ACQUISITON OF RENO CREEK PROJECT AND NORTH RENO CREEK PROJECT

12 Months Ended

Jul. 31, 2018

Business Combination Disclosure [Text Block]

NOTE 4:

ACQUISITON OF RENO CREEK PROJECT AND NORTH RENO CREEK PROJECT

Acquisition of Reno Creek Project

On August 9, 2017, we completed the acquisition of the issued and outstanding shares of Reno Creek Holdings Inc. (“RCHI”) and, indirectly thereby, 100% of its fully permitted Reno Creek in-situ recovery uranium project (the “Reno Creek Project”) located in the Powder River Basin, Wyoming, from each of the Pacific Roads Resources Funds (collectively, “PRRF”; as to 97.27% of RCHI) and Bayswater Holdings Inc. (as to the remaining 2.73% of RCHI; and, collectively with PRRF, the “Reno Creek Vendors”), in accordance with the terms and conditions of a certain Share Purchase Agreement, dated May 9, 2017, as amended by a certain Amending Agreement, dated August 7, 2017 (collectively, the “Share Purchase Agreement”; and, collectively, the “Reno Creek Acquisition”).

Pursuant to the terms of the original Share Purchase Agreement, we agreed to reimburse all costs and expenses (the “Reimbursable Expenses”) incurred by RCHI and its subsidiaries in the ordinary course of business from the effective date of the Share Purchase Agreement to closing, and, pursuant to the Amending Agreement, we also agreed with that the amount to be distributed from RCHI’s subsidiaries to RCHI at closing totalled $1,743,666, which was comprised of the Reimbursable Expenses and the amount of cash on hand held by RCHI’s subsidiaries at the time.

Consideration paid in connection with the completion of the Reno Creek Acquisition included the following:

		a cash payment of $909,930;
		14,392,927 shares of the Company;
		an additional 241,821 shares of the Company in settlement of certain insurance costs of $340,000 incurred by the Company and RCHI at closing;
		11,308,728 warrants (each a “Warrant”), with each Warrant entitling the holder to acquire one share of the Company at an exercise price of $2.30 per share for a period of five years from the date of issuance. The Warrants have an accelerator clause which provides that, in the event that the closing price of the shares of the Company on its principally traded exchange is equal to or greater than $4.00 per share for a period of 20 consecutive trading days, we may accelerate the expiry date of the Warrants to within 30 days by providing written notice to the holders;
		a 0.5% net profits interest royalty, capped at $2.5 million; and
		transaction costs of $779,509, of which $283,013 was paid by the issuance of 217,702 shares of the Company.

In connection with the Reno Creek Acquisition, we also issued 353,160 common shares in settlement of the Reimbursable Expenses totalling $483,829, which is included in the mineral property expenditures on our consolidated financial statements.

In accordance with ASC 360: Property, Plant and Equipment, the Reno Creek Acquisition was accounted for as an asset acquisition as it was determined that the operations of the Reno Creek Project do not meet the definition of a business as defined in ASC 805: Business Combinations.

The fair value of the consideration paid and the allocation to the identifiable assets acquired and liabilities assumed by virtue of the Reno Creek Acquisition are summarized as follows:

Consideration paid
14,634,748 UEC common shares at $1.37 per share	$	20,049,605
11,308,728 UEC share purchase warrants at $0.45 per warrant		5,088,928
Cash payment		909,930
Transaction costs		779,509
	$	26,827,972
Assets acquired and liabilities assumed
Cash and cash equivalents	$	1,247,170
Prepaid expenses		319,874
Reclamation deposits		73,973
Land & buildings		370,085
Mineral rights & properties		25,553,807
Asset retirement obligations		(73,973	)
Deferred tax liabilities		(662,964	)
	$	26,827,972

Acquisition of North Reno Creek Project

On May 1, 2018, we completed a purchase agreement (the “NRC Purchase Agreement”) with Uranerz Energy Corporation (“Uranerz”), a wholly owned subsidiary of Energy Fuels Inc., whereby we acquired 100% of its advanced stage North Reno Creek Project (the “NRC Acquisition”) located immediately adjacent to and within our existing Reno Creek Project permitting boundary in the Powder River Basin, Wyoming.

In accordance with ASC 360: Property, Plant and Equipment, the NRC Acquisition was accounted for as an asset acquisition. In connection with the closing of the NRC Purchase Agreement, we paid total consideration of $5,974,063, consisting of $2,940,000 in cash, 1,625,531 shares with a fair value of $2,617,105 and transaction costs of $416,958, which were capitalized as Mineral Rights and Properties and added to the acquisition costs of the existing Reno Creek Project. As a result, capitalized acquisition costs of the consolidated Reno Creek Project totaled $31,527,870 as at July 31, 2018.

The consolidated Reno Creek Project is comprised of U.S. federal mineral lode claims, state mineral leases, various private mineral leases and certain surface use agreements which grant us the exclusive right to explore, develop and mine for uranium on a 21,465-acre area in Campbell County, Wyoming. The mineral leases and surface use agreements are subject to certain royalty interests with terms ranging from 5 to 20 years, some of which have extension provisions.