URANIUM ENERGY CORP - Quarter Report: 2021 October (Form 10-Q)

uec20211031_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended October 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _____ to _____

Commission File Number: 001-33706

URANIUM ENERGY CORP.

(Exact name of registrant as specified in its charter)

Nevada		98-0399476
(State or other jurisdiction of incorporation of organization)		(I.R.S. Employer Identification No.)

1030 West Georgia Street, Suite 1830, Vancouver, B.C., Canada		V6E 2Y3
(Address of principal executive offices)		(Zip Code)

	(604) 682-9775
	(Registrant’s telephone number, including area code)

	N/A
	(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	UEC	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐ Large accelerated filer	☐ Accelerated filer

☒ Non-accelerated filer	☒ Smaller reporting company

☐ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 267,253,604 shares of common stock outstanding as of December 14, 2021.

CAUTIONARY NOTE TO U.S. RESIDENTS CONCERNING DISCLOSURE OF MINERAL RESOURCES

The Company is a U.S. Domestic Issuer for United States Securities and Exchange Commission (“SEC”) purposes, most of its shareholders are U.S. residents, the Company is required to report its financial results under U.S. generally accepted accounting principles and its only trading market is the NYSE American. However, because the Company is a reporting issuer in Canada, certain regulatory filings required of the Company in Canada contain or incorporate by reference therein certain disclosure that satisfies the additional requirements of Canadian securities laws, which differ from the requirements of United States’ securities laws. Unless otherwise indicated, all Company resource estimates included in those Canadian filings, and in the documents incorporated by reference therein, have been prepared in accordance with Canadian National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum classification system. NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects.

Canadian standards, including NI 43-101, differ significantly from the requirements of SEC Industry Guide 7, as defined in the Glossary of Technical Terms (“Industry Guide 7”). Thus, resource information contained, or incorporated by reference, in our Canadian filings, and in the documents incorporated by reference therein, may not be comparable to similar information disclosed by companies reporting “reserve” and resource information under SEC Industry Guide 7. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserve” under SEC Industry Guide 7. Under SEC Industry Guide 7 standards, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report “reserves” the three-year historical average price, to the extent possible, is used in any “reserve” or cash flow analysis to designate “reserves” and the primary environmental analysis or report must be filed with the appropriate governmental authority.

SEC Industry Guide 7 disclosure standards historically have not permitted the inclusion of information concerning “Measured Mineral Resources”, “Indicated Mineral Resources” or “Inferred Mineral Resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by SEC Industry Guide 7 standards. United States investors should also understand that “Inferred Mineral Resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an “Inferred Mineral Resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “Inferred Mineral Resources” may not form the basis of feasibility or pre-feasibility studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into mineral “reserves” as defined by SEC Industry Guide 7. Investors are cautioned not to assume that all or any part of an “Inferred Mineral Resource” exists or is economically or legally mineable. The Company does not have any mineral “reserves” within the meaning of SEC Industry Guide 7.

Disclosure of “contained pounds” or “contained ounces” in a resource estimate is permitted and typical disclosure under Canadian regulations; however, SEC Industry Guide 7 historically only permitted issuers to report mineralization that does not constitute “reserves” by SEC standards as in-place tonnage and grade without reference to unit measures. The requirements of NI 43-101 for identification of reserves are also not the same as those of SEC Industry Guide 7, and reserves reported by the Company in compliance with NI 43-101 may not qualify as “reserves” under SEC Industry Guide 7 standards. Accordingly, information concerning mineral deposits may not be comparable to information made public by companies that report in accordance with SEC Industry Guide 7 standards.

On October 31, 2018, the SEC adopted the Modernization of Property Disclosures for Mining Registrants (the “New Rule”), introducing significant changes to the existing mining disclosure framework to better align it with international industry and regulatory practice, including NI 43-101. The New Rule became effective as of February 25, 2019, and issuers are required to comply with the New Rule as of the annual report for their first fiscal year beginning on or after January 1, 2021, and earlier in certain circumstances. The Company does not anticipate needing to comply with the New Rule until the filing of our annual report for the fiscal year ending July 31, 2022 and, at this time, the Company does not know the full effect of the New Rule on its mineral resources and, therefore, the disclosure related to the Company’s mineral resources may be significantly different when computed using the requirements set forth in the New Rule.

URANIUM ENERGY CORP.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	4

Item 1. Financial Statements	4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3. Quantitative and Qualitative Disclosures About Market Risk	30

Item 4. Controls and Procedures	30

PART II – OTHER INFORMATION	31

Item 1. Legal Proceedings	31

Item 1A. Risk Factors	32

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3. Defaults Upon Senior Securities	43

Item 4. Mine Safety Disclosures	43

Item 5. Other Information	43

Item 6. Exhibits	44

SIGNATURES	45

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

URANIUM ENERGY CORP.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED OCTOBER 31, 2021

(Unaudited – Expressed in U.S. Dollars)

URANIUM ENERGY CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited – Expressed in U.S. Dollars)

	Note(s)		October 31, 2021			July 31, 2021

CURRENT ASSETS
Cash and cash equivalents		6	$	96,304,124		$	44,312,780
Inventories		3		36,217,420			29,172,480
Prepaid expenses and deposits				1,777,355			1,434,404
Other current assets				128,155			125,698
TOTAL CURRENT ASSETS				134,427,054			75,045,362

MINERAL RIGHTS AND PROPERTIES		4		64,009,292			63,784,003
PROPERTY, PLANT AND EQUIPMENT		5		7,318,570			7,358,037
RESTRICTED CASH		6		2,037,677			2,037,677
EQUITY-ACCOUNTED INVESTMENT		7		23,626,010			20,729,674
OTHER NON-CURRENT ASSETS				1,300,048			586,332
TOTAL ASSETS			$	232,718,651		$	169,541,085


CURRENT LIABILITIES
Accounts payable and accrued liabilities		8	$	2,173,618		$	2,763,570
Other current liabilities		11		310,968			238,899
Current portion of other loans payable				193,934			191,510
Current portion of long-term debt		9		10,340,802			10,075,231
TOTAL CURRENT LIABILITIES				13,019,322			13,269,210

OTHER LOANS PAYABLE				16,565			65,952
ASSET RETIREMENT OBLIGATIONS		10		3,989,740			3,938,655
OTHER NON-CURRENT LIABILITIES		11		271,530			271,132
DEFERRED TAX LIABILITIES				539,948			540,992
TOTAL LIABILITIES				17,837,105			18,085,941

STOCKHOLDERS' EQUITY
Capital stock
Common stock $0.001 par value: 750,000,000 shares authorized, 258,996,829 shares issued and outstanding (July 31, 2021 - 236,796,866)		12		258,996			236,797
Additional paid-in capital				507,325,510			441,990,650
Share issuance obligation				359,560			359,560
Accumulated deficit				(293,698,936	)		(291,625,110	)
Accumulated other comprehensive income				636,416			493,247
TOTAL EQUITY				214,881,546			151,455,144
TOTAL LIABILITIES AND EQUITY			$	232,718,651		$	169,541,085

SUBSEQUENT EVENTS		3,9,12,15

The accompanying notes are an integral part of these condensed consolidated financial statements.

URANIUM ENERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited – Expressed in U.S. Dollars)

			Three Months Ended October 31,
	Note(s)		2021			2020
COSTS AND EXPENSES
Mineral property expenditures		4	$	1,656,516		$	701,761
General and administrative		8,12		3,116,711			2,585,689
Depreciation, amortization and accretion		4,5,10		98,440			99,180
LOSS FROM OPERATIONS				(4,871,667	)		(3,386,630	)

OTHER INCOME (EXPENSES)
Interest income				20,571			5,610
Interest expenses and finance costs		9		(530,878	)		(890,914	)
Income (loss) from equity-accounted investment		7		2,753,167			(703,605	)
Realized gain on available-for-sale security				547,152			-
Other income				6,785			11,186
OTHER INCOME (EXPENSES)				2,796,797			(1,577,723	)
LOSS BEFORE INCOME TAXES				(2,074,870	)		(4,964,353	)

DEFERRED TAX BENEFIT				1,044			816
NET LOSS FOR THE PERIOD				(2,073,826	)		(4,963,537	)

OTHER COMPREHENSIVE INCOME
Translation gain		7		143,169			62,761
TOTAL OTHER COMPREHENSIVE INCOME				143,169			62,761
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD			$	(1,930,657	)	$	(4,900,776	)

NET LOSS PER SHARE, BASIC AND DILUTED		13	$	(0.01	)	$	(0.03	)

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING, BASIC AND DILUTED				246,859,322			189,955,499

The accompanying notes are an integral part of these condensed consolidated financial statements.

URANIUM ENERGY CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited – Expressed in U.S. Dollars)

			Three Months Ended October 31
	Note(s)		2021			2020
NET CASH PROVIDED BY (USED IN):

OPERATING ACTIVITIES
Net loss for the period			$	(2,073,826	)	$	(4,963,537	)
Adjustments to reconcile net loss to cash flows in operating activities
Stock-based compensation		12		1,380,660			1,378,515
Depreciation, amortization and accretion		4,5,10		98,440			99,180
Amortization of long-term debt discount		9		265,571			443,867
(Income) loss from equity-accounted investment		7		(2,753,167	)		703,605
Deferred tax benefits				(1,044	)		(816	)
Realized gain on available-for-sale security				(547,152	)		-
Foreign exchange loss				-			193
Changes in operating assets and liabilities
Inventories		3		(7,044,940	)		-
Prepaid expenses and deposits				(576,928	)		(78,730	)
Other current assets				(2,458	)		6,704
Accounts payable and accrued liabilities				(1,033,772	)		(170,678	)
Other liabilities				5,338			6,579
NET CASH USED IN OPERATING ACTIVITIES				(12,283,278	)		(2,575,118	)

FINANCING ACTIVITIES
Proceeds from share issuances, net of issuance costs		12		63,965,230			14,130,965
Repayments of other loans				(46,963	)		-
NET CASH PROVIDED BY FINANCING ACTIVITIES				63,918,267			14,130,965

INVESTING ACTIVITIES
Investment in mineral rights and properties		4		(6,274	)		-
Purchase of property, plant and equipment				(7,513	)		(2,903	)
Prepaid transaction costs				(177,010	)		-
Investment in term deposits				-			(10,000,000	)
Investment in available-for-sale security				(9,433,068	)		-
Proceeds from sale of available-for-sale security				9,980,220			-
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES				356,355			(10,002,903	)

NET CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH				51,991,344			1,552,944
*CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD*				46,350,457			6,986,919
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD		6	$	98,341,801		$	8,539,863

The accompanying notes are an integral part of these condensed consolidated financial statements.

URANIUM ENERGY CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited – Expressed in U.S. Dollars)

	Common Stock				Additional Paid-in		Share Issuance		Accumulated			Accumulated Other Comprehensive		Stockholders'
	Shares		Amount		Capital		Obligation		Deficit			Income		Equity
Balance, July 31, 2021		236,796,866	$	236,797	$	441,990,650	$	359,560	$	(291,625,110	)	$	493,247	$	151,455,144
Common stock
Issued under ATM offering, net of issuance costs		20,743,878		20,744		62,650,379		-		-			-		62,671,123
Issued upon exercise of stock options		753,990		754		383,025		-		-			-		383,779
Issued upon exercise of warrants		491,849		492		909,836		-		-			-		910,328
Issued for acquisition of mineral properties		64,149		64		219,326		-		-			-		219,390
Stock-based compensation
Common stock issued for consulting services		4,607		5		14,046		-		-			-		14,051
Common stock issued under Stock Incentive Plan		141,490		140		355,088		-		-			-		355,228
Amortization of stock-based compensation		-		-		803,160		-		-			-		803,160
Net loss for the period		-		-		-		-		(2,073,826	)		-		(2,073,826	)
Other comprehensive income		-		-		-		-		-			143,169		143,169
Balance, October 31, 2021		258,996,829	$	258,996	$	507,325,510	$	359,560	$	(293,698,936	)	$	636,416	$	214,881,546

	Common Stock				Additional Paid-in		Share Issuance		Accumulated			Accumulated Other Comprehensive			Stockholders'
	Shares		Amount		Capital		Obligation		Deficit			Income (Loss)			Equity
Balance, July 31, 2020		184,635,870	$	184,636	$	341,059,972	$	103,554	$	(276,811,300	)	$	(120,244	)	$	64,416,618
Common stock
Issued for equity financing, net of issuance costs		12,500,000		12,500		12,455,787		-		-			-			12,468,287
Issued upon exercise of stock options		13,532		15		9,294		-		-			-			9,309
Stock-based compensation
Common stock issued under Stock Incentive Plan		227,390		226		235,043		30,321		-			-			265,590
Amortization of stock-based compensation		-		-		1,046,175		-		-			-			1,046,175
Warrants
Issued for equity financing		-		-		1,518,432		-		-			-			1,518,432
Issued for equity financing as issuance costs		-		-		134,937		-		-			-			134,937
Net loss for the period		-		-		-		-		(4,963,537	)		-			(4,963,537	)
Other comprehensive income		-		-		-		-		-			62,761			62,761
Balance, October 31, 2020		197,376,792	$	197,377	$	356,459,640	$	133,875	$	(281,774,837	)	$	(57,483	)	$	74,958,572

The accompanying notes are an integral part of these condensed consolidated financial statements.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

NOTE 1:

NATURE OF OPERATIONS

Uranium Energy Corp. was incorporated in the State of Nevada on May 16, 2003. Uranium Energy Corp. and its subsidiary companies and a controlled partnership (collectively, the “Company” or “we”) are engaged in uranium and titanium mining and related activities, including exploration, pre-extraction, extraction and processing of uranium concentrates and titanium minerals, on projects located in the United States, Canada and the Republic of Paraguay.

As at October 31, 2021, we had working capital of $121.4 million including cash and cash equivalents of $96.3 million and uranium inventory holdings of $36.0 million. Subsequent to October 31, 2021, we received further cash proceeds of $31.5 million from our at-the-market offerings (refer to Note 12: Capital Stock) and sold 300,000 pounds of uranium inventories for total proceeds of $13.1 million.

Subsequent to October 31, 2021, we entered into a definitive share purchase agreement with Uranium One Investments Inc. to acquire all the issued and outstanding shares of Uranium One Americas, Inc. (“U1A”) for total consideration of $125.4 million (the “U1A Acquisition”), which is comprised of $111.6 million in cash and a further cash payment of $13.8 million equal to the amount of cash deposited by U1A in a surety deposit account that will remain with the Company after the U1A Acquisition. Additionally, as at October 31, 2021, we had uranium inventory purchase commitments totaling $96.0 million, of which $28.8 million will become due in the next 12 months from the date that our condensed consolidated financial statements are issued (refer to Note 3: Inventories). Furthermore, as at October 31, 2021, we had $10.0 million of term debt with a maturity date of January 31, 2022. We believe our existing cash resources and, if necessary, cash generated from the sale of the Company’s uranium inventories, will provide sufficient funds to complete the U1A Acquisition, fulfill our uranium inventory purchase commitments, repay the $10.0 million principal debt amount and carry out our planned operations for 12 months from the date that our condensed consolidated financial statements are issued. Our continuation as a going concern for a period beyond those 12 months will be dependent upon our ability to obtain adequate additional financing, as our operations are capital intensive and future capital expenditures are expected to be substantial.

Historically, we have been reliant primarily on equity financings from the sale of our common stock and on debt financing in order to fund our operations, and this reliance is expected to continue for the foreseeable future. Our continued operations, including the recoverability of the carrying values of our assets, are dependent ultimately on our ability to achieve and maintain profitability and positive cash flow from our operations.

NOTE 2:

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 10-K for the year ended July 31, 2021 (“Fiscal 2021”). 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 three months ended October 31, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending July 31, 2022 (“Fiscal 2022”).

Certain comparative figures have been reclassified to conform to the current year’s presentation.

Exploration Stage

We have established the existence of mineralized materials for certain uranium projects, including our Palangana Mine. We have not established proven or probable reserves, as defined by the SEC, through the completion of a final or bankable feasibility study for any of our uranium projects, including the Palangana Mine. Furthermore, we have no 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 by the SEC, and will continue to remain in the Exploration Stage until such time that proven or probable reserves have been established.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

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 by the SEC, 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 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 mine development activities. Additionally, there would be no corresponding amortization allocated to future reporting periods of our Company since those costs would have been expensed previously, resulting in both lower produced 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.

NOTE 3:

INVENTORIES

During the three months ended October 31, 2021, we entered into agreements to purchase 400,000 pounds of uranium concentrate inventories under our physical uranium initiative program (the “Physical Uranium Initiative Program”), of which 200,000 pounds of uranium concentrate inventories were received.

As at October 31, 2021, costs of uranium concentrate inventories consisted of the following:

	October 31, 2021		July 31, 2021
Supplies and work-in-progress	$	33,781	$	33,781
Uranium concentrates from production		177,881		177,881
Purchased uranium inventories		36,005,758		28,960,818
	$	36,217,420	$	29,172,480

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

As of October 31, 2021, our uranium inventory purchase commitments for the next five fiscal years are as the follows:

	Purchase Commitments in Pounds		Total Purchase Price
Fiscal 2022		700,000	$	21,965,000
Fiscal 2023		1,205,000		39,409,000
Fiscal 2024		495,000		16,913,250
Fiscal 2025		400,000		14,130,000
Fiscal 2026		100,000		3,620,000
Total		2,900,000	$	96,037,250

Subsequent to October 31, 2021, we received 400,000 pounds of uranium concentrate inventories for a total purchase price of $12,885,000. Subsequent to October 31, 2021, we sold 300,000 pounds of uranium inventories for total proceeds of $13,146,000, which will be recorded as sales revenue on our condensed consolidated statements of operations and comprehensive loss for the three months ended January 31, 2022.

NOTE 4:

MINERAL RIGHTS AND PROPERTIES

Mineral Rights

As at October 31, 2021, we had mineral rights in the States of Arizona, Colorado, New Mexico, Wyoming and Texas, in Canada and in the Republic of Paraguay. These mineral rights were acquired through staking, purchase or lease agreements and are subject to varying royalty interests, some of which are indexed to the sale price of uranium and titanium. As of October 31, 2021, annual maintenance payments of approximately $2.7 million will be required to maintain these mineral rights.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

As at October 31, 2021, the carrying value of our mineral rights and properties were as follows:

	October 31, 2021			July 31, 2021
Mineral Rights and Properties
Palangana Mine	$	6,027,784		$	6,027,784
Goliad Project		8,689,127			8,689,127
Burke Hollow Project		1,495,750			1,495,750
Longhorn Project		116,870			116,870
Salvo Project		14,905			14,905
Anderson Project		3,470,373			3,470,373
Workman Creek Project		899,854			899,854
Los Cuatros Project		257,250			257,250
Slick Rock Project		60,000			60,000
Reno Creek Project		31,527,870			31,527,870
Diabase Project		772,602			546,938
Yuty Project		11,947,144			11,947,144
Oviedo Project		1,133,412			1,133,412
Alto Paraná Titanium Project		1,433,030			1,433,030
Other Property Acquisitions		91,080			91,080
		67,937,051			67,711,387
Accumulated Depletion		(3,929,884	)		(3,929,884	)
		64,007,167			63,781,503

Databases and Land Use Agreements		2,458,808			2,458,808
Accumulated Amortization		(2,456,683	)		(2,456,308	)
		2,125			2,500
	$	64,009,292		$	63,784,003

We have not established proven or probable reserves, as defined by the SEC, for any of our mineral projects. We have established the existence of mineralized materials for certain mineral projects, including our Palangana Mine. Since we commenced uranium extraction at the Palangana Mine without having established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.

During the three months ended October 31, 2021, we entered into a property purchase agreement, whereby we acquired nine mineral claims totaling 10,050 acres as an addition to our existing Diabase Project (the “Diabase Addition”) located on the southern rim of the Athabasca Basin uranium district in Saskatchewan, Canada.

In connection with the Diabase Addition, we paid total consideration of $225,664, which consisted of 64,149 shares with a fair value of $219,390 and transaction costs of $6,274. As a result of these claims being added to our existing Diabase Project, the carrying value of our Diabase Project increased to $772,602 from $546,938 as at July 31, 2021.

During the three months ended October 31, 2021 and 2020, we continued with reduced operations at our Palangana Mine to capture residual uranium only. As a result, no depletion for the Palangana Mine was recorded on our condensed consolidated financial statements for the three months ended October 31, 2021 and 2020.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

Mineral property expenditures incurred on our projects were as follows:

	Three Months Ended October 31,
	2021		2020
Mineral Property Expenditures
Palangana Mine	$	245,320	$	198,802
Goliad Project		97,454		45,789
Burke Hollow Project		715,541		129,778
Longhorn Project		2,921		2,288
Salvo Project		5,696		8,192
Anderson Project		16,495		19,466
Workman Creek Project		8,587		8,198
Slick Rock Project		13,490		13,136
Reno Creek Project		199,819		100,490
Yuty Project		8,045		5,994
Oviedo Project		182,747		47,611
Alto Paraná Titanium Project		60,858		16,451
Other Mineral Property Expenditures		99,543		105,566
	$	1,656,516	$	701,761

NOTE 5:

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following:

	October 31, 2021							July 31, 2021
	Cost		Accumulated Depreciation			Net Book Value		Cost		Accumulated Depreciation			Net Book Value
Hobson Processing Facility	$	6,642,835	$	(870,360	)	$	5,772,475	$	6,642,835	$	(851,075	)	$	5,791,760
Mining Equipment		2,357,917		(2,317,350	)		40,567		2,355,341		(2,313,489	)		41,852
Logging Equipment and Vehicles		1,923,983		(1,787,818	)		136,165		1,923,983		(1,774,887	)		149,096
Computer Equipment		330,993		(289,990	)		41,003		326,056		(283,645	)		42,411
Furniture and Fixtures		184,941		(173,141	)		11,800		184,941		(172,302	)		12,639
Buildings		297,518		(61,041	)		236,477		297,518		(57,322	)		240,196
Land		1,080,083		-			1,080,083		1,080,083		-			1,080,083
	$	12,818,270	$	(5,499,700	)	$	7,318,570	$	12,810,757	$	(5,452,720	)	$	7,358,037

NOTE 6:

RESTRICTED CASH

Restricted cash includes cash and cash equivalents and money market funds pledged as collateral for various bonds posted in favor of applicable state regulatory agencies in Arizona, Texas and Wyoming, and for estimated reclamation costs associated with our Anderson Project, Palangana Mine, Hobson Processing Facility and Reno Creek Project. Restricted cash will be released upon the completion of reclamation of a mineral property or the restructuring of a surety and collateral arrangement.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

As at October 31, 2021, restricted cash consisted of the following:

	October 31, 2021		July 31, 2021
Restricted cash, beginning of period	$	2,037,677	$	1,839,216
Additional surety bond collateral		-		198,377
Interest received		-		84
Restricted cash, end of period	$	2,037,677	$	2,037,677

Cash, cash equivalents and restricted cash are included in the following accounts as of October 31, 2021 and 2020:

	October 31, 2021		October 31, 2020
Cash and cash equivalents	$	96,304,124	$	6,700,603
Restricted cash		2,037,677		1,839,260
Total cash, cash equivalents and restricted cash	$	98,341,801	$	8,539,863

NOTE 7:

EQUITY-ACCOUNTED INVESTMENT

As at October 31, 2021, we owned 15,000,000 shares of Uranium Royalty Corp. (“URC”), representing a 16.5% ( July 31, 2021: 18.1%) interest in URC. In addition, two of our officers are members of URC’s board of directors, and one of which is also an executive officer of URC. As a consequence, our ability to exercise significant influence over URC’s operating and financing policies continued to exist during the three months ended October 31, 2021. Should URC's outstanding options and warrants be fully exercised, UEC's ownership interest would decrease from 16.5% to 13.6%.

URC is a public company listed on the TSX Venture Exchange with the trading symbol “URC.V” and on NASDAQ with the trading symbol “UROY”.

For the three months ended October 31, 2021 and 2020, income (loss) from our equity-accounted investment consisted of the following:

	Three Months Ended October 31,
	2021		2020
Share of income (loss) from URC	$	834,713	$	(703,605	)
Gain on dilution of ownership interest		1,918,454		-
Total	$	2,753,167	$	(703,605	)

For the three months ended October 31, 2021, we recorded a gain on dilution of ownership interest of $1,918,454 as a result of URC issuing shares under its at-the-market offering and the exercise of URC share purchase warrants.

For the three months ended October 31, 2021 and 2020, we recorded translation gains of $143,169 and $62,761, respectively, as a result of translating the ending balance of the equity-accounted investment denominated in Canadian Dollars to U.S. Dollars using the period end exchange rate, which was included in other comprehensive income in our condensed consolidated statements of operations and comprehensive loss.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

During the three months ended October 31, 2021, the change in carrying value of the equity-accounted investment is summarized as follows:

Balance, July 31, 2021	$	20,729,674
Share of income from URC		834,713
Gain on dilution of ownership interest		1,918,454
Translation gain		143,169
Balance, October 31, 2021	$	23,626,010

As at October 31, 2021, the fair value of our investment in URC was approximately $72.3 million.

NOTE 8:

RELATED PARTY TRANSACTIONS

During the three months ended October 31, 2021 and 2020, we incurred $2,106 and $16,677, respectively, in general and administrative costs paid to Blender Media Inc. (“Blender”), a company controlled by Arash Adnani, a direct family member of our President and Chief Executive Officer, for various services, including information technology, financial subscriptions, corporate branding, media, website design, maintenance and hosting, provided by Blender to the Company.

As at October 31, 2021, the amount owing to Blender was $515 ( July 31, 2021: $843), which was included in Accounts Payable and Accrued Liabilities on our condensed consolidated balance sheets.

NOTE 9:

LONG-TERM DEBT

As of October 31, 2021, our long-term debt consisted of the following:

	October 31, 2021		July 31, 2021
Principal amount	$	10,000,000	$	10,000,000
Unamortized discount and accrued fees		340,802		75,231
Long-term debt, net of unamortized discount	$	10,340,802	$	10,075,231

During the three months ended October 31, 2021 and 2020, amortization of debt discount totaled $265,571 and $443,867, respectively, which was recorded as interest expense and included in our condensed consolidated statements of operations and comprehensive loss. During the three months ended October 31, 2021 and 2020, we paid $204,445 and $408,889, respectively, in cash to our lenders (the “Lenders”) for interest on the long-term debt.

The Company’s credit facility with our remaining Lender (the “Credit Facility”) has a maturity date of January 31, 2022, with an interest rate of 8% per annum and an underlying effective interest rate of 18.1%.

Subsequent to October 31, 2021, and pursuant to the terms of the Third Amended and Restated Credit Agreement, we issued 161,594 shares with a fair value of $600,000, representing 6.0% of the $10,000,000 principal balance outstanding, as payment of anniversary fees to our Lender.

As of October 31, 2021, our working capital ratio, excluding the current portion of our long-term debt, was 50:1, which was in compliance with the debt covenant requirement under our Credit Facility being a working capital ratio, excluding any current portion of the long-term debt, of not less than 1:1.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

NOTE 10:

ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations (“ARO”s) relate to future remediation and decommissioning activities at our Palangana Mine, Hobson Processing Facility, Reno Creek Project and Alto Paraná Titanium Project.

Balance, July 31, 2021	$	3,938,655
Accretion		51,085
Balance, October 31, 2021	$	3,989,740

The estimated amounts and timing of cash flows and assumptions used for ARO estimates are as follows:

October 31, 2021

July 31, 2021

Undiscounted amount of estimated cash flows

8,221,018

8,221,018

Payable in years

Inflation rate

1.56%

2.17%

1.56%

2.17%

Discount rate

5.50%

5.96%

5.50%

5.96%

The undiscounted amounts of estimated cash flows for the next five fiscal years and beyond are as follows:

Fiscal 2022	$	-
Fiscal 2023		-
Fiscal 2024		-
Fiscal 2025		-
Fiscal 2026		-
Remaining balance		8,221,018
	$	8,221,018

NOTE 11:

LEASE LIABILITIES

The Company primarily has operating leases for corporate offices and a processing facility with a remaining term of 0.4 to 17.6 years. The lease for the processing facility has an evergreen option that can continue for so long as it is in operation.

During the three months ended October 31, 2021 and 2020, total lease expenses include the following components:

	Three Months Ended October 31,
	2021		2020
Operating Leases	$	57,597	$	54,461
Short-term Leases		338,421		22,642
Total Lease Expenses	$	396,018	$	77,103

As at October 31, 2021, the weighted average remaining lease term was 15.1 years and the weighted average discount rate was 4.75%.

During the three months ended October 31, 2021, cash paid for amounts included in the measurement of operating lease liabilities totaled $49,942.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

Minimum future lease payments under operating leases with terms longer than one year are as follows:

Fiscal 2022	$	320,093
Fiscal 2023		20,000
Fiscal 2024		20,000
Fiscal 2025		20,000
Fiscal 2026		20,000
Thereafter		280,000
Total lease payments		680,093
Less: imputed interest		(136,861	)
Present value of lease liabilities	$	543,232

Current portion of lease liabilities	$	301,481
Non-current portion of lease liabilities	$	241,751

Current lease liabilities are included in Other Current Liabilities, and non-current lease liabilities are included in Other Non-Current Liabilities in our condensed consolidated balance sheets.

NOTE 12:

CAPITAL STOCK

Equity Financing

On May 14, 2021, we entered into an at-the-market offering agreement (the “May 2021 ATM Offering Agreement”) with H.C. Wainwright & Co., LLC and certain co-managers (collectively, the “ATM Managers”), under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100 million through the ATM Managers (the “May 2021 ATM Offering”).

On November 26, 2021, we filed a prospectus supplement to our Registration Statement on Form S-3 (the “2021 Shelf”) with respect to the continuation of the May 2021 ATM Offering Agreement with the ATM Managers under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100 million through the ATM Managers selected by us (the “November 2021 ATM Offering” and, collectively with May 2021 ATM Offering, the “2021 ATM Offerings”).

During the three months ended October 31, 2021, we issued 20,743,878 shares of the Company’s common stock under our May 2021 ATM Offering for net cash proceeds of $62,671,123.

Subsequent to October 31, 2021, we issued 6,655,295 shares of the Company’s common stock under our May 2021 ATM Offering for net cash proceeds of $28,919,064 and issued 747,841 shares of the Company’s common stock under our November 2021 ATM Offering for net cash proceeds of $2,558,808.

Share Purchase Warrants

A continuity schedule of outstanding share purchase warrants for the three months ended October 31, 2021, is as follows:

	Number of Warrants			Weighted Average Exercise Price
Balance, July 31, 2021		5,387,323		$	1.90
Exercised		(491,849	)		1.85
Balance, October 31, 2021		4,895,474		$	1.91

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

During the three months ended October 31, 2021, we received cash proceeds of $910,328 from the exercise of share purchase warrants.

A summary of share purchase warrants outstanding and exercisable as of October 31, 2021, is as follows:

Weighted Average Exercise Price		Number of Warrants Outstanding		Weighted Average Remaining Contractual Life (Years)		Expiry Date
$	2.30		221,546		0.77	August 9, 2022
	1.80		4,467,110		0.90	September 23, 2022
	1.64		25,000		1.55	May 21, 2023
	4.13		181,818		4.43	April 5, 2026
$	1.91		4,895,474		1.02

Stock Options

As of October 31, 2021, we had one stock option plan, our 2021 Stock Incentive Plan, which superseded and replaced our 2020 Stock Incentive Plan.

A continuity schedule of outstanding stock options for the underlying shares for the three months ended October 31, 2021, is as follows:

	Number of Stock Options			Weighted Average Exercise Price
Balance, July 31, 2021		10,404,333		$	1.21
Granted		10,000			2.89
Exercised		(1,030,543	)		1.18
Expired		(60,000	)		2.78
Balance, October 31, 2021		9,323,790		$	1.20

During the three months ended October 31, 2021 and 2020, the total number of stock options exercised, the number of shares issued upon exercise of those options and the cash received from such exercises are as follows:

	Three Months Ended October 31,
	2021		2020
Number of Options Exercised on Cash Basis		344,998		10,000
Number of Options Exercised on Forfeiture Basis		685,545		18,500
Total Number of Options Exercised		1,030,543		28,500

Number of Shares Issued on Cash Exercise		344,998		10,000
Number of Shares Issued on Forfeiture Basis		408,992		3,532
Total Number of Shares Issued Upon Exercise of Options		753,990		13,532

Cash Received from Exercise of Stock Options	$	383,779	$	9,309
Total Intrinsic Value of Options Exercised	$	1,905,216	$	6,678

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

A continuity schedule of outstanding unvested stock options as of October 31, 2021, and the changes during the period, is as follows:

	Number of Unvested Stock Options			Weighted Average Grant-Date Fair Value
Balance, July 31, 2021		3,891,207		$	0.66
Granted		10,000			1.73
Vested		(265,427	)		0.87
Balance, October 31, 2021		3,635,780		$	0.64

As of October 31, 2021, unrecognized stock-based compensation expense related to the unvested portion of stock options totaled $1,187,991 to be recognized over the next 1.07 years.

As of October 31, 2021, the aggregate intrinsic value under the provisions of ASC 718 of all outstanding stock options was $23,495,073 (vested: $14,549,700 and unvested: $8,945,373).

A summary of stock options outstanding and exercisable as of October 31, 2021, is as follows:

			Options Outstanding						Options Exercisable
Range of Exercise Prices			Outstanding at October 31, 2021		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Exercisable at October 31, 2021		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
$0.80	to	$0.99		4,859,185	$	0.92		8.31		2,951,060	$	0.92		8.05
$1.00	to	$1.49		2,168,875		1.17		5.70		1,285,541		1.23		3.63
$1.50	to	$2.89		2,295,730		1.82		5.09		1,451,409		1.59		2.40
				9,323,790	$	1.20		6.91		5,688,010	$	1.16		5.61

Restricted Stock Units

A summary of outstanding and unvested restricted stock units (“RSU”s) as of October 31, 2021, is as follows:

Grant Date	Number of Restricted Stock Units		Grant Date Fair Value		Remaining Life (Years)		Aggregate Intrinsic Value
July 30, 2019		154,999	$	0.94		0.75	$	576,596
July 16, 2020		434,996		0.91		1.71		1,618,185
July 21, 2021		407,617		2.15		2.72		1,516,335
		997,612	$	1.42		1.97	$	3,711,116

During the three months ended October 31, 2021 and 2020, stock-based compensation relating to RSUs totaled $188,821 and $271,834, respectively. As of October 31, 2021, outstanding unvested RSUs totaled 997,612 ( July 31, 2021: 997,612), and unrecognized compensation costs relating to unvested RSUs totaled $943,551, which is expected to be recognized over a period of approximately 1.66 years.

Performance Based Restricted Stock Units

During the three months ended October 31, 2021 and 2020, stock-based compensation relating to target performance based restricted stock units (“PRSU”s) totaled $73,420 and $37,544, respectively. As of October 31, 2021, outstanding unvested PRSUs totaled 1,250,451 ( July 31, 2021: 1,250,451), and unrecognized compensation costs relating to unvested PRSUs totaled $621,729, which is expected to be recognized over a period of approximately 1.63 years.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

Stock-Based Compensation

A summary of stock-based compensation expense is as follows:

	Three Months Ended October 31,
	2021		2020
Stock-Based Compensation for Consultants
Common stock issued to consultants	$	304,587	$	119,470
Amortization of stock option expenses		79,773		103,928
		384,360		223,398
Stock-Based Compensation for Management
Amortization of stock option expenses		165,549		253,731
Amortization of RSU and PRSU expenses		262,241		309,378
		427,790		563,109
Stock-Based Compensation for Employees
Common stock issued to employees		272,913		212,870
Amortization of stock option expenses		295,597		379,138
		568,510		592,008
	$	1,380,660	$	1,378,515

NOTE 13:

LOSS PER SHARE

The following table reconciles the weighted average number of shares used in the calculation of the basic and diluted loss per share:

	Three Months Ended October 31,
	2021			2020
Numerator
Net Loss for the Period	$	(2,073,826	)	$	(4,963,537	)

Denominator
Basic Weighted Average Number of Shares		246,859,322			189,955,499
Dilutive Stock Options, RSUs, PRSUs and Warrants		-			-
Diluted Weighted Average Number of Shares		246,859,322			189,955,499

Net Loss per Share, Basic and Diluted	$	(0.01	)	$	(0.03	)

For the three months ended October 31, 2021 and 2020, all outstanding stock options, RSUs, PRSUs and share purchase warrants were excluded from the calculation of the diluted loss per share since their effects would be anti-dilutive.

NOTE 14:

SEGMENTED INFORMATION

We currently operate in one reportable segment which is focused on uranium mining and related activities, including exploration, pre-extraction, extraction and processing of uranium concentrates.

As of October 31, 2021, our long-term assets located in the United States totaled $58,949,368 or 60% of our total long-term assets of $98,291,597.

URANIUM ENERGY CORP.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

October 31, 2021

(Unaudited – Expressed in U.S. Dollars)

The tables below provide a breakdown of the long-term assets by geographic segments:

October 31, 2021

Balance Sheet Items

United States

Texas

Arizona

Wyoming

Other States

Canada

Paraguay

Total

Mineral Rights and Properties

12,420,786

4,627,477

31,527,870

146,971

772,602

14,513,586

64,009,292

Property, Plant and Equipment

6,609,746

309,044

32,284

367,496

7,318,570

Restricted Cash

1,948,704

15,000

73,973

2,037,677

Equity-Accounted Investment

23,626,010

Other Non-Current Assets

1,255,297

14,500

30,251

1,300,048

Total Long-Term Assets

22,234,533

4,642,477

31,925,387

146,971

24,461,147

14,881,082

98,291,597

	July 31, 2021
Balance Sheet Items	United States
	Texas		Arizona		Wyoming		Other States		Canada		Paraguay		Total
Mineral Rights and Properties	$	12,421,161	$	4,627,477	$	31,527,870	$	146,971	$	546,938	$	14,513,586	$	63,784,003
Property, Plant and Equipment		6,645,905		-		312,763		-		34,036		365,333		7,358,037
Restricted Cash		1,948,704		15,000		73,973		-		-		-		2,037,677
Equity-Accounted Investment		-		-		-		-		20,729,674		-		20,729,674
Other Non-Current Assets		522,306		-		16,000		-		48,026		-		586,332
Total Long-Term Assets	$	21,538,076	$	4,642,477	$	31,930,606	$	146,971	$	21,358,674	$	14,878,919	$	94,495,723

The tables below provide a breakdown of our operating results by geographic segments for the three months ended October 31, 2021 and 2020. All intercompany transactions have been eliminated.

Three months ended October 31, 2021

Statement of Operations

United States

Texas

Arizona

Wyoming

Other States

Canada

Paraguay

Total

Costs and Expenses:

Mineral property expenditures

1,152,077

29,575

199,819

20,424

2,971

251,650

1,656,516

General and administrative

2,601,809

3,720

21,395

345

479,752

9,690

3,116,711

Depreciation, amortization and accretion

89,600

3,719

3,698

1,423

98,440

Loss from operations

(3,843,486

)

(33,295

)

(224,933

)

(20,769

)

(486,421

)

(262,763

)

(4,871,667

)

Other income (expenses)

26,829

(4,767

)

200

2,773,732

803

2,796,797

Loss before income taxes

(3,816,657

)

(38,062

)

(224,733

)

(20,769

)

2,287,311

(261,960

)

(2,074,870

)

	Three months ended October 31, 2020
Statement of Operations	United States
	Texas			Arizona			Wyoming			Other States			Canada			Paraguay			Total
Costs and Expenses:
Mineral property expenditures	$	477,330		$	31,024		$	100,490		$	20,069		$	2,792		$	70,056		$	701,761
General and administrative		2,167,359			3,720			17,470			373			385,208			11,559			2,585,689
Depreciation, amortization and accretion		89,372			-			3,719			-			4,308			1,781			99,180
Loss from operations		(2,734,061	)		(34,744	)		(121,679	)		(20,442	)		(392,308	)		(83,396	)		(3,386,630	)

Other income (expenses)		(880,214	)		(4,767	)		200			-			(697,995	)		5,053			(1,577,723	)
Loss before income taxes	$	(3,614,275	)	$	(39,511	)	$	(121,479	)	$	(20,442	)	$	(1,090,303	)	$	(78,343	)	$	(4,964,353	)

NOTE 15:

SUBSEQUENT EVENT

Subsequent to October 31, 2021, we entered into a definitive share purchase agreement with Uranium One Investments Inc., a subsidiary of Uranium One Inc., to acquire all the issued and outstanding shares of U1A for total consideration of $125.4 million, which is comprised of $111.6 million in cash and a further cash payment of $13.8 million equal to the amount of cash deposited by U1A in a surety deposit account that will remain with the Company after the U1A Acquisition.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following management’s discussion and analysis of the Company’s financial condition and results of operations (the “MD&A”) contain forward-looking statements that involve risks, uncertainties and assumptions including, among others, statements regarding our capital needs, business plans and expectations. In evaluating these statements you should consider various factors, including the risks, uncertainties and assumptions set forth in reports and other documents we have filed with or furnished to the SEC and, including, without limitation, this Form 10-Q Quarterly Report for the three months ended October 31, 2021, and our Form 10-K Annual Report for the fiscal year ended July 31, 2021, including the consolidated financial statements and related notes contained therein. These factors, or any one of them, may cause our actual results or actions in the future to differ materially from any forward-looking statement made in this Quarterly Report. Refer to “Cautionary Note Regarding Forward-looking Statements” as disclosed in our Form 10-K Annual Report for the fiscal year ended July 31, 2021, and Item 1A, Risk Factors, under Part II - Other Information, of this Quarterly Report.

Introduction

This MD&A is focused on material changes in our financial condition from July 31, 2021, our most recently completed year end, to October 31, 2021, and our results of operations for the three months ended October 31, 2021, and should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, as contained in our Form 10-K Annual Report for Fiscal 2021.

Business

We are predominantly engaged in uranium mining and related activities, including exploration, pre-extraction, extraction and processing, on uranium projects located in the United States and Paraguay, as more fully described in our Form 10-K Annual Report for Fiscal 2021.

We utilize in-situ recovery (“ISR”) mining where possible which we believe, when compared to conventional open pit or underground mining, requires lower capital and operating expenditures with a shorter lead time to extraction and a reduced impact on the environment. We have one uranium mine located in the State of Texas, the Palangana Mine, which utilizes ISR mining and commenced extraction of U₃O₈, or yellowcake, in November 2010. We have one uranium processing facility located in the State of Texas, the Hobson Processing Facility, which processes material from the Palangana Mine into drums of U₃O₈, our only sales product and source of revenue, for shipping to a third-party storage and sales facility. As of October 31, 2021, we had no uranium supply or off-take agreements in place.

Our fully-licensed and 100%-owned Hobson Processing Facility forms the basis for our regional operating strategy in the State of Texas, specifically the South Texas Uranium Belt where we utilize ISR mining. We utilize a “hub-and-spoke” strategy whereby the Hobson Processing Facility acts as the central processing site (the “hub”) for the Palangana Mine and future satellite uranium mining activities, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt (the “spokes”). The Hobson Processing Facility has a physical capacity to process uranium-loaded resins of up to a total of two million pounds of U₃O₈ annually and is licensed to process up to one million pounds of U₃O₈ annually.

We acquired the fully permitted Reno Creek Project in August 2017 and expanded our operations to the strategic Powder River Basin in Wyoming.

We also hold certain mineral rights in various stages of development in the States of Arizona, Colorado, New Mexico, Texas and Wyoming, in Canada and in the Republic of Paraguay, many of which are located in historically successful mining areas and have been the subject of past exploration and pre-extraction activities by other mining companies. We do not expect, however, to utilize ISR mining for all of the uranium mineral rights in which case we would expect to rely on conventional open pit and/or underground mining techniques.

Since we completed the acquisition of the Alto Paraná Titanium Project located in Paraguay in July 2017, we are also involved in titanium mining and related activities, including exploration, development, extraction and processing of titanium minerals such as ilmenite.

Subsequent to October 31, 2021, we entered into a definitive share purchase agreement with Uranium One Investments Inc. to acquire all the issued and outstanding shares of U1A for total consideration of $125.4 million, which is comprised of $111.6 million in cash and a further cash payment of $13.8 million equal to the amount of cash deposited by U1A in a surety deposit account that will remain with the Company after the U1A Acquisition.

Our operating and strategic framework is based on expanding our uranium and titanium extraction activities, which include advancing certain projects with established mineralized materials towards extraction and establishing additional mineralized materials on our existing uranium and titanium projects or through the acquisition of additional projects.

Uranium Market Developments

Over the past few years, global uranium market fundamentals have been improving as the market transitions from an inventory driven to more of a production driven market. The spot market bottomed in November 2016 at about $17.75 per pound U₃O₈ and stood at approximately $43.00 per pound at the date of this Quarterly Report (Ux U₃O₈Daily Price). Production curtailments, and mine closures from several global producers, have lowered uranium supply over the past few years, and in 2020 total global production was reduced from 2019 levels of about 142 million pounds to about 123 million pounds, primarily as a result of COVID-19 shutdowns. This event accelerated a rebalancing in the market, resulting in about 19 million pounds of supply being removed that will not be made up. Supply and demand projections show a structural deficit between production and utility requirements averaging about 48 million pounds a year over the next 10 years and increasing thereafter. The current gap is being filled with secondary market sources, including finite inventory that is projected to decline in coming years. New production at higher price levels will be needed to meet reactor requirements.

On the demand side of the equation, the global nuclear energy industry continues robust growth, with 58 new reactors connected to the grid since 2013 and another 51 reactors under construction as of November 2021. Nuclear generation has increased over the past several years and has eclipsed pre-Fukushima production levels. In the 2021 edition of the World Energy Outlook, the International Energy Agency's “Stated Policies Scenario” sees installed nuclear capacity growth of over 26% from 2020 to 2050 (reaching about 525 GWe). Additional upside market pressure also appears to be emerging as utilities finally return to a longer-term contracting cycle to replace expiring contracts, something the market has not experienced for several years. In a more recent market development, financial entities and various producers, including our Company, began purchasing significant quantities of drummed uranium inventory, further removing excess supplies that will likely not re-enter the market unless bundled in longer term contracts at much higher prices.

Response to COVID-19 Pandemic

In response to the COVID-19 pandemic and for the protection of our employees, we have arranged for our teams at our Vancouver, Corpus Christi and Paraguay offices to work remotely. In the meantime, we continued to operate our Palangana Mine at a reduced pace to capture residual uranium only and we continue to advance our ISR projects with engineering and geologic evaluations that support the Company’s extraction readiness strategy.

Results of Operations

For the three months ended October 31, 2021 and 2020, we recorded net losses of $2,073,826 ($0.01 per share) and $4,963,537 ($0.03 per share) and losses from operations of $4,871,667 and $3,386,630, respectively.

During the three months ended October 31, 2021, we continued with our strategic plan for reduced operations at our Palangana Mine to capture residual pounds of U₃O₈ only. As a result, no U₃O₈ extraction or processing costs were capitalized to inventories during the three months ended October 31, 2021.

During the three months ended October 31, 2021, we entered into agreements to purchase 400,000 pounds of uranium concentrate inventories under our Physical Uranium Initiative Program, of which 200,000 pounds of uranium inventory at a total cost of $7,044,940 were received. As at October 31, 2021, the total carrying value of our inventories was $36,217,420 (July 31, 2021: $29,172,480).

Subsequent to October 31, 2021, we sold 300,000 pounds of uranium inventories for total proceeds of $13,146,000, which will be recorded as sales revenue on our condensed consolidated statements of operations and comprehensive loss for the three months ended January 31, 2022.

Costs and Expenses

Mineral Property Expenditures

Mineral property expenditures primarily consisted of costs relating to permitting, property maintenance, exploration and pre-extraction activities and other non-extraction related activities on our projects.

During the three months ended October 31, 2021 and 2020, mineral property expenditures totaled $1,656,516 and $701,761, respectively, of which $240,026 and $198,020, respectively, were directly related to maintaining operational readiness and permitting compliance for our Palangana Mine and Hobson Processing Facility.

During the three months ended October 31, 2021, we continued the 2021 drilling campaign commenced in March 2021 and drilled 52 exploration holes and one cased well totaling 26,000 feet at our Burke Hollow Project.

The following table provides mineral property expenditures on our projects for the periods indicated:

	Three Months Ended October 31,
	2021		2020
Mineral Property Expenditures
Palangana Mine	$	245,320	$	198,802
Goliad Project		97,454		45,789
Burke Hollow Project		715,541		129,778
Longhorn Project		2,921		2,288
Salvo Project		5,696		8,192
Anderson Project		16,495		19,466
Workman Creek Project		8,587		8,198
Slick Rock Project		13,490		13,136
Reno Creek Project		199,819		100,490
Yuty Project		8,045		5,994
Oviedo Project		182,747		47,611
Alto Paraná Titanium Project		60,858		16,451
Other Mineral Property Expenditures		99,543		105,566
	$	1,656,516	$	701,761

General and Administrative

During the three months ended October 31, 2021, general and administrative expenses totaled $3,116,711, which increased by $531,022 compared to $2,585,689 for the three months ended October 31, 2020. The increase primarily resulted from increases in salaries and management fees and expenses related to corporate development and consulting services.

The following summary provides a discussion of the major expense categories including analyses of the factors that caused significant variances compared to the same period last year:

●

for the three months ended October 31, 2021, salaries and management fees totaled $475,565, which increased by $110,062 compared to $365,503 for the three months ended October 31, 2020, primarily as a result of the reinstatement of salaries and management fees, which had been reduced during the initial months of the COVID-19 pandemic in Fiscal 2020 and Fiscal 2021;

●

for the three months ended October 31, 2021, office, insurance, filing and listing fees, investor relations, corporate development and travel expenses totaled $1,181,950, which increased by $462,186 compared to $719,764 for the three months ended October 31, 2020, primarily as a result of increases in consulting fees and corporate development expenses;

●

for the three months ended October 31, 2021, professional fees totaled $115,328, which was consistent with $121,907 for the three months ended October 31, 2020. Professional fees are primarily comprised of legal services related to certain transactional activities and regulatory compliance, in addition to audit and tax services; and

●

for the three months ended October 31, 2021, stock-based compensation totaled $1,343,868, which was consistent with $1,378,515 for the three months ended October 31, 2020. The stock-based compensation expenses included the fair value of compensation shares at the time of issuance and the amortization of the fair value of various stock awards granted in prior fiscal years using the graded vesting method.

Other Income and Expenses

Interest and Finance Costs

During the three months ended October 31, 2021, interest and finance costs totaled $530,878, which decreased by $360,036 compared to $890,914 for the three months ended October 31, 2020.

For the three months ended October 31, 2021, interest paid on long-term debt totaled $204,445, which decreased by $204,444 compared to $408,889 for the three months ended October 31, 2020. For the three months ended October 31, 2021, amortization of debt discount totaled $265,571, which decreased by $178,296 compared to $443,867 for the three months ended October 31, 2020. The decreases in interest on long-term debt and amortization of debt discount are a result of the decrease in the outstanding principal amount of our long-term debt to $10,000,000 from $20,000,000 in the three months ended October 31, 2020.

For the three months ended October 31, 2021, surety bond premiums totaled $48,737, which increased by $19,667 compared to $29,070 for the three months ended October 31, 2020. The increase was primarily a result of increases in surety bond collateral amounts and the annual premium rate.

Income from Equity-Accounted Investment

During the three months ended October 31, 2021, we recorded income of $2,753,167 from our equity-accounted investment, which was comprised of an income pick up of $834,713 primarily resulting from value appreciation of URC’s short-term investment and a gain on dilution of ownership interest of $1,918,454. During the three months ended October 31, 2020, we recorded a loss of $703,605 as a result of a loss pick up from URC’s operations.

Realized Gain on Available-for-Sale Security

During the three months ended October 31, 2021, we recorded a gain of $547,152 from the sale of an available-for-sale security. No gain was recorded for the three months ended October 31, 2020.

Summary of Quarterly Results

	For the Quarters Ended
	October 31, 2021			July 31, 2021			April 30, 2021			January 31, 2021
Net loss	$	(2,073,826	)	$	(1,799,053	)	$	(4,590,161	)	$	(3,461,059	)
Total comprehensive loss		(1,930,657	)		(2,227,462	)		(4,097,060	)		(2,975,021	)
Basic and diluted loss per share		(0.01	)		(0.01	)		(0.02	)		(0.02	)
Total assets		232,718,651			169,541,085			163,575,373			100,142,619

Liquidity and Capital Resources

	October 31, 2021		July 31, 2021
Cash and cash equivalents	$	96,304,124	$	44,312,780
Current assets		134,427,054		75,045,362
Current liabilities		13,019,322		13,269,210
Working capital		121,407,732		61,776,152

During the three months ended October 31, 2021, we received net proceeds of $62,671,123 from the May 2021 ATM Offering and $1,294,107 from the exercise of stock options and share purchase warrants. As at October 31, 2021, we had working capital of $121,407,732, which increased by $59,631,580 from the working capital of $61,776,152 as at July 31, 2021. Subsequent to October 31, 2021, we received further cash proceeds of $31,477,872 under the 2021 ATM Offerings and sold 300,000 pounds of uranium inventories for total proceeds of $13,146,000.

As of October 31, 2021, we had uranium inventory purchase commitments of 2.9 million pounds with a total purchase price of $96.0 million, of which $28.8 million will become due in the next 12 months from the date of this Quarterly Report. In addition, as at October 31, 2021, we had $10,000,000 of debt with a maturity date of January 31, 2022.

Subsequent to October 31, 2021, we entered into a definitive share purchase agreement with Uranium One Investments Inc. to acquire all issued and outstanding shares of U1A for total consideration of $125.4 million, which is comprised of $111.6 million in cash and a further cash payment of $13.8 million equal to the amount of cash deposited by U1A in a surety deposit account that will remain with the Company after the U1A Acquisition.

We believe our existing cash resources and, if necessary, cash generated from the sales of the Company’s uranium inventories, will provide sufficient funds to complete the U1A Acquisition, fulfill our uranium inventory purchase commitments, repay the $10.0 million principal amount of the term debt, and carry out our planned operations for 12 months from the date of this Quarterly Report. Our continuation as a going concern beyond 12 months from the date of this Quarterly Report will be dependent upon our ability to obtain adequate additional financing, as our operations are capital intensive and future capital expenditures are expected to be substantial.

Historically we have been reliant primarily on equity financings from the sale of our common stock and on debt financings in order to fund our operations. We have also relied, to a limited extent, on cash flows generated from our mining activities during the years ended July 31, 2015 (“Fiscal 2015), 2013 (“Fiscal 2013) and 2012 (“Fiscal 2012”). However, we have yet to achieve profitability or develop positive cash flow from operations and we do not expect to achieve profitability or develop positive cash flow from operations in the near term. As at the date of this Quarterly Report, we have 1.3 million pounds of uranium concentrate inventories with a fair value of approximately $55.9 million. In the future we may also rely on cash flows generated from the sales of our uranium concentrates to fund our operations. Our reliance on equity and debt financings is expected to continue for the foreseeable future, and their availability whenever such additional financing is required, will be dependent on many factors beyond our control including, but not limited to, the market price of uranium, the continuing public support of nuclear power as a viable source of electrical generation, the volatility in the global financial markets affecting our stock price and the status of the worldwide economy, any one of which may cause significant challenges in our ability to access additional financing, including access to the equity and credit markets. We may also be required to seek other forms of financing, such as asset divestitures or joint venture arrangements, to continue advancing our uranium projects which would depend entirely on finding a suitable third party willing to enter into such an arrangement, typically involving an assignment of a percentage interest in the mineral project. However, there is no assurance that we will be successful in securing any form of additional financing when required and on terms favorable to us.

Our operations are capital intensive and future capital expenditures are expected to be substantial. We will require significant additional financing to fund our operations, including continuing with our exploration and pre-extraction activities and acquiring additional mineral projects. In the absence of such additional financing, we would not be able to fund our operations, including continuing with our exploration and pre-extraction activities, which may result in delays, curtailment or abandonment of any one or all of our mineral projects.

Our anticipated operations, including exploration and pre-extraction activities, will be dependent on and may change as a result of our financial position, the market price of uranium and other considerations, and such change may include accelerating the pace or broadening the scope of reducing our operations as originally announced in September 2013.

Our ability to secure adequate funding for these activities will be impacted by our operating performance, other uses of cash, the market price of commodities, the market price of our common stock and other factors which may be beyond our control. Specific examples of such factors include, but are not limited to:

●

if the market price of uranium weakens;

●

if the market price of our common stock weakens;

●

if the COVID-19 pandemic worsens or continues over an extended period and causes further financial market uncertainty; and

●

if a nuclear incident, such as the events that occurred at Fukushima in March 2011, is to occur, continuing public support of nuclear power as a viable source of electrical generation may be adversely affected, which may result in significant and adverse effects on both the nuclear and uranium industries.

Our long-term success, including the recoverability of the carrying values of our assets and our ability to acquire additional mineral projects and to continue with exploration and pre-extraction activities and mining activities on our existing mineral projects, will depend ultimately on our ability to achieve and maintain profitability and positive cash flow from our operations by establishing ore bodies that contain commercially recoverable minerals and to develop these into profitable mining activities.

Equity Financings

On May 14, 2021, we entered into the May 2021 ATM Offering Agreement with H.C. Wainwright & Co., LLC and certain co-managers, under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100 million through the ATM Managers selected by us.

On November 26, 2021, we filed the 2021 Shelf with respect to the continuation of the May 2021 ATM Offering Agreement with the ATM Managers under which we may, from time to time, sell shares of our common stock having an aggregate offering price of up to $100 million through the ATM Managers selected by us.

During the three months ended October 31, 2021, we issued 20,743,878 shares of the Company’s common stock under our May 2021 ATM Offering for net cash proceeds of $62,671,123.

Subsequent to October 31, 2021, we issued 6,655,295 shares of the Company’s common stock under our May 2021 ATM Offering for net cash proceeds of $28,919,064 and issued 747,841 shares of the Company’s common stock under our November 2021 ATM Offering for net cash proceeds of $2,558,808.

Credit Facility

On December 5, 2018, we entered into the Third Amended and Restated Credit Agreement with our Lenders, whereby we and the Lenders agreed to certain further amendments to our Credit Facility, under which initial funding of $10,000,000 was received by the Company upon closing of the Credit Facility on July 30, 2013, and additional funding of $10,000,000 was received by the Company upon closing of the amended Credit Facility on March 13, 2014. The Credit Facility is non-revolving with an amended term of 8.5 years since inception maturing on January 31, 2022, subject to an interest rate of 8% per annum, compounded and payable on a monthly basis. The Third Amended and Restated Credit Agreement superseded, in their entirety, our Second Amended and Restated Credit Agreement dated and effective February 9, 2016, our Amended and Restated Credit Agreement dated and effective March 13, 2014 and our Credit Agreement dated and effective July 30, 2013 with our Lenders.

During Fiscal 2021, we made voluntary payments totaling $10,000,000 to certain Lenders, which decreased the principal balance outstanding to $10,000,000 as at October 31, 2021.

Subsequent to October 31, 2021, and pursuant to the terms of the Third Amended and Restated Credit Agreement, we issued 161,594 shares with a fair value of $600,000, representing 6.0% of the $10,000,000 principal balance outstanding, as payment of anniversary fees to our Lender.

Operating Activities

During the three months ended October 31, 2021, net cash used in operating activities was $12,283,278, of which $7,044,940 was for purchases of uranium concentrate inventories. Other significant operating expenditures included mineral property expenditures, general and administrative expenses and interest payments. During the three months ended October 31, 2020, net cash used in operating activities was $2,575,118 for mineral property expenditures, general and administrative expenses and interest payments.

Financing Activities

During the three months ended October 31, 2021, net cash provided by financing activities totaled $63,918,267, comprised of net proceeds of $62,671,123 from the 2021 ATM Offering and net proceeds of $1,294,107 from the exercise of stock options and share purchase warrants, offset by $46,963 payments for a promissory note. During the three months ended October 31, 2020, cash provided by financing activities was $14,130,965 primarily from a public offering completed in September 2020.

Investing Activities

During the three months ended October 31, 2021, net cash provided by investing activities totaled $356,355, comprised of cash proceeds of $9,980,220 from sales of an available-for-sale security, offset by cash used in investment in an available-for-sale security of $9,433,068, cash used in prepaid transaction costs related to U1A Acquisition totaling $177,010, cash used for investment in mineral rights and properties of $6,274 and cash used for the purchase of property, plant and equipment of $7,513. During the three months ended October 31, 2020, net cash used by investing activities totaled $10,002,903, primarily for cash used for investments in term deposits of $10,000,000 and cash used for the purchase of property, plant and equipment of $2,903.

Stock Options and Warrants

As of October 31, 2021, we had stock options outstanding representing 9,323,790 shares at a weighted-average exercise price of $1.20 per share, and share purchase warrants outstanding representing 4,895,474 shares at a weighted-average exercise price of $1.91 per share. As of October 31, 2021, outstanding stock options and warrants represented a total 14,219,264 shares issuable for gross proceeds of approximately $20.5 million should these stock options and warrants be exercised in full on a cash basis. As of October 31, 2021, outstanding in-the-money share purchase warrants and stock options represented a total of 14,037,446 shares exercisable for gross proceeds of approximately $19.8 million should these in-the-money share purchase warrants and stock options be exercised in full on a cash basis. The exercise of stock options and warrants is at the discretion of the respective holders and accordingly, there is no assurance that any of the stock options or warrants will be exercised in the future.

Transactions with a Related Party

During the three months ended October 31, 2021 and 2020, we incurred $2,106 and $16,667, respectively, in general and administrative costs, paid to Blender, a company controlled by Arash Adnani, a direct family member of our President and Chief Executive Officer, for various services, including information technology, financial subscriptions, corporate branding, media, website design, maintenance and hosting, provided by Blender to the Company.

As of October 31, 2021, the amount owing to Blender was $515 (July 31, 2021: $843).

Material Commitments

Uranium Purchase Commitments

Our uranium concentrate purchase commitments at the date of this Quarterly Report are as follows:

	Purchase Commitments in Pounds		Total Purchase Price
Fiscal 2022		300,000	$	9,080,000
Fiscal 2023		1,205,000		39,409,000
Fiscal 2024		495,000		16,913,250
Fiscal 2025		400,000		14,130,000
Fiscal 2026		100,000		3,620,000
Total		2,500,000	$	83,152,250

Long-Term Debt Obligations

At October 31, 2021, we have made all scheduled payments and complied with all covenants under our Credit Facility, and we expect to continue complying with all scheduled payments and covenants during Fiscal 2022.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

For a complete summary of all of our significant accounting policies refer to Note 2: Summary of Significant Accounting Policies of the Notes to the consolidated financial statements as presented under Item 8, Financial Statements and Supplementary Data, in our Annual Report on Form 10-K for Fiscal 2021.

Refer to “Critical Accounting Policies” under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for Fiscal 2021.

Subsequent Events

Subsequent to October 31, 2021, we received 400,000 pounds of uranium concentrate inventories at a total purchase price of $12,885,000 under our Physical Uranium Initiative Program.

Subsequent to October 31, 2021, we entered into a definitive share purchase agreement with Uranium One Investments Inc., a subsidiary of Uranium One Inc., to acquire all of the issued and outstanding shares of U1A for a total consideration of $125.4 million, which is comprised of $111.6 million in cash and a further cash payment of $13.8 million equal to the amount of cash deposited by U1A in a surety deposit account that will remain with the Company after the U1A Acquisition.

Subsequent to October 31, 2021, and pursuant to the terms of the Third Amended and Restated Credit Agreement, we issued 161,594 shares with a fair value of $600,000 as payment of anniversary fees to our Lender.

Subsequent to October 31, 2021, we sold 300,000 pounds of uranium inventories for total proceeds of $13,146,000.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for Fiscal 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of our internal controls over financial reporting and disclosure controls and procedures (as such terms are defined in Rules 13a-15(e) and 15d-15(e) under the United States Securities Exchange Act of 1933, as amended (the “Exchange Act”)) and, as of the end of the period covered by this Quarterly Report, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report, our disclosure controls and procedures were effective.

It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals.

Changes in Internal Controls

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal quarter ended October 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

As of the date of this Quarterly Report, other than as disclosed below, there are no material pending legal proceedings, other than ordinary routine litigation incidental to our business, to which the Company or any of its subsidiaries is a party or of which any of their property is subject, and no director, officer, affiliate or record or beneficial owner of more than 5% of our common stock, or any associate or any such director, officer, affiliate or security holder is: (i) a party adverse to us or any of our subsidiaries in any legal proceeding; or (ii) has an adverse interest to us or any of our subsidiaries in any legal proceeding. Other than as disclosed below, management is not aware of any other material legal proceedings pending or that have been threatened against us or our properties.

On or about March 9, 2011, the Texas Commission on Environmental Quality (the “TCEQ”) granted the Company’s applications for a Class III Injection Well Permit, Production Area Authorization and Aquifer Exemption for its Goliad Project. On or about December 4, 2012, the U.S. Environmental Protection Agency (the “EPA”) concurred with the TCEQ issuance of the Aquifer Exemption permit (the “AE”). With the receipt of this concurrence, the final authorization required for uranium extraction, the Goliad Project achieved fully-permitted status. On or about May 24, 2011, a group of petitioners, inclusive of Goliad County, appealed the TCEQ action to the 250^th District Court in Travis County, Texas. A motion filed by the Company to intervene in this matter was granted. The petitioners’ appeal lay dormant until on or about June 14, 2013, when the petitioners filed their initial brief in support of their position. On or about January 18, 2013, a different group of petitioners, exclusive of Goliad County, filed a petition for review with the Court of Appeals for the Fifth Circuit in the United States (the “Fifth Circuit”) to appeal the EPA’s decision. On or about March 5, 2013, a motion filed by the Company to intervene in this matter was granted. The parties attempted to resolve both appeals, to facilitate discussions and avoid further legal costs. The parties jointly agreed, through mediation initially conducted through the Fifth Circuit on or about August 8, 2013, to abate the proceedings in the State District Court. On or about August 21, 2013, the State District Court agreed to abate the proceedings. The EPA subsequently filed a motion to remand without vacatur with the Fifth Circuit wherein the EPA’s stated purpose was to elicit additional public input and further explain its rationale for the approval. In requesting the remand without vacatur, which would allow the AE to remain in place during the review period, the EPA denied the existence of legal error and stated that it was unaware of any additional information that would merit reversal of the AE. The Company and the TCEQ filed a request to the Fifth Circuit for the motion to remand without vacatur, and if granted, to be limited to a 60-day review period. On December 9, 2013, by way of a procedural order from a three-judge panel of the Fifth Circuit, the Court granted the remand without vacatur and initially limited the review period to 60 days. In March of 2014, at the EPA’s request, the Fifth Circuit extended the EPA’s time period for review and additionally, during that same period, the Company conducted a joint groundwater survey of the site, the result of which reaffirmed the Company’s previously filed groundwater direction studies. On or about June 17, 2014, the EPA reaffirmed its earlier decision to uphold the granting of the Company’s existing AE, with the exception of a northwestern portion containing less than 10% of the uranium resource which was withdrawn, but not denied, from the AE area until additional information is provided in the normal course of mine development. On or about September 9, 2014, the petitioners filed a status report with the State District Court which included a request to remove the stay agreed to in August 2013 and to set a briefing schedule (the “Status Report”). In that Status Report the petitioners also stated that they had decided not to pursue their appeal at the Fifth Circuit. The Company continues to believe that the pending appeal is without merit and is continuing as planned towards uranium extraction at its fully-permitted Goliad Project.

The Company has had communications and filings with the Ministry of Public Works and Communications (the “MOPC”), the mining regulator in Paraguay, whereby the MOPC is taking the position that certain concessions forming part of the Company’s Yuty Project and Alto Parana Project are not eligible for extension as to exploration or continuation to exploitation in their current stages. While we remain fully committed to its development path forward in Paraguay, we have filed certain applications and appeals in Paraguay to reverse the MOPC’s position in order to protect the Company’s continuing rights in those concessions.

Item 1A. Risk Factors

In addition to the information contained in our Annual Report on Form 10-K for Fiscal 2021, and this Quarterly Report on Form 10-Q, we have identified the following material risks and uncertainties which reflect our outlook and conditions known to us as of the date of this Quarterly Report. These material risks and uncertainties should be carefully reviewed by our stockholders and any potential investors in evaluating the Company, our business and the market value of our common stock. Furthermore, any one of these material risks and uncertainties has the potential to cause actual results, performance, achievements or events to be materially different from any future results, performance, achievements or events implied, suggested or expressed by any forward-looking statements made by us or by persons acting on our behalf. Refer to “Cautionary Note Regarding Forward-looking Statements” as disclosed in our Annual Report on Form 10-K for Fiscal 2021.

There is no assurance that we will be successful in preventing the material adverse effects that any one or more of the following material risks and uncertainties may cause on our business, prospects, financial condition and operating results, which may result in a significant decrease in the market price of our common stock. Furthermore, there is no assurance that these material risks and uncertainties represent a complete list of the material risks and uncertainties facing us. There may be additional risks and uncertainties of a material nature that, as of the date of this Quarterly Report, we are unaware of or that we consider immaterial that may become material in the future, any one or more of which may result in a material adverse effect on us. You could lose all or a significant portion of your investment due to any one of these material risks and uncertainties.

Risks Related to Our Company and Business

Evaluating our future performance may be difficult since we have a limited financial and operating history, with significant negative operating cash flow and an accumulated deficit to date. Our long-term success will depend ultimately on our ability to achieve and maintain profitability and to develop positive cash flow from our mining activities.

As more fully described under Item 1, Business, in our Annual Report on Form 10-K for Fiscal 2021, Uranium Energy Corp. was incorporated under the laws of the State of Nevada on May 16, 2003 and, since 2004, we have been engaged in uranium mining and related activities, including exploration, pre-extraction, extraction and processing, on projects located in the United States, Canada and the Republic of Paraguay. In November 2010, we commenced uranium extraction for the first time at our Palangana Mine utilizing ISR methods and processed those materials at our Hobson Processing Facility into drums of U₃O₈, our only sales product and source of revenue. We also hold uranium projects in various stages of exploration and pre-extraction in the States of Arizona, Colorado, New Mexico, Texas and Wyoming, in Canada and the Republic of Paraguay. Since we completed the acquisition of our Alto Paraná Project located in the Republic of Paraguay in July 2017, we are also involved in mining and related activities, including exploration, pre-extraction, extraction and processing of titanium minerals.

As more fully described under “Liquidity and Capital Resources” of Item 2, Management’s Discussion and Analysis of Financial Condition and Result of Operations herein, we have a history of significant negative cash flow and net losses, with an accumulated deficit balance of $293.7 million as of October 31, 2021. Historically, we have been reliant primarily on equity financings from the sale of our common stock and on debt financing in order to fund our operations. Although we generated revenues from sales of U₃O₈ during Fiscal 2015, Fiscal 2013 and Fiscal 2012 of $3.1 million, $9.0 million and $13.8 million, respectively, we have yet to achieve profitability or develop positive cash flow from our operations, and we do not expect to achieve profitability or develop positive cash flow from operations in the near term. As a result of our limited financial and operating history, including our significant negative cash flow from operations and net losses to date, it may be difficult to evaluate our future performance.

As of October 31, 2021, we had working capital of $121.4 million including cash and cash equivalents of $96.3 million and uranium inventory holdings of $36.0 million. Subsequent to October 31, 2021, we received further cash proceeds of $31.5 million under the 2021 ATM Offerings and sold 300,000 pounds of uranium inventories for total proceeds of $13.1 million. As of the date of this Quarterly Report, we have uranium purchase commitments of $28.8 million that will become due in the next 12 months from the date of this Quarterly Report. In addition, as of October 31, 2021, we had $10 million of term debt with a maturity date of January 31, 2022. Subsequent to October 31, 2021, we entered into a definitive share purchase agreement with Uranium One Investments Inc. to acquire all the issued and outstanding shares of U1A for total consideration of $125.4 million, which is comprised of $111.6 million in cash and a further cash payment of $13.8 million equal to the amount of cash deposited by U1A in a surety deposit account that will remain with the Company after the U1A Acquisition. We believe our existing cash resources and, if necessary, cash generated from the sale of the Company’s uranium inventories, will provide sufficient funds to complete the U1A Acquisition, fulfill our uranium inventory purchase commitments, repay the $10 million principal amount of our term debt, and carry out our planned operations for 12 months from the date of this Quarterly Report. Our continuation as a going concern beyond those 12 months will be dependent upon our ability to obtain adequate additional financing as our operations are capital intensive and future capital expenditures are expected to be substantial. Our continued operations, including the recoverability of the carrying values of our assets, are dependent ultimately on our ability to achieve and maintain profitability and positive cash flow from our operations.

Our reliance on equity and debt financings is expected to continue for the foreseeable future, and their availability whenever such additional financing is required will be dependent on many factors beyond our control including, but not limited to, the market price of uranium, the continuing public support of nuclear power as a viable source of electrical generation, the volatility in the global financial markets affecting our stock price and the status of the worldwide economy, any one of which may cause significant challenges in our ability to access additional financing, including access to the equity and credit markets. We may also be required to seek other forms of financing, such as asset divestitures or joint venture arrangements, to continue advancing our projects which would depend entirely on finding a suitable third party willing to enter into such an arrangement, typically involving an assignment of a percentage interest in the mineral project.

Our long-term success, including the recoverability of the carrying values of our assets and our ability to acquire additional uranium projects and continue with exploration and pre-extraction activities and mining activities on our existing uranium projects, will depend ultimately on our ability to achieve and maintain profitability and positive cash flow from our operations by establishing ore bodies that contain commercially recoverable uranium and to develop these into profitable mining activities. The economic viability of our mining activities, including the expected duration and profitability of our Palangana Mine and of any future satellite ISR mines, such as our Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt, our Reno Creek Project located in the Powder River Basin, Wyoming, and our projects in Canada and in the Republic of Paraguay, have many risks and uncertainties. These include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium and titanium minerals; (ii) difficulty in marketing and/or selling uranium concentrates; (iii) significantly higher than expected capital costs to construct a mine and/or processing plant; (iv) significantly higher than expected extraction costs; (v) significantly lower than expected mineral extraction; (vi) significant delays, reductions or stoppages of uranium extraction activities; and (vii) the introduction of significantly more stringent regulatory laws and regulations. Our mining activities may change as a result of any one or more of these risks and uncertainties and there is no assurance that any ore body that we extract mineralized materials from will result in achieving and maintaining profitability and developing positive cash flow.

Our operations are capital intensive and we will require significant additional financing to acquire additional mineral projects and continue with our exploration and pre-extraction activities on our existing projects.

Our operations are capital intensive and future capital expenditures are expected to be substantial. We will require significant additional financing to fund our operations, including acquiring additional mineral projects and continuing with our exploration and pre-extraction activities which include assaying, drilling, geological and geochemical analysis and mine construction costs. In the absence of such additional financing we would not be able to fund our operations or continue with our exploration and pre-extraction activities, which may result in delays, curtailment or abandonment of any one or all of our projects.

If we are unable to service our indebtedness, we may be faced with accelerated repayments or lose the assets securing our indebtedness. Furthermore, restrictive covenants governing our indebtedness may restrict our ability to pursue our business strategies.

During Fiscal 2019, we entered into the Third Amended and Restated Credit Agreement under our Credit Facility with our Lenders under which we had previously drawn down the maximum $20 million in principal. During Fiscal 2021, we made voluntary payments totaling $10 million to certain Lenders, reducing the principal amount outstanding to $10 million as at October 31, 2021. The Credit Facility requires monthly interest payments calculated at 8% per annum and other periodic fees. Our ability to continue making these scheduled payments will be dependent on and may change as a result of our financial condition and operating results. Failure to make any of these scheduled payments will put us in default with the Credit Facility which, if not addressed or waived, could require accelerated repayment of our indebtedness and/or enforcement by the Lenders against our assets. Enforcement against our assets would have a material adverse effect on our financial condition and operating results.

Furthermore, our Credit Facility includes restrictive covenants that, among other things, limit our ability to sell our assets or to incur additional indebtedness other than permitted indebtedness, which may restrict our ability to pursue certain business strategies from time to time. If we do not comply with these restrictive covenants, we could be in default which, if not addressed or waived, could require accelerated repayment of our indebtedness and/or enforcement by the Lenders against our assets.

Our uranium extraction and sales history is limited, with our uranium extraction to date originating from a single uranium mine. Our ability to continue generating revenue is subject to a number of factors, any one or more of which may adversely affect our financial condition and operating results.

We have a limited history of uranium extraction and generating revenue. In November 2010 we commenced uranium extraction at our Palangana Mine, which has been our sole source of revenues from the sales of produced U₃O₈during Fiscal 2015, Fiscal 2013 and Fiscal 2012, with no revenues from sales of produced U₃O₈ during the three months ended October 31, 2021, and any other fiscal years.

During the three months ended October 31, 2021, we continued to operate our Palangana Mine at a reduced pace since implementing our strategic plan in September 2013 to align our operations to a weak uranium commodity market in a challenging post-Fukushima environment. This strategy has included the deferral of major pre-extraction expenditures and remaining in a state of operational readiness in anticipation of a recovery in uranium prices. Our ability to continue generating revenue from the Palangana Mine is subject to a number of factors which include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing and/or selling uranium concentrates; (iii) significantly higher than expected extraction costs; (iv) significantly lower than expected uranium extraction; (v) significant delays, reductions or stoppages of uranium extraction activities; and (vi) the introduction of significantly more stringent regulatory laws and regulations. Furthermore, continued mining activities at the Palangana Mine will eventually deplete the Palangana Mine or cause such activities to become uneconomical, and if we are unable to directly acquire or develop existing uranium projects, such as our Reno Creek, Burke Hollow and Goliad Projects, into additional uranium mines from which we can commence uranium extraction, it will negatively impact our ability to generate revenues. Any one or more of these occurrences may adversely affect our financial condition and operating results.

Exploration and pre-extraction programs and mining activities are inherently subject to numerous significant risks and uncertainties, and actual results may differ significantly from expectations or anticipated amounts. Furthermore, exploration programs conducted on our projects may not result in the establishment of ore bodies that contain commercially recoverable uranium.

Exploration and pre-extraction programs and mining activities are inherently subject to numerous significant risks and uncertainties, with many beyond our control and including, but not limited to: (i) unanticipated ground and water conditions and adverse claims to water rights; (ii) unusual or unexpected geological formations; (iii) metallurgical and other processing problems; (iv) the occurrence of unusual weather or operating conditions and other force majeure events; (v) lower than expected ore grades; (vi) industrial accidents; (vii) delays in the receipt of or failure to receive necessary government permits; (viii) delays in transportation; (ix) availability of contractors and labor; (x) government permit restrictions and regulation restrictions; (xi) unavailability of materials and equipment; and (xii) the failure of equipment or processes to operate in accordance with specifications or expectations. These risks and uncertainties could result in: (i) delays, reductions or stoppages in our mining activities; (ii) increased capital and/or extraction costs; (iii) damage to, or destruction of, our mineral projects, extraction facilities or other properties; (iv) personal injuries; (v) environmental damage; (vi) monetary losses; and (vii) legal claims.

Success in mineral exploration is dependent on many factors, including, without limitation, the experience and capabilities of a company’s management, the availability of geological expertise and the availability of sufficient funds to conduct the exploration program. Even if an exploration program is successful and commercially recoverable material is established, it may take a number of years from the initial phases of drilling and identification of the mineralization until extraction is possible, during which time the economic feasibility of extraction may change such that the material ceases to be economically recoverable. Exploration is frequently non-productive due, for example, to poor exploration results or the inability to establish ore bodies that contain commercially recoverable material, in which case the project may be abandoned and written-off. Furthermore, we will not be able to benefit from our exploration efforts and recover the expenditures that we incur on our exploration programs if we do not establish ore bodies that contain commercially recoverable material and develop these projects into profitable mining activities, and there is no assurance that we will be successful in doing so for any of our projects.

Whether an ore body contains commercially recoverable material depends on many factors including, without limitation: (i) the particular attributes, including material changes to those attributes, of the ore body such as size, grade, recovery rates and proximity to infrastructure; (ii) the market price of uranium, which may be volatile; and (iii) government regulations and regulatory requirements including, without limitation, those relating to environmental protection, permitting and land use, taxes, land tenure and transportation.

We have not established proven or probable reserves through the completion of a “final” or “bankable” feasibility study for any of our projects, including the Palangana Mine. Furthermore, we have no plans to establish proven or probable reserves for any of our uranium projects for which we plan on utilizing ISR mining, such as the Palangana Mine. Since we commenced extraction of mineralized materials from the Palangana Mine without having established proven or probable reserves, it may result in our mining activities at the Palangana Mine, and at any future projects for which proven or probable reserves are not established, being inherently riskier than other mining activities for which proven or probable reserves have been established.

We have established the existence of mineralized materials for certain of our projects, including the Palangana Mine. We have not established proven or probable reserves, as defined by the SEC, through the completion of a “final” or “bankable” feasibility study for any of our projects, including the Palangana Mine. Furthermore, we have no plans to establish proven or probable reserves for any of our projects for which we plan on utilizing ISR mining, such as the Palangana Mine. Since we commenced uranium extraction at the Palangana Mine without having established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated. 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.

Since we are in the Exploration Stage, pre-production expenditures including those related to pre-extraction activities are expensed as incurred, the effects of which may result in our consolidated financial statements not being directly comparable to the financial statements of companies in the Production Stage.

Despite the fact that we commenced uranium extraction at the Palangana Mine in November 2010, we remain in the Exploration Stage, as defined by the SEC, and will continue to remain in the Exploration Stage until such time proven or probable reserves have been established, which may never occur. We prepare our consolidated financial statements in accordance with U.S. GAAP under which acquisition costs of mineral rights are initially capitalized as incurred while pre-production expenditures are expensed as incurred until such time we exit the Exploration Stage. Expenditures relating to exploration activities are expensed as incurred and expenditures relating to pre-extraction activities are expensed as incurred until such time proven or probable reserves are established for that uranium project, after which subsequent expenditures relating to mine development activities for that particular project are capitalized as incurred.

We have neither established nor have any plans to establish proven or probable reserves for our uranium projects for which we plan on utilizing ISR mining, such as the Palangana Mine. Companies in the Production Stage as defined by the SEC, 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 inventory and, as that inventory is sold, to cost of goods sold. As we are in the Exploration Stage it has resulted in us reporting larger losses than if we had been in the Production Stage due to the expensing, instead of capitalization, of expenditures relating to ongoing processing facility and mine pre-extraction activities. Additionally, there would be no corresponding amortization allocated to our future reporting periods 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 acquisition costs 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.

Estimated costs of future reclamation obligations may be significantly exceeded by actual costs incurred in the future. Furthermore, only a portion of the financial assurance required for the future reclamation obligations has been funded.

We are responsible for certain remediation and decommissioning activities in the future primarily for our Hobson Processing Facility, our Palangana Mine, our Reno Creek Project and our Alto Paraná Project and have recorded a liability of $4.0 million on our balance sheets as at October 31, 2021 to recognize the present value of the estimated costs of such reclamation obligations. Should the actual costs to fulfill these future reclamation obligations materially exceed these estimated costs, it may have an adverse effect on our financial condition and operating results, including not having the financial resources required to fulfill such obligations when required to do so.

During Fiscal 2015 we secured $5.6 million of surety bonds as an alternate source of financial assurance for the estimated costs of the reclamation obligations of our Hobson Processing Facility and Palangana Mine, of which we have $1.7 million funded and held as restricted cash for collateral purposes as required by the surety. We may be required at any time to fund the remaining $4.0 million or any portion thereof for a number of reasons including, but not limited to, the following: (i) the terms of the surety bonds are amended, such as an increase in collateral requirements; (ii) we are in default with the terms of the surety bonds; (iii) the surety bonds are no longer acceptable as an alternate source of financial assurance by the regulatory authorities; or (iv) the surety encounters financial difficulties. Should any one or more of these events occur in the future, we may not have the financial resources to fund the remaining amount or any portion thereof when required to do so.

We cannot provide any assurance that our Physical Uranium Initiative Program involving the strategic acquisition of physical uranium will be successful, which may have an adverse effect on our results of operations.

We have used or allocated a large portion of our cash on hand in order to fund the acquisition of drummed uranium. This strategy will be subject to a number of risks and there is no assurance that the strategy will be successful. Future deliveries are subject to performance by other parties and there is a possibility of default by those parties, thus depriving us of potential benefits.

Due to the fluctuation of uranium prices, the price of uranium will fluctuate and we will be subject to losses should we ultimately determine to sell the uranium at prices lower than the acquisition cost. The primary risks associated with physical uranium will be the normal risks associated with supply and demand fundamentals affecting price movements.

We may be required to sell a portion or all of the physical uranium accumulated to fund our operations should other forms of financing not be available to meet our capital requirements.

Since there is no public market for uranium, selling the uranium may take extended periods of time and suitable purchasers may be difficult to find, which could have a material adverse effect on our financial condition and may have a material adverse effect on our securities.

There is no public market for the sale of uranium, although there are several trading and brokerage houses that serve the industry with bid and ask data as well as locations and quantities. The uranium futures market on the New York Mercantile Exchange does not provide for physical delivery of uranium, only cash on settlement, and that trading forum does not offer a formal market but rather facilitates the introduction of buyers to sellers.

The pool of potential purchasers and sellers is limited, and each transaction may require the negotiation of specific provisions. Accordingly, a sale may take several weeks or months to complete. If we determine to sell any physical uranium that we have acquired, we may likewise experience difficulties in finding purchasers that are able to accept a material quantity of physical uranium at a price and at a location that is compatible with our interests. The inability to sell on a timely basis in sufficient quantities and at a desired price and location could have a material adverse effect on our securities.

As part of our Physical Uranium Initiative Program, we have entered into commitments to purchase U₃O₈and may purchase additional quantities. There is no certainty that any future purchases contemplated by us will be completed.

Storage arrangements, including the extension of storage arrangements, along with credit and operational risks of uranium storage facilities may result in the loss or damage of our physical uranium which may not be covered by insurance or indemnity provisions and could have a material adverse effect on our financial condition.

Currently, the uranium we purchased will be stored at the licensed uranium conversion facility of ConverDyn owned by Honeywell. There can be no assurance that storage arrangements that have been negotiated will be extended indefinitely, forcing actions or costs not currently contemplated. Failure to negotiate commercially reasonable storage terms for a subsequent storage period with ConverDyn may have a material adverse effect on our financial condition.

By holding our uranium inventories at the ConverDyn conversion facility we are exposed to the credit and operational risks of the facility. There is no guarantee that we can fully recover all of our investment in uranium held with the facility in the event of a disruptive event. Failure to recover all uranium holdings could have a material adverse effect on our financial condition. Any loss or damage of the uranium may not be fully covered or absolved by contractual arrangements with ConverDyn or our insurance arrangements, and we may be financially and legally responsible for losses and/or damages not covered by indemnity provisions or insurance. Such responsibility could have a material adverse effect on our financial condition.

The uranium industry is subject to influential political and regulatory factors which could have a material adverse effect on our business and financial condition.

The international uranium industry, including the supply of uranium concentrates, is relatively small, competitive and heavily regulated. Worldwide demand for uranium is directly tied to the demand for electricity produced by the nuclear power industry, which is also subject to extensive government regulation and policies. In addition, the international marketing and trade of uranium is subject to political changes in governmental policies, regulatory requirements, and international trade restrictions (including trade agreements, customs, duties and/or taxes). International agreements, governmental policies and trade restrictions are beyond our control. Changes in regulatory requirements, customs, duties or taxes may affect the availability of uranium, which could have a material adverse effect on our business and financial condition.

We do not insure against all of the risks we face in our operations.

In general, where coverage is available and not prohibitively expensive relative to the perceived risk, we will maintain insurance against such risk, subject to exclusions and limitations. We currently maintain insurance against certain risks including securities and general commercial liability claims and certain physical assets used in our operations, subject to exclusions and limitations, however, we do not maintain insurance to cover all of the potential risks and hazards associated with our operations. We may be subject to liability for environmental, pollution or other hazards associated with our exploration, pre-extraction and extraction activities, which we may not be insured against, which may exceed the limits of our insurance coverage or which we may elect not to insure against because of high premiums or other reasons. Furthermore, we cannot provide assurance that any insurance coverage we currently have will continue to be available at reasonable premiums or that such insurance will adequately cover any resulting liability.

Acquisitions that we may make from time to time could have an adverse impact on us.

From time to time we examine opportunities to acquire additional mining assets and businesses. Any acquisition that we may choose to complete may be of a significant size, may change the scale of our business and operations, and may expose us to new geographic, political, operating, financial and geological risks. Our success in our acquisition activities depends on our ability to identify suitable acquisition candidates, negotiate acceptable terms for any such acquisition, and integrate the acquired operations successfully with those of our Company. Any acquisitions would be accompanied by risks which could have a material adverse effect on our business. For example: (i) there may be a significant change in commodity prices after we have committed to complete the transaction and established the purchase price or exchange ratio; (ii) a material ore body may prove to be below expectations; (iii) we may have difficulty integrating and assimilating the operations and personnel of any acquired companies, realizing anticipated synergies and maximizing the financial and strategic position of the combined enterprise, and maintaining uniform standards, policies and controls across the organization; (iv) the integration of the acquired business or assets may disrupt our ongoing business and our relationships with employees, customers, suppliers and contractors; and (v) the acquired business or assets may have unknown liabilities which may be significant. In the event that we choose to raise debt capital to finance any such acquisition, our leverage will be increased. If we choose to use equity as consideration for such acquisition, existing shareholders may suffer dilution. Alternatively, we may choose to finance any such acquisition with our existing resources. There can be no assurance that we would be successful in overcoming these risks or any other problems encountered in connection with such acquisitions.

The uranium and titanium industries are subject to numerous stringent laws, regulations and standards, including environmental protection laws and regulations. If any changes occur that would make these laws, regulations and standards more stringent, it may require capital outlays in excess of those anticipated or cause substantial delays, which would have a material adverse effect on our operations.

Uranium and titanium exploration and pre-extraction programs and mining activities are subject to numerous stringent laws, regulations and standards at the federal, state and local levels governing permitting, pre-extraction, extraction, exports, taxes, labor standards, occupational health, waste disposal, protection and reclamation of the environment, protection of endangered and protected species, mine safety, hazardous substances and other matters. Our compliance with these requirements requires significant financial and personnel resources.

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other applicable jurisdiction, may change or be applied or interpreted in a manner which may also have a material adverse effect on our operations. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency or special interest group, may also have a material adverse effect on our operations.

Uranium and titanium exploration and pre-extraction programs and mining activities are subject to stringent environmental protection laws and regulations at the federal, state and local levels. These laws and regulations include permitting and reclamation requirements, regulate emissions, water storage and discharges and disposal of hazardous wastes. Uranium mining activities are also subject to laws and regulations which seek to maintain health and safety standards by regulating the design and use of mining methods. Various permits from governmental and regulatory bodies are required for mining to commence or continue, and no assurance can be provided that required permits will be received in a timely manner.

Our compliance costs, including the posting of surety bonds associated with environmental protection laws and regulations and health and safety standards have been significant to date and are expected to increase in scale and scope as we expand our operations in the future. Furthermore, environmental protection laws and regulations may become more stringent in the future, and compliance with such changes may require capital outlays in excess of those anticipated or cause substantial delays, which would have a material adverse effect on our operations.

While the very heart of our business – uranium extraction, which is the fuel for carbon-free, emission-free baseload nuclear power – and our recycling programs, help address global climate change and reduce air pollution, the world’s focus on addressing climate change will require the Company to continue to conduct all of its operations in a manner that minimizes the use of resources, including the unnecessary use of energy resources, in order to continue to minimize air emissions at our facilities, which can also increase mine and facility, construction, development and operating costs. Regulatory and environmental standards may also change over time to address global climate change, which could further increase these costs.

To the best of our knowledge, our operations are in compliance, in all material respects, with all applicable laws, regulations and standards. If we become subject to liability for any violations, we may not be able or may elect not to insure against such risk due to high insurance premiums or other reasons. Where coverage is available and not prohibitively expensive relative to the perceived risk, we will maintain insurance against such risk, subject to exclusions and limitations. However, we cannot provide any assurance that such insurance will continue to be available at reasonable premiums or that such insurance will be adequate to cover any resulting liability.

We may not be able to obtain, maintain or amend rights, authorizations, licenses, permits or consents required for our operations.

Our exploration and mining activities are dependent upon the grant of appropriate rights, authorizations, licences, permits and consents, as well as continuation and amendment of these rights, authorizations, licences, permits and consents already granted, which may be granted for a defined period of time, or may not be granted or may be withdrawn or made subject to limitations. There can be no assurance that all necessary rights, authorizations, licences, permits and consents will be granted to us, or that authorizations, licences, permits and consents already granted will not be withdrawn or made subject to limitations.

Major nuclear and global market incidents may have adverse effects on the nuclear and uranium industries.

The nuclear incident that occurred in Japan in March 2011 had significant and adverse effects on both the nuclear and uranium industries. If another nuclear incident were to occur, it may have further adverse effects for both industries. Public opinion of nuclear power as a source of electrical generation may be adversely affected, which may cause governments of certain countries to further increase regulation for the nuclear industry, reduce or abandon current reliance on nuclear power or reduce or abandon existing plans for nuclear power expansion. Any one of these occurrences has the potential to reduce current and/or future demand for nuclear power, resulting in lower demand for uranium and lower market prices for uranium, adversely affecting the operations and prospects of our Company. Furthermore, the growth of the nuclear and uranium industries is dependent on continuing and growing public support of nuclear power as a viable source of electrical generation.

In March 2020 the COVID-19 pandemic resulted in a black swan event impacting about 50% of the world’s uranium production and has accelerated the market rebalancing. In 2020 significant production cuts were announced in response to the global COVID-19 pandemic, including uranium facilities in Canada, Kazakhstan, and Namibia. In 2021, although most production impacted by COVID-19 has returned to an operating status, some production has continued to be affected. It is unknown at this time exactly how long all the impacts will last or how much uranium production will ultimately be removed from the market as a result of the COVID-19 pandemic. The Company also believes that a large degree of uncertainty exists in the market, primarily due to the size of mobile uranium inventories, transportation issues, premature reactor shutdowns in the U.S. and the length of time of any uranium mine, conversion or enrichment facility shutdowns.

The marketability of uranium concentrates will be affected by numerous factors beyond our control which may result in our inability to receive an adequate return on our invested capital.

The marketability of uranium concentrates extracted by us will be affected by numerous factors beyond our control. These factors include: (i) macroeconomic factors; (ii) fluctuations in the market price of uranium; (iii) governmental regulations; (iv) land tenure and use; (v) regulations concerning the importing and exporting of uranium; and (vi) environmental protection regulations. The future effects of these factors cannot be accurately predicted, but any one or a combination of these factors may result in our inability to receive an adequate return on our invested capital.

The titanium industry is affected by global economic factors, including risks associated with volatile economic conditions, and the market for many titanium products is cyclical and volatile, and we may experience depressed market conditions for such products.

Titanium is used in many "quality of life" products for which demand historically has been linked to global, regional and local GDP and discretionary spending, which can be negatively impacted by regional and world events or economic conditions. Such events are likely to cause a decrease in demand for products and, as a result, may have an adverse effect on our results of operations and financial condition. The timing and extent of any changes to currently prevailing market conditions is uncertain, and supply and demand may be unbalanced at any time. Uncertain economic conditions and market instability make it particularly difficult for us to forecast demand trends. As a consequence, we may not be able to accurately predict future economic conditions or the effect of such conditions on our financial condition or results of operations. We can give no assurances as to the timing, extent or duration of the current or future economic cycles impacting the industries in which we operate.

Historically, the market for large volume titanium applications, including coatings, paper and plastics, has experienced alternating periods of tight supply, causing prices and margins to increase, followed by periods of lower capacity utilization resulting in declining prices and margins. The volatility this market experiences occurs as a result of significant changes in the demand for products as a consequence of global economic activity and changes in customers’ requirements. The supply-demand balance is also impacted by capacity additions or reductions that result in changes of utilization rates. In addition, titanium margins are impacted by significant changes in major input costs such as energy and feedstock. Demand for titanium depends in part on the housing and construction industries. These industries are cyclical in nature and have historically been impacted by downturns in the economy. In addition, pricing may affect customer inventory levels as customers may from time to time accelerate purchases of titanium in advance of anticipated price increases or defer purchases of titanium in advance of anticipated price decreases. The cyclicality and volatility of the titanium industry results in significant fluctuations in profits and cash flow from period to period and over the business cycle.

The uranium industry is highly competitive and we may not be successful in acquiring additional projects.

The uranium industry is highly competitive, and our competition includes larger, more established companies with longer operating histories that not only explore for and produce uranium, but also market uranium and other products on a regional, national or worldwide basis. Due to their greater financial and technical resources, we may not be able to acquire additional uranium projects in a competitive bidding process involving such companies. Additionally, these larger companies have greater resources to continue with their operations during periods of depressed market conditions.

The titanium industry is concentrated and highly competitive, and we may not be able to compete effectively with our competitors that have greater financial resources or those that are vertically integrated, which could have a material adverse effect on our business, results of operations and financial condition.

The global titanium market is highly competitive, with the top six producers accounting for approximately 60% of the world’s production capacity. Competition is based on a number of factors, such as price, product quality and service. Among our competitors are companies that are vertically-integrated (those that have their own raw material resources). Changes in the competitive landscape could make it difficult for us to retain our competitive position in various products and markets throughout the world. Our competitors with their own raw material resources may have a competitive advantage during periods of higher raw material prices. In addition, some of the companies with whom we compete may be able to produce products more economically than we can. Furthermore, some of our competitors have greater financial resources, which may enable them to invest significant capital into their businesses, including expenditures for research and development.

We hold mineral rights in foreign jurisdictions which could be subject to additional risks due to political, taxation, economic and cultural factors.

We hold certain mineral rights located in the Republic of Paraguay through Piedra Rica Mining S.A., Transandes Paraguay S.A., Trier S.A. and Metalicos Y No Metalicos S.R.L., which are incorporated in Paraguay. Operations in foreign jurisdictions outside of the United States and Canada, especially in developing countries, may be subject to additional risks as they may have different political, regulatory, taxation, economic and cultural environments that may adversely affect the value or continued viability of our rights. These additional risks include, but are not limited to: (i) changes in governments or senior government officials; (ii) changes to existing laws or policies on foreign investments, environmental protection, mining and ownership of mineral interests; (iii) renegotiation, cancellation, expropriation and nationalization of existing permits or contracts; (iv) foreign currency controls and fluctuations; and (v) civil disturbances, terrorism and war.

In the event of a dispute arising at our foreign operations in Paraguay, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of the courts in the United States or Canada. We may also be hindered or prevented from enforcing our rights with respect to a government entity or instrumentality because of the doctrine of sovereign immunity. Any adverse or arbitrary decision of a foreign court may have a material and adverse impact on our business, prospects, financial condition and results of operations.

The title to our mineral property interests may be challenged.

Although we have taken reasonable measures to ensure proper title to our interests in mineral properties and other assets, there is no guarantee that the title to any of such interests will not be challenged. No assurance can be given that we will be able to secure the grant or the renewal of existing mineral rights and tenures on terms satisfactory to us, or that governments in the jurisdictions in which we operate will not revoke or significantly alter such rights or tenures or that such rights or tenures will not be challenged or impugned by third parties, including local governments, aboriginal peoples or other claimants. The Company has had communications and filings with the MOPC, the mining regulator in Paraguay, whereby the MOPC is taking the position that certain concessions forming part of the Company’s Yuty Project and Alto Paraná Project are not eligible for extension as to exploration or continuation to exploitation in their current stages. While we remain fully committed to our development path forward in Paraguay, we have filed certain applications and appeals in Paraguay to reverse the MOPC’s position in order to protect the Company’s continuing rights in those concessions. Our mineral properties may be subject to prior unregistered agreements, transfers or claims, and title may be affected by, among other things, undetected defects. A successful challenge to the precise area and location of our claims could result in us being unable to operate on our properties as permitted or being unable to enforce our rights with respect to our properties.

Due to the nature of our business, we may be subject to legal proceedings which may divert management’s time and attention from our business and result in substantial damage awards.

Due to the nature of our business, we may be subject to numerous regulatory investigations, securities claims, civil claims, lawsuits and other proceedings in the ordinary course of our business including those described under Item 1, Legal Proceedings. The outcome of these lawsuits is uncertain and subject to inherent uncertainties, and the actual costs to be incurred will depend upon many unknown factors. We may be forced to expend significant resources in the defense of these suits, and we may not prevail. Defending against these and other lawsuits in the future may not only require us to incur significant legal fees and expenses, but may become time-consuming for us and detract from our ability to fully focus our internal resources on our business activities. The results of any legal proceeding cannot be predicted with certainty due to the uncertainty inherent in litigation, the difficulty of predicting decisions of regulators, judges and juries and the possibility that decisions may be reversed on appeal. There can be no assurances that these matters will not have a material adverse effect on our business, financial position or operating results.

We depend on certain key personnel, and our success will depend on our continued ability to retain and attract such qualified personnel.

Our success is dependent on the efforts, abilities and continued service of certain senior officers and key employees and consultants. A number of our key employees and consultants have significant experience in the uranium industry. A loss of service from any one of these individuals may adversely affect our operations, and we may have difficulty or may not be able to locate and hire a suitable replacement.

Certain directors and officers may be subject to conflicts of interest.

The majority of our directors and officers are involved in other business ventures including similar capacities with other private or publicly-traded companies. Such individuals may have significant responsibilities to these other business ventures, including consulting relationships, which may require significant amounts of their available time. Conflicts of interest may include decisions on how much time to devote to our business affairs and what business opportunities should be presented to us. Our Code of Conduct and Ethics provides for guidance on conflicts of interest.

The laws of the State of Nevada and our Articles of Incorporation may protect our directors and officers from certain types of lawsuits.

The laws of the State of Nevada provide that our directors and officers will not be liable to our Company or to our stockholders for monetary damages for all but certain types of conduct as directors and officers. Our Bylaws provide for broad indemnification powers to all persons against all damages incurred in connection with our business to the fullest extent provided or allowed by law. These indemnification provisions may require us to use our limited assets to defend our directors and officers against claims, and may have the effect of preventing stockholders from recovering damages against our directors and officers caused by their negligence, poor judgment or other circumstances.

Several of our directors and officers are residents outside of the United States, and it may be difficult for stockholders to enforce within the United States any judgments obtained against such directors or officers.

Several of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside of the United States. As a result, it may be difficult for investors to effect service of process on such directors and officers, or enforce within the United States any judgments obtained against such directors and officers, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, stockholders may be effectively prevented from pursuing remedies against such directors and officers under United States federal securities laws. In addition, stockholders may not be able to commence an action in a Canadian court predicated upon the civil liability provisions under United States federal securities laws. The foregoing risks also apply to those experts identified in this document that are not residents of the United States.

Disclosure controls and procedures and internal control over financial reporting, no matter how well designed and operated, are designed to obtain reasonable, and not absolute, assurance as to its reliability and effectiveness.

Management’s evaluation on the effectiveness of disclosure controls and procedures is designed to ensure that information required for disclosure in our public filings is recorded, processed, summarized and reported on a timely basis to our senior management, as appropriate, to allow timely decisions regarding required disclosure.

Management’s report on internal control over financial reporting is designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use and transactions are properly recorded and reported. However, any system of controls, no matter how well designed and operated, is based in part upon certain assumptions designed to obtain reasonable, and not absolute, assurance as to its reliability and effectiveness. Any failure to maintain effective disclosure controls and procedures in the future may result in our inability to continue meeting our reporting obligations in a timely manner, qualified audit opinions or restatements of our financial reports, any one of which may affect the market price for our common stock and our ability to access the capital markets.

Closing of our UIA Acquisition is subject to certain conditions precedent which may not be met.

The closing of our U1A Acquisition is subject to certain conditions precedent, which may not be met.

Risks Related to Our Common Stock

Historically, the market price of our common stock has been and may continue to fluctuate significantly.

On September 28, 2007 our common stock commenced trading on the NYSE American (formerly known as the American Stock Exchange, the NYSE Amex Equities Exchange and the NYSE MKT) and prior to that, traded on the OTC Bulletin Board.

The global markets have experienced significant and increased volatility in the past and have been impacted by the effects of mass sub-prime mortgage defaults and liquidity problems of the asset-backed commercial paper market, resulting in a number of large financial institutions requiring government bailouts or filing for bankruptcy. The effects of these past events and any similar events in the future may continue to or further affect the global markets, which may directly affect the market price of our common stock and our accessibility for additional financing. Although this volatility may be unrelated to specific company performance, it can have an adverse effect on the market price of our shares which, historically, has fluctuated significantly and may continue to do so in the future.

In addition to the volatility associated with general economic trends and market conditions, the market price of our common stock could decline significantly due to the impact of any one or more events, including, but not limited to, the following: (i) volatility in the uranium market; (ii) occurrence of a major nuclear incident such as the events in Fukushima in March 2011; (iii) changes in the outlook for the nuclear power and uranium industries; (iv) failure to meet market expectations on our exploration, pre-extraction or extraction activities, including abandonment of key uranium projects; (v) sales of a large number of our shares held by certain stockholders including institutions and insiders; (vi) downward revisions to previous estimates on us by analysts; (vii) removal from market indices; (viii) legal claims brought forth against us; and (ix) introduction of technological innovations by competitors or in competing technologies.

A prolonged decline in the market price of our common stock could affect our ability to obtain additional financing which would adversely affect our operations.

Historically we have relied on equity financing and, more recently, on debt financing, as primary sources of financing. A prolonged decline in the market price of our common stock or a reduction in our accessibility to the global markets may result in our inability to secure additional financing which would have an adverse effect on our operations.

Additional issuances of our common stock may result in significant dilution to our existing shareholders and reduce the market value of their investment.

We are authorized to issue 750,000,000 shares of common stock of which 258,996,829 shares were issued and outstanding as of October 31, 2021. Future issuances for financings, mergers and acquisitions, exercise of stock options and share purchase warrants and for other reasons may result in significant dilution to and be issued at prices substantially below the price paid for our shares held by our existing stockholders. Significant dilution would reduce the proportionate ownership and voting power held by our existing stockholders and may result in a decrease in the market price of our shares.

We are subject to the Continued Listing Criteria of the NYSE American and our failure to satisfy these criteria may result in delisting of our common stock.

Our common stock is currently listed on the NYSE American. In order to maintain this listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of shareholders’ equity and a minimum number of public shareholders. In addition to these objective standards, the NYSE American may delist the securities of any issuer if: (i) in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory; (ii) it appears that the extent of public distribution or the aggregate market value of the security has become so reduced as to make continued listing on the NYSE American inadvisable; (iii) the issuer sells or disposes of principal operating assets or ceases to be an operating company; (iv) an issuer fails to comply with the NYSE American’s listing requirements; (v) an issuer’s common stock sells at what the NYSE American considers a “low selling price” and the issuer fails to correct this via a reverse split of shares after notification by the NYSE American; or (vi) any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion, inadvisable.

If the NYSE American delists our common stock, investors may face material adverse consequences, including, but not limited to, a lack of trading market for our securities, reduced liquidity, decreased analyst coverage of our securities and an inability for us to obtain additional financing to fund our operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

During our fiscal quarter ended October 31, 2021, we issued the following securities that were not registered under the Securities Act:

●

on September 30, 2021, we issued an aggregate of 4,607 shares of common stock to a consultant in consideration for services under a consulting agreement at a deemed issuance price of $2.93 per share. We relied on exemptions from registration under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of these shares; and

●

on October 14, 2021, we issued an aggregate of 64,149 shares of common stock to a certain vendor pursuant to a Property Purchase Agreement dated October 6, 2021, at a deemed issuance price of $3.0898 per share. We relied on exemptions from registration under the Securities Act provided by Regulation S and/or Section 4(a)(2) with respect to the issuance of these shares.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Pursuant to Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, issuers that are operators, or that have a subsidiary that is an operator, of a coal or other mine in the United States, and that is subject to regulation by the Federal Mine Safety and Health Administration under the Mine Safety and Health Act of 1977 (“Mine Safety Act”), are required to disclose in their periodic reports filed with the SEC information regarding specified health and safety violations, orders and citations, related assessments and legal actions and mining-related fatalities. During the quarter ended October 31, 2021, the Company’s Palangana Mine was not subject to regulation by the Mine Safety Act.

Item 5. Other Information

None.

Item 6. Exhibits

The following exhibits are included with this Quarterly Report:

Exhibit	Description of Exhibit

31.1	Certification of Chief Executive Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) or 15d‑14(a).

31.2	Certification of Chief Financial Officer pursuant to the Securities Exchange Act of 1934 Rule 13a-14(a) or 15d‑14(a).

32.1	Certifications pursuant to the Securities Exchange Act of 1934 Rule 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.1NS 101.SCH 101.CAL 101.DEF 101.LAB 101.PRE 104	Inline XBRL Instance Document Inline XBRL Taxonomy Extension Schema Document Inline XBRL Taxonomy Extension Calculation Linkbase Document Inline XBRL Taxonomy Extension Definitions Linkbase Document Inline XBRL Taxonomy Extension Label Linkbase Document Inline XBRL Taxonomy Extension Presentation Linkbase Document Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	URANIUM ENERGY CORP.


	By:	/s/ Amir Adnani
		Amir Adnani
		President, Chief Executive Officer (Principal
		Executive Officer) and Director
		Date: December 14, 2021

	By:	/s/ Pat Obara
		Pat Obara
		Chief Financial Officer (Principal Financial Officer)
		Date: December 14, 2021