NOTE 3:

MINERAL RIGHTS AND PROPERTIES

Mineral Rights

At July 31, 2016, 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 purchase, 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, 2016, annual maintenance payments of approximately $1,528,000 were required to maintain these mineral rights.

Mineral rights and property acquisition costs consisted of the following:

	July 31, 2016		July 31, 2015
Mineral Rights and Properties
Palangana Mine	$	6,443,028	$	6,587,135
Goliad Project		8,689,127		8,689,127
Burke Hollow Project		1,495,750		1,495,750
Longhorn Project		116,870		116,870
Salvo Project		14,905		14,905
Nichols Project		154,774		154,774
Anderson Project		9,154,268		9,154,268
Workman Creek Project		1,472,008		1,472,008
Los Cuatros Project		257,250		257,250
Slick Rock Project		615,650		661,271
Yuty Project		11,947,144		11,947,144
Coronel Oviedo Project		1,133,412		1,133,412
Other Property Acquisitions		234,248		285,741
		41,728,434		41,969,655
Accumulated Depletion		(3,929,884)		(3,929,884)
		37,798,550		38,039,771

Databases		2,410,038		2,410,038
Accumulated Amortization		(2,364,019)		(2,166,966)
		46,019		243,072

Land Use Agreements		404,310		390,155
Accumulated Amortization		(274,928)		(235,031)
		129,382		155,124
	$	37,973,951	$	38,437,967

During Fiscal 2016, the Company abandoned certain mineral interests at projects located in Colorado, New Mexico and Wyoming having a combined acquisition cost of $97,114. As a result, an impairment loss on mineral properties of $97,114 was reported on the consolidated statement of operations.

During Fiscal 2015, the Company abandoned certain mineral interests which were outside of the previously established mineralize materials at the Salvo Project with a combined acquisition cost of $349,805. As a result, an impairment loss on mineral property of $349,805 was reported on the consolidated statement of operations.

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 was reported on the consolidated statement of operations.

The Company has not established proven or probable reserves, as defined by the SEC under Industry Guide 7, 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.

The Palangana Mine has been the Company’s sole source for the uranium concentrates sold to generate its sales revenues during Fiscal 2015, Fiscal 2013 and 2012, with no sales revenues generated during Fiscal 2016, 2014 and 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 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 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 are as follows:

Fiscal 2017	$	68,605
Fiscal 2018		52,028
Fiscal 2019		379,585
Fiscal 2020		832,588
Fiscal 2021		1,595,344
Total	$	2,928,150

Mineral property expenditures incurred by major projects were as follows:

	Year Ended July 31,
	2016		2015		2014
Mineral Property Expenditures
Palangana Mine	$	1,273,002	$	2,147,293	$	2,566,770
Goliad Project		92,588		105,282		1,747,619
Burke Hollow Project		1,034,888		1,316,321		2,094,089
Longhorn Project		10,149		66,135		71,497
Salvo Project		34,289		54,462		14,384
Anderson Project		178,212		240,519		254,840
Workman Creek Project		32,820		31,702		32,290
Slick Rock Project		53,861		53,313		66,525
Yuty Project		388,840		392,879		451,464
Coronel Oviedo Project		569,077		564,501		759,804
Other Mineral Property Expenditures		701,831		733,673		1,101,366
Revaluation of Asset Retirement Obligations		(308,398)		-		-
	$	4,061,159	$	5,706,080	$	9,160,648

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 6,987-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.

During Fiscal 2016, the asset retirement obligations (“ARO”) of the Palangana Mine were revised due to changes in the estimated timing of restoration and reclamation of the Palangana Mine, resulting in the corresponding mineral rights and properties being reduced by $144,107, and a credit amount of revaluation of ARO totaling $308,398 being recorded against the mineral property expenditures for the Palangana Mine. Refer to Note 9: Asset Retirement Obligations.

During Fiscal 2016, the Company continued with the strategic plan of reduced operations implemented in Fiscal 2014 and further reduced operations at the Palangana Mine to capture residual uranium only. As a result, no depletion for the Palangana Mine was recorded on the Company’s consolidated financial statements.

At July 31, 2016, capitalized costs of the Palangana Mine were $6,443,028 (July 31, 2015: $6,587,135), less accumulated depletion of $3,929,884 (July 31, 2015: $3,929,884), for a net book value of $2,513,144 (July 31, 2015: $2,657,251).

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 1,139-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, 2016, capitalized costs totaled $8,689,127 (July 31, 2015: $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, 2016, capitalized costs totaled $1,495,750 (July 31, 2015: $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, 2016, capitalized costs totaled $116,870 (July 31, 2015: $116,870).

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 1,847-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.

During Fiscal 2015, the Company abandoned certain mineral interests which were outside of the boundaries of the previously reported mineralized materials at the Salvo Project with a combined acquisition cost of $349,805. At July 31, 2016, capitalized costs totaled $14,905 (July 31, 2015: $14,905).

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, 2016, capitalized costs totaled $154,774 (July 31, 2015: $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 8,268-acre property located in Yavapai County, Arizona. At July 31, 2016, capitalized costs totaled $9,154,268 (July 31, 2015: $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. The Workman Creek Project is subject to a 3.0% net smelter royalty requiring an annual advance royalty payment of $50,000 for 2016 and 2017, and $100,000 thereafter. 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. At July 31, 2016, capitalized costs totaled $1,472,008 (July 31, 2015: $1,472,008).

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, 2016, capitalized costs totaled $257,250 (July 31, 2015: $257,250).

Slick Rock Project, Colorado

The Company holds an undivided 100% interest in contiguous mineral lode claims in the Slick Rock Project, a 5,333-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.

During Fiscal 2016, the Company abandoned certain mineral interests in the Slick Rock project with acquisition cost of $45,621. As a result, an impairment loss on mineral properties of $45,621 was reported on the consolidated statement of operations and comprehensive loss. At July 31, 2016, capitalized acquisition costs totaled $615,650 (July 31, 2015: $661,271).

Yuty Project, Paraguay

The Company holds an undivided 100% interest in one exploitation concession in the Yuty Project, a 289,680-acre property located in Paraguay. The Yuty Project is subject to an overriding royalty of $0.21 per pound of uranium produced from the Yuty Project. At July 31, 2016, capitalized costs totaled $11,947,144 (July 31, 2015: $11,947,144).

Coronel Oviedo Project, Paraguay

The Company holds an undivided 100% interest in one exploration permit in the Coronel Oviedo Project, a 464,548-acre property located in Paraguay. 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 $166,667 and a right of first refusal to acquire all or any portion of the remaining one percent (1.0%). At July 31, 2016, capitalized costs totaled $1,133,412 (July 31, 2015: $1,133,412).