The following management's discussion and analysis of the Company's financial condition and results of operations 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 theSEC and, including, without limitation, this Form 10-K filing for the fiscal year endedJuly 31, 2021 , including the consolidated financial statements and related notes contained herein. 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 document. Refer to "Cautionary Note Regarding Forward-looking Statements" and Item 1A. Risk Factors herein. Introduction The following discussion summarizes the results of operations for each of our fiscal years endedJuly 31, 2021 and 2020 and our financial condition as atJuly 31, 2021 and 2020, with a particular emphasis on Fiscal 2021, our most recently completed fiscal year. Business
We operate in a single reportable segment and, since 2004, as more fully
described under "General Business" of Item 1. Business herein, we have been
primarily engaged in uranium mining and related activities, including
exploration, pre-extraction, extraction and processing, on uranium projects
located in
We utilize ISR mining for our uranium projects 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 theState of Texas , ourPalangana Mine , which utilizes ISR mining and commenced extraction of U3O8, or yellowcake, inNovember 2010 . We have one uranium processing facility located in theState of Texas , our Hobson Processing Facility, which processes material from thePalangana Mine into drums of U3O8, our only sales product and source of revenue, for shipping to a third-party storage and sales facility. AtJuly 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 theState 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, which has a physical capacity to process uranium-loaded resins up to a total of two million pounds of U3O8 annually and is licensed to process up to one million pounds of U3O8 annually, acts as the central processing site (the "hub") for ourPalangana Mine , and future satellite uranium mining activities, such as ourBurke Hollow andGoliad Projects, located within the South Texas Uranium Belt (the "spokes"). We also hold certain mineral rights in various stages in the States ofArizona ,Colorado ,New Mexico ,Wyoming andTexas , and inCanada and in theRepublic 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 our mineral rights in which case we would expect to rely on conventional open pit and/or underground mining techniques. Our operating and strategic framework is based on expanding our uranium extraction activities, which includes advancing certain uranium projects with established mineralized materials towards uranium extraction, and establishing additional mineralized materials on our existing uranium projects or through acquisition of additional uranium projects. 73 --------------------------------------------------------------------------------
Key Issues Since commencing uranium extraction at thePalangana Mine inNovember 2010 , we have been focused primarily on expanding ourSouth Texas uranium mining activities and establishing additional uranium mines through exploration and pre-extraction activities and direct acquisitions in both theU.S. andParaguay , all of which require us to manage numerous challenges, risks and uncertainties inherent in our business and operations as more fully described in Item 1A. Risk Factors herein. Our operations are capital intensive, and we will require significant additional financing to continue with our exploration and pre-extraction activities and acquire additional uranium projects. Historically, we have been reliant primarily on equity financings from the sale of our common stock and, for Fiscal 2014 and Fiscal 2013, on debt financing, in order to fund our operations. We have also relied on cash flows generated from our mining activities during Fiscal 2015, Fiscal 2013 and Fiscal 2012. In the future we may also rely on cash flows generated from the sales of our uranium inventories under our Physical Uranium Portfolio to fund our operations. However, we have yet to achieve profitability or develop positive cash flow from 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 electricity 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 inability to obtain additional financing would have a negative impact on our operations, including delays, curtailment or abandonment of any one or all of our uranium projects. We have not established proven or probable reserves through the completion of a "final" or "bankable" feasibility study for any of our mineral projects. We have established the existence of mineralized materials for certain uranium projects, including ourPalangana Mine . Since we commenced uranium extraction at thePalangana 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.The Palangana Mine has been our sole source to generate sales revenues from the sales of U3O8 during Fiscal 2015, Fiscal 2013 and Fiscal 2012, with no sales revenues generated during other years. The economic viability of our mining activities, including the expected duration and profitability of ourPalangana Mine and of any future satellite ISR mines, such as ourBurke Hollow andGoliad Projects, located within the South Texas Uranium Belt, has many risks and uncertainties. These 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 capital costs to construct a mine and/or processing plant; (iv) significantly higher than expected extraction costs; (v) significantly lower than expected uranium 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. Response to COVID-19 Pandemic In response to the COVID-19 pandemic for the protection of our employees, we have arranged for our teams at ourVancouver ,Corpus Christi andParaguay offices to work remotely and implemented certain health protocols for our employees and contractors who work at the field. In the meantime, we continue to operate ourPalangana Mine at a reduced pace to capture residual uranium only and continue to advance our ISR projects with engineering and geologic evaluations that support the Company's extraction readiness strategy. As atJuly 31, 2021 , we had no uranium supply or off-take agreements in place. Future sales of U3O8 are therefore expected to generally occur through the uranium spot market, with any fluctuations in the market price continuing to have a direct impact on our revenues and cash flows. 74 -------------------------------------------------------------------------------- The table below provides the high/low/average/close for the uranium spot price for each of our last five fiscal years as obtained from UxC Broker Average Price: Fiscal Year Ended High Low Average Close July 31, 2021$ 32.75 $ 27.31 $ 30.38 $ 32.40 July 31, 2020 34.19 23.88 27.66 32.35 July 31, 2019 29.28 23.94 26.95 25.41 July 31, 2018 26.44 19.87 22.09 25.81 July 31, 2017 26.69 17.80 22.33 20.11 Historically, the uranium spot price has been difficult to predict and subject to significant volatility and will continue to be affected by numerous factors beyond our control. Results of Operations For Fiscal 2021 and Fiscal 2020, we recorded a net loss of$14,813,810 ($0.07 per share) and$14,610,516 ($0.08 per share), respectively. Loss from operations during Fiscal 2021 and Fiscal 2020 totaled$17,511,978 and$14,334,523 , respectively. No revenue from sales of produced U3O8 was generated during Fiscal 2021 and Fiscal 2020.
During Fiscal 2021, we continued with our strategic plan for reduced operations
at our
While we remain in a state of operational readiness, uranium extraction expenditures incurred for PAA-1, 2 and 3 at thePalangana Mine , which are directly related to regulatory/mine permit compliance, lease maintenance obligations and maintaining a minimum labor force, are being charged to our consolidated statement of operations. As a result, no uranium concentrate was extracted at thePalangana Mine and processed at the Hobson Processing Facility during Fiscal 2021 and Fiscal 2020. We established the Physical Uranium Portfolio and have entered into agreements to purchase 4.1 million pounds of uranium concentrates as of the date of this Annual Report. Various deliveries have or are scheduled to occur inMarch 2021 intoDecember 2025 at a weighted average price of$32.12 per pound of uranium. During Fiscal 2021, as part of our Physical Uranium Portfolio, we received 1,000,000 pounds of uranium concentrates with a total cost of$28,960,818 . As ofJuly 31, 2021 , the carrying value of our inventories was$29,172,480 (July 31, 2020 :$211,662 ). Costs and Expenses During Fiscal 2021 and Fiscal 2020, costs and expenses totaled$17,511,978 and$14,334,523 , respectively, primarily comprised of mineral property expenditures of$4,478,807 and$4,582,403 , respectively, general and administrative expenses of$12,639,998 and$9,441,898 , respectively, and depreciation, amortization and accretion of$393,173 and$310,222 , respectively. Mineral Property Expenditures
During Fiscal 2021, mineral property expenditures consisted of expenditures relating to permitting, property maintenance, exploration and pre-extraction activities and all other non-extraction related activities on our mineral projects.
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The following table provides mineral property expenditures on a project basis during the past two fiscal years:
Year Ended July 31, 2021 2020 Mineral Property Expenditures Palangana Mine$ 889,597 $ 1,342,927 Goliad Project 237,515 190,278 Burke Hollow Project 1,445,797 1,130,467 Longhorn Project 9,154 17,023 Salvo Project 31,209 28,318 Anderson Project 78,601 71,170 Workman Creek Project 32,700 32,700 Slick Rock Project 52,117 52,521 Reno Creek Project 672,225 596,551 Yuty Project 31,279 65,679 Oviedo Project 371,966 350,211 Alto Paraná Titanium Project 198,969 230,350
Other Mineral Property Expenditures 427,678 474,208
$ 4,478,807 $ 4,582,403 During Fiscal 2021 and Fiscal 2020, mineral property expenditures included costs directly related to maintaining operational readiness and permit compliance at ourPalangana Mine and Hobson Processing Facility totaled$924,050 and$1,130,028 , respectively.
The following provides a discussion of significant mineral property expenditures on certain projects:
?Palangana Mine
During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the
?Goliad Project During Fiscal 2021 and Fiscal 2020, mineral property expenditures at theGoliad Project totaled$237,515 and$190,278 , respectively, which were comprised of permitting and property maintenance costs of$165,715 and$117,204 , and exploration and development costs of$71,800 and$73,074 , respectively. ?Burke Hollow Project During Fiscal 2021 and Fiscal 2020, mineral property expenditures at theBurke Hollow Project totaled$1,445,797 and$1,130,467 , respectively, which were comprised of permitting and property maintenance costs of$387,499 and 384,885, exploration drilling costs of$1,025,309 and$214,246 , and wellfield development costs of$32,989 and$531,336 , respectively. During Fiscal 2021, we initiated a drilling campaign inMarch 2021 and drilled 81 exploration holes totaling 38,785 feet. During Fiscal 2020, we completed a drilling campaign initiated in Fiscal 2019 and drilled 26 exploration holes and 21 monitor wells totaling 21,069 feet. ?Reno Creek Project During Fiscal 2021 and Fiscal 2020, mineral property expenditures at theReno Creek Project totaled$672,225 and$596,551 , respectively, which were comprised of property maintenance costs of$521,039 and$484,228 , and permitting and exploration costs of$151,186 and$112,323 , respectively. 76 --------------------------------------------------------------------------------
?Yuty Project
During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the
?Oviedo Project During Fiscal 2021 and Fiscal 2020, mineral property expenditures at theOviedo Project totaled$371,966 and$350,211 , respectively, which were comprised of property maintenance costs of$150,857 and$78,223 , and exploration expenditures of$221,109 and$271,988 , respectively, primarily for exploration drilling programs conducted. ? Alto ParanáTitanium Project During Fiscal 2021 and Fiscal 2020, mineral property expenditures at the Alto ParanáTitanium Project totaled$198,969 and$230,350 , respectively, which were comprised of exploration costs of$179,179 and$230,350 , and property maintenance costs of$19,790 and $Nil, respectively. During Fiscal 2021, we continued to maintain our projects in good standing, and the costs incurred on other projects of our Company were mainly for property maintenance costs. General and Administrative
During Fiscal 2021, general and administrative expenses totaled
The following summary provides a discussion of the major expense categories, including analyses of factors that caused significant variances from year-to-year:
? during Fiscal 2021, salaries, wages and management fees totaled
which increased by
Fiscal 2020, in response to the financial market uncertainty due to the
COVID-19 pandemic, we implemented corporate-wide pay reductions, ceased cash
bonuses and increased share compensation in lieu of cash for the Company's
employees, officers and directors. During Fiscal 2021, in light of the recovery of the financial market and outperformance of the Company, the compensation of our directors, officers and employees was re-instated;
? during Fiscal 2021, office, filing and listing fee, insurance, corporate
development, investor relations and travel expenses totaled
increased by
due to a corporate-wide cost reduction implemented in Fiscal 2020 in response
to the COVID-19 pandemic;
? during Fiscal 2021, professional fees totaled
with
legal services related to transactional activities, regulatory compliance and
for audit, accounting and tax compliance services; and
? during Fiscal 2021, stock-based compensation expense totaled
increased by
compensation includes the fair value of stock options granted to optionees and
the fair value of shares of the Company issued to directors, officers,
employees and consultants of the Company under our Stock Incentive Plan. In
the past few years, we have been utilizing equity-based payments to our
directors, officers, employees and consultants as part of our continuing
efforts to reduce cash outlays. The stock-based compensation varied from year
to year primarily as a result of changes in the amount of compensation shares
and stock award expenses which are amortized on an accelerating basis,
resulting in more expenses being recorded at the beginning of the vesting period than at the end. 77
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Depreciation, Amortization and Accretion
During Fiscal 2021, depreciation, amortization and accretion totaled$393,173 , which was consistent compared to$310,222 during Fiscal 2020. Depreciation, amortization and accretion includes depreciation and amortization of long-term assets acquired in the normal course of operations and accretion of asset retirement obligations. Other Income and Expenses Interest and Finance Costs During Fiscal 2021, interest and finance costs totaled$2,879,809 , which decreased by$581,161 compared to$3,460,970 during Fiscal 2020. During Fiscal 2021, interest on long-term debt totaled$1,255,556 , which decreased by$371,111 compared to$1,626,667 during Fiscal 2020, and amortization of debt discount totaled$1,375,754 , which decreased by$293,760 compared to$1,669,514 during Fiscal 2020. These decreases were offset by an increase of$83,710 in surety bond premium and other interest expenses from$164,789 in Fiscal 2020 to$248,499 in Fiscal 2021. 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 in Fiscal 2021 from$20,000,000 in Fiscal 2020.
Income or Loss from
During Fiscal 2021, we recorded income of
During Fiscal 2020, we recorded income of$2,967,583 from our investment in URC. As a consequence of URC's initial public offering and other private placements URC completed during Fiscal 2020, our ownership interest in URC decreased to 19.5% atJuly 31, 2020 from 32.6% atJuly 31, 2019 , which resulted in a dilution gain of$3,056,656 being recorded. During Fiscal 2020, we recorded a loss pick up of$89,073 representing our share of URC's loss.
Liquidity and Capital Resources
July 31, 2021 July 31, 2020 Cash and cash equivalents$ 44,312,780 $ 5,147,703 Current assets 75,045,362 6,589,879 Current portion of long-term debt 10,075,231 - Other current liabilities 3,193,979 2,037,402 Working capital 61,776,152 4,552,477 During Fiscal 2021, we received net proceeds of$89,931,236 from various equity financings and$5,504,286 from the exercises of stock options and share purchase warrants, which significantly strengthened our working capital position. As atJuly 31, 2021 , we had a working capital of$61,776,152 , an increase of$57,223,675 from$4,552,477 as atJuly 31, 2020 . Subsequent toJuly 31, 2021 , we received additional cash proceeds of$62.7 million under our 2021 ATM Offering. During the year ended and subsequent toJuly 31, 2021 , we entered into agreements to purchase 4.1 million pounds of uranium concentrates under our Physical Uranium Portfolio for a total purchase price of$131.7 million , of which$22.0 million will become due in the next 12 months from the date that this Annual Report is issued. Refer to Note 3: Inventories in our Audited Consolidated Financial Statements. In addition, as atJuly 31, 2021 , we had$10.0 million of term debt with a maturity date onJanuary 31, 2022 . We believe our existing cash resources will provide sufficient funds to fulfill our uranium inventory purchase commitments, repay the debt principal of$10.0 million when it becomes due, and carry out our planned operations for the next 12 months from the date that this Annual Report is issued. 78 -------------------------------------------------------------------------------- Although our planned principal operations commenced in Fiscal 2012, from which significant revenues from U3O8 sales were realized, our revenues generated from sales of produced U3O8 have been inconsistent and we have yet to achieve profitability. We have a history of operating losses resulting in an accumulated deficit balance since inception. In Fiscal 2021, we recorded net losses totaling$14,813,810 (Fiscal 2020:$14,610,516 ) and we had an accumulated deficit balance of$291,625,110 as atJuly 31, 2021 . During Fiscal 2021, net cash used in operating activities totaled$41,469,449 , which included$28,960,818 cash used for the purchase of 1.0 million pounds of uranium concentrates. Furthermore, we may not achieve and maintain profitability or develop positive cash flow from our operations in the near term. 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. As detailed in the preceding paragraph, we have also relied to a limited extent on cash flows generated from our mining activities during Fiscal 2015, Fiscal 2013 and Fiscal 2012, however, we have yet to achieve profitability or develop positive cash flow from operations. At the date of this Annual Report, we have 1.2 million pounds of uranium concentrate inventories with a fair value of approximately$56.7 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 and including, but not limited to, the market price of uranium, the continuing public support of nuclear power as a viable source of electricity 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 uranium 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 uranium projects. For Fiscal 2022, we estimate that a total of up to$2.0 million will be incurred on our mineral projects for permitting, exploration and pre-extraction activities. We hold mineral rights in the States ofArizona ,Colorado ,New Mexico ,Texas andWyoming , inCanada and in theRepublic of Paraguay with annual land-related payments totaling$3.4 million to maintain these rights in good standing. Our anticipated operations, including exploration and pre-extraction activities, however, 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 inSeptember 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 uranium, 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 event that occurred at Fukushima in March
2011, were to occur, continuing public support of nuclear power as a viable
source of electricity generation may be adversely affected, which may result
in significant and adverse effects on both the nuclear and uranium industries.
Our continuation as a going concern beyond 12 months from the date this Annual Report is filed 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 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. 79 --------------------------------------------------------------------------------
Equity Financings OnFebruary 21, 2020 , we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by theSEC onMarch 3, 2020 (the "2020 Shelf") providing for the public offer and sale of certain securities of the Company from time to time, at our discretion, of up to an aggregate offering amount of$100 million . As a result of the 2020 Shelf, ourMarch 10, 2017 Form S-3 registration statement was then deemed terminated and, as a consequence, our thenApril 9, 2019 ATM Offering Agreement (the "April 2019 ATM Offering Agreement") withH.C. Wainwright & Co, LLC (as the lead manager) and the co-managers as set forth in theApril 2019 ATM Offering Agreement (collectively, the ATM Managers") and its related offering terminated unless renewed under the 2020 Shelf. OnMarch 19, 2020 , we entered into an Amending Agreement to theApril 2019 ATM Offering Agreement with the ATM Managers under which the Company may, from time to time, sell shares of its common stock having an aggregate offering price of up to$30 million through the ATM Managers through the 2020 Shelf (the "2020 ATM Offering"). OnSeptember 23, 2020 , and under our 2020 Shelf, we completed an offering of 12,500,000 units at a price of$1.20 per unit for gross proceeds of$15,000,000 (the "September 2020 Offering"). Each unit was comprised of one share of the Company and one-half of one share purchase warrant, and each whole warrant entitles its holder to acquire one share at an exercise price of$1.80 per share exercisable immediately upon issuance and expiring 24 months from the date of issuance. In connection with theSeptember 2020 Offering, we also issued compensation share purchase warrants to agents as part of share issuance costs to purchase 583,333 shares of our Company exercisable at an exercise price of$1.80 per share and expiring 24 months from the date of issuance. During Fiscal 2021, we issued 13,668,906 shares of the Company's common stock at a weighted average price of$2.19 per share under our 2020 ATM Offering for net cash proceeds of$29,320,949 .
On
OnApril 8, 2021 , and under our 2020 Shelf, we completed an offering of 3,636,364 shares of the Company's common stock at a price of$3.30 per share for net proceeds of$11,315,966 (the "April 2021 Offering"). In connection with theApril 2021 Offering, we also issued, on a private placement basis, 181,818 Agent Warrants to the agent as partial compensation, and each Agent Warrant entitles its holder to acquire one share of common stock at an exercise price of$4.125 per share and expiring five years from the date of issuance. OnMay 17, 2021 , we filed a Form S-3 shelf registration statement under the Securities Act which was declared effective by theSEC onJune 1, 2021 providing for the public offer and sale of certain securities of the Company from time to time, at our discretion, of up to an aggregate offering amount of$200 million (the "2021 Shelf"), which included an at-the-market offering agreement prospectus (the "2021 ATM Offering") covering the offering, issuance and sale of up to a maximum offering of$100 million as part of the$200 million under the 2021 Shelf. OnMay 14, 2021 , we entered into an at-the-market offering agreement (the "2021 ATM Offering Agreement") withH.C. Wainwright & Co., LLC and certain co-managers (collectively, the "2021 ATM Managers") as set forth in the 2021 ATM Offering Agreement 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 2021 ATM Managers selected by us.
As of the date of this Annual Report, we issued 23,009,578 shares of the
Company's common stock at a weighted average price of
Credit Facility OnDecember 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 onJuly 30, 2013 , and additional funding of$10,000,000 was received by the Company upon closing of the amended Credit Facility onMarch 13, 2014 . 80 --------------------------------------------------------------------------------
Key terms of the Third Amended and Restated Credit Agreement are summarized as follows:
? the extension of the maturity date from
? the deferral of the prior monthly principal payments until the new maturity
date of
? the issuance of 1,180,328 shares on signing in Fiscal 2019 representing third
extension fee shares equal to 7% of the principal balance outstanding or
? the payment of anniversary fees to the Lenders on each of
2020 and 2021, of 7%, 6.5% and 6%, respectively, of the principal balance then
outstanding, if any, payable at the option of the Company in cash or shares of
the Company with a price per share calculated at a 10% discount to the five
trading-day volume-weighted average price of the Company's shares immediately
prior to the applicable date. The Credit Facility is non-revolving with an amended term from inception of 8.5 years maturing onJanuary 31, 2022 , subject to an interest rate of 8% per annum, compounded and payable on a monthly basis. The Third Credit Amended and Restated Agreement supersedes, in their entirety, the Company's prior Second Amended and Restated Credit Agreement, dated and effectiveFebruary 9, 2016 , the Amended and Restated Credit Agreement, dated and effectiveMarch 13, 2014 , and the Credit Agreement dated and effectiveJuly 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 under the Credit Facility. Pursuant to the terms of the Third Amended and Restated Credit Agreement, during Fiscal 2021, we issued an aggregate of 1,249,039 shares with a fair value of$1,170,000 , representing 6.5% of the$18,000,000 principal balance outstanding at the time; and during Fiscal 2020, we issued an aggregate of 1,743,462 shares to our Lenders, with a fair value of$1,400,000 , representing 7% of the$20,000,000 principal balance outstanding at the time, as payment of anniversary fees to our Lenders.
Refer to "Long-Term Debt Obligations" under Material Commitments and to Note 9: Long-Term Debt to our Consolidated Financial Statements herein.
Government Loans During Fiscal 2020, our Canadian subsidiary received a loan of$29,842 (CA$40,000) under theCanada Emergency Business Account program (the "CEBA Loan"). During Fiscal 2021, we repaid CA$30,000 of the CEBA Loan, 75% of the total CEBA Loan principal before its initial term date onDecember 31, 2022 , and received a CEBA Loan Closure Confirmation for forgiveness of the balance of CA$10,000.
During Fiscal 2020, we applied for a Paycheck Protection Program loan and
received the proceeds of
Promissory Note During Fiscal 2021, in connection with a land purchase located within ourGoliad Project (the "Goliad Land Purchase"), we issued a promissory note with a principal amount of$380,000 to a landowner (the "Promissory Note"). The Promissory Note carries an interest rate of 5% per annum with principal and interest payable in 24 monthly installments with a maturity date ofNovember 1, 2022 . We may prepay the Promissory Note in any amount at any time before the maturity date without penalty. Operating Activities During Fiscal 2021, net cash used in operating activities totaled$41,469,449 , of which$28,960,818 was for purchases of uranium concentrates. Other significant operating expenditures included mineral property expenditures, general and administrative expenses and interest payments. During Fiscal 2020, net cash used in operating activities totaled$12,870,711 , primarily for maintaining production readiness, mineral property expenditures and general and administrative expenses. 81
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Financing Activities During Fiscal 2021, net cash provided by financing activities totaled$84,457,538 , primarily from net cash of$89,931,236 from various offerings, and$5,504,286 from the exercises of stock options and share purchase warrants, offset by the payments of$833,363 for tax withholding amounts related to the issuance of RSU shares, the principal payment of$10,000,000 to certain Lenders under the Credit Facility and$144,621 for the Promissory Note and the CEBA Loan. During Fiscal 2020, net cash provided by financing activities totaled$307,092 , consisting of$277,250 from the PPP Loan and$29,842 from the CEBA Loan. Investing Activities During Fiscal 2021, net cash used by investing activities totaled$3,624,551 , primarily for cash used in investment in term deposits of$10,000,000 , cash used in acquisition of URC shares of$3,396,852 , cash used in the investment in mineral rights and properties of$80,000 and cash used in the purchase of property, plant and equipment of$147,699 , offset by cash received from redemption of term deposits of$10,000,000 . During Fiscal 2020, net cash provided by investing activities totaled$11,670,960 , primarily from cash received from the redemption of term deposits totaling$11,831,671 , offset by cash used in the investment in mineral rights and properties of$80,000 and cash used in the purchase of property, plant and equipment of$83,838 . Stock Options and Warrants As atJuly 31, 2021 , the Company had 10,404,333 stock options outstanding at a weighted-average exercise price of$1.21 per share and 5,387,323 share purchase warrants outstanding at a weighted-average exercise price of$1.90 per share. As atJuly 31, 2021 , outstanding stock options and share purchase warrants represented a total 15,791,656 shares issuable for gross proceeds of approximately$22.8 million should these stock options and share purchase warrants be exercised in full. As atJuly 31, 2021 , outstanding in-the-money stock options and share purchase warrants represented a total 15,095,852 shares exercisable for gross proceeds of approximately$20.8 million should these in-the-money stock options and warrants be exercised in full. The exercise of these stock options and share purchase warrants is at the discretion of the respective holders and, accordingly, there is no assurance that any of these stock options or share purchase warrants will be exercised in the future. Plan of Operations For Fiscal 2022, uranium extraction at PAA-1, 2 and 3 of ourPalangana Mine is expected to continue being operated at a reduced pace, including the deferral of major pre-extraction expenditures, and to remain in a state of operational readiness in anticipation of a recovery in uranium prices. In addition, we will continue the drilling program initiated inMarch 2021 at ourBurke Hollow Project . Material Commitments Long-term Debt Obligations The Credit Facility described above requires scheduled payments of principal, interest and fees and includes restrictive covenants that, among other things, limit our ability to sell the assets securing our indebtedness or to incur additional indebtedness other than permitted indebtedness. Our ability to make these scheduled payments will be dependent on, and may change as a result of, our financial condition and operating performance. If we become unable to make these scheduled payments or if we do not comply with any one or more of these covenants, we could be in default which, if not addressed or waived, could require accelerated repayment of our indebtedness. Furthermore, such default could result in the enforcement by our Lenders against the Company's assets securing our indebtedness. These are key assets on which our business is substantially dependent and as such, the enforcement against any one or all of these assets would have a material adverse effect on our operations and financial condition.
As at
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As at
Payment Due by Period Less Than 1 More Than 5 Contractual Obligations Total Year 1-3 Years 3-5 Years Years Long-Term Debt Obligations - Principal$ 10,000,000 $ 10,000,000 $ - $ - $ - Long-Term Debt Obligations - Interests and Fees 1,008,889 1,008,889 - - - Other Loan Obligations - Principal and Interests 266,738 200,054 66,684 - - Asset Retirement Obligations 8,221,018 - - - 8,221,018 Operating Lease Obligations 609,405 249,405 40,000 40,000 280,000 Uranium Inventory Purchase Obligations 88,517,250 18,065,000 56,322,250 14,130,000 - Total$ 108,623,300 $ 29,523,348 $ 56,428,934 $ 14,170,000 $ 8,501,018
As at
Commitments for Management Services
As at
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 herein.
The preparation of financial statements in conformity withU.S. GAAP requires management to make judgement, estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reported periods. Significant areas requiring management's judgement, estimates and assumptions include valuation and measurement of impairment losses on mineral rights and properties, valuation of stock-based compensation, and valuation of asset retirement obligations. Other areas requiring estimates include allocations of expenditures to inventories, depletion and amortization of mineral rights and properties and depreciation of property, plant and equipment. Actual results could differ significantly from those estimates and assumptions. The following summary provides a description of our critical accounting policies.
Mineral Rights and Exploration Stage
Acquisition costs of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time proven or probable reserves are established for that project. We have established the existence of mineralized materials for certain uranium projects, including ourPalangana Mine . However, we have not established proven or probable reserves for any of our uranium projects, including thePalangana 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 thePalangana Mine . As a result, and despite the fact that we commenced extraction of mineralized materials at thePalangana Mine inNovember 2010 , we remain in the Exploration Stage and will continue to remain in the Exploration Stage until such time proven or probable reserves have been established. 83 -------------------------------------------------------------------------------- Companies in the Production Stage that have established proven and probable reserves and exited the Exploration Stage, typically capitalize expenditures relating to ongoing development activities, with corresponding depletion calculated over proven and probable reserves using the units-of-production method and allocated to future reporting periods to inventory and, as that inventory is sold, to cost of goods sold. Since we are in the Exploration Stage, it has resulted in our reporting of larger losses than if we had been in the Production Stage due to the expensing, instead of capitalization, of expenditures relating to ongoing mine development 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 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.
Impairment of Long-lived Assets
Long-lived assets including mineral rights and property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable. Management applies judgment to assess whenever events or changes in circumstances indicate the carrying amount of an asset or asset group may not be recoverable giving rise to the requirement to conduct an impairment test. Circumstances which could trigger an impairment test include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors including significant decreases in uranium prices; significant increase in reclamation costs and accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. Recoverability of these assets is measured by comparing the carrying value to the future undiscounted cash flows expected to be generated by the assets. When the carrying value of an asset exceeds the related undiscounted cash flows, an impairment loss is recorded by writing down the carrying value of the related asset to its estimated fair value, which is determined using discounted future cash flows or other measures of fair value.
Restoration and Remediation Costs (Asset Retirement Obligations)
Various federal and state mining laws and regulations require our Company to reclaim the surface areas and restore underground water quality to the pre-existing quality or class of use after the completion of mining. We recognize the present value of the future restoration and remediation costs as an asset retirement obligation (each, an "ARO") in the period in which we incur an obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. AROs consist of estimated final well closure, plant and equipment decommissioning and removal and environmental remediation costs to be incurred by our Company in the future. The AROs are estimated based on the current costs escalated at an inflation rate and discounted at a credit adjusted risk-free rate. The AROs are capitalized as part of the costs of the underlying assets and amortized over its remaining useful life. The AROs are accreted to an undiscounted value until they are settled. The accretion expenses are charged to earnings and the actual retirement costs are recorded against the AROs when incurred. Any difference between the recorded AROs and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement. Stock-based Compensation We measure stock-based awards at fair value on the date of the grant and expense the awards in our Consolidated Statements of Operations and Comprehensive Loss over the requisite service period of employees or consultants. The fair value of stock options is determined using the Black-Scholes valuation model. The fair value of RSUs is determined using the share price of the Company at the date of grant. The fair value of PRSUs is determined using a Monte Carlo simulation model. Stock-based compensation expense related to stock awards is recognized over the requisite service period on an accelerating basis. Forfeitures are accounted for as they occur. 84
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Subsequent Events Subsequent toJuly 31, 2021 , we entered into agreements to purchase 400,000 pounds of uranium concentrates with an aggregate purchase price of$14,500,000 , of which 200,000 pounds of uranium concentrates with an aggregate purchase price of$6,980,000 were received. Subsequent toJuly 31, 2021 , we issued 20,743,878 shares of the Company's common stock at a weighted average price of$3.09 per share under the 2021 ATM Offering for net cash proceeds of$62,671,103 .
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