ACQUISITION OF URANERZ ENERGY CORPORATION

12 Months Ended

Dec. 31, 2016

Business Combinations [Abstract]

Acquisition of Uranerz Energy Corporation

ACQUISITION OF THE ALTA MESA ISR PROJECT

On June 16, 2016, the Company acquired 100% of the membership interests of EFR Alta Mesa LLC (“Alta Mesa”) (formerly named “Mesteña Uranium, LLC”) and its related companies, together referred to as “Alta Mesa”. Under the terms of the acquisition agreement, the sellers of Alta Mesa received 4,551,284 common shares of the Company.

Alta Mesa’s primary asset is the Alta Mesa ISR Project (the “Alta Mesa Project”) located in Texas. The Alta Mesa Project is a fully-permitted and licensed production facility that is not currently operating. The acquisition was accounted for as a purchase of assets as Alta Mesa did not meet the definition of a business under ASC Topic 805, Business Combinations because the assets in Alta Mesa do not have developed wellfields which are a key process for extraction of uranium. The development can only commence once uranium prices improve and economic feasibility of the Alta Mesa Project is established. The measurement of the purchase consideration was based on the market price of the Company's common stock on June 16, 2016 of $2.50 per share. The total transaction costs incurred through June 30, 2016 by the Company were $1.29 million which were capitalized as part of the purchase consideration.

The aggregate fair values of assets acquired and liabilities assumed were as follows on the acquisition date:

Issuance of 4,551,824 common shares	$	11,378
Transaction costs	1,290
Purchase consideration	$	12,668
The purchase price was allocated as follows:
Plant and equipment (a)	$	13,626
Inventories	177
Restricted cash	4,532
Accounts payable and accrued liabilities	(213		)
Asset retirement obligation	(5,454		)
Net identifiable assets	$	12,668

(a) The plant and equipment includes the value ascribed to the processing plant and equipment. The mineral properties acquired as part of the acquisition of Alta Mesa in 2016 do not have proven and probable reserves under SEC Industry Guide 7. Accordingly, all subsequent expenditures at the Alta Mesa Project and equipment, which do not have any alternative use, and expenditures on mineral properties are expensed as incurred.

ACQUISITION OF URANERZ ENERGY CORPORATION

On June 18, 2015, the Company acquired 100% of the outstanding shares of Uranerz Energy Corporation. Under the terms of the acquisition agreement, shareholders of Uranerz received 0.255 common shares of the Company for each share of Uranerz common stock held. Each outstanding Uranerz option or warrant was converted into an option or warrant (as applicable) to acquire common shares of the Company, on the same terms and conditions as were applicable to the stock option or warrant (as applicable) prior to the acquisition, except that the number of shares subject to the option or warrant and the exercise price of the option or warrant were adjusted based on the exchange ratio of 0.255, so as to preserve the economic value of such options or warrants.

Uranerz, now a wholly owned subsidiary of the Company, is a United States based uranium company focused on in-situ uranium recovery. ISR is a uranium extraction process that uses a “leaching solution” to extract uranium from underground sandstone-hosted uranium resources and then recover the uranium in the form of uranium concentrates. Uranerz controls a land position in the central Powder River Basin in Wyoming, where it operates the Nichols Ranch Project. The acquisition of Uranerz provided the Company with ISR capabilities and the capability to expand ISR extraction and recovery in the future.

The acquisition was accounted for using the acquisition method in accordance with ASC Topic 805, Business Combinations, with the Company being identified as the acquirer. The measurement of the purchase consideration was based on the market price of the Company's common stock on June 18, 2015 which was $4.16 per share. The total purchase price, including the fair value of the options and warrants, amounted to $106.34 million. The total transaction costs incurred through December 31, 2015 by the Company were $6.89 million which were recorded in Costs directly attributable to acquisitions and are comprised of cash costs of $2.96 million and the issuance of 889,436 common shares of the Company for a total value of $3.93 million for advisory fees and to settle a portion of required change in control payments to certain employees of Uranerz.

The final allocation of the purchase price, based on the fair value of assets acquired and liabilities assumed on June 18, 2015, is summarized in the following table:

Purchaseprice
Issuance of 24,457,773 common shares for replacement of Uranerz common shares	$	101,744
Issuance of 2,690,250 warrants for replacement of Uranerz warrants (Note 12)	915
Issuance of 2,040,408 options for replacement of Uranerz share based options (Note 12)	3,681
	$	106,340
Uranerzpurchasepriceallocation
Cash and cash equivalents	$	2,459
Inventories	3,742
Prepaid expenses and other assets	402
Plant and equipment	29,974
Mineral properties	36,563
Intangible assets - customer contracts	10,600
Restricted cash	2,100
Accounts payable and accrued liabilities	(2,280		)
Loans and borrowings	(18,813		)
Asset retirement obligation	(2,145		)
Non-controlling interest	(3,992		)
Goodwill	47,730
Totalpurchase consideration	$	106,340

The purchase consideration was allocated to the fair value of assets acquired and liabilities assumed, based on an independent valuation report and management's best estimates.