATM Offering, the “ATM Offerings”) covering the offering, issuance and sale of up to a maximum offering of $300 million under the 2022 Shelf.

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On November 16, 2022, we entered into an at-the-market offering agreement (the “2022 ATM Offering Agreement”) with the ATM Managers as set forth in the 2022 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 $300 million through the ATM Managers selected by us.

During Fiscal 2022, we issued 47,507,536 shares of the Company’s common stock under our ATM Offerings for gross cash proceeds of $167,588. The total issuance costs were $3,833, which includes compensation of $3,774 paid to the ATM Managers.

During Fiscal 2023, we issued 15,171,253 shares of the Company’s common stock under our ATM Offerings for gross cash proceeds of $59,816. The total issuance costs were $1,396, which includes compensation of $1,346 paid to the ATM Managers.

During Fiscal 2024, we issued 26,375,699 shares of the Company’s common stock under our ATM Offerings for gross cash proceeds of $171,738. The total issuance costs were $3,864, all of which were related to compensation paid to the ATM Managers.

Credit Facility

On December 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 on July 30, 2013, and additional funding of $10,000 was received by the Company upon closing of the amended Credit Facility on March 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 effective February 9, 2016, the Amended and Restated Credit Agreement, dated and effective March 13, 2014, and the Credit Agreement dated and effective July 30, 2013, with our Lenders.

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 2022, we made payment of $10,000 to the remaining Lender, which decreased the principal balance outstanding to $Nil, and the Credit Facility was terminated as at July 31, 2022.

Operating Activities

During Fiscal 2024, we recorded net cash used in operating activities of $106,487.  The negative cash flow was primarily driven by the purchase of uranium concentrates of $69,626 and operating expenditures such as mineral property expenditures and G&A expenses.  During Fiscal 2023, we recorded net cash provided by operating activities of $72,573. The positive cash flow was primarily driven by the gross profit of $49,670, a decrease in our inventory balance of $60,363 and was partially offset by operating expenditures such as mineral property expenditures and G&A expenses.  During Fiscal 2022, net cash used in operating activities totaled $52,987, of which $37,206 was for purchases of uranium concentrates.

Financing Activities

During Fiscal 2024, net cash provided from financing activities totaled $173,076, primarily from net cash of $176,708 from our ATM Offerings and the exercises of stock options and share purchase warrants, offset by payments of $3,632 for tax withholding amounts related to the issuance of options, RSU and PRSU shares.

During Fiscal 2023, net cash provided from financing activities totaled $65,417, primarily from net cash of $66,527 from our ATM Offerings and the exercises of stock options and share purchase warrants, offset by payments of $1,044 for tax withholding amounts related to the issuance of RSU and PRSU shares.

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 our then Credit Facility and $191 for a promissory note.

Investing Activities

During Fiscal 2024, net cash used for investing activities totaled $24,641, comprised of cash used for investment in equity securities of $12,115, the purchase of an additional interest in URC of $9,238, capital contributions to JCU of $2,876, cash used for investment in mineral rights and properties of $1,441 and cash used for the purchase of property, plant and equipment of $1,987, offset by cash proceeds of $3,008 from the sale of equity securities and $8 from the disposition of assets.

During Fiscal 2023, net cash used for investing activities totaled $124,780, comprised of net cash used for the acquisition of the Roughrider Project of $82,117, cash used for investment in equity securities of $47,192, capital contributions to JCU of $1,415, cash used for investment in mineral rights and properties of $101 and cash used for the purchase of property, plant and equipment of $555, offset by cash received as a result of the acquisition of UEX of $1,984 and $26 from the disposition of assets.

During Fiscal 2022, net cash used for 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.

Stock Options and Warrants

As at July 31, 2024, the Company had 5,103,339 stock options outstanding at a weighted-average exercise price of 2.66 per share, and 1,265,319 share purchase warrants outstanding at a weighted-average exercise price of $3.42 per share.  As at July 31, 2024, the Company had 5,053,196 in-the-money stock options outstanding at a weighted-average exercise price of $2.62 per share and 1,265,319 in-the-money share purchase warrants outstanding at a weighted-average exercise price of $3.42 per share.  As at July 31, 2024, outstanding in-the-money stock options and share purchase warrants represented a total of 6,318,515 shares issuable for gross proceeds of approximately $17.6 million should the stock options and the share purchase warrants be exercised in full.  The exercise of these stock options and share purchase warrants is at the discretion of their respective holders and, accordingly, there is no assurance that any of these stock options or share purchase warrants will be exercised in the future.

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Plan of Operations

We restarted extracting uranium at Christensen Ranch Mine in August 2024 and expect first shipment of yellowcake in November or December 2024. We will hire additional personnel for future wellfield development and expand extraction at the Christensen Ranch Mine in Fiscal 2025. Our Palangana 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 addition, we will continue the drilling program at our Burke Hollow and Roughrider Projects, as well as carry out additional exploration activities as required on our remaining project portfolio.

Material Contractual Obligations and Commitments

As at July 31, 2024, significant payment obligations of the Company over the next five years and beyond are as follows:

As at July 31, 2024, we were renting or leasing office premises in Texas, Arizona and Wyoming, U.S., Vancouver, British Columbia, Canada, and Paraguay for total monthly payments of $44.  Office lease agreements for the U.S. and Canada expire between July 2026 and November 2029.

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 with U.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.

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 the uranium projects we operate, including our ISR Mines.  Furthermore, we currently 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 lower income or 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.

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Business Combination and Asset Acquisition

When an acquisition does not meet the definition of a business combination, as the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, we account for the acquisition as an asset acquisition.  In an asset acquisition, any direct acquisition-related transaction costs are capitalized as part of the purchase consideration.  Deferred taxes are recorded on temporary book/tax differences in an asset acquisition using the simultaneous equations method and adjusted the assigned value of the non-monetary assets acquired to include the deferred tax liability.

When an acquisition is accounted for as a business combination, we recognize and measure the assets acquired and liabilities assumed 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 “income valuation method”).  The market valuation method uses prices paid for a similar asset by other purchasers in the market, normalized for any differences between the assets (the “market valuation method”).  The cost valuation method is based on the replacement cost of a comparable asset at the time of the acquisition adjusted for depreciation and economic and functional obsolescence of the asset (the “cost valuation method”).  If the initial accounting for the business combination is incomplete by the end of the reporting period in which the acquisition occurs, an estimate will be recorded.  Subsequent to the acquisition date, and not later than one year from the acquisition date, we will record any material adjustments to the initial estimate based on new information obtained that would have existed as of the date of the acquisition.  Any adjustment that arises from information obtained that did not exist as of the date of the acquisition will be recorded in the period the adjustments arises.

Equity Investments

Investments in an entity in which our ownership is greater than 20% but less than 50%, a 50/50 joint venture which the Company does not have control, or an entity where other facts and circumstances indicate that we have the ability to exercise significant influence over its operating and financing policies, 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.

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 and material adverse changes relating to the Company’s legal rights to its mineral rights and properties; (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.

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Subsequent Events

Acquisition of Wyoming project

On September 20, 2024, the Company, through its wholly-owned subsidiary, UEC Sweetwater Corp., a Delaware corporation (the “Buyer”) entered into a stock purchase agreement (the “Stock Purchase Agreement”) with Rio Tinto America Inc., a Delaware corporation (the “Seller”), pursuant to which the Company through the Buyer will acquire from the Seller all of the issued and outstanding shares of capital stock (the “Shares”) of (i) Kennecott Uranium Company, a Delaware corporation (“KUC”), which is a joint venture participant of, and owns a 50% ownership interest in, the Green Mountain Mining Venture, an unincorporated Wyoming contractual joint venture (“GMMV”), and (ii) Wyoming Coal Resources Company, a Delaware corporation (“WCRC”), which is a joint participant of, and owns a 50% ownership interest in GMMV (collectively, the “Acquisition”). KUC, WCRC and GMMV, collectively, own or hold the assets, rights and obligations comprised of: (i) the facilities, equipment, improvements and fixtures for the processing of uranium located in Sweetwater County, Wyoming owned by KUC, WCRC and GMMV, and related facilities and impoundments; (ii) the Jackpot and Big Eagle properties located in Wyoming; (iii) the mineral and real property interests which are owned or leased by KUC, WCRC or GMMV, subject to the permitted encumbrances, including patented and unpatented mining and millsite claims, leaseholds, and material easements and rights-of-way of record; and (iv) the other rights and interests in uranium mineralization located in Fremont and Sweetwater Counties, Wyoming owned or held by any of KUC, WCRC or GMMV (collectively, the “Project”).

The consideration for the Acquisition payable at closing of the Stock Purchase Agreement is $175 million in cash, subject to customary working capital adjustments as provided for in the Stock Purchase Agreement, with closing expected to occur in the fourth quarter of calendar year 2024.

Upon completion of the Acquisition, the Company will arrange to replace approximately $25 million in surety bonds securing future reclamation costs relating to the Project. In addition, from and after the completion of the Acquisition the Company and the Buyer shall continue to indemnify the Seller from most of the liabilities associated with the Project.

The closing of the Acquisition is subject to certain conditions customary for an Acquisition of this nature, including that the Wyoming Nuclear Regulator shall have preliminarily approved the application for the transfer of a Radioactive Materials License to the Buyer, and the same shall not have been stayed or enjoined.

The foregoing description of the Stock Purchase Agreement does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Stock Purchase Agreement, which is filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated September 23, 2024.

Other subsequent events

Subsequent to July 31, 2024,

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Expressed in thousands of U.S. dollars, except per share amounts)

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 the SEC and, including, without limitation, this Form 10-K filing for the fiscal year ended July 31, 2023, 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 ended July 31, 2023, 2022 and 2021 and our financial condition as at July 31, 2023 and 2022, with a particular emphasis on Fiscal 2023, 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 the United States, Canada and the Republic of Paraguay.

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 the vicinity of our IRS Mines, which process material from our ISR Mines into drums of U3O8 for shipping to a third-party storage and sales facility. At July 31, 2023, we had no uranium supply or off-take agreements in place.

In Texas, our fully-licensed and 100% owned Hobson Processing Facility forms the basis for our regional operating strategy in the State of Texas, specifically the South Texas Uranium Belt where we utilize ISR mining. We utilize a “hub-and-spoke” strategy whereby the Hobson Processing Facility, 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 our Palangana Mine, and future satellite uranium mining activities, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the “spokes”).

We acquired the fully permitted Reno Creek Project in August 2017 and expanded our operations to the strategic Powder River Basin in Wyoming.

On December 17, 2021, we completed the acquisition of all the issued and outstanding shares of Uranium One Americas, Inc. (now UEC Wyoming Corp.; UEC Wyoming) for total cash consideration of $128,495. The UEC Wyoming portfolio primarily consists of 12 projects located in Wyoming, six of which are located in the Powder River Basin with four fully permitted, and six of which are located in the Great Divide Basin (the “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 a Wyoming 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 5: Acquisition of Uranium One Americas, Inc. of the Consolidated Financial Statements for Fiscal 2023.

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On June 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 in Wyoming (the “Anfield ISR Projects”) in exchange for UEC’s Slick Rock and Long Park projects located in Colorado. The Anfield ISR Projects increased UEC’s Wyoming land holdings by 50%, adding 55,119 acres of federal mining claims and state mineral leases.  The Anfield ISR Projects are comprised of the Charlie Project, located immediately adjacent to UEC’s Christensen Ranch property, along with nine projects in the Powder River Basin, seven projects in the Great Divide Basin, four projects in the Wind River Basin, three projects in the Shirley Basin and one project in the Black Hills.

On August 19, 2022, we completed the acquisition of UEX Corporation (UEX) through a plan of arrangement (the UEX Acquisition).  UEX is a Canadian uranium and cobalt exploration and development company involved with a portfolio of uranium projects. UEX’s directly-owned portfolio of projects is located in the eastern, western and northern perimeters of the Athabasca Basin, one of the world’s richest uranium regions. 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 the Athabasca Basin which include the Paul Bay, Ken Pen and Ōrora deposits at the Christie Lake Project, the Kianna, Anne, Colette and 58B deposits at its currently 49.1%-owned Shea Creek Project, the Horseshoe and Raven deposits located on its 100%-owned Horseshoe-Raven Project and the West Bear Uranium Deposit located at its 100%-owned West Bear Project.

On October 14, 2022, we acquired, through UEC Resources (SK) Corp., Roughrider Mineral Holdings Inc., a Saskatchewan corporation and wholly-owned subsidiary of Rio Tinto Fer Et Titane Inc., which, in turn, owns all of the issued and outstanding shares of Roughrider Mineral Assets Inc., also a Saskatchewan corporation, that holds certain mineral leases totaling approximately 598 hectares in northern Saskatchewan that is commonly referred to as the “Roughrider Project” located in the Athabasca Basin in Saskatchewan, Canada.

Subsequent to July 31, 2023, we acquired a portfolio of exploration-stage projects in the Athabasca Basin, Saskatchewan, Canada, for CAD$1.5 million from Rio Tinto Exploration Canada Inc., a subsidiary of Rio Tinto Inc., whereby we acquired a 60% equity stake in the Henday Lake joint venture, 100% of the Milliken project and a 50% equity stake in the Carswell joint venture project.  With this transaction, we added an additional 44,444 acres of prospective ground in the Athabasca Basin to our existing portfolio.

We also hold certain mineral rights in various stages in the States of Arizona, New Mexico, Texas and Wyoming, and in Canada and in the Republic of Paraguay, many of which are located in historically successful mining areas and have been the subject of past exploration and pre-extraction activities by other mining companies. We do not expect, however, to utilize ISR mining for all of our mineral rights in which case we would expect to rely on conventional open pit and/or underground mining techniques.

Our operating and strategic framework is based on expanding our uranium extraction activities, which includes advancing certain uranium projects with established mineralized materials towards uranium extraction and establishing additional mineralized materials on our existing uranium projects or through acquisition of additional uranium projects.

Key Issues

Since commencing uranium extraction at our Palangana Mine in November 2010, we have been focused primarily on our South Texas uranium mining activities. Since the completion of the U1A Acquisition in December 2021, we expanded our footprints in Wyoming with our Wyoming hub-and-spoke operations. The acquisition of UEX in August 2022 and the acquisition of Roughrider Mineral Holdings Inc. in October 2022 further expanded our footprint in Canada and, in particular, the Athabasca Basin in Saskatchewan.  In the meantime, we continue to establish additional uranium mines through exploration and pre-extraction activities and direct acquisitions in both the U.S. and Paraguay, 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.

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 and have relied on cash flows generated from the sales of our purchased uranium inventories under our Physical Uranium Program to fund our operations since Fiscal 2022. However, we have yet to achieve consistent profitability or develop consistent 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 additional 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 the mineral projects we operate. 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 was 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, of any future satellite ISR mines, such as our Burke Hollow and Goliad Projects, Ludeman, Antelope and Charlie Projects, and of our recently acquired traditional uranium mines in Athabasca Basin in Saskatchewan, Canada, 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.

As at July 31, 2023, 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.

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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:

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 2023, we recorded sales and service revenue of $164,389 and realized gross profit of $49,670. For Fiscal 2022, we recorded sales and service revenue of $23,161 and realized gross profit of $7,293.  No sales and service revenues were recorded during Fiscal 2021.

We recorded a net loss of $3,307 ($0.01 per share) for Fiscal 2023 and net income of $5,252  ($ 0.02 per share) for Fiscal 2022, while we recorded a net loss of $14,813 ($0.07 per share) for Fiscal 2021.  Income (loss) from operations during Fiscal 2023, Fiscal 2022 and Fiscal 2021 was $8,867, $ (22,710) and $(17,512), respectively.

During Fiscal 2023, we continued with our strategic plan for reduced operations at our Palangana Mine, and we continued reduced operations at the Christensen Ranch Mine, to capture residual pounds of U3O8 only. Since the acquisition of UEX and Roughrider Mineral Holdings Inc., we have increased our exploration activities in Canada.

While we remain in a state of operational readiness, uranium extraction expenditures incurred at the Palangana Mine and the Christensen 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 the Hobson and the Irigaray Processing Facilities during Fiscal 2023 and Fiscal 2022.

We established our Physical Uranium Program in Fiscal 2021.  As of July 31, 2023, we have 1,695,000 pounds of uranium inventory purchase commitments outstanding for a total purchase price of $72,517. Various deliveries are scheduled to occur from Fiscal 2024 into Fiscal 2026 at a weighted average price of $42.78 per pound of uranium.

During Fiscal 2023, as part of our Physical Uranium Program, we purchased 1,521,000 pounds of uranium concentrates with a total cost of $53.7 million.  As of July 31, 2023, the carrying value of our uranium inventories was $5,801 (July 31, 2022: $66,160).

Sales and Service Revenue

During Fiscal 2023, we recorded sales of $163,950 from the sale of uranium concentrate inventory, which increased by $141,004 or 614.5% compared to Fiscal 2022. In addition, we recorded revenue from toll processing services of $439 in Fiscal 2023, increased by $224 compared to Fiscal 2022, 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 $49,670, representing a gross profit margin of 30.2% in Fiscal 2023, an increase of $42,377 from Fiscal 2022.  No sales and service revenues were recorded during Fiscal 2021.

The table below provides a breakdown of sales and service revenue and 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 the nature of mineral property expenditures during the past three fiscal years:

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During Fiscal 2023, the exploration expenditures, such as drilling and preliminary economic assessments, were primarily spent on the following projects:

During Fiscal 2023, the production readiness expenditures were primarily spent on the following projects:

During Fiscal 2023, the property maintenance expenditures were primarily spent on the following projects:

General and Administrative

During Fiscal 2023, general and administrative (“G&A”) expenses totaled $20,064, compared to $15,026 in Fiscal 2022 and $12,640 in Fiscal 2021. G&A expenses were comprised of the following:

The following summary provides a discussion of the major expense categories, including analyses of factors that caused significant variances from year-to-year:

Acquisition-related Costs

During Fiscal 2023, the acquisition-related costs of UEX and Roughrider Project were capitalized in the consolidated balance sheets as both the UEX and Roughrider Project acquisitions were accounted for as assets acquisition under US GAAP. During Fiscal 2022, we incurred acquisition-related costs of $3,444 in the statement of operations in connection with the U1A Acquisition, as it was accounted for as a business combination.

Depreciation, Amortization and Accretion

During Fiscal 2023, depreciation, amortization and accretion totaled $2,007, which increased by $628 compared to $1,379 during Fiscal 2022, primarily due to a full-year depreciation of our plant and equipment acquired from the U1A Acquisition compared to 7 months of depreciation in Fiscal 2022. During Fiscal 2022, depreciation, amortization and accretion totaled $393. 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.

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Other Income and Expenses

Interest and Finance Costs

Interest and finance costs were comprised of the following:

During Fiscal 2023 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. The increase in surety bond premiums in Fiscal 2022 resulted from the surety bonds assumed as a result of the U1A Acquisition.

Income from Equity-Accounted Investment

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, income from the equity-accounted investment comprised of the following:

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, we recorded a gain on dilution of ownership interest in Uranium Royalty Corp. (“URC”) of $654, $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 14.9% at July 31, 2023, from 15.5% at July 31, 2022 and from 18.1% at July 31, 2021.

During Fiscal 2023, Fiscal 2022 and Fiscal 2021, we recorded a share of URC’s income of $414, $153 and $732, respectively. During Fiscal 2023, we also recorded a share of JCU (Canada) Exploration Company Limited (“JCU”)'s loss of $2,062 since the acquisition of UEX which owns 50% of JCU.

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 at December 17, 2021.

On April 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 CAD$0.18 until May 12, 2027 (collectively, the “Anfield Debt Settlement”). Completion of the Anfield Agreements was contingent on Anfield raising additional financing.

On June 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.

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 in Fiscal 2022. 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.

Gain on Disposition of Assets

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 in Fiscal 2022. 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.

Fair value loss on Equity Securities

As at July 31, 2023, our investments in certain equity securities are re-evaluated using the market values at period end, which resulted in fair value loss totaling $13,083 compared to fair value loss of $1,898 in Fiscal 2022.  Refer to Note 17: Fair Value Loss on Equity Securities contained herein.

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Liquidity and Capital Resources

During Fiscal 2023, we received net proceeds of $66,527 from equity financing, and exercises of stock options and share purchase warrants.  As at July 31, 2023, we had a working capital of $43,011.

Subsequent to July 31, 2023, we received additional cash proceeds of $36,217 under our ATM Offering (as described herein).

We have a history of operating losses resulting in an accumulated deficit balance since inception.  Although we recorded net income in Fiscal 2022, we recorded net losses in Fiscal 2023 and all prior years, and we had an accumulated deficit balance of $289,680 as at July 31, 2023.  During Fiscal 2023, net cash provided by operating activities totaled $72,573, but we recorded negative operating cash flow in prior years. 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. We have yet to achieve consistent profitability or develop consistent positive cash flow from operations. Currently, we also rely on cash flows generated from the sales of our purchased 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.

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.

We hold mineral rights in the States of Arizona, New Mexico, Texas and Wyoming, in Canada and in the Republic of Paraguay, with annual land-related payments totaling $5.8 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:

We believe our existing cash resources and, if necessary, cash generated from the sale of the Company’s liquid assets, will provide sufficient funds to carry out our planned operations for 12 months from the date that this Annual Report is issued.  Our continuation as a going concern for a period beyond those 12 months will be dependent upon our ability to generate cash flow from the sales of our uranium inventories under our Physical Uranium Program and 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

On May 17, 2021, we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by the SEC on June 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.

On May 14, 2021, we entered into an at-the-market offering agreement (the “2021 ATM Offering Agreement”) with H.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.

On November 26, 2021, we filed a prospectus supplement to our 2021 Shelf with respect to the continuation of the May 2021 ATM Offering Agreement with the 2021 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 an additional $100 million for a total of $200 million through the 2021 ATM Managers selected by us (the “November 2021 ATM Offering”; and, collectively with the May 2021 ATM Offering, the “2021 ATM Offering”).

On November 16, 2022, we filed a Form S-3 automatic shelf registration statement under the Securities Act, which became effective upon filing, providing for the public offer and sale of certain securities of the Company from time to time, at our discretion, of an undetermined dollar value of common stock, debt securities, warrants to purchase common stock or debt securities, subscription receipts for and units which include common stock, debt securities, warrants or any combination thereof (the “2022 Shelf”), which included an at-the-market offering agreement prospectus (the “2022 ATM Offering”; and, collectively, with the 2021 ATM Offering, the “ATM Offerings”) covering the offering, issuance and sale of up to a maximum offering of $300 million under the 2022 Shelf.

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On November 16, 2022, we entered into an at-the-market offering agreement (the “2022 ATM Offering Agreement”) with H.C. Wainwright & Co., LLC and certain co-managers (collectively, the “2022 ATM Managers”) as set forth in the 2022 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 $300 million through the 2022 ATM Managers selected by us.

During Fiscal
2022, we issued
15,934,606 shares of the Company’s common stock under our ATM Offerings for net cash proceeds of $
35,235.

During Fiscal
2023, we issued
15,171,253 shares of the Company’s common stock under our ATM Offerings for net cash proceeds of $
58,420.

Subsequent to
July 31, 2023, we issued a further 7,010,000 shares of the Company’s common stock under our ATM Offerings for net cash proceeds of $36,217.

Credit Facility

On December 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 on July 30, 2013, and additional funding of $10,000 was received by the Company upon closing of the amended Credit Facility on March 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 effective February 9, 2016, the Amended and Restated Credit Agreement, dated and effective March 13, 2014, and the Credit Agreement dated and effective July 30, 2013, with our Lenders.

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, and during Fiscal 2021, we issued an aggregate of 1,249,039 shares to our Lender, with a fair value of $1,170, as payment of anniversary fees to our Lender.

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 at July 31, 2022 and 2023 under the Credit Facility.

Operating Activities

During Fiscal 2023, we recorded net cash provided by operating activities totaled $72,573. The positive cash flow was primarily driven by the gross profit of $49,670, decrease in our inventory balance of $60,363, and was partially offset by operating expenditures such as mineral property expenditures and general and administrative expenses.  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.

Financing Activities

During Fiscal 2023, net cash provided from financing activities totaled $65,417, primarily from net cash of $66,527 from our ATM Offerings and the exercises of stock options and share purchase warrants, offset by payments of $1,044 for tax withholding amounts related to the issuance of RSU and PRSU shares.

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.

Investing Activities

During Fiscal 2023, net cash used for investing activities totaled $124,780, comprised of net cash used for the acquisition of Roughrider of $82,117, cash used for investment in equity securities of $42,602, capital contribution to JCU of $1,415, cash used for investment in mineral rights and properties of $101 and cash used for the purchase of property, plant and equipment of $555, offset by cash received as a resulting of the acquisition of UEX of $1,984 and $26 from the disposition of assets.

During Fiscal 2022, net cash used for 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 for 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 for the purchase of property, plant and equipment of $148, offset by cash received from the redemption of term deposits of $10,000.

Stock Options and Warrants

As at July 31, 2023, the Company had 8,326,983 stock options outstanding at a weighted-average exercise price of $ 1.92 per share, and 3,857,030 share purchase warrants outstanding at a weighted-average exercise price of $3.31 per share. As at July 31, 2023, the Company had 7,150,361 in-the-money stock options outstanding at a weighted-average exercise price of $1.58 per share and 3,675,212 in-the-money share purchase warrants outstanding at a weighted-average exercise price of $3.27 per share. As at July 31, 2023, outstanding in-the-money stock options and share purchase warrants represented a total of 10,825,573 shares issuable for gross proceeds of approximately $23.3 million should the stock options and share purchase warrants 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.

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Plan of Operations

For Fiscal 2024, uranium extraction at PAA-1, 2 and 3 of our Palangana Mine and at the Christensen 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 sustained recovery of uranium prices. In addition, we will continue the drilling program at our Burke Hollow Project and our recently acquired Roughrider Project, as well as carry out additional exploration activities as required on our remaining portfolio.

Material Commitments

As at July 31, 2023, significant payment obligations of the Company over the next five years and beyond are as follows:

As at July 31, 2023, we were renting or leasing office premises in Texas, Arizona and Wyoming, U.S., Vancouver, British Columbia, Canada, and Paraguay for total monthly payments of $37. Office lease agreements for the U.S. and Canada expire between September 2023 and November 2028.

Commitments for Management Services

As at July 31, 2023, we have committed to pay our key executives a total of $1,065 per year for management services for Fiscal 2024.

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 with U.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.

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 the uranium projects we operate, 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 lower income or 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.

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Business Combination and Asset Acquisition

When an acquisition does not meet the definition of a business combination, as the acquired entity does not have an input and a substantive process that together significantly contribute to the ability to create outputs, we account for the acquisition as an asset acquisition. In an asset acquisition, any direct acquisition-related transaction costs are capitalized as part of the purchase consideration. Deferred taxes are recorded on temporary book/tax differences in an asset acquisition using the simultaneous equations method and adjusted the assigned value of the non-monetary assets acquired to include the deferred tax liability

When an acquisition is accounted for as a business combination, we recognize and measure the assets acquired and liabilities assumed 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 “income valuation method”). The market valuation method uses prices paid for a similar asset by other purchasers in the market, normalized for any differences between the assets (the “market valuation method”). The cost valuation method is based on the replacement cost of a comparable asset at the time of the acquisition adjusted for depreciation and economic and functional obsolescence of the asset (the “cost valuation method”). If the initial accounting for the business combination is incomplete by the end of the reporting period in which the acquisition occurs, an estimate will be recorded. Subsequent to the acquisition date, and not later than one year from the acquisition date, we will record any material adjustments to the initial estimate based on new information obtained that would have existed as of the date of the acquisition. Any adjustment that arises from information obtained that did not exist as of the date of the acquisition will be recorded in the period the adjustments arises.

Equity Investments

Investments in an entity in which our ownership is greater than 20% but less than 50%, a 50/50 joint venture which the Company does not have control, or an entity where other facts and circumstances indicate that we have the ability to exercise significant influence over its operating and financing policies, 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.

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

On August 22, 2023, we acquired a portfolio of exploration-stage projects in the Athabasca Basin, Saskatchewan, Canada, which includes 60% equity stake in the Henday Lake joint venture, 100% of the Milliken project and a 50% equity stake in the Carswell joint venture project from Rio Tinto Exploration Canada Inc. for approximately $1.1 million (CAD$1.5 million).

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

(Expressed in thousands of U.S. dollars, except per share amounts)

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 the SEC and, including, without limitation, this Form 10-K filing for the fiscal year ended July 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 ended July 31, 2022, 2021 and 2020 and our financial condition as at July 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 the United States, Canada and the Republic of Paraguay.

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 our IRS Mines, which process material from our ISR Mines into drums of U3O8 for shipping to a third-party storage and sales facility. At July 31, 2022, we had no uranium supply or off-take agreements in place.

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In Texas our fully-licensed and 100% owned Hobson Processing Facility forms the basis for our regional operating strategy in the State of Texas, specifically the South Texas Uranium Belt where we utilize ISR mining. We utilize a “hub-and-spoke” strategy whereby the Hobson Processing Facility, 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 our Palangana Mine, and future satellite uranium mining activities, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the “spokes”).

We acquired the fully permitted Reno Creek Project in August 2017 and expanded our operations to the strategic Powder River Basin in Wyoming.

On December 17, 2021, we completed the acquisition of all the issued and outstanding shares of U1A (now UEC Wyoming Corp.; “UEC Wyoming”) for total cash consideration of $128,495. The UEC Wyoming portfolio primarily consists of 12 projects located in Wyoming, six of which are located in the Powder River Basin with four fully permitted, and six of which are located in the Great Divide Basin (the “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 a Wyoming 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 of Uranium One Americas, Inc. of the Consolidated Financial Statements for Fiscal 2022.

On June 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 in Wyoming (the “Anfield ISR Projects”) in exchange for UEC’s Slick Rock and Long Park projects located in Colorado. The Anfield ISR Projects increase UEC’s Wyoming land holdings by 50%, adding 55,119 acres of federal mining claims and state mineral leases.  The Anfield ISR Projects are comprised of the Charlie Project, located immediately adjacent to UEC’s Christensen Ranch property, along with nine projects in the Powder River Basin, seven projects in the Great Divide Basin, four projects in the Wind River Basin, three projects in the Shirley Basin and one project in Black Hills.

Subsequent to July 31, 2022, we completed the acquisition of UEX 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 the Athabasca 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 the Athabasca Basin which include the Paul Bay, Ken Pen and Ōrora deposits at the Christie Lake Project, the Kianna, Anne, Colette and 58B deposits at its currently 49.1%-owned Shea Creek Project, the Horseshoe and Raven deposits located on its 100%-owned Horseshoe-Raven Project and the West Bear Uranium Deposit located at its 100%-owned West Bear Project.

We also hold certain mineral rights in various stages in the States of Arizona, New Mexico, Texas and Wyoming, and in Canada and in the Republic of Paraguay, many of which are located in historically successful mining areas and have been the subject of past exploration and pre-extraction activities by other mining companies. We do not expect, however, to utilize ISR mining for all of our mineral rights in which case we would expect to rely on conventional open pit and/or underground mining techniques.

Our operating and strategic framework is based on expanding our uranium extraction activities, which includes advancing certain uranium projects with established mineralized materials towards uranium extraction and establishing additional mineralized materials on our existing uranium projects or through acquisition of additional uranium projects.

Key Issues

Since commencing uranium extraction at our Palangana Mine in November 2010, we have been focused primarily on expanding our South Texas uranium mining activities. Since the completion of the U1A Acquisition in December 2021, we further expanded our footprints in Wyoming with our Wyoming 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 the U.S. and Paraguay, 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.

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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 our Burke Hollow and Goliad 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 our Vancouver, Corpus Christi and Paraguay 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 our Palangana Mine and recently acquired Christensen 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 at July 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.

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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:

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 $23,161 and realized gross profit of $7,293. No sales and service revenues were recorded during Fiscal 2021 and Fiscal 2020.

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 our Palangana Mine and, since the closing of the U1A Acquisition, we continued reduced operations at the Christensen Ranch Mine, to capture residual pounds of U3O8 only.

While we remain in a state of operational readiness, uranium extraction expenditures incurred at the Palangana Mine and the Christensen 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 the Hobson 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 in December 2022 into December 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 of July 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.

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The table below provides a breakdown of sales and service revenue and 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:

During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures included costs directly related to maintaining operational readiness and permit compliance at our Palangana 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 our Christensen Ranch Mine and Irigaray Processing Facility totaled $1,161.

The following provides a discussion of significant mineral property expenditures on certain projects:

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During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at our Palangana 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.

During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at our Burke 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.

During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at our Goliad 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.

During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at our Reno 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.

During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at our Yuty Project totaled $86, $31 and $66, respectively, primarily for general expenditures.

During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at our Oviedo 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.

During Fiscal 2022, Fiscal 2021 and Fiscal 2020, mineral property expenditures at our Alto Paraná Titanium 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 Paraná Titanium Project.

During Fiscal 2022, we completed the U1A Acquisition and acquired the UEC Wyoming Portfolio including the Irigaray Processing Facility, the Christensen 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 the Christensen Ranch Mine, with the balance of $1,039 mainly related to property maintenance expenditures for various projects of our UEC Wyoming Portfolio.

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General and Administrative

During Fiscal 2022, general and administrative expenses totaled $15,026, which increased by $2,386 compared to $12,640 in Fiscal 2021, which increased by $3,198 compared to $9,442 in Fiscal 2020.

The following summary provides a discussion of the major expense categories, including analyses of factors that caused significant variances from year-to-year:

Acquisition-related Costs

During Fiscal 2022, we incurred acquisition-related costs of $3,444 in connection with the U1A Acquisition.

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.

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Interest and finance costs were comprised of the following:

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 Equity-Accounted Investment

During Fiscal 2022, Fiscal 2021 and Fiscal 2020, income from the equity-accounted investment comprised of the following:

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% at July 31, 2022, from 18.1% at July 31, 2021 and from 19.5% at July 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% at July 31, 2020 from 32.6% at July 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 at December 17, 2021.

On April 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 until May 12, 2027 (collectively, the “Anfield Debt Settlement”). Completion of the Anfield Agreements was contingent on Anfield raising additional financing.

On June 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.

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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 in Wyoming in exchange for the Company’s Slick Rock Project and Long Park Project located in Colorado 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 Equity Securities

As at July 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 on Equity Securities contained herein.

Liquidity and Capital Resources

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 ending July 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 of Arizona, New Mexico, Texas and Wyoming, in Canada and in the Republic 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:

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

On February 21, 2020, we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by the SEC on March 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, our March 10, 2017 Form S-3 registration statement was then deemed terminated and, as a consequence, our then April 9, 2019 ATM Offering Agreement (the “April 2019 ATM Offering Agreement”) with H.C. Wainwright & Co, LLC (as the lead manager) and the co-managers as set forth in the April 2019 ATM Offering Agreement (collectively, the ATM Managers”) and its related offering terminated unless renewed under the 2020 Shelf.

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On March 19, 2020, we entered into an Amending Agreement to the April 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”).

On September 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 the September 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 $29,321.

On March 19, 2021, and under our 2020 Shelf, we completed an offering of 10,000,000 shares of the Company’s common stock at a price of $3.05 per share for net proceeds of $29,084.

On April 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 the April 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.

On May 17, 2021, we filed a Form S-3 shelf registration statement under the Securities Act, which was declared effective by the SEC on June 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.

On May 14, 2021, we entered into an at-the-market offering agreement (the “2021 ATM Offering Agreement”) with H.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.

On November 26, 2021, we filed a prospectus supplement to our 2021 Shelf with respect to the continuation of the May 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 with May 2021 ATM Offering, the “2021 ATM Offerings”).

During Fiscal 2021, we issued 2,265,700 shares of the Company’s common stocks under our May 2021 ATM Offering for net cash proceeds of $6,157.

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 $163,814.

Subsequent to July 31, 2022, we issued a further 3,510,100 shares of the Company’s common stock under our 2021 ATM Offerings for net cash proceeds of $14,808 and received proceeds of $6,141 from the exercise of share purchase warrants.

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Credit Facility

On December 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 on July 30, 2013, and additional funding of $10,000 was received by the Company upon closing of the amended Credit Facility on March 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 effective February 9, 2016, the Amended and Restated Credit Agreement, dated and effective March 13, 2014, and the Credit Agreement dated and effective July 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 at July 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.

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Stock Options and Warrants

As at July 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 at July 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 our Palangana Mine and at the recently acquired Christensen 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 our Burke Hollow Project.

Material Commitments

As at July 31, 2022, significant payment obligations of the Company over the next five years and beyond are as follows:

As at July 31, 2022, we were renting or leasing office premises in Texas, Arizona and Wyoming, U.S., Vancouver, British Columbia, Canada, and Paraguay for total monthly payments of $28. Office lease agreements for the U.S. and Canada expire between July 2023 and March 2027.

Commitments for Management Services

As at July 31, 2022, we were committed to paying our key executives a total of $888 per year for management services.

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 with U.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.

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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.

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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

On June 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).   On June 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 the Toronto Stock Exchange subject to and in accordance with applicable laws. As of July 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.

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Subsequent to July 31, 2022, we closed the UEX Acquisition under the Canada 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 on August 15, 2022, and was subsequently approved by the Supreme Court of British Columbia on August 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 July 31, 2022, we sold 150,000 pounds of purchased uranium inventory for gross proceeds of $7,178 and entered into agreements to sell 600,000 pounds of purchased uranium inventory for gross proceeds of $30,675.

Subsequent to July 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.

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management’s discussion and analysis of the Company’s financial condition and results of operations contain forward-looking statements that involve risks, uncertainties and assumptions including, among others, statements regarding our capital needs, business plans and expectations. In evaluating these statements, you should consider various factors, including the risks, uncertainties and assumptions set forth in reports and other documents we have filed with or furnished to the SEC and, including, without limitation, this Form 10-K filing for the fiscal year ended July 31, 2021, 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 ended July 31, 2021 and 2020 and our financial condition as at July 31, 2021 and 2020, with a particular emphasis on Fiscal 2021, 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 the United States, Canada and the Republic of Paraguay.

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 one uranium mine located in the State of Texas, our Palangana Mine, which utilizes ISR mining and commenced extraction of U3O8, or yellowcake, in November 2010. We have one uranium processing facility located in the State of Texas, our Hobson Processing Facility, which processes material from the Palangana Mine into drums of U3O8, our only sales product and source of revenue, for shipping to a third-party storage and sales facility. At July 31, 2021, we had no uranium supply or off-take agreements in place.

Our fully-licensed and 100% owned Hobson Processing Facility forms the basis for our regional operating strategy in the State of Texas, specifically the South Texas Uranium Belt where we utilize ISR mining. We utilize a “hub-and-spoke” strategy whereby the Hobson Processing Facility, 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 our Palangana Mine, and future satellite uranium mining activities, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the “spokes”).

We also hold certain mineral rights in various stages in the States of Arizona, Colorado, New Mexico, Wyoming and Texas, and in Canada and in the Republic of Paraguay, many of which are located in historically successful mining areas and have been the subject of past exploration and pre-extraction activities by other mining companies. We do not expect, however, to utilize ISR mining for all of our mineral rights in which case we would expect to rely on conventional open pit and/or underground mining techniques.

Our operating and strategic framework is based on expanding our uranium extraction activities, which includes advancing certain uranium projects with established mineralized materials towards uranium extraction, and establishing additional mineralized materials on our existing uranium projects or through acquisition of additional uranium projects.

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Key Issues

Since commencing uranium extraction at the Palangana Mine in November 2010, we have been focused primarily on expanding our South Texas uranium mining activities and establishing additional uranium mines through exploration and pre-extraction activities and direct acquisitions in both the U.S. and Paraguay, 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.

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 Portfolio 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 Palangana Mine. Since we commenced uranium extraction at the Palangana Mine without having established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated. 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, with no sales revenues generated during other years. The economic viability of our mining activities, including the expected duration and profitability of our Palangana Mine and of any future satellite ISR mines, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt, has many risks and uncertainties. These include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing and/or selling uranium concentrates; (iii) significantly higher than expected capital costs to construct 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 for our teams at our Vancouver, Corpus Christi and Paraguay offices to work remotely and implemented certain health protocols for our employees and contractors who work at the field. In the meantime, we continue to operate our Palangana 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 at July 31, 2021, 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.

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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 Broker Average Price:

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

For Fiscal 2021 and Fiscal 2020, we recorded a net loss of $14,813,810 ($0.07 per share) and $14,610,516 ($0.08 per share), respectively. Loss from operations during Fiscal 2021 and Fiscal 2020 totaled $17,511,978 and $14,334,523, respectively. No revenue from sales of produced U3O8 was generated during Fiscal 2021 and Fiscal 2020.

During Fiscal 2021, we continued with our strategic plan for reduced operations at our Palangana Mine to capture residual pounds of U3O8 only.

While we remain in a state of operational readiness, uranium extraction expenditures incurred for PAA-1, 2 and 3 at the Palangana Mine, which are directly related to regulatory/mine permit compliance, lease maintenance obligations and maintaining a minimum labor force, are being charged to our consolidated statement of operations. As a result, no uranium concentrate was extracted at the Palangana Mine and processed at the Hobson Processing Facility during Fiscal 2021 and Fiscal 2020.

We established the Physical Uranium Portfolio and have entered into agreements to purchase 4.1 million pounds of uranium concentrates as of the date of this Annual Report. Various deliveries have or are scheduled to occur in March 2021 into December 2025 at a weighted average price of $32.12 per pound of uranium.

During Fiscal 2021, as part of our Physical Uranium Portfolio, we received 1,000,000 pounds of uranium concentrates with a total cost of $28,960,818.  As of July 31, 2021, the carrying value of our inventories was $29,172,480 (July 31, 2020: $211,662).

Costs and Expenses

During Fiscal 2021 and Fiscal 2020, costs and expenses totaled $17,511,978 and $14,334,523, respectively, primarily comprised of mineral property expenditures of $4,478,807 and $4,582,403, respectively, general and administrative expenses of $12,639,998 and $9,441,898, respectively, and depreciation, amortization and accretion of $393,173 and $310,222, respectively.

Mineral Property Expenditures

During Fiscal 2021, 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.

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The following table provides mineral property expenditures on a project basis during the past two fiscal years:

During Fiscal 2021 and Fiscal 2020, mineral property expenditures included costs directly related to maintaining operational readiness and permit compliance at our Palangana Mine and Hobson Processing Facility totaled $924,050 and $1,130,028, respectively.

The following provides a discussion of significant mineral property expenditures on certain projects:

During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the Palangana Mine totaled $889,597 and $1,342,927, respectively, which were comprised of maintenance of operational readiness and permit compliance of $608,662 and $772,515, permitting and property maintenance of $269,612 and $553,531, and exploration and development costs of $11,323 and $16,881, respectively.

During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the Goliad Project totaled $237,515 and $190,278, respectively, which were comprised of permitting and property maintenance costs of $165,715 and $117,204, and exploration and development costs of $71,800 and $73,074, respectively.

During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the Burke Hollow Project totaled $1,445,797 and $1,130,467, respectively, which were comprised of permitting and property maintenance costs of $387,499 and 384,885, exploration drilling costs of $1,025,309 and $214,246, and wellfield development costs of $32,989 and $531,336, respectively. During Fiscal 2021, we initiated a drilling campaign in March 2021 and drilled 81 exploration holes totaling 38,785 feet. During Fiscal 2020, we completed a drilling campaign initiated in Fiscal 2019 and drilled 26 exploration holes and 21 monitor wells totaling 21,069 feet.

During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the Reno Creek Project totaled $672,225 and $596,551, respectively, which were comprised of property maintenance costs of $521,039 and $484,228, and permitting and exploration costs of $151,186 and $112,323, respectively.

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During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the Yuty Project totaled $31,279 and $65,679, respectively, primarily for general expenditures.

During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the Oviedo Project totaled $371,966 and $350,211, respectively, which were comprised of property maintenance costs of $150,857 and $78,223, and exploration expenditures of $221,109 and $271,988, respectively, primarily for exploration drilling programs conducted.

During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the Alto Paraná Titanium Project totaled $198,969 and $230,350, respectively, which were comprised of exploration costs of $179,179 and $230,350, and property maintenance costs of $19,790 and $Nil, respectively.

During Fiscal 2021, we continued to maintain our projects in good standing, and the costs incurred on other projects of our Company were mainly for property maintenance costs.

General and Administrative

During Fiscal 2021, general and administrative expenses totaled $12,639,998, which increased by $3,198,100 compared to $9,441,898 in Fiscal 2020.

The following summary provides a discussion of the major expense categories, including analyses of factors that caused significant variances from year-to-year:

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Depreciation, Amortization and Accretion

During Fiscal 2021, depreciation, amortization and accretion totaled $393,173, which was consistent compared to $310,222 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 2021, interest and finance costs totaled $2,879,809, which decreased by $581,161 compared to $3,460,970 during Fiscal 2020. During Fiscal 2021, interest on long-term debt totaled $1,255,556, which decreased by $371,111 compared to $1,626,667 during Fiscal 2020, and amortization of debt discount totaled $1,375,754, which decreased by $293,760 compared to $1,669,514 during Fiscal 2020. These decreases were offset by an increase of $83,710 in surety bond premium and other interest expenses from $164,789 in Fiscal 2020 to $248,499 in Fiscal 2021. The decreases in interest on long-term debt and amortization of debt discount are a result of the decrease in the outstanding principal amount of our long-term debt to $10,000,000 in Fiscal 2021 from $20,000,000 in Fiscal 2020.

Income or Loss from Equity-Accounted Investment

During Fiscal 2021, we recorded income of $5,204,004 from our investment in Uranium Royalty Corp (“URC”), which included our share of URC’s income of $732,446 and a dilution gain of $4,471,558 as a result of URC issuing more shares from its equity financings, which decreased our ownership interest in URC to 18. 1% at July 31, 2021 from 19.5% at July 31, 2020.

During Fiscal 2020, we recorded income of $2,967,583 from our investment in URC. As a consequence of URC’s initial public offering and other private placements URC completed during Fiscal 2020, our ownership interest in URC decreased to 19.5% at July 31, 2020 from 32.6% at July 31, 2019, which resulted in a dilution gain of $3,056,656 being recorded. During Fiscal 2020, we recorded a loss pick up of $89,073 representing our share of URC’s loss.

Liquidity and Capital Resources

During Fiscal 2021, we received net proceeds of $89,931,236 from various equity financings and $5,504,286 from the exercises of stock options and share purchase warrants, which significantly strengthened our working capital position. As at July 31, 2021, we had a working capital of $61,776,152, an increase of $57,223,675 from $4,552,477 as at July 31, 2020.

Subsequent to July 31, 2021, we received additional cash proceeds of $62.7 million under our 2021 ATM Offering.  During the year ended and subsequent to July 31, 2021, we entered into agreements to purchase 4.1 million pounds of uranium concentrates under our Physical Uranium Portfolio for a total purchase price of $131.7 million, of which $22.0 million will become due in the next 12 months from the date that this Annual Report is issued.   Refer to Note 3: Inventories in our Audited Consolidated Financial Statements. In addition, as at July 31, 2021, we had $10.0 million of term debt with a maturity date on January 31, 2022.   We believe our existing cash resources will provide sufficient funds to fulfill our uranium inventory purchase commitments, repay the debt principal of $10.0 million when it becomes due, and carry out our planned operations for the next 12 months from the date that this Annual Report is issued.

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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 profitability. We have a history of operating losses resulting in an accumulated deficit balance since inception. In Fiscal 2021, we recorded net losses totaling $14,813,810 (Fiscal 2020: $14,610,516) and we had an accumulated deficit balance of $291,625,110 as at July 31, 2021. During Fiscal 2021, net cash used in operating activities totaled $41,469,449, which included $28,960,818 cash used for the purchase of 1.0 million pounds 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 profitability or develop positive cash flow from operations.  At the date of this Annual Report, we have 1.2 million pounds of uranium concentrate inventories with a fair value of approximately $56.7 million.  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.

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 Fiscal 2022, we estimate that a total of up to $2.0 million will be incurred on our mineral projects for permitting, exploration and pre-extraction activities. We hold mineral rights in the States of Arizona, Colorado, New Mexico, Texas and Wyoming, in Canada and in the Republic of Paraguay with annual land-related payments totaling $3.4 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 as originally announced in September 2013. Our ability to secure adequate funding for these activities will be impacted by our operating performance, other uses of cash, the market price of uranium, the market price of our common stock and other factors which may be beyond our control. Specific examples of such factors include, but are not limited to:

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.

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Equity Financings

On February 21, 2020, we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by the SEC on March 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, our March 10, 2017 Form S-3 registration statement was then deemed terminated and, as a consequence, our then April 9, 2019 ATM Offering Agreement (the “April 2019 ATM Offering Agreement”) with H.C. Wainwright & Co, LLC (as the lead manager) and the co-managers as set forth in the April 2019 ATM Offering Agreement (collectively, the ATM Managers”) and its related offering terminated unless renewed under the 2020 Shelf.

On March 19, 2020, we entered into an Amending Agreement to the April 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”).

On September 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 $15,000,000 (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 the September 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 at a weighted average price of $2.19 per share under our 2020 ATM Offering for net cash proceeds of $29,320,949.

On March 19, 2021, and under our 2020 Shelf, we completed an offering of 10,000,000 shares of the Company’s common stock at a price of $3.05 per share for net proceeds of $29,083,710.

On April 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 $11,315,966 (the “April 2021 Offering”). In connection with the April 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.

On May 17, 2021, we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by the SEC on June 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 “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.

On May 14, 2021, we entered into an at-the-market offering agreement (the “2021 ATM Offering Agreement”) with H.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.

As of the date of this Annual Report, we issued 23,009,578 shares of the Company’s common stock at a weighted average price of $3.06 per share under our 2021 ATM Offering for net cash proceeds of $68,827,792.

Credit Facility

On December 5, 2018, we entered into the Third Amended and Restated Credit Agreement with our Lenders, whereby we and the Lenders agreed to certain further amendments to our Credit Facility, under which initial funding of $10,000,000 was received by the Company upon closing of the Credit Facility on July 30, 2013, and additional funding of $10,000,000 was received by the Company upon closing of the amended Credit Facility on March 13, 2014.

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Key terms of the Third Amended and Restated Credit Agreement are summarized as follows:

The Credit Facility is non-revolving with an amended term from inception of 8.5 years maturing on January 31, 2022, subject to an interest rate of 8% per annum, compounded and payable on a monthly basis.

The Third Credit Amended and Restated Agreement supersedes, in their entirety, the Company’s prior Second Amended and Restated Credit Agreement, dated and effective February 9, 2016, the Amended and Restated Credit Agreement, dated and effective March 13, 2014, and the Credit Agreement dated and effective July 30, 2013, with our Lenders.

During Fiscal 2021, we made voluntary payments totaling $10,000,000 to certain Lenders, which decreased the principal balance outstanding to $10,000,000 under the Credit Facility.

Pursuant to the terms of the Third Amended and Restated Credit Agreement, during Fiscal 2021, we issued an aggregate of 1,249,039 shares with a fair value of $1,170,000, representing 6.5% of the $18,000,000 principal balance outstanding at the time; and during Fiscal 2020, we issued an aggregate of 1,743,462 shares to our Lenders, with a fair value of $1,400,000, representing 7% of the $20,000,000 principal balance outstanding at the time, as payment of anniversary fees to our Lenders.

Refer to “Long-Term Debt Obligations” under Material Commitments and to Note 9: Long-Term Debt to our Consolidated Financial Statements herein.

Government Loans

During Fiscal 2020, our Canadian subsidiary received a loan of $29,842 (CA$40,000) under the Canada Emergency Business Account program (the “CEBA Loan”). During Fiscal 2021, we repaid CA$30,000 of the CEBA Loan, 75% of the total CEBA Loan principal before its initial term date on December 31, 2022, and received a CEBA Loan Closure Confirmation for forgiveness of the balance of CA$10,000.

During Fiscal 2020, we applied for a Paycheck Protection Program loan and received the proceeds of $277,250 (the “PPP Loan”). During Fiscal 2021, we received a Notice of Paycheck Protection Program Forgiveness Payment from the Small Business Administration regarding the approval of our application for forgiveness of the PPP Loan amount of $277,250 and associated interest.

Promissory Note

During Fiscal 2021, in connection with a land purchase located within our Goliad Project (the “Goliad Land Purchase”), we issued a promissory note with a principal amount of $380,000 to a landowner (the “Promissory Note”). The Promissory Note carries an interest rate of 5% per annum with principal and interest payable in 24 monthly installments with a maturity date of November 1, 2022. We may prepay the Promissory Note in any amount at any time before the maturity date without penalty.

Operating Activities

During Fiscal 2021, net cash used in operating activities totaled $41,469,449, of which $28,960,818 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 $12,870,711, primarily for maintaining production readiness, mineral property expenditures and general and administrative expenses.

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Financing Activities

During Fiscal 2021, net cash provided by financing activities totaled $84,457,538, primarily from net cash of $89,931,236 from various offerings, and $5,504,286 from the exercises of stock options and share purchase warrants, offset by the payments of $833,363 for tax withholding amounts related to the issuance of RSU shares, the principal payment of $10,000,000 to certain Lenders under the Credit Facility and $144,621 for the Promissory Note and the CEBA Loan. During Fiscal 2020, net cash provided by financing activities totaled $307,092, consisting of $277,250 from the PPP Loan and $29,842 from the CEBA Loan.

Investing Activities

During Fiscal 2021, net cash used by investing activities totaled $3,624,551, primarily for cash used in investment in term deposits of $10,000,000, cash used in acquisition of URC shares of $3,396,852, cash used in the investment in mineral rights and properties of $80,000 and cash used in the purchase of property, plant and equipment of $147,699, offset by cash received from redemption of term deposits of $10,000,000. During Fiscal 2020, net cash provided by investing activities totaled $11,670,960, primarily from cash received from the redemption of term deposits totaling $11,831,671, offset by cash used in the investment in mineral rights and properties of $80,000 and cash used in the purchase of property, plant and equipment of $83,838.

Stock Options and Warrants

As at July 31, 2021, the Company had 10,404,333 stock options outstanding at a weighted-average exercise price of $1.21 per share and 5,387,323 share purchase warrants outstanding at a weighted-average exercise price of $1.90 per share. As at July 31, 2021, outstanding stock options and share purchase warrants represented a total 15,791,656 shares issuable for gross proceeds of approximately $22.8 million should these stock options and share purchase warrants be exercised in full. As at July 31, 2021, outstanding in-the-money stock options and share purchase warrants represented a total 15,095,852 shares exercisable for gross proceeds of approximately $20.8 million should these in-the-money stock options and 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 2022, uranium extraction at PAA-1, 2 and 3 of our Palangana 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 initiated in March 2021 at our Burke Hollow Project.

Material Commitments

Long-term Debt Obligations

The Credit Facility described above requires scheduled payments of principal, interest and fees and includes restrictive covenants that, among other things, limit our ability to sell the assets securing our indebtedness or to incur additional indebtedness other than permitted indebtedness. Our ability to make these scheduled payments will be dependent on, and may change as a result of, our financial condition and operating performance. If we become unable to make these scheduled payments or if we do not comply with any one or more of these covenants, we could be in default which, if not addressed or waived, could require accelerated repayment of our indebtedness. Furthermore, such default could result in the enforcement by our Lenders against the Company’s assets securing our indebtedness. These are key assets on which our business is substantially dependent and as such, the enforcement against any one or all of these assets would have a material adverse effect on our operations and financial condition.

As at July 31, 2021, we complied with all of the covenants under the Credit Facility, and we expect to continue complying with all scheduled payments and covenants during Fiscal 2022.

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As at July 31, 2021, significant payment obligations of the Company over next five years and beyond are as follows:

As at July 31, 2021, we were renting or leasing office premises in Texas, Arizona and Wyoming, U.S., Vancouver, British Columbia, Canada, and Paraguay for total monthly payments of $18,000. Office lease agreements for the U.S. and Canada expire between March 2022 and August 2022.

Commitments for Management Services

As at July 31, 2021, we were committed to paying our key executives a total of $835,000 per year for management services.

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 with U.S. GAAP requires management to make judgement, 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.  Significant areas requiring management’s judgement, estimates and assumptions include valuation and measurement of impairment losses on mineral rights and properties, 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.

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 Palangana Mine. However, we have not established proven or probable reserves for any of our uranium projects, including the Palangana Mine. 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, such as the Palangana Mine. As a result, and despite the fact that we commenced extraction of mineralized materials at the Palangana Mine in November 2010, 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.

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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.

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: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors including significant decreases in uranium prices; 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; 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 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 an accelerating basis. Forfeitures are accounted for as they occur.

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Subsequent Events

Subsequent to July 31, 2021, we entered into agreements to purchase 400,000 pounds of uranium concentrates with an aggregate purchase price of $14,500,000, of which 200,000 pounds of uranium concentrates with an aggregate purchase price of $6,980,000 were received.

Subsequent to July 31, 2021, we issued 20,743,878 shares of the Company’s common stock at a weighted average price of $3.09 per share under the 2021 ATM Offering for net cash proceeds of $62,671,103.