NOTE

SUMMARY OF SIGNIFICANT POLICIES

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with United States (“U.S.”) generally accepted accounting principles (“U.S. GAAP”) for interim financial information and are presented in U.S. dollars. Accordingly, they do

not

include all of the information and footnotes required under U.S. GAAP for complete financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in our Annual Report on Form

-K for Fiscal

2019.

In the opinion of management, all adjustments of a normal recurring nature and considered necessary for a fair presentation have been made. Operating results for the

six

months ended

January 31, 2020,

are

not

necessarily indicative of the results that

may

be expected for the fiscal year ending

July 31, 2020 (

“Fiscal

2020”

Exploration Stage

We have established the existence of mineralized materials for certain uranium projects, including for our Palangana Mine. We have

not

established proven or probable reserves, as defined by the United States Securities and Exchange Commission (the “SEC”) under Industry Guide

(“Industry Guide

7”

), through the completion of a “final” or “bankable” feasibility study for any of our uranium projects, including the Palangana Mine. Furthermore, we have

plans to establish proven or probable reserves for any of our uranium projects for which we plan on utilizing in-situ recovery (“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 as defined under Industry Guide

and will continue to remain in the Exploration Stage until such time proven or probable reserves have been established.

Since we commenced the extraction of mineralized materials at the Palangana Mine without having established proven or probable reserves, any mineralized materials established or extracted from the Palangana Mine should

not

in any way be associated with having established or produced from proven or probable reserves.

In accordance with U.S. GAAP, expenditures relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time we exit the Exploration Stage by establishing proven or probable reserves. Expenditures relating to exploration activities such as drilling programs to establish mineralized materials are expensed as incurred. Expenditures relating to pre-extraction activities such as the construction of mine wellfields, ion exchange facilities and disposal wells are expensed as incurred until such time proven or probable reserves are established for that project, after which expenditures relating to mine development activities for that particular project are capitalized as incurred.

Companies in the Production Stage as defined under Industry Guide

having 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. We are in the Exploration Stage which has resulted in us reporting larger losses than if we had been in the Production Stage due to the expensing, rather than capitalizing, of expenditures relating to ongoing mill and mine development activities. Additionally, there would be

corresponding amortization allocated to future reporting periods of our Company 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.

Recent

Adopted

Accounting

Standards

February 2016,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”)

2016

02,

“Leases”, (Topic

842

), together with subsequent amendments. The new standard requires a lessee to recognize on its balance sheet a liability to make lease payments (the lease liability) and the right-of-use (“ROU”) asset representing the right to the underlying asset for the lease term.

Effective

August 1, 2019,

the Company adopted this new standard using the modified retrospective approach with a cumulative-effect adjustment recorded at the beginning of the period of adoption. Therefore, upon adoption, the Company has recognized and measured leases without revising comparative period information or disclosure. We elected the package of practical expedients permitted under the transition guidance, which applies to expired or existing leases and allows the Company

not

to reassess whether a contract contains a lease, the lease classification and any initial direct costs incurred.

We elected the following optional practical expedients:

•

we elected the short-term lease recognition exemption whereby ROU assets and lease liabilities will

not

be recognized for leasing arrangements with terms less than

one

year;

•

we elected the land easements practical expedient whereby existing land easements are

not

reassessed under the new standard;

•

we elected hindsight practical expedient when determining lease term; and

•

we elected the practical expedient

not

to separate non-lease components from lease components.

Based on contracts outstanding at

August 1, 2019,

the adoption of the new standard resulted in the recognition of operating lease ROU assets of

$876,590

including

$92,235

reclassified from Prepaid Expenses and Deposits, and lease liabilities of

$784,355.

Adoption of this standard did

not

have a material impact to our Consolidated Statements of Operations and Comprehensive Loss and our Consolidated Statements of Cash Flows. See Note

11:

Lease Liabilities for additional qualitative and quantitative disclosures related to leasing arrangements.

Accounting Policy - Leases

The Company’s accounting policy as a result of adoption of ASC

842

is summarized below.

The Company determines if a contractual arrangement represents or contains a lease at inception. Operating leases with lease terms greater than

months are included in Other Long-term Assets and Other Current Liabilities and Other Long-term Liabilities in our Consolidated Balance Sheet. Finance leases are included in Property, Plant and Equipment and Other Current Liabilities and Other Long-term Liabilities in our Consolidated Balance Sheet.

Operating and finance lease ROU assets and lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date. When the rate implicit to the lease cannot be readily determined, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and the amount equal to the lease payments in a similar economic environment.

The Company’s operating lease expenses are recognized on a straight-line basis over the lease term and included in General and Administration expenses. Short-term leases, which have an initial term of

months or less, are

not

recorded in our Condensed Consolidated Balance Sheets.

The Company has leases arrangements that include both lease and non-lease components. The Company accounts for each separate lease component and its associated non-lease components as a single lease component for all of its asset classes.