Assets Held for Sale

9 Months Ended

Sep. 30, 2016

Assets Held For Sale

Assets Held for Sale

5. ASSETS HELD FOR SALE

On April 7, 2016, the Company entered into the Laramide SPA with Laramide Resources for the sale of its wholly-owned subsidiary Hydro Resources, Inc., which holds the Company’s Churchrock and Crownpoint projects. Under the terms of the Laramide SPA, the Company is set to transfer ownership of the Churchrock and Crownpoint projects in exchange for the following consideration from Laramide Resources at closing:

· $5.25 million in cash; and

· $7.25 million promissory note, secured by a deed of trust or mortgage over the projects. The note will have a three-year term and carry an initial interest rate of 5% which then increases to 10% upon Laramide Resources decision regarding commercial production at the Churchrock project. Principal payments of approximately $2.4 million are due and payable on the anniversary of the closing of the transaction in each of 2017, 2018 and 2019. Interest will be payable on a quarterly basis, provided however that no interest will be payable prior to the first principal payment in 2017.

The closing under the Laramide SPA is subject to various conditions, including, without limitation, completion of a financing by Laramide Resources on commercially reasonable terms and in such amount as is necessary to fund the $5.25 million purchase price and certain customary and required consents and releases of and by third parties, including RCF. The United States Nuclear Regulatory Commission has approved the transfer of the Company’s license to Laramide Resources, effective at closing.

Either party could originally terminate the Laramide SPA if the closing thereunder had not occurred on or before September 30, 2016. On October 2, 2016, the Company and Laramide Resources agreed to extend the Laramide SPA until November 30, 2016 in exchange for an extension payment of $250,000 which was paid to the Company on October 21, 2016. Other than an extension of the date by which either party could terminate the Laramide SPA from September 30, 2016 to November 30, 2016, no further changes were made to the Laramide SPA. The $250,000 extension payment is non-refundable and will be treated as a pre-payment of the purchase price upon closing of the transaction.

As a result, the assets and liabilities associated with the Churchrock and Crownpoint projects have been classified as held for sale as of September 30, 2016 and December 31, 2015. The Company recently acquired a portion of the Churchrock project from Energy Fuels Inc., and recorded the assets at a fair value of $2.1 million.