Note 5 - Acquisition of Uranium One Americas, Inc.

12 Months Ended

Jul. 31, 2024

U1A Acquisition [Member]

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE 5: ACQUISITION OF URANIUM ONE AMERICAS, INC.

On December 17, 2021, we completed the acquisition of all the issued and outstanding shares of Uranium One Americas, Inc. (“U1A”), a Nevada corporation, from Uranium One Investments Inc., a subsidiary of Uranium One Inc., for total cash consideration of $128,495 (the “U1A Acquisition”).  Subsequent to the completion of the U1A Acquisition, we changed the name of U1A to UEC Wyoming Corp. (“UEC Wyoming”) and, in conjunction therewith, we also changed the name of U1A’s wholly-owned subsidiary, Uranium One USA Inc., a Delaware corporation, to UEC Uranium Corp.

The UEC Wyoming portfolio consists of the Irigaray Processing Facility, the Christensen Ranch Mine and the Ludeman, Antelope, Moore Ranch and Barge Projects located in Wyoming, which creates a Wyoming hub-and-spoke operation for the Company.

The U1A Acquisition was accounted for as a business combination with UEC identified as the acquirer.  The Company’s judgement that the U1A Acquisition is a business combination is based on the Company’s assessment that substantially all the fair value of the assets are not concentrated in a single asset or group of similar assets.  In accordance with the acquisition method of accounting, the purchase price has been assigned to the assets acquired, and the liabilities assumed, based on their estimated fair values at the acquisition date.  In connection with the U1A Acquisition, we incurred acquisition-related costs of $3,444, which were expensed in Fiscal 2022.

As of July 31, 2022, we had completed the analysis to assign fair values to all assets acquired and liabilities assumed and, therefore, the purchase price allocation for the U1A Acquisition is final.

The table below sets forth the consideration paid and the fair value of the assets acquired and liabilities assumed for the U1A Acquisition:

Consideration paid
Cash	$	125,593
Working capital adjustment (1)		2,902
Total consideration paid	$	128,495
Assets acquired and liabilities assumed
Cash & cash equivalents (1)		1,183
Prepaid expenses and deposits (1)		1,550
Other current assets (1)		73
Inventories (1)		192
Mineral rights and properties (2)		110,693
Property, plant and equipment (3)		13,004
Restricted cash		13,755
Debt receivable (4)		-
Other non-current assets (5)		1,613
Total assets		142,063
Accounts payable and accrued liabilities (1)		96
Other liabilities (5)		765
Asset retirement obligations (6)		12,707
Total liabilities		13,568
Total net assets	$	128,495

Notes:

(1)	The working capital adjustment represents the working capital of U1A at the date of the U1A Acquisition, which was comprised of: (i) cash and cash equivalents of $1,183; (ii) prepaid expenses and deposits of $1,550; (iii) other current assets of $73; (iv) inventories of $192; and (v) accounts payable and accrued liabilities of $96.  The fair value of these working capital items approximates their respective carrying values at the date of the acquisition.
(2)	The fair value of mineral rights and properties was determined using the discounted cash flow model (being the net present value of expected future cash flows).  Expected future cash flows are based on estimates of future uranium prices, production based on current estimates of recoverable mineral resources, future operating costs and capital expenditures and the discount rate.  The Company’s estimates of recoverable mineral resources are based on information prepared by qualified persons (management’s specialists).
(3)	The fair value of property, plant and equipment was determined using a replacement cost approach.
(4)	Other non-current assets included certain material and supply inventories classified as non-current and ROU assets associated with U1A’s operating leases.  The fair value of long-term inventory was determined to approximate its carrying value.  ROU assets and lease liabilities for operating leases are measured based on the present value of the future lease payments over the remaining lease terms at the acquisition date.
(5)	The fair value of asset retirement obligations was measured based on the expected costs and timing for final well closure, plant and equipment decommissioning and removal, and environmental remediation, which are discounted to present value using credit adjusted risk-free rates.

Since it has been consolidated from December 17, 2021, UEC Wyoming’s net income of $15,616, primarily resulted from the recovery of the Anfield Debt (as defined below), and operating costs of $4,206 were included in the Company’s consolidated statements of operations and comprehensive income for Fiscal 2022.

The following unaudited proforma financial information presents consolidated results assuming the U1A Acquisition occurred on August 1, 2020.

	Year Ended July 31,
	2022		2021
Sales and service revenue	$	23,298	$	192
Net income (loss) for the year		2,626		(21,945	)