MINERAL RIGHTS AND PROPERTIES

12 Months Ended

Jul. 31, 2014

MINERAL RIGHTS AND PROPERTIES [Text Block]

NOTE 4: MINERAL RIGHTS AND PROPERTIES

Mineral Rights

At July 31, 2014, the Company had mineral rights in the States of Arizona, Colorado, New Mexico, Texas and Wyoming and the Republic of Paraguay. These mineral rights were acquired through staking and lease or option agreements and are subject to varying royalty interests, some of which are indexed to the sale price of uranium. At July 31, 2014, annual maintenance payments of approximately $1,185,000 were required to maintain these mineral rights.

Mineral rights and property acquisition costs consist of the following:

		July 31, 2014			July 31, 2013
Mineral Rights and Properties, Unproven
Palangana Mine	$	6,664,260		$	7,045,457
Goliad Project		8,689,127			8,689,127
Burke Hollow Project		1,495,750			1,495,750
Channen Project		-			428,164
Longhorn Project		116,870			78,392
Salvo Project		364,710			363,645
Nichols Project		154,774			154,774
Anderson Project		9,154,268			9,154,268
Workman Creek Project		1,372,008			1,287,158
Los Cuatros Project		257,250			257,250
Slick Rock Project		661,271			653,213
Todilto Project		-			166,720
Yuty Project		11,947,144			11,947,144
Coronel Oviedo Project		1,133,412			1,133,412
Other Property Acquisitions		262,115			316,256
		42,272,959			43,170,730
Accumulated Depletion		(3,454,533	)		(2,278,053	)
		38,818,426			40,892,677
Databases		2,405,038			2,345,038
Accumulated Amortization		(1,928,901	)		(1,685,011	)
		476,137			660,027
Land Use Agreements		390,155			390,155
Accumulated Amortization		(196,019	)		(157,007	)
		194,136			233,148
	$	39,488,699		$	41,785,852

During Fiscal 2014, the Company abandoned the Channen Project located in Texas with an acquisition cost of $428,164, the Todilto Project located in New Mexico with an acquisition cost of $166,720 and certain other interests located in Arizona, Colorado and Texas with a combined acquisition cost of $58,340. As a result, an impairment loss on mineral properties of $653,224 is reported on the consolidated statement of operations in Fiscal 2014 (Fiscal 2013: Nil; Fiscal 2012: Nil).

The Company has not established proven or probable reserves, as defined by the SEC under Industry Guide 7, through the completion of a “final” or “bankable” feasibility study for any of its mineral projects. The Company has established the existence of mineralized materials for certain uranium projects, including the Palangana Mine. Since the Company commenced uranium extraction at the Palangana Mine without having established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.

No revenues were generated from the sale of U₃O₈ during Fiscal 2014. Historically, the Palangana Mine has been the Company’s sole source for the U₃O₈ sold to generate its revenues during Fiscal 2013 and 2012, with no revenues generated prior to Fiscal 2012. The economic viability of the Company’s mining activities, including the expected duration and profitability of the Palangana Mine and of any future satellite ISR mines, such as the Goliad Project, located within the South Texas Uranium Belt, has many risks and uncertainties. These include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing and/or selling uranium concentrates; (iii) significantly higher than expected capital costs to construct the mine and/or processing plant; (iv) significantly higher than expected extraction costs; (v) significantly lower than expected uranium extraction; (vi) significant delays, reductions or stoppages of uranium extraction activities; and (vii) the introduction of significantly more stringent regulatory laws and regulations. The Company’s mining activities may change as a result of any one or more of these risks and uncertainties and there is no assurance that any ore body that we extract mineralized materials from will result in profitable mining activities.

The estimated depletion and amortization of mineral rights and properties for the next five fiscal years is as follows:

Fiscal 2015	$	1,234,021
Fiscal 2016		1,679,722
Fiscal 2017		1,592,110
Fiscal 2018		1,575,533
Fiscal 2019		1,199,724
Total	$	7,281,110

Mineral property expenditures incurred by major projects are as follows:

		Year Ended July 31,
		2014		2013		2012
Mineral Property Expenditures
Palangana Mine	$	2,566,770	$	4,347,025	$	7,597,102
Goliad Project		1,747,619		540,853		646,314
Burke Hollow Project		2,094,089		2,225,132		1,176,101
Channen Project		728		843,243		190,009
Longhorn Project		71,497		16,335		10,163
Salvo Project		14,384		54,329		1,113,659
Anderson Project		254,840		117,008		375,058
Workman Creek Project		32,290		33,573		50,069
Slick Rock Project		66,525		147,043		47,691
Yuty Project		451,464		424,411		627,623
Coronel Oviedo Project		759,804		632,454		2,207,255
Other Mineral Property Expenditures		1,100,638		629,285		897,678
	$	9,160,648	$	10,010,691	$	14,938,722

Palangana Mine, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Palangana Mine, a 7,094-acre property located in Duval County, Texas approximately 100 miles south of the Hobson Processing Facility. These agreements are subject to certain royalty and overriding royalty interests indexed to the sale price of uranium and generally have an initial five-year term with extension provisions. Effective December 18, 2009, the Company acquired the Palangana Mine as part of the acquisition of South Texas Mining Venture, L.L.P. (“STMV Acquisition”) with an estimated fair value of $3,911,800 at acquisition.

During Fiscal 2014, certain changes in the assumptions related to the asset retirement obligations (“ARO”) of the Palangana Mine resulted in a reduction of the respective ARO assets and liabilities of $381,197 (See Note 9).

Upon commencement of uranium extraction during the second quarter of Fiscal 2011, the Company began depleting the capitalized costs of the Palangana Mine over a 30 to 42-month period. At July 31, 2014, capitalized costs of the Palangana Mine were $6,664,260 (July 31, 2013: $7,045,457), less accumulated depletion of $3,454,533 (July 31, 2013: $2,278,053), for a net book value of $3,209,727 (July 31, 2013: $4,767,404).

Goliad Project, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Goliad Project, a 1,862-acre property located in Goliad County, Texas. These agreements are subject to certain royalty interests indexed to the sale price of uranium and have an initial five-year term with extension provisions. At July 31, 2014, capitalized costs totaled $8,689,127 (July 31, 2013: $8,689,127).

Burke Hollow Project, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Burke Hollow Project, a 19,335-acre property located in Bee County, Texas. These agreements are subject to certain royalty interests indexed to the sale price of uranium and have an initial five-year term with extension provisions. At July 31, 2014, capitalized costs totaled $1,495,750 (July 31, 2013: $1,495,750).

Longhorn Project, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Longhorn Project, a 651-acre property located in Live Oak County, Texas. These agreements are subject to certain royalty interests indexed to the sale price of uranium and have an initial five-year term with extension provisions. At July 31, 2014, capitalized costs totaled $116,870 (July 31, 2013: $78,392).

Salvo Project, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Salvo Project, a 5,345-acre property located in Bee County, Texas. These agreements are subject to certain royalty interests indexed to the sale price of uranium and have an initial five-year term with extension provisions. At July 31, 2014, capitalized costs totaled $364,710 (July 31, 2013: $363,645).

Nichols Project, Texas

The Company holds a mining lease and surface use agreement granting the Company the exclusive right to explore, develop and mine for uranium at the Nichols Project, a 909-acre property located in Karnes County, Texas. The agreement is subject to certain royalty interests indexed to the sale price of uranium and has an initial five-year term with extension provisions. At July 31, 2014, capitalized costs totaled $154,774 (July 31, 2013: $154,774).

Anderson Project, Arizona

The Company holds an undivided 100% interest in contiguous mineral lode claims and state leases in the Anderson Project, a 9,214-acre property located in Yavapai County, Arizona, acquired originally from Concentric Energy Corp. (“Concentric”) through a Merger Agreement and Plan of Merger dated May 5, 2011 and effective September 9, 2011 (the “Merger Agreement”).

As part of the Merger Agreement, the Company assumed the obligations of certain convertible debentures previously issued by Concentric with a combined estimated fair value of $1,707,938. During 2012, these convertible debentures were settled in full by cash payments totaling $1,370,486 and the issuance of 128,508 shares of the Company with a fair value of $699,340 for an aggregate value of $1,757,619, resulting in the recognition of a loss on settlement of convertible debentures of $312,207. During Fiscal 2012, the Company also recognized a loss in fair value of convertible debentures of $49,681.

During Fiscal 2012, the Company settled certain accounts payable and accrued liabilities assumed as part of the Merger Agreement totaling $640,415 by cash payments totaling $292,045 and the issuance of 40,312 shares of the Company with a fair value of $158,426, resulting in the recognition of a gain on settlement of current liabilities of $189,944.

At July 31, 2014, capitalized costs totaled $9,154,268 (July 31, 2013: $9,154,268).

Workman Creek Project, Arizona

The Company holds an undivided 100% interest in contiguous mineral lode claims in the Workman Creek Project, a 4,036-acre property located in Gila County, Arizona, acquired originally from Cooper Minerals, Inc. (“Cooper”) through a Property Acquisition Agreement dated November 7, 2011, as amended on November 25, 2011, and effective November 30, 2011. The Workman Creek Project is subject to a 3.0% net smelter royalty requiring an annual advance royalty payment of $100,000. The Company has an exclusive right and option to acquire one-half ( 1.5%) of the net smelter royalty for $1,000,000 at any time until January 21, 2024. Additionally, certain individuals hold an option to acquire a 0.5% net smelter royalty exercisable by paying the Company the sum of $333,340 at any time until January 21, 2024.

During Fiscal 2014, the Company paid the annual advance royalty by a cash payment of $50,000 and the issuance of 30,304 shares of the Company with a fair value of $34,850.

At July 31, 2014, capitalized costs totaled $1,372,008 (July 31, 2013: $1,287,158).

Los Cuatros Project, Arizona

The Company holds an undivided 100% interest in a state lease in the Los Cuatros Project, a 640 -acre property located in Maricopa County, Arizona. At July 31, 2014, capitalized costs totaled $257,250 (July 31, 2013: $257,250).

Slick Rock Project, Colorado

The Company holds an undivided 100% interest in contiguous mineral lode claims in the Slick Rock Project, a 6,773-acre property located in San Miguel County, Colorado. Certain claims of the Slick Rock Project are subject to a 1.0% or 3.0% net smelter royalty, the latter requiring an annual advance royalty payment of $30,000 beginning in November 2017. As of July 31, 2014, capitalized acquisition and addition costs totaled $661,271 (July 31, 2013: $653,213).

Coronel Oviedo Project, Paraguay

The Company holds an undivided 100% interest in two prospecting permits in the Coronel Oviedo Project, a 494,000-acre property located in Paraguay, acquired originally from three private Paraguayan companies through a Property Acquisition Agreement dated October 14, 2011, as amended on February 28, 2012 and March 31, 2012. The Coronel Oviedo Project is subject to a 1.5% gross overriding royalty over which the Company has an exclusive right and option at any time to acquire one-half percent ( 0.5%) for $500,000 and a right of first refusal to acquire all or any portion of the remaining one percent ( 1.0%) .

At July 31, 2014, capitalized costs totaled $1,133,412 (July 31, 2013: $1,133,412).

Yuty Project, Paraguay

The Company holds an undivided 100% interest in four prospecting permits in the Yuty Project, a 492,000-acre property located in Paraguay, acquired originally from Cue Resources Ltd. (“Cue”) through an Arrangement Agreement dated January 20, 2012 and effective March 30, 2012 (the “Arrangement Agreement”).

Pursuant to a Settlement and Release Agreement dated and effective August 7, 2012 (the “Settlement Agreement”), the Company renegotiated certain acquisition and royalty agreement terms previously agreed to between Cue and the original property vendors of the Yuty Project. The Settlement Agreement confirms an overriding royalty payable to the property vendors of $0.21 for each pound of uranium produced from the Yuty Project, and supersedes all prior agreements entered into between Cue and the original property vendors. As consideration for the Settlement Agreement, the Company paid $50,000 in cash and issued 75,000 restricted shares with a fair value of $190,500.

At July 31, 2014, capitalized costs totaled $11,947,144 (July 31, 2013: $11,947,144).