UEX CORPORATION
2015 ANNUAL REPORT
Message to Shareholders
March 16, 2016
Resource investors experienced a wild ride during the last five months. Investor appetite for uranium equity stocks
waned as we approached the end of the year, and UEX was certainly impacted. However, with our significant resources
and growth potential, UEX’s share price has rebounded in the new year, increasing to June 2015 price levels. Our
share price rise has been fueled by increasing investor appetite for exposure to quality uranium companies with
significant Athabasca-based resources along with growth prospects such as our new Christie Lake Project.
There is a general belief that uranium prices will rise in the near future. Analysts are forecasting a uranium supply
deficit around the year 2020. Japanese nuclear restarts commenced in 2015 with the pace of restarts expected to
increase through 2016 and beyond. China has indicated that they plan to construct six to eight new reactors annually
over the next five years, for a total of 110 plants by 2030. Existing utilities’ uncovered uranium requirements are growing
rapidly coinciding with the start of a wave of long-term contract expirations commencing this year.
Christie Lake Acquisition and Initiation of our First Drill Campaign
Last quarter, we announced that the Company had signed an LOI with JCU (Canada) Exploration Company Limited to
earn up to a 70% interest in the Christie Lake Project for $7 million of staged cash payments and completion of $15
million in work commitments by January 1, 2020. The Christie Lake Project is located only 9 km northeast and along
strike of the McArthur River Mine, the world’s largest uranium mine. The Project is host to significant historical uranium
resources within two known deposits that themselves are located along a substantially under-explored mineralized trend
that is approximately 1.5 km long.
In January, UEX and JCU signed the definitive option agreement on the Christie Lake Project. In late December, UEX
announced a $2 million private placement with our founding CEO, Mr. Stephen Sorensen, that closed in January.
Christie Lake is a highly sought after project that I pursued during my time at Cameco and one that Mr. Sorensen, also
pursued on behalf of UEX during his tenure with the Company. When Mr. Sorensen learned of the deal, he immediately
stepped up to fund the initial acquisition payment at a difficult time in the capital markets.
Review of historic project data by the UEX technical team resulted in a new 3-D computer model of the Paul Bay and
Ken Pen Deposits, clearly showing that the deposits remain open for expansion in the down-dip direction. An analysis
of the 1.5 km long mineralized trend confirmed that this trend north of the Paul Bay and Ken Pen Deposits has not yet
tested the basement structure below the unconformity.
Concurrent with the financing, UEX developed a new exploration plan and budget, completed all permitting
requirements, negotiated contracts with diamond drillers, constructed a new exploration camp and secured all-weather
trail access to the project to allow us to start our first exploration program as soon as possible.
Construction of the temporary camp has now been completed and UEX is currently drilling the first holes of our inaugural
exploration campaign at Christie Lake. The program has a budget of $2.75 million and will consist of 13 to 18 holes to
expand the Paul Bay and Ken Pen Deposits in the down-dip direction. The campaign will likely continue until late July
or early August with a short hiatus in April and May during the spring thaw.
I am honoured that JCU selected UEX to be their partner on this highly sought-after and competitively bid project. I am
looking forward to reporting the results of our drilling program to you as we receive them.
Metallurgical Testing and Waste Rock Characterization at the Raven and Horseshoe Deposits
UEX continued with its waste rock characterization testing program at the Raven and Horseshoe Deposits on the Hidden
Bay Project. These test results will allow UEX and the regulators to determine the suitability of surface storage of non-
uranium bearing rocks that would be excavated during the potential mining of the deposits. Such information is required
before any mining would be permitted.
In the fourth quarter, UEX initiated a new set of bottle roll and column leach metallurgical tests on the uranium
mineralization from the Raven and Horseshoe Deposits. These tests are the first step in determining whether these
deposits may be amenable to heap leach extraction. While the final results of the testing are not expected until the
second quarter, UEX is encouraged with the preliminary results to date. Positive results from the testing could allow
UEX to consider an alternative method of extracting uranium from Raven and Horseshoe minimizing our need for toll
milling.
Last year, UEX initiated its first drilling program on the Hidden Bay Basement Targeting Program. While we did not
make a discovery in the first program, we did upgrade the targets at Wolf Lake and Dwyer Lake, which remain high
priority future drill targets for the Company. Given the fact that we upgraded the only two targets we tested of the
thirteen we have identified, the Basement Targeting Program, I believe strongly that this is still one of the very best
exploration programs in the Athabasca Basin. Due to financial constraints, UEX will not be testing basement targets
on Hidden Bay in 2016 while we focus our resources at Christie Lake.
The Western Athabasca Basin Heats Up
Over the past couple of years, new uranium deposit discoveries have been made by other junior explorers in the
Western Athabasca Basin immediately south of our world-class Shea Creek Deposits. The discovery of the Triple R
deposit by Fission Uranium and the recent announcement of the huge maiden resource estimate of NexGen Energy’s
Arrow discovery have revived investor attention on the Western Athabasca Basin. These discoveries confirm what we
at UEX have believed all along, that the Western Athabasca is a truly world-class uranium district. UEX, along with our
JV partner AREVA and our Shea Creek Deposits will be an integral part of the development of the west side uranium
assets.
I am looking forward to updating you on our progress in the near future as UEX continues to energetically grow through
discovery, innovation and acquisition.
Roger Lemaitre
President & CEO
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
This Management’s Discussion and Analysis (“MD&A”) of UEX Corporation (“UEX” or the “Company”) for the year
ended December 31, 2015 is intended to provide a detailed analysis of the Company’s business and compares
its financial results with those of previous periods. This MD&A is dated March 16, 2016 and should be read in
conjunction with the audited annual financial statements and related notes for the years ended December 31,
2015 and 2014. The financial statements are prepared in accordance with International Financial Reporting
Standards (“IFRS”). Unless specified otherwise, all dollar amounts are in Canadian dollars.
Other disclosure documents of the Company, including its Annual Information Form, filed with the applicable
securities regulatory authorities in Canada are available at www.sedar.com.
Table of Contents
Introduction
1.
2. Exploration and Evaluation Update
3. Financial Update
4. Risks and Uncertainties
5. Disclosure Controls and Procedures
6.
7. Cautionary Statement Regarding Forward-Looking Information
Internal Controls over Financial Reporting
2
5
27
45
49
50
51
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Introduction
Overview
UEX’s fundamental goal is to remain one of the leading global uranium explorers and to advance its portfolio of
Athabasca Basin uranium deposits and discoveries through the development stage to the production stage. Since
being listed on the Toronto Stock Exchange in 2002, UEX has pursued exploration on a diversified portfolio of
prospective uranium projects in three areas within the Athabasca Basin in Saskatchewan, Canada. The Company
is focusing its main efforts on three advanced projects, two in the eastern Athabasca Basin and one in the western
Athabasca Basin. Eastern Athabasca Basin advanced projects include the Hidden Bay Project (“Hidden Bay”)
that hosts the Horseshoe, Raven and West Bear Deposits and the 10%-owned Christie Lake Project (“Christie
Lake”) that hosts the Paul Lake and Ken Pen Deposits and for which the Company has entered into an Option
Agreement to earn up to a 70% interest. The western Athabasca Basin advanced project is the 49.1%-owned
Shea Creek Project (“Shea Creek”) that hosts the Kianna, Anne, Colette and 58B Deposits.
UEX is involved in sixteen uranium projects totalling 260,511 hectares (643,737 acres), located on the eastern,
western and northern perimeters of the Athabasca Basin, the world’s richest uranium district, which in 2015
accounted for approximately 15% of global primary uranium production. The Company’s projects include four
that are 100% owned and operated by UEX, one joint venture with AREVA Resources Canada Inc. (“AREVA”)
that is operated by UEX, nine projects joint-ventured with and operated by AREVA (Western Athabasca), one
project joint-ventured with AREVA and JCU (Canada) Exploration Company, Limited (“JCU”) that is operated by
AREVA and one project under option from JCU and operated by UEX. AREVA is part of the AREVA group, one
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
of the world’s largest nuclear service providers, and JCU is a private company with significant investments in
uranium projects in Canada.
Since inception, UEX has been successful discovering and advancing uranium resources in the Athabasca Basin.
The Company has three 100%-owned uranium deposits in the eastern Athabasca Basin and a 49.1% interest in
four uranium deposits joint-ventured with AREVA in the western Athabasca Basin. The following charts
summarize UEX’s ownership share of these mineral resources.
Millions of Pounds U3O8 by Category and Project (UEX Share)
69.84
16.56
Indicated Mineral Resource (UEX share)
Inferred Mineral Resource (UEX share)
40
35
30
25
20
15
10
5
0
33.22
36.62
13.84
Shea Creek
(UEX’s 49.1% share)
2.72
Hidden Bay
N.I. 43-101 Mineral Resource Estimates
SHEA CREEK – Indicated Category
at 0.30% U3O8 Cut-Off (1)(2)(4)
SHEA CREEK – Inferred Category at
0.30% U3O8 Cut-Off (1)(2)(4)
HIDDEN BAY – Indicated Category
at 0.05% U3O8 Cut-Off (1)(3)
HIDDEN BAY – Inferred Category
at 0.05% U3O8 Cut-Off (1)(3)
Deposit
Tonnes
Kianna
1,034,500
Anne
Colette
58B
564,000
327,800
141,600
Grade
U3O8
(%)
1.526
1.992
0.786
0.774
U3O8 (lbs)
Tonnes
34,805,000
24,760,000
5,680,000
2,417,000
560,700
134,900
493,200
83,400
Grade
U3O8
(%)
Deposit
U3O8 (lbs)
Tonnes
Grade
U3O8
(%)
U3O8 (lbs)
Tonnes
1.364
16,867,000
Horseshoe
5,119,700
0.203
22,895,000
287,000
0.88
2,617,000
Raven
5,173,900
0.107
12,149,000
822,200
0.716
0.505
7,780,000
West Bear
78,900
0.908
1,579,000
-
928,000
Grade
U3O8
(%)
0.166
0.092
-
U3O8 (lbs)
1,049,000
1,666,000
-
Total
2,067,900
1.484
67,663,000
1,272,200
1.005
28,192,000
Total
10,372,500
0.16
36,623,000
1,109,200
0.111
2,715,000
(1) The mineral resource estimates follow the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects
and classifications follow CIM definition standards.
(2) The Shea Creek mineral resources were estimated at a cut-off of 0.30% U3O8, and are documented in the Shea Creek Technical Report
with an effective date of May 31, 2013 which was filed on SEDAR at www.sedar.com on May 31, 2013.
(3) The Hidden Bay mineral resources were estimated at a cut-off of 0.05% U3O8, and are documented in the Hidden Bay Technical Report
with an effective date of February 15, 2011 which was filed on SEDAR at www.sedar.com on February 23, 2011.
(4) Certain amounts presented in the Shea Creek N.I. 43-101 report have been rounded for presentation purposes. This rounding may
impact the footing of certain amounts included in the tables above.
Mineral resources that are not mineral reserves do not have demonstrated economic viability. Further information
on each of these deposits and the mineral resource estimates presented above is available under the Western
Athabasca Projects – Shea Creek and Hidden Bay Project sections of this MD&A.
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Non-Compliant Resources
The Company holds a 10% direct interest in the Paul Bay and Ken Pen Uranium Deposits, located on the Christie
Lake Project. UEX can increase its ownership interest to 70% in the Christie Lake Project through an option
agreement with JCU. The ultimate size of the Paul Bay and Ken Pen Deposits has not been fully defined. The
deposits are estimated to host a combined 20.87 million pounds of U3O8 at an average grade of 3.22% U3O8.
(This is a historic resource estimation which does not use resource classifications consistent with NI 43-101. The
historical resource estimate was presented in an internal report titled Christie Lake Project, Geological Resource
Estimate completed by PNC Tono Geoscience Center, Resource Analysis Group, dated September 12, 1997.
The historical resource was calculated using a 3‐D block model using block sizes of 2 m by 2 m by 2 m, and block
grades interpolated using the inverse distance squared method over a circular search radius of 25 m and 1 m
height. Specific gravities for each deposit were averaged from specific gravity measures of individual samples
collected for assay. UEX plans to complete additional infill drilling on the deposits during the option period to
upgrade these historic resources to indicated and inferred. A qualified person has not done sufficient work to
classify the historic estimate as current mineral resources or mineral reserves. UEX is not treating the historic
estimate as current mineral reserves or mineral resources.)
Further information on these deposits is available under the Christie Lake section of this MD&A.
Growth Strategy – UEX
To plan and execute the exploration and evaluation work required to delineate and develop economic
uranium resources at Christie Lake, as part of our project earn-in.
To find new uranium deposits at the Hidden Bay Project and in the Western Athabasca Projects with our
joint-venture partner AREVA.
To continue the exploration and evaluation work required to delineate and develop economic uranium
resources at Shea Creek.
To advance the evaluation/development process at the Horseshoe, Raven and West Bear uranium
deposits at the Hidden Bay Project to a production decision once uranium commodity prices have
demonstrated a sustained recovery from current spot and long-term prices.
To maintain, explore and advance to discovery our other uranium projects.
Change in Rights for Significant Shareholder
Cameco Corporation (“Cameco”), under the agreement between Pioneer Metals Corporation, UEX Corporation
and Cameco Corporation dated October 2001, had special rights so long as it maintained a minimum 20%
ownership interest in UEX. In January of 2016, Cameco chose not to exercise its pre-emptive right to maintain
its equity ownership of UEX and Cameco’s equity ownership of UEX has now declined below 20%. The drop in
Cameco’s equity ownership below the 20% level terminates some of the special rights Cameco has held since
UEX’s inception:
Cameco’s right to market, on behalf of UEX, its share of uranium produced from any mine in which UEX
has an ownership interest.
Cameco’s right of first refusal to match the terms of any equity, equivalent-to-equity, or debt financing
required by UEX to develop a new mine.
Cameco’s right to maintain its ownership interest in UEX through a pre-emptive right to participate in
UEX’s future share equity financings.
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Exploration and Evaluation Update
The following is a general discussion of UEX’s recent exploration and evaluation activities. For more detailed
information regarding UEX’s exploration projects, please refer to UEX’s current Annual Information Form,
available at www.sedar.com, or to UEX’s website at www.uex-corporation.com.
Western Athabasca Projects (“WAJV”) – Overview
Nine separate joint ventures:
o UEX 49.1%, AREVA 50.9% on eight of the
joint ventures
o Option to earn up to an additional 0.8%
interest (0.1% per $2 million of discretionary
exploration expenditures in addition to the
annual approved budget) (see 2013 Option
Agreement below)
Flagship project: Shea Creek Project (see
Shea Creek – 2016 exploration)
Four deposits: Kianna, Anne, Colette & 58B
2016 revised budget of $2.0 million approved
o UEX’s share of Shea Creek expenditures
for 2016 is $0.66 million
o UEX has elected to dilute its interest on the
early stage Mirror River project in 2016
AREVA’s former Cluff Lake Mine produced over
62 million pounds of U3O8 during its successful
22 years of operation*
* Source: http://www.saskmining.ca/commodity-info/Commodities/38/uranium.html
Western Athabasca
Projects
Number of
claims
Hectares
Acres
Project
Operator
UEX
Ownership %
AREVA
Ownership %
Alexandra
Brander Lake
Coppin Lake
Erica
Laurie
Mirror River
Nikita
Shea Creek
Uchrich
Total
3
9
10
19
4
5
6
14
1
71
8,010
13,993
2,768
36,600
8,778
17,400
15,131
27,343
2,263
19,793
34,577
6,840
90,441
21,691
42,996
37,390
67,566
5,592
132,286
326,886
AREVA
AREVA
AREVA
AREVA
AREVA
AREVA
AREVA
AREVA
AREVA
49.0975
49.0975
49.0975
49.0975
42.1826
49.0975
49.0975
49.0975
49.0975
50.9025
50.9025
50.9025
50.9025
57.8174
50.9025
50.9025
50.9025
50.9025
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
In 2004, UEX entered into an agreement with AREVA to fund $30 million of exploration costs in exchange for a
49% interest in the Western Athabasca Projects, which include Shea Creek. UEX successfully met its funding
target and earned its 49% interest in 2007. The current approximate 49.1% ownership interest for eight of the
nine projects reflects additional amounts funded 100% by UEX under the WAJV option agreement dated April 4,
2013 (see discussion below). The Laurie Project that was previously owned approximately 49.1% by UEX was
diluted to approximately 42.2% on December 31, 2015 as a result of UEX’s decision not to fund the Laurie 2015
exploration program.
The 2015 exploration programs had a combined budget of $4.8 million and were completed early in the fourth
quarter (Shea Creek - $2.8 million budget vs $2.81 million actual, Erica - $1.5 million versus $1.35 million actual,
Laurie - $500,000 versus $510,000 actual and Alexandra/Brander/Nikita - $30,000 vs $5,225 actual). Total
combined expenditures on the joint venture projects in 2015 totaled approximately $4.68 million of which UEX
funded approximately $2.05 million. The 2015 programs were under budget by approximately $150,500, primarily
due to lower than expected expenditures on the Erica Project.
UEX elected not to participate in the 2015 Laurie program, which focused exclusively on geophysics. UEX’s
decision to not fund exploration work at the Laurie Project has resulted in a reduction in the Company’s ownership
interest effective December 31, 2015 to approximately 42.2% with AREVA owning the balance of the project
equity. The decision not to fund our share of the proposed Laurie program did not have an impact on UEX’s
ownership interest in the other eight WAJV projects which will remain at 49.097%, including the Company’s
ownership of the existing uranium resources at the Shea Creek Project.
The 2016 exploration programs originally had a combined budget of $2.2 million approved at the Joint Venture
meetings in November 2015. In January 2016, due to higher than expected costs from the tenders received for
the Coppin Lake Project for the proposed linecutting and ground geophysics program, UEX and AREVA agreed
to cancel the approved program and budget on the Coppin Lake Project, thus reducing the combined 2016
exploration program budgets to $2.0 million (Shea Creek - $1.35 million and Mirror River - $650,000).
UEX has agreed to contribute its share of expenditures for the Shea Creek Project (UEX share - $662,800), which
will consist of a 7 to 9 hole - 4,300 m diamond drilling program on the southernmost Shea Creek claim.
UEX has elected not to participate in the 2016 Mirror River program which will focus exclusively on geophysics.
UEX’s decision not to fund exploration work at the Mirror River Project will result in a reduction in the Company’s
ownership interest in the Mirror River Project effective December 31, 2016 to an estimated 41.4% should AREVA
complete and fund the program as proposed (see Western Athabasca Projects – Other Projects below). The
decision not to fund our share of the proposed Mirror River program will not have an impact on UEX’s ownership
interest in the other eight WAJV projects, seven of which will remain at 49.097%, including the Company’s
ownership of the existing uranium resources at the Shea Creek Project.
Please refer to the Western Athabasca Projects - Shea Creek and Western Athabasca Projects - Other Projects
sections below for further discussion of the 2015 programs.
Cumulative expenditures (inclusive of non-cash items) by UEX on the Western Athabasca Projects at December
31, 2015 on exploration and evaluation were $57.1 million and $7.4 million, respectively, with approximately
274,000 m of drilling completed.
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
WAJV 2013 Option Agreement
Pursuant to this agreement with AREVA dated April 4, 2013, UEX has the option to increase its ownership interest
in the Western Athabasca Projects, which includes Shea Creek, to 49.9% through the expenditure by UEX of an
aggregate of up to $18.0 million (the “Additional Expenditures”) by December 31, 2018. For further details on the
terms of this agreement, please refer the most recent Annual Information Form, which is available at
www.sedar.com.
Total expenditures of approximately $2.0 million relating to this agreement were incurred in 2013 with exploration
work completed in December 2013 and minimal costs were incurred in early 2014. This increased UEX’s
ownership interest in the WAJV by approximately 0.1% to 49.1%.
Due to uranium market conditions, UEX did not propose supplemental program budgets for the Western
Athabasca for 2014 or 2015 and has not proposed a supplemental program for 2016; however, the Company
retains the ability to propose budgets that would allow UEX to increase its ownership interest under the
agreement.
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Western Athabasca Projects – Shea Creek
Four known deposits – Kianna, Anne,
Colette and 58B, distributed along a 3 km
strike-length at the north end of the 33 km
Saskatoon Lake Conductor (“SLC”)
2015 drilling near SHE-02 to follow-up
historical uranium mineralization outlined a
previously unknown hydrothermal clay
alteration zone that will require follow-up
drilling in future programs.
2016 exploration will focus on drill testing
electromagnetic targets on the southern
Shea Creek claims. A total of 4,300 m is
planned in 7 to 9 holes.
Former Cluff Lake airstrip is not actively
maintained.
Cumulative expenditures (inclusive of non-cash items) at December 31, 2015 by UEX on exploration and
evaluation were $45.8 million and $7.4 million, respectively, with approximately 265,000 m of drilling completed.
Shea Creek – Colette, 58B, Kianna and Anne Deposits
Fourth largest undeveloped
uranium resource in the
Athabasca Basin (the “Basin”)
and fifth largest existing uranium
resource in the Basin.
Resources are open in almost
every direction and have
excellent potential for significant
expansion.
Three styles of mineralization
have been observed at Shea
Creek: unconformity-hosted,
basement-hosted and perched.
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
A N.I. 43-101 independent mineral resource estimate for Shea Creek was prepared by James N. Gray, P.Geo. of
Advantage Geoservices Limited in April 2013 (see UEX news release dated April 17, 2013). This estimate
includes resources from the Kianna, Anne, Colette and 58B deposits based on drilling information up to December
31, 2012. A technical report entitled “Technical Report on the Shea Creek property, northern Saskatchewan, with
an updated mineral resource estimate”, prepared by R.S. Eriks, P.Geo., J.N. Gray, P.Geo., D.A. Rhys, P.Geo.
and S. Hasegawa, P.Geo. with an effective date of May 31, 2013 supporting this mineral resource estimate was
filed on SEDAR on May 31, 2013. Details of the mineral resource estimate at a cut-off grade of 0.30% U3O8 are
as follows:
Deposit
Kianna
Anne
Colette
58B
Tonnes
Grade
U3O8 (%)
U3O8
(lbs)
Tonnes
Grade
U3O8 (%)
U3O8
(lbs)
1,034,500
1.526
34,805,000
560,700
1.364
16,867,000
564,000
1.992
24,760,000
134,900
0.880
2,617,000
Indicated
327,800
0.786
5,680,000
Inferred
493,200
0.716
7,780,000
141,600
0.774
2,417,000
83,400
0.505
928,000
TOTALS (1)(2)
2,067,900
1.484
67,663,000
1,272,200
1.005
28,192,000
(1) Certain amounts presented in the Shea Creek N.I. 43-101 report have been rounded for presentation purposes. This rounding may
impact the footing of certain amounts included in the tables above.
(2) The mineral resource estimates follow the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral Projects
and classifications follow CIM definition standards.
Mineral resources that are not mineral reserves do not have demonstrated economic viability. For additional
information on the mineral resource estimate, please refer to Refer to “Technical Report on the Shea Creek
property, northern Saskatchewan, with an updated mineral resource estimate” as filed on SEDAR on May 31,
2013.
Shea Creek – 2015 Exploration
A $2.81 million exploration program was completed at Shea Creek in 2015. UEX contributed its share of costs
to the program which totaled $1.38 million. The 2015 exploration programs consisted of drilling in four areas for
a total of 8,184.9 m of drilling in twelve holes and approximately 31.5 km of electromagnetic surveying on the
southernmost Shea Creek claim using a moving-loop SQUID electromagnetic survey:
In the first quarter of 2015, one drill hole was completed to test the sparsely explored southernmost extent
of the SLC at the southern end of the Shea Creek property where unconformity depths are in the range
of 450 to 500 m. This hole successfully intersected its target at the unconformity but did not encounter
anomalous uranium radioactivity or alteration.
Approximately 31.5 km of electromagnetic surveying was completed in mid-April 2015 on the
southernmost Shea Creek claim using a moving-loop SQUID electromagnetic survey.
During the summer 2015 program, six holes were drilled to follow up on hole SHE-2 which was the first
mineralized hole encountered on the property during a systematic drilling campaign of the SLC
undertaken in 1992 by Amok, a previous operator of the project. SHE-2 intersected uranium
mineralization (0.342% U3O8 over 0.4 m) associated with the SLC. Until this program, the SHE-2
intersection had not been followed up with additional drilling as other mineralized holes that tested the
SLC led the exploration team toward the discovery of the current Shea Creek Deposits approximately 2.0
TSX:UEX | Energy for the Future
9
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
km to the north. In addition, SHE-127, located approximately 200 m northwest and along strike of SHE-
2, also encountered basement mineralization approximately 35 m below the unconformity.
o AREVA, the project operator, was motivated by the drilling results to allocate remaining WAJV
funds to drill additional holes. This drilling was encouraging, but was still over 100 m away from
the SHE-2 target which remains open for testing.
o Five directional offcuts were completed from SHE-127 to test the extent of mineralization to the
north of SHE-2. Notable alteration and structure were intersected in all offcuts with three
returning significant elevated radioactivity. The sixth hole was completed 185 m north of
SHE-127 and successfully intersected the unconformity and narrow zones of structure and
alteration within the sandstone.
A total of four holes were drilled to test along the sparsely explored SLC 3 to 4 km south of the Shea
Creek Deposits. Conductive basement lithologies and notable structure were intersected in three holes;
however, no significant alteration or elevated radioactivity was noted.
One drill hole was completed to intersect a previously untested electromagnetic conductor parallel to and
west of the SLC, approximately 650 m southwest of the Anne Deposit. This hole intersected fresh
basement lithologies with no apparent conductive package.
The summer 2015 drilling program was temporarily suspended in June by AREVA and the Government
of Saskatchewan when forest fires were burning on the property. Drilling operations resumed in August.
No joint venture assets were lost to the fires.
Shea Creek – 2016 Exploration Program
The 2016 Shea Creek exploration program will consist of 4,300 m of diamond drilling in 7 to 9 holes and will test
the Shea South (S-14) conductor on the southernmost Shea Creek claims. The approved budget for the 2016
program is $1.35 million. UEX has agreed to fund its share of the program, estimated to be approximately $0.66
million.
The 2016 drilling program will test the S14 conductor systematically over a strike length of up to 5 km, mostly
north of hole SHE-147 drilled in the winter of 2015. The S14 conductor is undertested by drilling and is believed
to be the southern strike extension of the Saskatoon Lake conductor system, host of all the known mineralization
associated with the Shea Creek Deposits. The S14 conductor was resurveyed by AREVA during the 2015
exploration program using a small moving loop electromagnetic survey. Prior to the 2015 geophysical survey, a
total of eight holes (including SHE-147) had attempted to intersect the S-14 conductor at the unconformity without
success.
TSX:UEX | Energy for the Future
10
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Western Athabasca Projects – Other Projects
The Western Athabasca Projects – Other Projects include Erica, Laurie, Mirror River, Alexandra, Brander Lake,
Nikita, Uchrich and Coppin Lake. See area map above under Western Athabasca Projects (“WAJV”) – Overview.
Erica Project
2015 Drilling Program
A $1.35 million winter drilling program was completed at the Erica Project in the first quarter of 2015. The program
consisted of two pilot holes and two off-cut holes (one off each pilot hole) totalling 2,643 m, which tested one of
the five electromagnetic conductor trends that is coincident with a magnetic low located 15 km west-southwest of
the Shea Creek Deposits. The trend is oriented parallel to the SLC and exhibits a similar geophysical signature
as the basement rocks on the Shea Creek property. UEX funded its 49.1% share of the Erica program, or
approximately $0.66 million. None of the holes encountered significant uranium, radioactivity or alteration;
however, these were the first holes drilled following up on the electromagnetic survey which was completed in
2014.
2016 Exploration Program
There is no program or budget proposed for the Erica Project in 2016.
Laurie Project
2015 Geophysical Program
A $0.5 million winter geophysical program was completed at the Laurie Project. Exploration activities consisted
exclusively of a moving-loop time-domain electromagnetic (“ML-TEM”) survey on the southern end of the project
where the Athabasca sandstone ranges from 0 to 225 m thick. A total of 49 km of ML-TEM was completed on
fourteen profiles defining future drill targets in the southern portion of the property.
UEX elected not to participate in the 2015 Laurie program and the Company’s ownership of the Laurie Project
has been reduced to 42.2% with AREVA owning the balance of the project equity.
UEX’s decision to not fund exploration work at the Laurie Project does not have an impact on UEX’s ownership
interest in the other eight WAJV projects which will remain at 49.097% in 2016, including the Company’s ownership
of the existing uranium resources at the Shea Creek Project.
2016 Exploration Program
There is no program or budget proposed for the Laurie Project in 2016.
Alexandra, Brander Lake, Nikita and Uchrich Projects
2015 Programs
No significant exploration activities were undertaken on the Brander, Alexandra and Nikita Projects in 2015.
Budgets of $10,000 were approved for each of these projects in 2015 (for a cumulative total of $30,000) to prepare
for future exploration activities, possibly as soon as 2017. Total cumulative expenditures in 2015 for the three
projects were $5,222 instead of the $30,000 budgeted as fewer preparation activities were completed on these
three projects than planned. UEX funded its share of the combined Alexandra-Brander-Nikita Projects which
were $2,564 cumulatively.
There was no proposed program or budget for the Uchrich Project in 2015.
TSX:UEX | Energy for the Future
11
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
2016 Programs
There is no program or budget proposed for the Alexandra, Brander, Nikita or Uchrich projects in 2016.
Mirror River Project
2015 Exploration Program
There were no exploration activities on the Mirror River Project in 2015.
2016 Geophysical Program
The $0.65 million 2016 exploration program at Mirror River will consist of a 52 line-km DC resistivity survey in
eight profiles covering the southern claim on the property where sandstone thicknesses are estimated to range
between 50 m and 250 m thick. The objective of the resistivity survey is to prioritize areas for future drilling along
the known electromagnetic conductors. While there have been several historical holes drilled in the survey area
by previous operators, few holes have directly tested the known conductors which were defined long after the
holes were drilled.
UEX has elected not to participate in the 2016 Mirror River program which will focus exclusively on geophysics.
UEX’s decision not to fund exploration work at the Mirror River Project will result in a reduction in the Company’s
ownership interest in the Mirror River Project to an estimated 41.4% effective December 31, 2016, should AREVA
complete and fund the program as proposed (see Western Athabasca Projects – Other Projects below). The
decision not to fund our share of the proposed Mirror River program will not have an impact on UEX’s ownership
interest in the other eight WAJV projects, seven of which will remain at 49.097%, including the Company’s
ownership of the existing uranium resources at the Shea Creek Project.
Coppin Lake Project
2015 Exploration Program
There were no exploration activities on the Coppin Lake Project in 2015.
2016 Geophysical Program
In the fall of 2015, UEX and AREVA approved a $0.2 million geophysical program on the Coppin Lake Project
consisting of approximately 41.6 line-kilometres of SQUID Moving Loop electromagnetic surveying with the
objective of ground-locating a short conductor segment underlying the southeast corner of the property. The only
historical exploration activities conducted on the property consist of airborne magnetic and electromagnetic
surveys completed by former operators.
AREVA informed UEX that due to much higher than expected tender costs for linecutting and geophysical
contractors, AREVA would be unable to complete the proposed 2016 program within the approved budget. As a
result, UEX and AREVA both agreed to cancel the 2016 program.
As a result, it is anticipated that all the claims comprising the Coppin Lake Project will expire in August of 2016.
Given that there are no future plans to explore the property and a decision was made to allow the claims to lapse
in the coming months, UEX has recorded an impairment charge of $1,528, which represents UEX’s share of the
cost to stake the project in 2014.
TSX:UEX | Energy for the Future
12
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Beatty River Project
Number
of claims
Hectares
Acres
Project
Operator
UEX
Ownership
%
AREVA
Ownership
%
JCU
Ownership
%
Beatty River
7
6,688
16,526
AREVA
25.0
50.7
24.3
The Beatty River Project is located in the western Athabasca Basin approximately 40 km south of the Shea Creek
Deposits. Please see the Western Athabasca Projects map for the location of the Beatty River Project.
Pursuant to an option agreement dated June 15, 2004 and subsequently amended on March 20, 2013, UEX
acquired a 25% interest in Beatty River from JCU in 2013.
No program has been proposed for 2016. However, UEX anticipates that the operator will be proposing an
exploration program for 2017.
TSX:UEX | Energy for the Future
13
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Hidden Bay Project
22 km
4 km
Three known deposits: Horseshoe,
Raven and West Bear.
Proximal to operating uranium mills,
year-round access by road and air,
electric transmission lines transect the
property.
Competitive advantage due to
extensive historic core library and large
historic drilling database:
o Has identified targets for new
basement uranium mineralization.
10,179 m - $2.5 million exploration
program in 2015 focused on Dwyer
Lake and Wolf Lake for basement-
hosted uranium deposits.
Cameco’s Rabbit Lake Mill (including Eagle Point)
has produced over 202 million pounds of U3O8 to
date (1)
AREVA’s McLean Lake JEB Mill has produced
close to 50 million pounds of U3O8 to date (2)
Umpherville River claims added to
Hidden Bay Project in Q2 2015 and
ownership interest increased from 70%
to 100% in November 2015.
(1) Source: 2015 Cameco Management Discussion and Analysis, February 2015
(2) Source: http://us.areva.com/EN/home-984/areva-resources-canada-mcclean-lake.html
Number of claims
Hectares
Acres
UEX
Ownership %
Hidden Bay
64
59,584
147,235
100
Hidden Bay was acquired from Cameco upon UEX’s formation in 2002 establishing Cameco’s initial equity
position in UEX.
The Hidden Bay Project is comprised of the Tent-Seal, Telephone-Shamus, Rabbit Lake, Raven, Wolf Lake,
Rhino, Dwyer-Mitchell and Umpherville River project exploration areas and includes the Horseshoe, Raven and
West Bear deposits.
In October of 2014, UEX staked five new mineral claims which now form a part of the Hidden Bay Project. Most
of the newly staked claims are contiguous to existing Hidden Bay claims and expand the Company’s holdings in
the Dwyer Lake and Wolf Lake areas.
TSX:UEX | Energy for the Future
14
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
In April of 2015, UEX staked six new mineral claims which expand the Company’s holdings in the Dwyer Lake
area of the Hidden Bay Project.
In May of 2015, UEX acquired a 70% interest in the Umpherville River property (“Umpherville”) from Cameco
(significant shareholder of UEX Corporation) for cash consideration of $12,000. On October 7, 2015, the
Company acquired a further 20% interest in Umpherville from Glencore for cash consideration of $10,000 plus
an agreement to pay to Glencore a 2% NSR royalty on Glencore’s current 20% interest for each mineral produced
from the project (equivalent to a 0.4% NSR on the total project) with the NSR on uranium capped at $10 million.
On November 23, 2015, UEX assumed 100% ownership of the Umpherville when Esso Resources (1989) Ltd., a
subsidiary of Imperial Oil, forfeited its 10% interest in the project under the terms of the joint venture agreement
by failing to pay its share of joint venture expenditures related to the summer core re-logging program. Esso
Resources (1989) Ltd. had indicated in previous correspondence with UEX before the summer program that they
did not believe that they retained any interest in Umpherville.
The Umpherville claims abut the Hidden Bay mineral claims in the West Bear area, with any future exploration
easily coordinated through our Raven exploration camp.
The 2015 Hidden Bay exploration program commenced in December 2014 with the field work completed early in
the third quarter and consisted of drilling at Wolf Lake and Dwyer Lake (completed in Q2 2015), geophysical
surveys at Dwyer Lake (completed in Q3 2015) and ongoing historical core and field data review at Umpherville
and the south block of Hidden Bay to identify exploration targets for future drill programs.
Cumulative expenditures (inclusive of non-cash items) at December 31, 2015 by UEX on exploration and
evaluation at Hidden Bay were $71.8 million and $7.4 million, respectively, with approximately 498,000 m of
drilling completed.
Horseshoe and Raven Deposits
Positive PA at US$60/lb U3O8 – see discussion below
Eighth largest undeveloped uranium resource in the Athabasca Basin
Located 4 km from Cameco’s Rabbit Lake Mill and 22 km from AREVA’s McClean Lake Mill
Existing power line supplying Rabbit Lake Mill crosses over the deposits
Year-round all-weather access by commercial airport and via Provincial Highway 905
West Bear Deposit
Shallowest undeveloped uranium deposit in the Athabasca Basin
Near existing milling infrastructure and power lines
Short distance from year-round all-weather access by commercial airport and via Provincial
Highway 905
TSX:UEX | Energy for the Future
15
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Mineral Resource Estimates
The current technical report, “Preliminary Assessment Technical Report on the Horseshoe and Raven Deposits,
Hidden Bay Project, Saskatchewan, Canada” (the “Preliminary Assessment Technical Report”, the “PA” or the
“Hidden Bay Report”), prepared by SRK Consulting (Canada) Inc. (“SRK Consulting”) and G. Doerksen, P.Eng.,
L. Melis, P.Eng., M. Liskowich, P.Geo., B. Murphy, FSAIMM, K. Palmer, P.Geo. and Dino Pilotto, P.Eng., with an
effective date of February 15, 2011 was filed on SEDAR at www.sedar.com on February 23, 2011. Details for
the mineral resource estimates at a cut-off grade of 0.05% U3O8 as follows:
Deposit
Horseshoe
Raven
West Bear
TOTAL(1)
Indicated
Tonnes
Grade
U3O8 (%)
U3O8
(lbs)
5,119,700
5,173,900
78,900
0.203
0.107
0.908
22,895,000
12,149,000
1,579,000
Inferred
Tonnes
Grade
U3O8 (%)
287,000
822,200
0.166
0.092
-
-
U3O8
(lbs)
1,049,000
1,666,000
-
10,372,500
0.160
36,623,000
1,109,200
0.111
2,715,000
(1) The mineral resource estimates follow the requirements of National Instrument 43-101 – Standards of Disclosure for Mineral
Projects and classifications follow CIM definition standards.
The PA is preliminary in nature and includes inferred mineral resources that are considered too speculative
geologically to have economic considerations applied to them that would enable them to be categorized as mineral
reserves. There is no certainty that the preliminary economic assessment will be realized. Mineral resources that
are not mineral reserves do not have demonstrated economic viability.
The PA found the economics of mining the Horseshoe and Raven deposits to be positive and, based on a spot
price of US$60 per pound of U3O8, reported undiscounted earnings before interest and taxes (“EBIT”) of
$246 million, a pre-tax net present value (“NPV”) at a 5% discount rate of $163 million and an internal rate of
return (“IRR”) of 42%.
Projects in the mining sector have experienced rising costs, including rising capital and operating costs, during
the past few years. The price of uranium has declined since the date of the PA which could negatively impact the
results of the PA. Projects in the mining sector have also experienced significant fluctuations of costs, which could
impact EBIT, NPV and IRR which have been calculated based upon historical costs. Accordingly, readers should
bear these factors in mind when reading the PA and should not place undue reliance on the PA.
PA recommended the Horseshoe and Raven deposits be advanced to a preliminary feasibility level.
The PA for Horseshoe and Raven deposits (see discussion above) also recommended that the West
Bear deposit be advanced to a preliminary feasibility level along with the Horseshoe and Raven deposits.
TSX:UEX | Energy for the Future
16
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Basement Targeting at Hidden Bay
Recent work completed has confirmed
that previous operators on the Hidden
Bay Project focused primarily on testing
unconformity
little effort
targets with
expended on testing basement targets at
depths below the unconformity where the
Millennium, Gryphon and Roughrider
basement-hosted deposits were found.
In the western half of the Hidden Bay
property where Athabasca sandstone
cover is present, less than 25% of the
historical drilling extended deep enough
below
for
the unconformity
basement uranium mineralization.
test
to
confers
UEX’s existing unconformity-focused
exploration
a
database
substantial competitive advantage, as it
can be used to generate high-quality
basement targets with limited capital
outlay.
in
geophysics, prospecting and drilling
would be required to obtain a fraction of
that UEX already
the
possesses and is using to vector toward
basement-hosted deposits.
Substantial
information
investment
Field review of historical drill core was undertaken in the summer of 2014 and 2015 and identified high priority
basement uranium targets:
Thirteen target areas were identified from the Company’s database of 1,800+ historic drill holes and
exploration data as being prospective for basement-hosted uranium deposits.
Ten of the thirteen target areas require additional historic core review to select future drill targets.
The 2015 drilling program confirmed that Dwyer Lake and Wolf Lake, two of the thirteen identified target
areas, exhibit key characteristics associated with basement-hosted uranium deposits similar to the
Millennium, Roughrider and Eagle Point deposits.
The summer 2015 Umpherville core and historical data review identified a previously unrecognized target.
2015 Exploration Program
This exploration program was the first of a series of programs intended to discover new basement-hosted deposits
on Hidden Bay based on ongoing re-interpretation and leveraging of the extensive historical dataset compiled
when historical exploration in the area was targeting unconformity-style mineralization.
TSX:UEX | Energy for the Future
17
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
The $2.5 million winter drilling program of 47 holes totalling 10,179 m was completed in the first quarter, based
out of the Company’s Raven exploration camp and included a ground resistivity program in the Dwyer Lake are
conducted in September.
The winter program tested two of the initial thirteen target areas recently identified and confirmed that they exhibit
characteristics associated with known basement uranium deposits. These characteristics or markers were
present in the core extracted from areas with shallow sandstone cover drilled by previous explorers looking for
unconformity style mineralization.
Highlights of the winter program at Hidden Bay are outlined below:
At Dwyer Lake, a major hydrothermal clay alteration zone over an area 175 m by 75 m was encountered,
significantly expanding the area of intense clay alteration first identified during the 2014 summer re-
logging program in historical hole D-57. Massive kaolinite-illite clay replacement of the sandstone and
basement rocks is considered highly prospective and confirms Dwyer Lake as a high priority area for
follow-up exploration work. The ultimate limits of the clay alteration zone have not yet been defined and
the Company believes that following this alteration zone could ultimately lead to a location where uranium
could have been deposited.
A ground resistivity survey was completed in September to define the geographical limits of the clay
alteration zone at Dwyer Lake. Data collection was of a high quality and interpretation of the results is
ongoing as of year end. Once these results have been interpreted, they will be used with the Dwyer drill
results to select future drill targets.
At Wolf Lake, a new radioactive and hydrothermally-altered graphitic fault system oriented in an
east-northeasterly direction in the Wolf Lake area was identified that extends eastward from a known
area of hydrothermal alteration, geochemically anomalous uranium and radioactivity that occurs along
the main Wolf Lake north-south fault system. The two highest readings of radioactivity intersected during
the winter program were encountered in this newly identified fault structure:
o Hole WO-151 returned a down-hole radiometric probe peak of 12,771 cps
o Hole WO-152 returned a down-hole radiometric probe peak of 4,348 cps
This new fault zone has potential for both unconformity-style and basement-type uranium mineralization
and remains untested along strike to the east.
East-northeasterly fault systems that splay off regional fault structures are known to host important
basement-uranium mineralization in the district. The nearby Eagle Point Mine (Cameco’s Rabbit Lake
Operation) is currently mining uranium from such a fault system.
During August 2015, the UEX exploration team continued the review of historic drill core from the some
of the remaining ten areas identified during the 2014 database review, which began in the summer of
2014. The objective of the review was to identify and prioritize additional targets for testing in future
drilling programs. The 2015 core review focused on the southern half of the Hidden Bay property
extending our knowledge in the vicinity of the winter drilling programs at Dwyer and Wolf Lakes, in the
Michael Lake area and along the key Mitchell-Dwyer trend leading to our newly acquired Umpherville
River claims.
o The 2015 core review led to the discovery of a previously unknown graphitic fault zone parallel to
and north of the Mitchell-Dwyer trend that is untested by diamond drilling over a 7 km strike length
and represents a classic unconformity-style target.
TSX:UEX | Energy for the Future
18
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Umpherville River
During the third quarter, UEX geologists located and reviewed historical drill core as well as other cross sections
and data related to the Umpherville. Of particular interest was a historic weakly mineralized intercept in hole ML-
5-77 drilled in 1977. ML-5-77 encountered uranium mineralization at the unconformity that averaged 0.12% U3O8
over 1.5 m at a very shallow depth of approximately 50 m. Later the same year, two holes were drilled to follow
up this intersection down dip; however, both of these holes were lost in highly altered clay at the unconformity
and did not properly test the target. Significant alteration can be an indicator for basement-hosted uranium
deposits. We expect to follow up on these indicators in an upcoming program and are optimistic that
advancements in drilling technology should allow us to properly test this promising target.
2016 Activities
UEX has not yet proposed an exploration program for the Hidden Bay Project in 2016. While UEX believes that
the Hidden Bay Basement Targeting Program is one of the premier uranium exploration projects in the world
today, due to the challenging conditions impacting the global resource industry, the Company will be focusing the
majority of its financial resources on the Christie Lake Project in the first quarter of 2016.
UEX will be revisiting our plans for the Hidden Bay Project in the second quarter of 2016 and may propose a
program at that time.
UEX continues to monitor the results of the on-site barrel testing program designed to evaluate the characteristics
of rocks that would be exposed during any potential mining operation at Raven and Horseshoe. The tests are
expected to continue for at least one more year.
In early January 2016, UEX initiated a metallurgical study of mineralization from the Raven and Horseshoe
Deposits. The study, being conducted at the SGS Lakefield laboratories, consists of a column leach test and
bottle roll tests of uranium mineralized samples collected in the third quarter of 2015 from existing mineralized
drill core from these deposits.
The objective of the metallurgical study is to determine at a preliminary stage the technical viability of recovering
uranium from the Raven and Horseshoe Deposits using heap leach techniques.
TSX:UEX | Energy for the Future
19
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Christie Lake Project
Located in the eastern Athabasca
Basin, 9 km northeast and along strike
of the McArthur River mine and 30 km
southwest of the Cigar Lake mine.
Two known uranium deposits: Paul
Bay and Ken Pen with historical non-
compliant resource of 20.87 Mlbs at
an average grade of 3.22%*.
UEX signed an Option Agreement on
January 16, 2016 to earn up to a 70%
interest in the project from JCU.
UEX has vested a 10% interest in the
project.
The Christie Lake Project is 90% owned by JCU (Canada) Exploration Company, Limited (JCU) and 10% by UEX.
The Company signed a Letter of Intent (“LOI”) on October 26, 2015 to earn up to a 70% interest in the project by
making cash payments of $7.0 million and funding $15.0 million in exploration work commitments over 5 years.
On January 16, 2016, UEX signed the definitive Option Agreement with JCU under which UEX can earn its
interest. UEX earned its 10% interest in the project by making a $250,000 payment upon the signing of the LOI
and making a $1,750,000 payment on January 22, 2016.
Historical Resource*
Ore Body
Paul Bay Ore Shoot
Ken Pen Ore Shoot
Total
Cut-Off
Grade
(% U3O8)
0.3
0.3
Ore
(t)
Resources
(t U3O8)
Resources
(million lbs
U3O8)
Average
Grade
(% U3O8)
231,298
62,956
294,254
7,078
2,392
9,470
15.60
5.27
20.87
3.06
3.80
3.22
Source: Geological Resource Estimation Christie Lake Project Saskatchewan September 1997 by Resource
Analysis/Evaluation Group PNC Tono Geoscience Center Japan
* This is a historic resource estimation which does not use resource classifications consistent with NI 43-101. A qualified person has not
done sufficient work to classify the historic estimate as current mineral resources or mineral reserves. UEX is not treating the historic
estimate as current mineral reserves or mineral resources. The historical resource estimate was presented in an internal report titled
Christie Lake Project, Geological Resource Estimate completed by PNC Tono Geoscience Center, Resource Analysis Group, dated
September 12, 1997. The historical resource was calculated using a 3-D block model using block sizes of 2 m by 2 m by 2 m, and block
grades interpolated using the inverse distance squared method over a circular search radius of 25 m and 1 m height. Specific gravities
for each deposit were averaged from specific gravity measures of individual samples collected for assay. UEX plans to complete
additional infill drilling on the deposits during the option earn-in period to upgrade these historic resources to indicated and inferred
resources.
TSX:UEX | Energy for the Future
20
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Number of claims
Hectares
Christie Lake
6
7,922
Acres
19,576
UEX
Ownership %
10.00
UEX believes that the P2 Fault trend that hosts the McArthur River mine may continue onto the Christie Lake
Project. UEX intends to convert the historical resource to a NI 43-101 resource in the coming years with additional
drilling and detailed review of the historical work completed. Beyond the known mineralized zones, management
believes that the full potential of the productive corridor has only begun to be understood and that it holds very
good potential for the discovery of new uranium deposits and expansion of the historical resources. Many
kilometers of conductors exist on the southern half of the project which have never been drill tested and provide
excellent greenfields exploration potential proximal to producing uranium mines.
Option Agreement – Vesting Schedule
On January 16, 2016, UEX and JCU signed the definitive Option Agreement for the Christie Lake Project. UEX
can earn an incremental interest annually up to a maximum 70% cumulative interest in the property by completing
the cash payment and exploration work milestones outlined below:
Date
Cash Payment Completed
Upon signing of the LOI
$ 250,000
Before January 28, 2016
Before January 1, 2017
Before January 1, 2018
Before January 1, 2019
Before January 1, 2020
1,750,000
2,000,000
1,000,000
1,000,000
1,000,000
Yes
Yes
Exploration
Work
Commitment
$ -
-
Completed
N/A
N/A
2,500,000
In progress
2,500,000
5,000,000
5,000,000
$ 7,000,000
$ 15,000,000
UEX Cumulative
Interest Earned
(%)
-
10.00
30.00
45.00
60.00
70.00
70.00
UEX can elect to proceed with or cease future cash payments and work commitments at any time and vest a
reduced interest in the property according to this schedule.
2016 Exploration Program
UEX and JCU have approved a $2.75 million exploration drilling program for the Christie Lake Project that
commenced in February 2016 and is planned to continue into the second and third quarters of 2016.
The program will consist exclusively of diamond drilling in the Paul Bay and Ken Pen Deposits area. A total of
approximately 10,000 m of drilling will be completed in 13 to18 drill holes. The primary goal of the drilling program
is to increase the total uranium resources in the Paul Bay and Ken Pen Deposits by drill testing for extensions of
both deposits in their down-dip direction.
A technical review of both deposits by the UEX exploration team has led the Company to the conclusion that both
deposits are hosted in the basement fault structure below the classic unconformity setting for uranium deposits
and that the ultimate size of both deposits has not been defined by the previous exploration work.
TSX:UEX | Energy for the Future
21
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
UEX believes that the historical operator, whose last exploration campaign on the Christie Lake property occurred
in 1997, focused its efforts on defining uranium at the classic unconformity setting consistent with the exploration
practices at that time. The historical operator did not test for deposit extensions into the basement structure within
the same geological locations and structural setting that have yielded the majority of the new and valuable
uranium deposit discoveries made in the Athabasca Basin in the last fifteen years, which include the Eagle Point
North Extension Deposits, our Shea Creek basement-hosted extensions, Roughrider, Triple R, Arrow and the
Gryphon Zone.
Our review of the technical data provided by JCU and the new three-dimensional geological model constructed
by our exploration team appears to indicate that the Paul Bay and Ken Pen Deposits have not been closed off in
the down-dip direction.
The objectives of the 2016 exploration program at Christie Lake are to:
Increase the total uranium resources defined at the Paul Bay and Ken Pen Deposits by growing the size of
both deposits.
Complete a NI 43-101 uranium resource estimate report for the Paul Bay and Ken Pen Deposits in 2017.
Determine the prospectivity of and develop an exploration plan to test the remaining 1.5 km long mineralized
trend that extends northeast of and includes the Paul Bay and Ken Pen Deposits for the presence of new
uranium zones for future exploration programs.
TSX:UEX | Energy for the Future
22
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Black Lake Project
Located at the northern edge of
the Athabasca Basin.
Uracan Resources (TSX.V:URC)
has an option to earn a 60%
interest.
Year-round access by road and
air, electric transmission lines
transect the property.
Village of Stony Rapids provides
accommodations and other
support services.
Uranium mineralization has been
encountered on three separate
areas of the property.
Number of
claims
Hectares
Acres
Project
Operator
UEX
Ownership
%
Black Lake
12
30,381
75,073
UEX
90.92
AREVA
Ownership
%
9.08
Cumulative expenditures by UEX (inclusive of non-cash items) to December 31, 2015 on exploration at Black
Lake were $15.3 million, inclusive of non-option costs that are not covered under the earn-in agreement, with
approximately 67,629 m of drilling completed. A total of 71,695 m of drilling had been completed at Black Lake
as at December 31, 2015, which includes 4,066 m of drilling funded by Uracan Resources Ltd. (“Uracan”). The
exploration expenditures funded by Uracan are not reflected in UEX’s financial statements, with the exception of
the 10% management fee received from Uracan, which is netted against salaries expense.
Pursuant to an agreement dated January 24, 2013 and amended June 23, 2014, December 15, 2014 and
November 25, 2015, Uracan can earn a 60% interest in the Black Lake Project by funding $10 million in
exploration expenditures over 11 years with a minimum of $1 million per year, with no partial earn-in permitted.
UEX remains the project operator until such time as Uracan has earned its 60% interest in the Project and is
entitled to a 10% management fee under the Black Lake joint-venture agreement. Uracan has also granted to
UEX a 1% NSR royalty from their ownership interest and upon UEX receiving a total of $10.0 million in royalty
payments, the NSR royalty will terminate.
In consideration for signing the initial agreement, Uracan issued 300,000 common shares and 150,000 warrants
to UEX in 2013. In consideration for signing the June 23, 2014 amendment, Uracan issued a further 50,000
shares and 25,000 warrants to UEX in 2014.
TSX:UEX | Energy for the Future
23
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
The June 23, 2014 amendment reduced the 2014 expenditure requirement from $2,000,000 to $1,577,560. The
$422,440 reduction to the 2014 expenditure requirement was added to the 2015 requirement, increasing it from
$1,000,000 to $1,422,440. The December 15, 2014 amendment extended Uracan’s 2014 exploration
expenditures deadline to January 31, 2015, which have been fulfilled by Uracan. Except for the amendment of
the annual expenditure requirements for 2014 and 2015 described above, all original terms of the earn-in
agreement remained unchanged.
The November 25, 2015 amendment extended Uracan’s amended 2015 funding requirements by 12 months until
December 31, 2016 and all other annual work commitments deadlines were extended by one year. Under this
amendment, Uracan will be required to have completed $3.0 million in cumulative work commitments by
December 31, 2016 and will be required to fund at least $1.0 million in additional work commitments annually
thereafter for the following seven years until a cumulative $10.0 million is spent prior to December 31, 2023.
As at November 9, 2015, Uracan has funded approximately $1.6 million in exploration expenditures toward its
earn-in resulting in approximately 4,066 m of drilling on the Black Lake Project. These amounts are in addition
to those incurred by UEX on Black Lake to date. The Black Lake claims are in good standing until at least January
2024.
Notable Historic Intersections
Previous drilling by UEX encountered uranium mineralization in three separate areas of the property (as described
in UEX press releases dated October 12, 2004, August 14, 2006, February 27, 2007 and August 21, 2007,
respectively):
BL-018: 0.69% U3O8 over 4.4 m, including 1.96% U3O8 over 0.5 m;
BL-082: 0.50% U3O8 over 3.3 m, including 1.60% U3O8 over 0.7 m;
BL-110: 0.79% U3O8 over 2.82 m; and
BL-140: 0.67% U3O8 over 3.0 m, including 1.58% U3O8 over 1.0 m.
These mineralized intervals were encountered at the unconformity between the overlying Proterozoic Athabasca
sandstones and underlying Archean/Aphebian basement rocks at relatively shallow down-hole depths between
274 m and 318 m.
2015 Exploration Program
A $455,000 winter diamond drilling program totalling 1,318 m was completed in January 2015 to fulfill the
requirements of the December 15, 2014 amendment. Report writing for this program has been completed and
the assessment report was submitted for credit to the Saskatchewan government. This program was fully funded
by Uracan as part of the earn-in agreement.
Uracan was presented with a budget of $1.6 million for 2015 for work to be completed after January 31, 2015.
Uracan failed to meet their 2015 amended exploration work commitments and UEX agreed to extend Uracan’s
amended 2015 funding requirements as outlined in the November 25, 2015 amendment.
2016 Exploration Program
UEX has not yet been informed by Uracan whether they are able to implement the program and budget that was
presented to them in 2015, nor have Uracan proposed an alternative to the proposed program at this time.
TSX:UEX | Energy for the Future
24
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Northern Athabasca and Riou Lake Projects
Located at the northern edge of the
Athabasca Basin.
Year-round access by road and air,
close to existing electric transmission
lines.
Village of Stony Rapids provides
accommodation and other support
services.
Uranium mineralization has been
encountered on three areas of the Riou
Lake Project.
Lack of recent activity and exploration
budgets triggered impairment charges
on these projects despite their
potential.
La Roque claims adjacent to Cameco’s
La Roque Lake deposit.
UEX is actively seeking partners to advance the
Northern Athabasca and Riou Lake Projects
Northern Athabasca
Butler Lake
La Roque
Total
Number of
claims
2
3
5
Hectares
Acres
7,245
378
7,623
17,903
934
18,837
UEX
Ownership %
100
100
100
UEX continues to hold claims on our Northern Athabasca Project; however, the Company does not have any
exploration plans at this time. The Northern Athabasca Project was written off in 2010 due to a lack of planned
exploration activity at that time.
One claim at each of the former Monroe Lake and Fond du Lac projects lapsed in February 2015.
TSX:UEX | Energy for the Future
25
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Riou Lake
Riou Lake
Number of
claims
11
Hectares
Acres
UEX
Ownership %
16,027
39,604
100
The Riou Lake Project was written off in June 2014 due to a lack of planned future activity and the lapsing of two
claims. One claim lapsed in March 2015 and was re-staked in April 2015. A second claim lapsed on June 30,
2015 and was not re-staked. One claim lapsed in March 2016 and was not re-staked. UEX maintains several
Riou Lake claims in good standing.
The Company will continue to seek partners that may be interested in earning into this project to follow up on
historic uranium mineralization encountered on the property.
Qualified Person
The disclosure of technical information regarding UEX’s properties in this MD&A has been reviewed and approved
by Roger Lemaitre, P.Eng., P.Geo., UEX’s President and CEO, who is a Qualified Person as defined by National
Instrument 43-101 – Standards of Disclosure for Mineral Projects and is non-independent of UEX.
TSX:UEX | Energy for the Future
26
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Financial Update
Selected Financial Information
The following is selected financial data from the audited financial statements of UEX for the last three completed
fiscal years. The data should be read in conjunction with the audited financial statements for the years ended
December 31, 2015, 2014 and 2013 and the notes thereto.
Summary of Annual Financial Results
Interest income
Net loss for the year
Write-down of mineral properties
Basic and diluted loss
per share
Capitalized exploration and evaluation
expenditures, net of fair value consideration
received and impairment charges (if any)
December 31, 2015
December 31, 2014 December 31, 2013
$ 106,027
$ 131,399
$ 202,074
(2,148,570)
(1,528)
(0.009)
(9,456,981)
(10,425,937)
(0.041)
(2,348,002)
-
(0.010)
4,845,662
1,560,079
4,670,032
Total assets
$ 165,730,712
$ 164,943,741
$ 173,871,037
The following quarterly financial data is derived from the unaudited condensed interim financial statements of
UEX as at (and for) the three-month periods indicated below.
Summary of Quarterly Financial Results (Unaudited)
2015
Quarter 4
2015
Quarter 3
2015
Quarter 2
2015
Quarter 1
2014
Quarter 4
2014
Quarter 3
2014
Quarter 2
2014
Quarter 1
Interest income
$ 20,265 $ 26,993 $ 27,168 $ 31,601 $ 34,660 $ 29,358 $ 32,279 $ 35,102
Net loss for the period
(769,636 )
(363,589 )
(402,500)
(612,845)
(573,455)
(364,243 )
(8,067,108)
(452,175)
Write-down of mineral
properties
Basic and diluted loss
per share
Capitalized exploration
and evaluation
expenditures, net of
fair value consideration
received and
impairment charges
(if any)
(1,528 )
-
-
-
-
-
(10,425,937)
-
(0.003 )
(0.001 )
(0.002)
(0.003)
(0.003)
(0.002 )
(0.035)
(0.002)
476,401
769,345
808,757
2,791,159
236,706
179,835
515,064
628,474
Total assets
$165,730,712 $166,668,889 $167,117,327 $165,232,996 $164,943,741 $165,032,267 $162,766,315 $174,264,271
TSX:UEX | Energy for the Future
27
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
UEX’s business is not affected by seasonality as the Company is able to perform exploration and evaluation work
year round. In late Q2 2015, there were some delays to our exploration programs in the Athabasca Basin due to
forest fires that led to travel restrictions and evacuations in some areas. Variations in capitalized exploration and
evaluation expenditures from quarter to quarter and year to year are affected by the timing and size of the
exploration and evaluation programs in the periods. Beginning in 2012 and continuing to 2015, in response to a
decrease in uranium prices following the earthquake and tsunami that damaged Japan’s Fukushima nuclear
power plant and the global economic slowdown that affected UEX’s share price, certain discretionary exploration
and evaluation expenditures were deferred. This reduced level of activity in exploration and evaluation
expenditures is reflected in the 2014 financial results.
In 2015, UEX commenced exploration at Hidden Bay targeting basement deposits. The majority of this work
occurred in the first quarter of 2015 followed by geophysics and drill core review at Hidden Bay and there was a
larger exploration program at the Western Athabasca Projects than in the previous year. In the fourth quarter of
2015, UEX paid $250,000 and signed a LOI to earn into the Christie Lake Project in the Athabasca Basin and
began planning and incurring costs for a 2016 drilling program.
Variations in loss are primarily affected by the number of options granted and/or vesting in the period and the
associated inputs used in calculating share-based payment expense, the timing of mineral property impairments
that may have occurred during the period (inclusive of the tax impact thereon) and the timing of the recognition
of deferred taxes associated with the renunciation of tax benefits related to flow-through expenditures.
Impairment:
o UEX and AREVA each staked claims in July 2014, which became the Coppin Lake Project. A
budget of $200,000 for geophysics and line cutting was proposed for 2016, of which UEX would
have been responsible for funding its 49.097% share, or approximately $98,000. When bids were
received to perform the proposed work, they were much higher than expected. Given the higher
than expected costs and small area involved, UEX and AREVA made a decision to cancel the
program and will let the claims lapse in the third quarter of 2016. As there is no work budgeted or
planned for the project and the claims will be allowed to lapse in 2016, an impairment charge of
$1,528 has been recorded for the project in the fourth quarter of 2015.
o
In the second quarter of 2014, the Company determined that the carrying value of UEX’s
100%-owned Riou Lake Project was impaired and a $10,425,937 charge is reflected in the loss for
the second quarter of 2014 (net deferred tax effect, which reduced the impact of the impairment by
approximately $2,815,000). This impairment was recognized because the Company does not have
any exploration activity planned or currently budgeted for the area. UEX continues to maintain
several Riou Lake claims in good standing.
Renunciation of tax benefits:
o Approximately $1.485 million of the required flow-through expenditures from the $3.3 million,
May 11, 2015 flow-through private placement had been incurred by December 31, 2015. The
associated tax benefits were renounced to eligible subscribers in February 2016 effective
December 31, 2015 (under the general rule), resulting in a significant increase in deferred tax
expense in the fourth quarter of 2015.
o The remaining $1.815 million in required flow-through expenditures from the May 2015 placement
were renounced to eligible subscribers in February 2016, effective December 31, 2015 (under the
look-back rule) and will have a significant tax impact in the first quarter of 2016.
TSX:UEX | Energy for the Future
28
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
o The majority of the required flow-through expenditures from the September 2014 flow-through
private placement were incurred during the first quarter of 2015. All remaining proceeds were
expended by April 30, 2015. Due to the timing of these expenditures, the tax effect of the
renunciation is primarily reflected in the first quarter of 2015 (under the look-back rule) as the
renunciation was filed in February 2015.
o
In the three-month period ended December 31, 2014, $229,819 in exploration expenditures were
funded with flow-through dollars compared to the three-month period ended March 31, 2015 when
$2,781,366 in exploration expenditures were funded with flow-through dollars.
Deferred tax recovery
o The loss for the second quarter of 2014 was reduced by $3.3 million in deferred tax recovery as a
result of the impairment of Riou Lake as well as the increase in non-capital loss carryforwards due
to the operating losses incurred.
Share Capital
The Company is authorized to issue an unlimited number of common shares without par value, of which
246,015,069 common shares were issued and outstanding as at December 31, 2015 and 266,015,069 common
shares were issued and outstanding as at March 16, 2016, and an unlimited number of preferred shares (no par
value) issuable in series of which 1,000,000 preferred shares have been designated Series 1 Preferred Shares,
none of which are issued and outstanding. At December 31, 2015 and March 16, 2016, the Company had
reserved a total of 17,316,000 and 17,376,000 common shares related to director, employee and consultant share
purchase options. The share purchase options are exercisable into common shares at exercise prices ranging
from $0.15 per share to $1.45 per share. At December 31, 2015, the Company had no share purchase warrants
outstanding and at March 16, 2016, there were 20,000,000 share purchase warrants outstanding with an exercise
price of $0.20 per share.
Results of Operations for the Three-Month Period Ended December 31, 2015
For the three-month period ended December 31, 2015, the Company earned interest income of $20,265 (Q4
2014 - $34,660). The decrease in interest income was primarily due to lower average cash balances, as well as
lower interest rates on cash invested during the current three-month period. In the fourth quarter of 2015, the
Company had an average cash balance invested of approximately $5.5 million versus $8.5 million in the
comparative period.
For the three-month period ended December 31, 2015, the Company incurred expenses of $670,953 (Q4 2014 -
$746,342) with significant changes from the comparative period identified as follows:
Office expenses of $121,658 (Q4 2014 - $99,640) increased primarily due to fees paid to consultants for
data migration following the Q2 2015 acquisition of a new geological database solution and costs
associated with the transition to a new corporate office location;
Salaries expense of $297,844 (Q4 2014 - $367,094) decreased primarily as a result of severance paid
to a member of the senior management team in the comparative period;
Share-based compensation expense of $72,141 (Q4 2014 - $154,171) decreased from the comparative
quarter as a result of the 2014 annual grant of options being delayed until Q4 2014 due to a black out
stemming from a potential acquisition. In November 2014, the annual option grant occurred and
TSX:UEX | Energy for the Future
29
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
1,795,000 options were granted, with one-third vesting immediately. There was no comparable option
grant in the current quarter as the 2015 annual grant of options had already occurred in June 2015; and
Travel and promotion costs of $44,219 (Q4 2014 - $27,370) increased as UEX attended meetings in Q4
2015 with shareholders and potential investors outside of Canada, which did not occur in Q4 2014.
Deferred income tax expense for the three-month period ended December 31, 2015 was $118,948 (Q4 2014 -
recovery of $138,227) and primarily reflects the tax impact of the renunciation under the general rule of
approximately $1.485 million in eligible flow-through expenditures (out of $3.300 million raised in May 2015)
effective December 31, 2015. Deferred income tax recovery for the three-month period ended December 31,
2014 was $138,277 and primarily reflects the pre-tax loss for the quarter, reduced by the tax impact of the
renunciation under the general rule of approximately $0.230 million in eligible flow-through expenditures (out of
$3.085 million raised in September 2014) effective December 31, 2014. The majority of flow-through funds raised
in 2014 were not expended until Q1 2015, thus the tax impact of the Q4 2014 renouncement was significantly
lower than in the current period.
The vesting of share purchase options during the three-month period ended December 31, 2015 resulted in total
share-based compensation of $77,158 (Q4 2014 - $154,578), of which $5,017 was allocated to mineral property
expenditures (Q4 2014 - $407) and the remaining $72,141 was expensed (Q4 2014 - $154,171).
Results of Operations for the Year Ended December 31, 2015
For the year ended December 31, 2015, the Company earned interest income of $106,027 (2014 - $131,399).
The decrease in interest income was due to lower cash balances during 2015 as well as $940 of Part XII.6 tax,
which was netted against interest income in 2015 versus $Nil in 2014. In 2015, the Company had an average
cash balance invested of approximately $6.6 million versus $8.1 million in 2014.
For the year ended December 31, 2015, the Company incurred expenses of $2,411,825 (2014 - $12,884,677)
with significant changes from 2014 identified as follows:
Filing fees and stock exchange costs of $85,147 (2014 - $116,278) primarily decreased due to a change
in the method of distributing the materials for the annual general meeting to shareholders;
Legal and audit fees of $139,095 (2014 - $126,993) were higher primarily due to third quarter review
costs that were higher than the comparative period and professional fees for tax advice that were not
incurred in 2014;
Maintenance costs of $49,750 (2014 - $14,200) relate to repair and maintenance costs at the Company’s
Raven exploration camp and servicing for the Company’s geological server and field equipment, with
minimal costs of this nature incurred in the comparative year;
Office expenses of $452,737 (2014 - $402,266) increased primarily due to fees paid to consultants for
database management services related to the evaluation and assessment of the Company’s geological
database and related processes, as well as data migration which occurred in the third and fourth quarters
of 2015;
Project investigation costs of $21,938 (2014 - $90,054) decreased due to the location of the opportunities
which were evaluated. Travel costs and advisory fees incurred in 2014 as part of the project investigation
were not incurred in 2015;
TSX:UEX | Energy for the Future
30
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Salaries expense of $869,489 (2014 - $845,545) increased primarily as a result of annual inflation
adjustment of compensation and lower Black Lake Project management fees, which are netted against
salaries expense, offset by severance paid to a member of the senior management team in 2014 which
was not incurred in 2015;
Share-based compensation expense of $361,095 (2014 - $490,107) decreased from 2014 as the
comparative period expense reflects the vesting of options granted prior to 2014, many of which were
fully vested by 2015, and the impact of the 1,000,000 share purchase options granted to the CEO in 2014
as part of his employment contract, one-third of which vested immediately;
An impairment charge of $1,528 for Coppin Lake was recorded in 2015 after UEX and AREVA made a
decision to withdraw the proposed program and allow the claims to lapse in 2016. An impairment charge
of $10,425,937 for Riou Lake was recorded in 2014 due to a lack of planned or budgeted exploration
activity.
Deferred income tax recovery for the year ended December 31, 2015 was $157,228 (2014 - recovery of
$3,296,297). The difference primarily relates to the Q2 2014 tax impact of the Riou Lake impairment charge of
$10,425,937 recorded in June 2014, which created a deferred income tax recovery of $2,815,003. No comparable
impairment charge was recognized in 2015. The deferred income tax recovery for the year ended December 31,
2015 reflects the pre-tax loss for the year, reduced by the combined tax impact of:
the renunciation under the look-back rule of approximately $2.855 million in eligible flow-through
expenditures (out of $3.085 million raised in September 2014), effective December 31, 2014 on February
2, 2015; and
the renunciation under the general rule of approximately $1.485 million in eligible flow-through
expenditures (out of $3.300 million raised in May 2015), effective December 31, 2015.
In 2014, the tax impact of flow-through renouncements was minimal as only $0.230 million in flow-through eligible
expenditures were renounced under the general rule (out of $3.085 million raised in September 2014), effective
December 31, 2014.
The vesting of share purchase options during the year ended December 31, 2015 resulted in total share-based
compensation of $391,997 (2014 - $523,841), of which $30,902 was allocated to mineral property expenditures
(2014 - $33,734) and the remaining $361,095 was expensed (2014 - $490,107). The share-based compensation
expense in 2014 reflects the granting of options to the CEO upon his appointment in January 2014, with no similar
grant occurring in 2015.
TSX:UEX | Energy for the Future
31
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
The continuity of expenditures on uranium projects for the years ended December 31, 2015 and 2014 is as follows:
Balance at December 31, 2013
Additions - exploration
Additions - evaluation
Fair value consideration
Impairment charge for the year
Hidden
Bay (1)
Riou
Lake
Western
Athabasca (2)
Black
Lake (3)
Beatty
River
Christie
Lake (4)
Total (5)
$ 76,223,469 $ 10,425,937 $ 61,357,244 $ 15,230,180
$ 869,391 $ - $ 164,106,221
456,436
19,391
-
-
-
-
-
(10,425,937)
1,050,323
37,568
-
-
-
-
(3,639)
-
-
-
-
-
62,407,567
15,264,109
869,391
-
-
-
-
-
1,544,327
19,391
(3,639)
(10,425,937)
155,240,363
Balance at December 31, 2014
76,699,296
Additions - acquisitions/staking
24,180
Additions - exploration
Additions - evaluation
2,376,823
71,755
Impairment charge for the year
-
-
-
-
-
-
604
-
-
250,000
274,784
2,055,764
4,170
3,678
58,688
4,499,123
-
(1,528)
-
-
-
-
-
-
71,755
(1,528)
Balance at December 31, 2015
$ 79,172,054 $ - $ 64,462,407 $ 15,268,279
$ 873,069 $ 308,688 $ 160,084,497
(1) Hidden Bay
The balance at December 31, 2015 includes evaluation expenditures of $7,383,446 (December 31, 2014 - $7,311,691)
which represent costs associated with the continuing evaluation of and advancement of the Raven, Horseshoe and West
Bear Deposits at Hidden Bay. These costs include the West Bear Preliminary Feasibility Study (February 24, 2010), the
Hidden Bay Preliminary Assessment Technical Report (February 23, 2011) and various component technical studies.
Exploration expenditures in the year ended December 31, 2015 primarily relate to the Hidden Bay winter 2015 drilling
program at Dwyer Lake and Wolf Lake. Comparative period exploration costs primarily related to the review of the
Company’s geological database to identify basement target areas, two of which were at Dwyer Lake and Wolf Lake.
Evaluation expenditures in the year ended December 31, 2015 primarily relate to ongoing onsite barrel testing. Comparative
evaluation costs related to component technical studies and the setup of field barrel testing.
Acquisitions/staking in the year ended December 31, 2015 includes $12,000 paid to Cameco (20.33% shareholder of UEX
Corporation at the time of the transaction, 18.80% shareholder at January 21, 2016) and $10,000 paid to Glencore to acquire
a 70% and 20% interest, respectively, in Umpherville River, plus the staking of several small claims in the Dwyer Lake area.
(2) Western Athabasca
The balance at December 31, 2015 and 2014 includes evaluation expenditures at Shea Creek of $7,370,026 which
represent costs associated with the continuing evaluation of and advancement of the Shea Creek Project. There were no
evaluation expenditures incurred in the years ended December 31, 2015 or 2014 that were related to this project, as AREVA
and UEX have focused on exploration activities.
Current and comparative year exploration costs include both drilling and geophysics at the Western Athabasca Projects.
(3) Black Lake
Exploration drilling in early 2015 was fully funded by Uracan as per the farm-out agreement. UEX costs capitalized in 2014
and 2015 related to exploration costs and share-based compensation that were not billable to Uracan under the agreement.
(4) Christie Lake
Capitalized expenditures of $308,688 in 2015 include the $250,000 initial payment to JCU upon signing the LOI as well as
planning for the 2016 exploration program. Costs associated with reviewing the project prior to signing the LOI were
expensed as project investigation costs in 2015.
(5) Exploration and evaluation additions in 2015 for all projects include non-cash share-based compensation and depreciation
totalling $66,817 (2014 - $75,054).
TSX:UEX | Energy for the Future
32
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
For further information regarding expenditures on the projects shown in the table above, please refer to
“Exploration and Evaluation Activities”. Also please refer to the “Critical Accounting Estimates, Valuation of
mineral properties” section.
The Company has an interest in several joint operations relating to the exploration and evaluation of various
properties in the western, eastern and northern Athabasca Basin. These interests are governed by contractual
arrangements but have not been organized into separate legal entities or vehicles. The joint arrangements that
the Company is party to in some cases entitle the Company, or its joint venture partner, to a right of first refusal
on the projects should one of the partners choose to sell their interest. The joint arrangements are governed by
management committees which set the annual exploration budgets for these projects. Should the Company be
unable to, or choose not to, fund its required contributions as outlined in the agreements, there is a risk that the
Company’s ownership interest could be diluted. As a result of decisions to fund exploration programs for the joint
arrangements, the Company may choose to complete further equity issuances or fund these amounts through
the Company’s general working capital.
UEX is party to the following joint arrangements:
March 16, 2016
December 31, 2015
Ownership interest (%)
UEX
AREVA JCU
Total
UEX
AREVA JCU
Total
Beatty River (1)
Black Lake (1)
Christie Lake (2)
Western Athabasca
Laurie Project (1)
Western Athabasca
All other projects (1)
25.000
50.702
24.298
100.000
25.000
50.702
24.298
100.000
90.920
9.080 -
100.000
90.920
9.080
-
100.000
10.000
-
90.000
100.000
-
-
100.000
100.000
42.183
57.817 -
100.000
42.183
57.817
-
100.000
49.097
50.903 -
100.000
49.097
50.903
-
100.000
(1) Joint venture project ownership interests are updated effective December 31 upon receipt of notification from the joint venture
operator.
(2) On October 26, 2015, UEX signed a LOI with JCU to earn up to a 70% interest in the Christie Lake Project by making cash
payments of $7 million and incurring $15 million in exploration expenditures before January 1, 2020. Upon signing of the LOI,
UEX made a cash payment of $250,000 to JCU with a second cash payment of $1,750,000 made on January 22, 2016 to vest
a 10% ownership in the project (see “Christie Lake Project”).
Financing Activities
As UEX has not begun production on any of its mineral properties, the Company does not generate cash from
operations and has historically funded its operations through monies raised in the public equity markets:
On January 21, 2016, the Company completed a non-brokered private placement of 20,000,000 units at
a price of $0.10 per unit for gross proceeds of $2,000,000. Each unit consisted of one common share
and one common share purchase warrant exercisable at $0.20 per share for a period of two years. The
placement was fully subscribed by a former CEO of the Company, with no commission payable. Cameco
did not exercise its pre-emptive right to participate in the offering and as a result, its ownership interest
in UEX declined from approximately 20.33% to approximately 18.80%.
These funds were raised to make the $1,750,000 cash payment to JCU required to complete the 10%
Christie Lake Project earn-in on January 22, 2016. The remaining $250,000 from the placement was
used to replace funds that were paid to JCU from the Company’s working capital upon signing the LOI.
TSX:UEX | Energy for the Future
33
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
On May 11, 2015, the Company completed a private placement of 11,000,000 flow-through common
shares at a price of $0.30 per share to raise proceeds of $3,300,000 with issue costs of $78,558 and paid
an agent a cash commission of $165,000, both of which were paid from existing cash reserves. A flow-
through premium related to the sale of the associated tax benefits was determined to be $275,000 and a
related $65,761 deferred income tax was recorded in share capital. Cameco did not exercise its pre-
emptive right to participate in the offering and as a result its ownership interest in UEX declined from
approximately 21.28% to approximately 20.33%.
The use of proceeds from the May 11, 2015 flow-through private placement as at December 31, 2015 is
presented in the table below:
PROPOSED USE OF PROCEEDS (1)
Flow-through Private Placement
ACTUAL USE OF PROCEEDS
Use of Proceeds
Remaining to be Spent
Hidden Bay
Western Athabasca
Christie Lake
TOTAL
$ 1,300,000
$ 340,955
$ 959,045
2,000,000
-
1,087,824
56,198
912,176
(56,198)
$ 3,300,000
$ 1,484,977
$ 1,815,023
(1) Expenses of $243,558 related to the offering were funded from existing working capital.
UEX has and intends to use some of the remaining May 11, 2015 flow-through proceeds to exploration
at the Christie Lake Project.
The Company renounced the income tax benefit of the May 11, 2015 private placement to its subscribers
effective December 31, 2015 and incurred Part XII.6 tax at a rate of Nil% for January 2016 and 1% per
month thereafter on unspent amounts. As at March 16, 2016, an estimated $2.5 million of the placement
proceeds have been expended and a Part XII.6 tax expense of approximately $1,500 has been incurred.
On September 29, 2014, the Company completed a non-brokered private placement of 7,176,390
flow-through shares at a price of $0.43 per share for gross proceeds of $3,085,848 with issue costs of
$89,736 and paid an agent a cash commission of $154,292, both of which were paid from existing cash
reserves. A flow-through premium related to the sale of the associated tax benefits was determined to
be $681,757 and a related $65,887 deferred income tax was recorded in share capital. Cameco did not
exercise its pre-emptive right to participate in the offering and as a result, its ownership interest in UEX
declined from approximately 21.95% to 21.28%.
The proceeds from the September 29, 2014 flow-through private placement were fully expended by April
30, 2015 and the allocation by project is presented in the table below:
PROPOSED USE OF PROCEEDS (2)
Flow-through Private Placement
ACTUAL USE OF PROCEEDS
Use of Proceeds
Remaining to be Spent
Hidden Bay
Western Athabasca
Beatty River
TOTAL
$ 2,500,000
$ 2,173,523
$ 326,477
585,848
-
908,725
3,600
(322,877)
(3,600)
$ 3,085,848
$ 3,085,848
$ -
(2) Expenses of $244,028 related to the offering were funded from existing working capital.
TSX:UEX | Energy for the Future
34
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
The Company renounced the income tax benefit of the September 29, 2014 private placement to its
subscribers effective December 31, 2014 and incurred Part XII.6 tax at a rate of Nil% for January 2015
and 1% per month thereafter on unspent amounts. As at April 30, 2015, the placement proceeds had
been fully expended and Part XII.6 tax expense of $940 had been incurred and remitted to the CRA.
No share purchase options were exercised during the years ended December 31, 2015 or 2014.
Liquidity and Capital Resources
Working capital as at December 31, 2015 was $4,825,590 compared to working capital of $8,246,867 as at
December 31, 2014 and includes the following:
Current assets as at December 31, 2015 and December 31, 2014 were $5,302,127 and $9,569,306
respectively, including:
o Cash and cash equivalents of $5,139,814 at December 31, 2015 and $9,321,596 at December 31,
2014. The Company’s cash balances are invested in highly liquid term deposits redeemable within
90 days or less.
Accounts payable and other liabilities as at December 31, 2015 and December 31, 2014 were $476,537
and $1,322,439, respectively:
o The balance at December 31, 2015 is primarily comprised of $325,285 in trade and other payables,
with the remainder due to the flow-through share premium liability of $151,252 related to the May
11, 2015 private placement.
o The balance at December 31, 2014 is primarily comprised of the remaining flow-through share
premium liability of $630,984 related to the private placement completed in September 2014 as
well as $424,034 relating to the Uracan prepayment for the 2015 exploration program at Black
Lake, with the remaining $267,421 in trade and other payables.
The Company has sufficient financial resources to fund administrative costs and the majority of its planned 2016
exploration programs for at least twelve months from the end of the reporting period; however, the Company will
require additional funding to fully meet its 2016 exploration commitments at Christie Lake. If the funds are not
available on reasonable terms to meet the remaining 2016 Christie Lake exploration commitments, the Company
may elect not to complete the acquisition as outlined in the Christie Lake Option Agreement (see Christie Lake
Project). The Company will require additional financing from time to time and although it has been successful in
the past, there is no assurance that it will be able to obtain adequate financing in the future or that such financing
will be available on acceptable terms. The Company anticipates a cash balance at December 31, 2016 of
approximately $1.1 million in the absence of a financing.
The Company’s net deferred income tax liability of $10,596,810 at December 31, 2015 is comprised of a
$15,099,662 deferred income tax liability primarily related to the tax effect of the difference between the carrying
value of the Company’s mineral properties and their tax values, offset by the Company’s deferred income tax
assets of $4,502,852. At December 31, 2014, the Company’s net deferred income tax liability was $10,063,649
and was comprised of a $13,917,555 deferred income tax liability related to the tax effect of the difference between
the carrying value of the Company’s mineral properties and their tax values, offset by the Company’s deferred
income tax assets of $3,853,906. The net deferred income tax liability increased from December 31, 2014 to
December 31, 2015 primarily due to the filings of the September 29, 2014 flow-through renouncement under the
look-back rule and the May 11, 2015 flow-through renouncement under the general rule.
TSX:UEX | Energy for the Future
35
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Commitments
In the normal course of business, the Company enters into contracts and performs business activities that give
rise to commitments for future minimum payments. The Company has obligations under operating leases for its
premises, which expire between July 31, 2018 and October 31, 2020. Future minimum lease payments as at
December 31, 2015 are as follows:
Leases for premises
$ 71,040
$ 71,502
$ 67,774
$ 61,446
$ 53,130
2016
2017
2018
2019
2020
UEX has agreements with partners to fund exploration and make other acquisition related payments that if not
made would result in project dilution or potentially loss of the project in its entirety.
Exploration Commitments – Western Athabasca
As at December 31, 2015, UEX committed to fund approximately $0.66 million of the $1.35 million 2016 Western
Athabasca exploration budget. UEX has decided not to fund its share of $0.65 million for the 2016 geophysical
program, or approximately $0.32 million at the Mirror River Project. UEX’s interest in this project is anticipated to
drop from the current 49.097% interest to approximately 41.449% should AREVA complete the approved
program. This dilution would only apply to UEX’s interest in the Mirror River Project.
As at December 31, 2014, UEX had committed to fund $2.1 million of the $4.8 million 2015 Western Athabasca
exploration budget. The program was completed in the second quarter of 2015. UEX decided not to fund its
share of the 2015 geophysical program at the Laurie Project. As a result of UEX’s decision not to fund its share
of $509,861 for the geophysical program at the Laurie Project, or approximately $250,326, UEX’s interest in this
project has dropped from 49.097% at December 31, 2014 to approximately 42.183% effective December 31,
2015. This dilution only applies to UEX’s interest in the Laurie Project. As at December 31, 2015, UEX has fully
funded its 2015 exploration commitment for the 2015 Western Athabasca exploration budget.
Exploration and Earn-in Commitments – Christie Lake
On January 19, 2016, UEX signed an Option Agreement with JCU formalizing the terms upon which UEX may
earn up to 70% interest in the Christie Lake Project.
The Company must complete the cash payments and exploration work outlined in the table below or it risks not
achieving its objective of earning a 70% interest in the Christie Lake Project.
Date
Cash Payment Completed
Upon signing of the LOI
$ 250,000
Before January 28, 2016
Before January 1, 2017
Before January 1, 2018
Before January 1, 2019
Before January 1, 2020
1,750,000
2,000,000
1,000,000
1,000,000
1,000,000
Yes
Yes
Exploration
Work
Commitment
$ -
-
Completed
N/A
N/A
2,500,000
In progress
2,500,000
5,000,000
5,000,000
$ 7,000,000
$ 15,000,000
UEX Cumulative
Interest Earned
(%)
-
10.00
30.00
45.00
60.00
70.00
70.00
TSX:UEX | Energy for the Future
36
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Having made the required cash payments to JCU of $250,000 on October 23, 2015 and $1,750,000 on January
22, 2016, UEX vested a 10% ownership interest in the Christie Lake Project in January 2016.
UEX could elect to cease future cash payments and work commitments and instead vest a reduced interest in
the property according to the schedule in the table above.
Uracan Exploration Prepayment – Black Lake
In December 2014, UEX received a prepayment of $455,884 from Uracan, which amounted to 100% of the
budgeted 2015 winter drilling program at Black Lake. This program was completed in January 2015. As at
December 31, 2015, Uracan has $Nil in prepayments remaining for 2015 exploration programs (December 31,
2014 - $424,034) and has funded approximately $1.6 million (December 31, 2014 - $1.6 million) toward its earn-
in on the Black Lake Project. All previous prepayments received from Uracan were fully expended by December
31, 2014.
On November 25, 2015, the agreement was amended such that an aggregate of $3,000,000 for the first, second,
third and fourth calendar years in exploration expenditures are required to be paid by December 31, 2016. The
2015 funding requirement of $1,422,440 was reduced to $Nil and deferred to 2016, with all payments after 2016
extended by one year, which caused the agreement expiry date to be extended to December 31, 2023 from
December 31, 2022.
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
TSX:UEX | Energy for the Future
37
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, amounts receivable, deposits,
investments and accounts payable and other liabilities. Interest income is recorded in the statement of operations
and comprehensive loss. Cash and cash equivalents, as well as amounts receivable, are classified as loans and
receivables, and accounts payable and other liabilities are classified as other financial liabilities and recorded at
amortized cost using the effective interest rate method. In addition, any impairment of loans and receivables is
deducted from amortized cost. Investments include warrants which have been classified as Financial assets at
fair value through profit or loss (“FVTPL”) and as such are stated at fair value with any changes in fair value
recognized in profit or loss. The investments also include shares which have been classified as Available-for-sale
financial assets and are carried at fair value with changes in fair value recognized in other comprehensive income
with amounts accumulated in other comprehensive income recognized in profit or loss when they are sold or
when they experience a prolonged decline in fair value.
The Company operates entirely in Canada and is not subject to any significant foreign currency risk. The
Company’s financial instruments are exposed to limited liquidity risk, credit risk and market risk.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Company manages liquidity risk through the management of its capital structure. The Company’s objective when
managing capital is to safeguard the Company’s ability to continue as a going concern in order to pursue the
exploration and development programs on its mineral properties. The Company manages its capital structure,
consisting of shareholders’ equity, and makes adjustments to it, based on funds available to the Company, in
order to support the exploration and development of its mineral properties. Historically, the Company has relied
exclusively on the issuance of common shares for its capital requirements. Accounts payable and other liabilities
are due within the current operating period.
Credit risk is the risk of an unexpected loss if a third party to a financial instrument fails to meet its contractual
obligations. The Company’s exposure to credit risk includes cash and cash equivalents and amounts receivable.
The Company reduces its credit risk by maintaining its bank accounts at large international financial institutions.
The maximum exposure to credit risk is equal to the carrying value of cash and cash equivalents and amounts
receivable. The Company’s investment policy is to invest its cash in highly liquid short-term interest-bearing
investments that are redeemable 90 days or less from the original date of acquisition.
Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect
the Company’s income. The Company is subject to interest rate risk on its cash and cash equivalents. The
Company reduces this risk by investing its cash in highly liquid short-term interest-bearing investments that earn
interest on a fixed rate basis.
The carrying values of amounts receivable and accounts payable and other liabilities are a reasonable estimate
of their fair values because of the short period to maturity of these instruments.
Cash and cash equivalents are classified as loans and receivables and are initially recorded at fair value and
subsequently at amortized cost with accrued interest recorded in accounts receivable.
Investments are recorded at fair value. The fair value change for the Uracan shares represents the change to
the quoted price of these publicly traded securities from the date they were acquired. These common shares and
common share purchase warrants are being held for long-term investment purposes. The fair value change for
the common share purchase warrants reflects the changes to the Black-Scholes valuation input assumptions at
the December 31, 2015 revaluation date, as compared to December 31, 2014. The February 13, 2013 warrants,
which had an exercise price of $0.15 per share, expired on February 13, 2016 (150,000 warrants). The June 23,
TSX:UEX | Energy for the Future
38
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
2014 warrants have an exercise price of $0.12 per share (which is currently above market share price) and will
expire on June 23, 2017 (25,000 warrants).
The impacts of fair value changes are incidental to the Company as the assets impacted by these changes do
not represent significant value in comparison with the core assets of the Company. The Company has not
exercised any of the Uracan common share purchase warrants that it holds.
The fair value of the Uracan shares, classified as Level 1, is based on the market price for these actively traded
securities at December 31, 2015 and December 31, 2014, the financial statement fair value dates.
The fair value of the warrants received from Uracan, classified as Level 3, has been determined using the Black-
Scholes option-pricing model with the following assumptions as at the dates indicated:
February 13, 2013 Agreement
Number of warrants – Uracan (1)
Expected forfeiture rate
Valuation date share price
Expected volatility
Risk-free interest rate
Dividend yield
Expected life
Valuation date fair value
December 31
2015
December 31
2014
150,000
0.00%
$ 0.02
330.38%
0.48%
0.00%
0.12 years
$ 0.00
150,000
0.00%
$ 0.06
124.13%
1.01%
0.00%
1.12 years
$ 0.01
(1)
Initial fair value of the 150,000 Uracan warrants on February 13, 2013 was determined to be $8,931 using the Black-Scholes option-
pricing model with the following assumptions: Pre-vest forfeiture rate – 0.00%; Expected volatility – 127.26%; Risk-free interest rate
– 1.22%; Dividend yield – 0.00%; and Expected life of warrants – 3.00 years.
June 23, 2014 Agreement Amendment
Number of warrants – Uracan (2)
Expected forfeiture rate
Valuation date share price
Expected volatility
Risk-free interest rate
Dividend yield
Expected life
Valuation date fair value
December 31
2015
25,000
0.00%
$ 0.02
163.43%
0.48%
0.00%
1.48 years
$ 0.01
December 31
2014
25,000
0.00%
$ 0.06
121.77%
1.03%
0.00%
2.48 years
$ 0.03
(2)
Initial fair value of the 25,000 Uracan warrants on June 23, 2014 was determined to be $889 using the Black-Scholes option-pricing
model with the following assumptions: Pre-vest forfeiture rate – 0.00%; Expected volatility – 132.48%; Risk-free interest rate – 1.23%;
Dividend yield – 0.00%; and Expected life of warrants – 3.00 years.
TSX:UEX | Energy for the Future
39
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Market factors, such as fluctuations in the trading prices for the marketable securities as well as fluctuations in
the risk-free interest rates offered by the Bank of Canada for short-term deposits, are updated each time the
Uracan warrants are revalued. The Company expects that these valuation inputs are likely to change at every
reporting period which will result in adjustments to the fair value of these warrants in future periods.
The following table shows the valuation techniques used in the determination of fair values within Level 3 of the
hierarchy, as well as the key unobservable inputs used in the valuation model:
Level 3 item
Valuation approach
Key unobservable inputs
Inter-relationship between key
unobservable inputs and fair
value measurement
Warrants – Uracan
The fair value has been
determined by using the
Black-Scholes option
pricing model.
Expected volatility for Uracan
shares, derived from the shares’
historical prices (weekly).
The estimated fair value for the
warrants increases as the volatility
increases.
Related Party Transactions
The Company was involved in the following related party transactions for the three months and years ended
December 31, 2015 and 2014:
Related party transactions include the following payments which were made to related parties other than key
management personnel:
Three months ended
December 31
Year ended
December 31
2015
2014
2015
2014
Panterra Geoservices Inc. (1)
$ 2,400
$ -
$ 2,400
$ 2,000
Panterra Geoservices Inc. share-based
payments (1)(2)
Cameco Corporation (3)
1,718
5,503
9,532
18,654
-
-
12,000
-
$ 4,118
$ 5,503
$ 23,932
$ 20,654
(1) Panterra Geoservices Inc. is a company owned by David Rhys, a member of the management advisory board that
provides geological consulting services to the Company. The management advisory board members are not paid a
retainer or fee; specific services are invoiced as provided.
(2) Share-based compensation expense is the fair value of options granted which have been calculated using the
Black-Scholes option-pricing model and the assumptions disclosed in Note 12(c) of the December 31, 2015 annual
financial statements for options granted and vesting in the period.
(3) Represents an amount paid to Cameco (20.33% shareholder of UEX Corporation at the time of the transaction,
18.80% shareholder at January 21, 2016) in May of 2015 to acquire its 70% interest in the Umpherville River Project.
TSX:UEX | Energy for the Future
40
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Key management personnel compensation includes management and director compensation, inclusive of any
consulting arrangements with directors, as follows:
Three months ended
December 31
2015
2014
Year ended
December 31
2015
2014
Salaries and short-term employee benefits (1)(2)
$ 231,803 $ 328,176
$ 676,127 $ 854,565
Share-based payments (3)
Other compensation (4)
65,099
124,883
322,770
455,512
-
-
183,000
183,000
$ 296,902 $ 453,059
$ 1,181,897 $ 1,493,077
(1)
(2)
In the event of a change of control of the Company, certain senior management may elect to terminate their
employment agreements and the Company shall pay termination benefits of two times their respective annual
salaries at that time and all of their share purchase options will become immediately vested with all other employee
benefits, if any, continuing for a period of up to two years.
In the event that Mr. Lemaitre’s (UEX’s President and CEO) employment is terminated by the Corporation for any
reason other than as a result of a change of control, death or termination for cause, the Corporation will pay a
termination amount equal to one year’s base salary plus any bonus owing. All other employee related benefits will
continue for a period of one year following such termination. Mr. Lemaitre may also terminate the employment
agreement upon three months written notice to the Board and receive a lump sum payment equal to his base salary
plus benefits for three months.
(3) Share-based compensation expense is the fair value of options granted which have been calculated using the
Black-Scholes option-pricing model and the assumptions disclosed in Note 12(c) of the December 31, 2015 annual
financial statements for options granted and vesting in the period.
(4) Represents amounts paid in January 2015 and January 2014 to Mr. Graham Thody, the Company’s former President
and CEO, under the terms of a retirement consulting agreement for consulting services up to December 31, 2015.
During the term of this agreement, Mr. Thody was not entitled to receive director’s fees; however, upon expiry of this
agreement on December 31, 2015, Mr. Thody became entitled to receive director’s fees in 2016 on the same terms
as other non-management directors.
Accounting Policies
The accounting policies and methods employed by the Company determine how it reports its financial condition
and results of operations, and may require management to make judgments or rely on assumptions about matters
that are inherently uncertain. The Company’s results of operations are reported using policies and methods in
accordance with IFRS. In preparing financial statements in accordance with IFRS, management is required to
make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses
for the period. Management reviews its estimates and assumptions on an ongoing basis using the most current
information available.
TSX:UEX | Energy for the Future
41
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Joint Arrangements
Joint arrangements are arrangements of which the Company has joint control, established by contracts requiring
unanimous consent for decisions about the activities that significantly affect the arrangements’ returns. They are
classified and accounted for as follows:
(i)
Joint operation – when the Company has rights to the assets, and obligations for the liabilities, relating
to an arrangement, it accounts for each of its assets, liabilities and transactions, including its share of
those held or incurred jointly, in relation to the joint operation.
(ii)
Joint venture – when the Company has rights only to the net assets of the arrangement, it accounts for
its interest using the equity method.
The Company has an interest in several joint operations relating to the exploration and evaluation of various
properties in the western and northern Athabasca Basin. The financial statements include the Company’s
proportionate share of the joint operations’ assets, liabilities, revenue and expenses with items of a similar nature
on a line-by-line basis from the date that the joint arrangement commences until the date that the joint
arrangement ceases. These interests are governed by contractual arrangements but have not been organized
into separate legal entities or vehicles.
The Company does not have any joint arrangements that are classified under IFRS 11 as joint ventures. However,
“joint operations” as defined by IFRS are nevertheless commonly referred to as “joint ventures” by UEX, its
operating partners and the general mining industry, and use of the term “joint venture” by UEX in its disclosures
for the purposes of describing its operating results is considered consistent with these statements.
The joint arrangements that the Company is party to in some cases entitle the Company to a right of first refusal
on the projects should one of the partners choose to sell their interest. The joint arrangements are governed by
a management committee which sets the annual exploration budgets for these projects. In certain cases, should
the Company choose not to fund the minimum required contributions as outlined in the agreement, there is a risk
that the Company’s ownership interest could be diluted. As a result of decisions to fund exploration programs for
the joint arrangements, the Company may choose to complete further equity issuances or fund these amounts
through the Company’s general working capital.
Critical Accounting Estimates
The Company prepares its financial statements in accordance with IFRS, which require management to estimate
various matters that are inherently uncertain as of the date of the financial statements. Accounting estimates are
deemed critical when a different estimate could have reasonably been used or where changes in the estimate
are reasonably likely to occur from period to period, and would materially impact the Company’s financial
statements. The Company’s significant accounting policies are discussed in the financial statements. Critical
estimates inherent in these accounting policies are discussed below.
Valuation of Mineral Properties
The recovery of amounts shown for exploration and evaluation assets is dependent upon the discovery of
economically recoverable resources, the ability of the Company to obtain financing to complete exploration and
development of the properties, and on future profitable production or proceeds of disposition. The Company
recognizes in income any costs recovered on mineral properties when amounts received or receivable are in
excess of the carrying amount. Upon transfer of exploration and evaluation assets into development properties,
all subsequent expenditures on the exploration, construction, installation or completion of infrastructure facilities
is capitalized within development properties.
TSX:UEX | Energy for the Future
42
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
All capitalized exploration and evaluation assets are monitored for indications of impairment. Where a potential
impairment is indicated, assessments are performed for each area of interest. To the extent that the exploration
expenditures are not expected to be recovered, this amount is recorded as a write-down of interest in mineral
properties in the statement of operations and comprehensive loss in the period.
The Company performed an evaluation of impairment indicators under IFRS 6(20) for its exploration and
evaluation assets (mineral properties) as at December 31, 2015 and has concluded that there are no indicators
of impairment. As at December 31, 2015, the market capitalization of the Company was below the carrying value
of its net assets which are primarily represented by mineral properties. Accordingly, the Company has reviewed
the value attributed per pound in the ground of U3O8 in the most recent arms-length transactions for the acquisition
of uranium resources defined by the National Instrument 43-101. As a result of this review, the Company has
concluded that the Company’s net assets are not impaired.
Environmental Rehabilitation Provision
The Company recognizes the fair value of a liability for environmental rehabilitation in the period in which the
Company is legally or constructively required to remediate, if a reasonable estimate of fair value can be made,
based on an estimated future cash settlement of the environmental rehabilitation obligation, discounted at a
pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the
obligation. The environmental rehabilitation obligation is capitalized as part of the carrying amount of the
associated long-lived asset and a liability is recorded. The environmental rehabilitation cost is amortized on the
same basis as the related asset. The liability is adjusted for the accretion of the discounted obligation and any
changes in the amount or timing of the underlying future cash flows. Significant judgements and estimates are
involved in forming expectations of the amounts and timing of environmental rehabilitation cash flows. The
Company has assessed each of its mineral projects and determined that no material environmental rehabilitations
exist as the disturbance to date is minimal.
Share-based Payments
The Company has a share option plan which is described in Note 12(c) of the annual financial statements for the
year ended December 31, 2015. The fair value of all share-based awards is estimated using the Black-Scholes
option-pricing model at the grant date and amortized over the vesting periods. An individual is classified as an
employee when the individual is an employee for legal or tax purposes (direct employee) or provides services
similar to those performed by a direct employee, including directors of the Company. Share-based payments to
non-employees are measured at the fair value of the goods or services received, or the fair value of the equity
instruments issued if it is determined the fair value of the goods or services cannot be reliably measured, and are
recorded at the date the goods or services are received. The amount recognized as an expense is adjusted to
reflect the number of awards expected to vest.
None of the Company’s awards call for settlement in cash or other assets. Upon the exercise of the share
purchase options, consideration paid together with the amount previously recognized in the share-based
payments reserve is recorded as an increase in share capital. The offset to the recorded cost is to share-based
payments reserve. Consideration received on the exercise of share purchase options is recorded as share capital
and the related share-based payments value in the reserve is transferred to share capital. Charges for share
purchase options that are forfeited before vesting are reversed from share-based payments reserve. For those
share purchase options that expire or are forfeited after vesting, the recorded value is transferred to retained
earnings (deficit).
TSX:UEX | Energy for the Future
43
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Valuation of Warrants
The Company has adopted the residual value method with respect to the measurement of shares and warrants
issued as part of units. The residual value method first allocates value to common shares issued in the private
placements at their fair value, as determined by the closing quoted bid price on the announcement date or the
price protection date, if applicable. The balance remaining, if any, is allocated to the warrants with the fair value
recorded in shareholders’ equity under warrant reserve.
Recent Accounting Announcements
The International Accounting Standards Board has issued IFRS 9 Financial Instruments (“IFRS 9”) to replace IAS
39 Financial Instruments, which is intended to reduce the complexity in the measurement and classification of
financial instruments. The current version of IFRS 9 has a mandatory effective date of January 1, 2018 and is
available for early adoption. The Company does not expect IFRS 9 to have a material impact on the financial
statements and does not intend to early adopt. The classification and measurement of the Company’s financial
assets is not expected to change under IFRS 9 because of the nature of the Company’s operations and the types
of financial assets that it holds.
In January of 2016 the IASB issued IFRS 16 Leases (“IFRS 16”), which replaces the existing leasing standard,
IAS 17 Leases. The new standard effectively eliminates the distinction between operating and finance leases for
lessees, while lessor accounting remains largely unchanged with the distinction between operating and finance
leases retained. IFRS 16 takes effect on January 1, 2019, with earlier application permitted. The Company has
not yet evaluated the impact of adopting this standard and does not intend to early adopt.
TSX:UEX | Energy for the Future
44
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Risks and Uncertainties
An investment in UEX common shares is considered speculative due to the nature of UEX’s business and the
present stage of its development. A prospective investor should carefully consider the risk factors set out below.
It is not possible to determine if the exploration programs of UEX will result in profitable commercial
mining operations
The successful exploration and development of mineral properties is speculative. Such activities are subject to a
number of uncertainties, which even a combination of careful evaluation, experience and knowledge may not
eliminate. Most exploration projects do not result in the discovery of commercially mineable deposits. There is
no certainty that the expenditures made or to be made by UEX in the exploration and development of its mineral
properties or properties in which it has an interest will result in the discovery of uranium or other mineralized
materials in commercial quantities. While discovery of a uranium deposit may result in substantial rewards, few
properties that are explored are ultimately developed into producing mines. Major expenses may be required to
establish reserves by drilling and to construct mining and processing facilities at a site. There is no assurance
that the current exploration programs of UEX will result in profitable commercial uranium mining operations. UEX
may abandon an exploration project because of poor results or because UEX feels that it cannot economically
mine the mineralization.
Joint ventures
UEX participates in certain of its projects (such as the Western Athabasca, Black Lake, Beatty River and Christie
Lake projects) through joint ventures (referred to as “joint operations” in the financial statements) with third parties.
UEX has other joint ventures and may enter into more in the future. There are risks associated with joint ventures,
including:
disagreement with a joint-venture partner about how to develop, operate or finance a project;
a joint-venture partner not complying with a joint-venture agreement;
possible litigation between joint-venture partners about joint-venture matters; and
limited control over decisions related to a joint venture in which UEX does not have a controlling interest.
In particular, UEX is in the process of negotiating joint-venture agreements with AREVA on the Western
Athabasca Projects and there is no assurance that the parties will be able to conclude a mutually satisfactory
agreement.
Reliance on other companies as operators
Where another company is the operator and majority owner of a property in which UEX has an interest, UEX is
and will be, to a certain extent, dependent on that company for the nature and timing of activities related to those
properties and may be unable to direct or control such activities.
Uranium price fluctuations could adversely affect UEX
The market price of uranium is the most significant market risk for companies exploring for and producing uranium.
The marketability of uranium is subject to numerous factors beyond the control of UEX. The price of uranium has
recently experienced and may continue to experience volatile and significant price movements over short periods
of time. Factors impacting price include demand for nuclear power, political and economic conditions in uranium
producing and consuming countries, natural disasters such as those that struck Japan in March, 2011,
reprocessing of spent fuel and the re-enrichment of depleted uranium tails or waste, sales of excess civilian and
military inventories (including from the dismantling of nuclear weapons) by governments and industry participants
and production levels and costs of production in countries such as Kazakhstan, Russia, Africa and Australia.
TSX:UEX | Energy for the Future
45
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Reliance on the economics of the Preliminary Assessment Technical Report
The market price of U3O8 has decreased since the date of the Hidden Bay PA. The uranium industry has been
adversely affected by the natural disasters that struck Japan on March 11, 2011 and the resulting damage to the
Fukushima nuclear facility. These events resulted in many countries, which presently rely on nuclear power for
a portion of their electrical generation, stating that they will review their commitment to this source of clean energy.
These reviews resulted in downward pressure on the price of uranium and may have a significant effect on the
country-by-country demand for uranium. The current long-term U3O8 market price, as reported by Ux Consulting
on February 29, 2016, is US$44.00 /lb. Given that the PA presented three economic scenarios using prices
ranging from US$60 to US$80 /lb of U3O8, the economic analysis which uses U3O8 prices higher than the
prevailing market price may no longer be accurate and readers of the PA are therefore cautioned when reading
or relying on the PA.
Competition for properties could adversely affect UEX
The international uranium industry is highly competitive and significant competition exists for the limited supply of
mineral lands available for acquisition. Many participants in the mining business include large, established
companies with long operating histories. UEX may be at a disadvantage in acquiring new properties as many
mining companies have greater financial resources and more technical staff. Accordingly, there can be no
assurance that UEX will be able to compete successfully to acquire new properties or that any such acquired
assets would yield reserves or result in commercial mining operations.
Resource estimates are based on interpretation and assumptions
Mineral resource estimates presented in this document and in UEX’s filings with securities regulatory authorities,
news releases and other public statements that may be made from time to time are based upon estimates. These
estimates are imprecise and depend upon geological interpretation and statistical inferences drawn from drilling
and sampling analysis, which may prove to be unreliable. There can be no assurance that these estimates will
be accurate or that this mineralization could be extracted or processed profitably.
Mineral resource estimates for UEX’s properties may require adjustments or downward revisions based upon
further exploration or development work, actual production experience, or future changes in uranium price. In
addition, the grade of mineralization ultimately mined, if any, may differ from that indicated by drilling results.
There can be no assurance that minerals recovered in small-scale tests will be duplicated in large-scale tests
under on-site conditions or in production scale.
Failure to obtain additional financing on a timely basis could cause UEX to reduce its interest in its
properties
The Company currently has sufficient financial resources to carry out the majority of its anticipated short-term
planned exploration and development on all of its projects and to fund its short-term general administrative costs;
however, there are no revenues from operations and no assurances that sufficient funding will be available to
conduct further exploration and development of its projects or to fund exploration expenditures under the terms
of any joint-venture or option agreements after that time. If the Company’s exploration and development programs
are successful, additional funds will be required for development of one or more projects. Failure to obtain
additional funding could result in the delay or indefinite postponement of further exploration and development or
the possible loss of the Company’s properties or inability to earn further interests in the Christie Lake Project. It
is intended that such funding will be obtained primarily from future equity issues. If additional funds are raised
from the issuance of equity or equity-linked securities, the percentage ownership of the current shareholders of
UEX will be reduced, and the newly issued securities may have rights, preferences or privileges senior to or equal
to those of the existing holders of UEX’s common shares. The ability of UEX to raise the additional capital and
TSX:UEX | Energy for the Future
46
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
the cost of such capital will depend upon market conditions from time to time. There can be no assurances that
such funds will be available at reasonable cost or at all.
Competition from other energy sources and public acceptance of nuclear energy
Nuclear energy competes with other sources of energy, including oil, natural gas, coal and hydro-electricity.
These other energy sources are to some extent interchangeable with nuclear energy, particularly over the longer
term. Lower prices of oil, natural gas, coal and hydro-electricity may result in lower demand for uranium
concentrate and uranium conversion services. Furthermore, the growth of the uranium and nuclear power
industry beyond its current level will depend upon continued and increased acceptance of nuclear technology as
a means of generating electricity. Because of unique political, technological and environmental factors that affect
the nuclear industry, the industry is subject to public opinion risks which could have an adverse impact on the
demand for nuclear power and increase the regulation of the nuclear power industry.
Dependence on key management employees
UEX’s development to date has depended, and in the future will continue to depend, on the efforts of key
management employees. UEX will need additional financial, administrative, technical and operations staff to fill
key positions as the business grows. If UEX cannot attract and train qualified people, the Company’s growth
could be restricted.
Compliance with and changes to current environmental and other regulatory laws, regulations and
permits governing operations and activities of uranium exploration companies, or more stringent
interpretation, implementation, application or enforcement thereof, could have a material adverse impact
on UEX
Mining and refining operations and exploration activities, particularly uranium mining, refining and conversion in
Canada, are subject to extensive regulation by provincial, municipal and federal governments. Such regulations
relate to production, development, exploration, exports, taxes and royalties, labour standards, occupational
health, waste disposal, protection and remediation of the environment, mines decommissioning and reclamation,
mine safety, toxic substances and other matters. Compliance with such laws and regulations has increased the
costs of exploring, drilling, developing and constructing. It is possible that, in the future, the costs, delays and
other effects associated with such laws and regulations may impact UEX’s decision to proceed with exploration
or development or that such laws or regulations may result in UEX incurring significant costs to remediate or
decommission properties which do not comply with applicable environmental standards at such time. UEX
believes it is in substantial compliance with all material laws and regulations that currently apply to its operations.
However, there can be no assurance that all permits which UEX may require for the conduct of uranium
exploration operations will be obtainable or can be maintained on reasonable terms or that such laws and
regulations would not have an adverse effect on any uranium exploration project which UEX might undertake.
World-wide 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.
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions.
These actions may result in orders issued by regulatory or judicial authorities causing operations to cease or be
curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment
or remedial actions. Companies engaged in uranium exploration operations may be required to compensate
others who suffer loss or damage by reason of such activities and may have civil or criminal fines or penalties
imposed for violations of applicable laws or regulations.
TSX:UEX | Energy for the Future
47
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Conflicts of interest
Some of the directors of UEX are also directors of other companies that are similarly engaged in the business of
acquiring, exploring and developing natural resource properties. Such associations may give rise to conflicts of
interest from time to time. In particular, one of those consequences may be that corporate opportunities presented
to a director of UEX may be offered to another company or companies with which the director is associated, and
may not be presented or made available to UEX. The directors of UEX are required by law to act honestly and
in good faith with a view to the best interests of UEX, to disclose any interest which they may have in any project
or opportunity of UEX, and to abstain from voting on such matter. Conflicts of interest that arise will be subject to
and governed by procedures prescribed in the Company’s by-laws and Code of Ethics and by the Canada
Business Corporations Act.
Internal controls
Internal controls over financial reporting are procedures 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. A control system, no matter how well designed and operated,
can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting and
financial statement preparation.
Market price of shares
Securities of mining companies have experienced substantial volatility in the past often based on factors unrelated
to the financial performance or prospects of the companies involved. These factors include macroeconomic
conditions in North America and globally, and market perceptions of the attractiveness of particular industries.
The price of UEX’s securities is also likely to be significantly affected by short-term changes in uranium or other
commodity prices, currency exchange fluctuation, or in its financial condition or results of operations as reflected
in its periodic reports. Other factors unrelated to the performance of UEX that may have an effect on the price of
the securities of UEX include the following: the extent of analytical coverage available to investors concerning the
business of UEX may be limited if investment banks with research capabilities do not follow UEX’s securities;
lessening in trading volume and general market interest in UEX’s securities may affect an investor’s ability to
trade significant numbers of securities of UEX; and the size of UEX’s public float and its inclusion in market indices
may limit the ability of some institutions to invest in UEX’s securities. If an active market for the securities of UEX
does not continue, the liquidity of an investor’s investment may be limited and the price of the securities of the
Corporation may decline. If an active market does not exist, investors may lose their entire investment in the
Company. As a result of any of these factors, the market price of the securities of UEX at any given point in time
may not accurately reflect the long-term value of UEX. Securities class-action litigation has been brought against
companies following periods of volatility in the market price of their securities. UEX may in the future be the target
of similar litigation. Securities litigation could result in substantial costs and damages and divert management’s
attention and resources.
The potential costs which could be associated with any liabilities not covered by insurance or in excess
of insurance coverage may cause substantial delays and require significant capital outlays, adversely
affecting UEX’s financial position
The nature of the risks UEX faces in the conduct of its operations are such that liabilities could exceed policy
limits in any insurance policy or could be excluded from coverage under an insurance policy. The potential costs
that could be associated with any liabilities not covered by insurance or in excess of insurance coverage or
compliance with applicable laws and regulations may cause substantial delays and require significant capital
outlays, adversely affecting UEX’s financial position.
TSX:UEX | Energy for the Future
48
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Disclosure Controls and Procedures
The Company has established disclosure controls and procedures to ensure that information disclosed in its
annual filings, interim filings or other reports filed or submitted by it under securities legislation was properly
recorded, processed, summarized and reported to the Company’s Board and Audit Committee.
The Company’s certifying officers conducted or caused to be conducted under their supervision an evaluation of
the disclosure controls and procedures as required under applicable Canadian securities laws as at the financial
period end. Based on the evaluation, the Company’s certifying officers concluded that the disclosure controls
and procedures were effective to provide a reasonable level of assurance that information required to be disclosed
by the Company in its annual filings, interim filings and other reports that it files or submits under applicable
Canadian securities laws is recorded, processed, summarized and reported within the time period specified and
that such information is accumulated and communicated to the Company’s management, including the certifying
officers, as appropriate to allow for timely decisions regarding required disclosure.
It should be noted that while the Company’s certifying officers believe that the Company’s disclosure controls and
procedures provide a reasonable level of assurance and that they are effective, they do not expect that the
disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well
conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control
system are met.
TSX:UEX | Energy for the Future
49
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Internal Controls over Financial Reporting
The Company’s certifying officers acknowledge that they are responsible for designing internal controls over
financial reporting, or causing them to be designed under their supervision in order to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with IFRS.
Based upon the 2013 COSO Framework, the Company’s certifying officers evaluated or caused to be evaluated
under their supervision the effectiveness of the Company’s internal controls over financial reporting. Based upon
this assessment, management concluded that as at December 31, 2015 the Company’s internal control over
financial reporting was effective to provide reasonable assurance regarding the preparation of the Company’s
financial statements in accordance with IFRS.
The internal controls over financial reporting were designed to ensure that testing and reliance could be achieved.
Management and the Board of Directors work to mitigate the risk of material misstatement in financial reporting;
however, there can be no assurance that this risk can be reduced to less than a remote likelihood of material
misstatement.
TSX:UEX | Energy for the Future
50
UEX CORPORATION
Management’s Discussion and Analysis
For the years ended December 31, 2015 and 2014
(Expressed in Canadian dollars, unless otherwise noted)
Cautionary Statement Regarding Forward-Looking Information
This MD&A contains “forward-looking statements” within the meaning of applicable Canadian securities
legislation. Such forward-looking statements include statements regarding the outlook for our future operations,
plans and timing for the commencement or advancement of exploration activities on our properties, joint venture
and option earn in arrangements, statements about future market conditions, supply and demand conditions,
forecasts of future costs and expenditures, the outcome of any legal proceedings, and other expectations,
intention and plans that are not historical fact. These forward-looking statements are based on certain factors
and assumptions, including expected economic conditions, uranium prices, results of operations, performance
and business prospects and opportunities.
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors
which could cause actual events or results to differ from those expressed or implied by the forward-looking
statements, including, without limitation:
UEX’s exploration activities may not result in profitable commercial mining operations;
risks associated with UEX’s participation in joint ventures, ability to earn into joint venture and option
arrangements;
risks related to UEX’s reliance on other companies as operators;
risks related to uranium price fluctuations;
the economic analysis contained in the 2011 technical report on UEX’s Hidden Bay project may no longer
be accurate or reliable as prevailing uranium prices are lower than those used in the report;
risks associated with competition for mineral properties from mining companies which have greater financial
resources and more technical staff;
risks related to reserves and mineral resource figures being estimates based on interpretations and
assumptions which may prove to be unreliable;
uncertainty in UEX’s ability to raise financing and fund the exploration and development of its mineral
properties which could cause UEX to reduce or be unable to earn interests in properties;
uncertainty in competition from other energy sources and public acceptance of nuclear energy;
risks related to dependence on key management employees;
risks related to compliance with environmental laws and regulations which may increase costs of doing
business and restrict our operations;
risks related to officers and directors becoming associated with other natural resource companies which may
give rise to conflicts of interests;
risks related to accounting policies requiring UEX management to make estimates and assumptions that
affect reported amounts of financial items;
risks related to UEX’s internal control systems providing reasonable, but not absolute, assurance on the
reliability of its financial reporting;
risks related to the market price of UEX’s shares; and
potential costs which could be associated with any liabilities not covered by insurance or in excess of
insurance coverage.
This list is not exhaustive of the factors that may affect our forward-looking statements. Reference should also
be made to factors described under “Risk Factors” in UEX’s latest Annual Information Form filed on
www.sedar.com. Should one or more of these risks and uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those described in the forward-looking
statements. UEX’s forward-looking statements are based on beliefs, expectations and opinions of management
on the date the statements are made. For the reasons set forth above, investors should not place undue reliance
on forward-looking statements.
TSX:UEX | Energy for the Future
51
Audited Financial Statements of
UEX CORPORATION
Years ended December 31, 2015 and 2014
KPMG LLP
Chartered Professional Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
Telephone (604) 691-3000
(604) 691-3031
Fax
www.kpmg.ca
Internet
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of UEX Corporation
We have audited the accompanying financial statements of UEX Corporation, which comprise the balance
sheets as at December 31, 2015 and December 31, 2014, the statements of operations and comprehensive
loss, changes in equity and cash flows for the years then ended, and notes, comprising a summary of
significant accounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with International Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted
our audits in accordance with Canadian generally accepted auditing standards. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on our judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide
a basis for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of UEX
Corporation as at December 31, 2015 and December 31, 2014, and its financial performance and its cash
flows for the years then ended in accordance with International Financial Reporting Standards.
Chartered Professional Accountants
March 16, 2016
Vancouver, Canada
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
KPMG Canada provides services to KPMG LLP.
UEX CORPORATION
Balance Sheets
As at December 31, 2015 and 2014
Assets
Current assets
Cash and cash equivalents
Amounts receivable
Prepaid expenses
Investments - current portion
Non-current assets
Deposits
Equipment
Mineral properties
Investments
Total assets
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and other liabilities
Non-current liabilities
Deferred tax liability
Total liabilities
Shareholders’ equity
Share capital
Share-based payments reserve
Accumulated other comprehensive income (loss)
Deficit
Notes
2015
2014
3
4
5
8(v), 9, 15
6
7
8
8(v), 9, 15
10
11
12(b)
12(c)
$ 5,139,814
62,010
100,177
126
$ 9,321,596
141,170
106,540
-
5,302,127
9,569,306
44,704
292,202
160,084,497
7,182
-
111,885
155,240,363
22,187
$ 165,730,712
$ 164,943,741
$ 476,537
$ 1,322,439
10,596,810
10,063,649
11,073,347
11,386,088
180,389,814
3,067,912
-
(28,800,361 )
177,542,611
2,787,954
(9,082)
(26,763,830)
154,657,365
153,557,653
Total liabilities and shareholders’ equity
$ 165,730,712
$ 164,943,741
Nature and continuance of operations
Commitments
Subsequent events
1
8(iv)(vii), 12(d), 13
8(vii), 9, 12(b)(c)
See accompanying notes to the financial statements.
Approved on behalf of the Board and authorized for issue on March 16, 2016.
“signed” “signed”
Director
Roger M. Lemaitre
Emmet A. McGrath
TSX:UEX | Energy for the Future
Director
1
UEX CORPORATION
Statements of Operations and Comprehensive Loss
Years ended December 31, 2015 and 2014
Revenue
Interest income
Expenses
Bank charges and interest
Depreciation
Filing fees and stock exchange
Legal and audit
Loss on disposal of equipment
Maintenance
Office expenses
Project investigation
Rent
Salaries, termination and placement fees
Share-based compensation
Travel and promotion
Unrealized loss on available-for-sale financial assets
Unrealized fair value loss on held-for-trading
financial assets
Write-down of mineral properties
Loss before income taxes
Deferred income tax recovery
Loss for the year
Other comprehensive income (loss)
Notes
2015
2014
$ 106,027
$ 131,399
5,308
19,282
85,147
139,095
423
49,750
452,737
21,938
157,456
869,489
361,095
223,198
22,750
4,330
21,276
116,278
126,993
513
14,200
402,266
90,054
145,621
845,545
490,107
198,872
-
2,629
2,685
1,528
10,425,937
2,411,825
12,884,677
(2,305,798 )
(12,753,278)
17
12(c)
8(v), 9, 15
8(v), 9, 15
8(ii)(iv)
11
157,228
3,296,297
$ (2,148,570 )
$ (9,456,981)
Available-for-sale financial assets net change in fair value
8(v), 9, 15
-
(10,500)
Losses on available-for-sale assets transferred to earnings
8(v), 9, 15
10,500
-
Deferred income tax recovery (expense) on change in
fair value of available-for-sale financial assets
11
(1,418 )
1,418
Comprehensive loss for the year
9,082
(9,082)
$ (2,139,488 )
$ (9,466,063)
Basic and diluted loss per share
$ (0.009 )
$ (0.041)
Basic and diluted weighted-average number of shares
outstanding
See accompanying notes to the financial statements.
TSX:UEX | Energy for the Future
242,094,261
229,667,184
2
UEX CORPORATION
Statements of Changes in Equity
Years ended December 31, 2015 and 2014
Number of
common
shares
Share
capital
Share-based
payments
reserve
Accumulated other
comprehensive
income
Deficit
Total
227,838,679 $ 175,316,661 $ 4,585,900
$ - $ (19,628,636)
$ 160,273,925
(9,456,981)
(9,456,981)
7,176,390
3,085,848
(244,028)
(681,757)
65,887
3,085,848
(244,028)
(681,757)
65,887
(10,500)
1,418
523,841
2,321,787
-
(10,500 )
1,418
523,841
(2,321,787)
235,015,069 $ 177,542,611 $ 2,787,954
$ (9,082 ) $ (26,763,830)
$ 153,557,653
(2,148,570)
(2,148,570)
11,000,000
3,300,000
(243,558)
(275,000)
65,761
3,300,000
(243,558)
(275,000)
65,761
10,500
(1,418)
391,997
112,039
-
10,500
(1,418 )
391,997
(112,039)
December 31, 2013
Loss for the year
Issued pursuant to
private placements
Share issuance costs
Value attributed to flow-through
premium on issuance
Deferred income taxes
on share issuance costs
Other comprehensive
income (loss)
Fair value change in
AFS financial assets
Deferred income tax recovery
- fair value change in
AFS financial assets
Share-based payment
transactions
Transfer to deficit on expiry
of share purchase options
December 31, 2014
Loss for the year
Issued pursuant to
private placements
Share issuance costs
Value attributed to flow-through
premium on issuance
Deferred income taxes
on share issuance costs
Other comprehensive
income (loss)
Losses on available-for-sale
assets transferred to net
earnings
Deferred income tax recovery
(expense) - fair value change
in AFS financial assets
Share-based payment
transactions
Transfer to deficit on expiry
and cancellation of share
purchase options
December 31, 2015
246,015,069 $ 180,389,814 $ 3,067,912
$ - $ (28,800,361)
$ 154,657,365
See accompanying notes to the financial statements.
TSX:UEX | Energy for the Future
3
UEX CORPORATION
Statements of Cash Flows
Years ended December 31, 2015 and 2014
Cash provided by (used for):
Operating activities
Loss for the year
Adjustments for:
Depreciation
Deferred income tax recovery
Interest income
Loss on disposal of equipment
Part XII.6 tax
Share-based compensation
Unrealized fair value loss on AFS financial assets
Unrealized fair value loss on held-for-trading financial assets
Write-down of mineral properties
Changes in non-cash operating working capital
Amounts receivable
Prepaid expenses and deposits
Accounts payable and other liabilities
Investing activities
Interest received
Investment in exploration and evaluation assets
Purchase of equipment
Proceeds on sale of furniture
Notes
2015
2014
12(d)
8(ii)(iv)
$ (2,148,570 )
$ (9,456,981)
19,282
(157,228 )
(106,027 )
423
(940 )
361,095
22,750
2,629
1,528
44,826
(38,341 )
(291,957 )
21,276
(3,296,297)
(131,399)
513
-
490,107
-
2,685
10,425,937
(45,711)
36,038
355,655
(2,290,530 )
(1,598,177)
135,463
(4,847,220 )
(236,756 )
819
(4,947,694 )
3,300,000
(243,558 )
3,056,442
(4,181,782 )
9,321,596
188,762
(1,382,762)
(49,963)
-
(1,243,963)
3,085,848
(244,028)
2,841,820
(320)
9,321,916
Financing activities
Proceeds from common shares issued
Share issuance costs
12(b)
12(b)
Increase (decrease) in cash and cash equivalents during the year
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
$ 5,139,814
$ 9,321,596
Supplementary information
Non-cash transactions
Increase (decrease) in accounts payable and other liabilities relating to mineral
property expenditures
Increase in other liabilities due to flow-through premiums
Decrease in other liabilities due to partial extinguishment of flow-through
premiums on December 31, 2015 and 2014 renouncements (General Rule)
Decrease in other liabilities due to extinguishment of remaining 2014
flow-through premium on February 2, 2015 renouncement (Look-Back Rule)
Decrease (increase) in amounts receivable relating to mineral property
Expenditures
Non-cash share-based compensation included in mineral property
Expenditures
Fair value of shares and warrants received as partial consideration for mineral
property earn-in (reduction in carrying value of mineral properties)
Depreciation included in mineral properties
Advance payments
Other liabilities include prepayments received for Black Lake exploration, net
of disbursements (see Notes 8(v) and 10)
See accompanying notes to the financial statements.
TSX:UEX | Energy for the Future
$ (74,213 )
$ 115,166
275,000
(123,748 )
(630,984 )
5,838
30,902
-
35,915
681,757
(50,773)
-
(9,264)
33,734
(3,639)
41,320
-
424,034
4
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
1.
Nature and continuance of operations
UEX Corporation (the “Company”) was incorporated under the Canada Business Corporations Act on
October 2, 2001. The Company entered into an agreement with Pioneer Metals Corporation (“Pioneer”)
and Cameco Corporation (“Cameco”) to establish the Company as a public uranium exploration company.
On July 17, 2002, under a plan of arrangement with Pioneer, Pioneer transferred to the Company its
uranium exploration properties and all related assets, including the Riou Lake and Black Lake projects. On
the same date, Cameco transferred its Hidden Bay uranium exploration property and certain related assets,
in exchange for shares of the Company.
The Company is currently engaged in the exploration and evaluation of its mineral properties located in the
province of Saskatchewan. The Company’s shares are listed on the Toronto Stock Exchange under the
symbol UEX. The head office and principal address is located at 750 West Pender Street, Suite 1700,
Vancouver, British Columbia, Canada V6C 2T8. The Company’s registered office is 885 West Georgia
Street, 19th Floor, Vancouver, British Columbia, Canada V6C 3H4.
The Company is exploring and evaluating its mineral properties and has not yet determined whether its
mineral properties contain mineral resources that are economically recoverable. The recoverability of
amounts shown for mineral properties is dependent upon the discovery of economically recoverable mineral
resources, the ability of the Company to obtain the necessary financing to complete explorations and
development and upon future profitable production or proceeds from the disposition of its mineral
properties.
The Company performed an evaluation of impairment indicators under IFRS 6(20) for its exploration and
evaluation assets (mineral properties) as at December 31, 2015 and has concluded that there are no
indicators of impairment. However, as at December 31, 2015, the market capitalization of the Company
was below the carrying value of its net assets which are primarily represented by mineral properties.
Accordingly, the Company has also reviewed the value attributed per pound in the ground of U3O8 in the
most recent arms-length transactions for the acquisition of uranium resources defined by National
Instrument 43-101. As a result of this review, the Company has concluded that the Company’s net assets
are not impaired.
The Company has sufficient financial resources to fund administrative costs and the majority of its planned
2016 exploration programs for at least, but not limited to, twelve months from the end of the reporting
period; however, the Company will require additional funding to fully meet its 2016 exploration commitments
at Christie Lake. If the funds are not available to meet the remaining 2016 exploration commitments at
Christie Lake, the Company may elect not to complete the acquisition as outlined in the Christie Lake
Option Agreement (see Note 8(vii)). The Company will require additional financing from time to time and
although it has been successful in the past, there is no assurance that it will be able to obtain adequate
financing in the future or that such financing will be available on acceptable terms.
2.
Basis of preparation and significant accounting policies
(a) Statement of compliance
These financial statements, including comparative figures have been prepared in accordance with
International Financial Reporting Standards (“IFRS”), as issued by the International Accounting
Standards Board (“IASB”). The accounting policies set out below have been applied consistently to all
periods presented in these financial statements. The financial statements of UEX Corporation were
reviewed by the Audit Committee and approved and authorized for issue by the Board of Directors on
March 16, 2016.
TSX:UEX | Energy for the Future
5
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(b) Functional and presentation currency
These financial statements are presented in Canadian dollars, which is the functional currency of the
Company. Transactions in currencies other than the entity’s functional currency are recorded at the
rate of exchange prevailing on the date of the transaction. Monetary assets and liabilities denominated
in foreign currencies at the reporting date are retranslated to the functional currency at the exchange
rate at that date. Translation gains and losses are recorded in profit or loss.
(c) Use of estimates and judgments
The preparation of financial statements requires management to make accounting estimates and
assumptions requiring judgment in applying the Company’s accounting policies. These estimates and
assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates
are revised and in any future periods affected. Actual amounts may differ from such estimates.
Information about judgment and estimates is contained in the notes to the financial statements, with the
key areas summarized below.
Significant areas requiring the use of critical judgments in applying accounting policies that have the
most significant effect on the amounts recognized in the financial statements relate to:
(i)
Ongoing review for the support of the carrying value of mineral properties, including:
consideration of ongoing and anticipated expenditures on the mineral properties; evaluation of
the success of exploration to date and other general factors such as commodity prices and
outlook; evaluation of UEX’s market capitalization compared to the net assets of the Company
(which are primarily mineral properties); and comparison to recent arm’s length transactions for
similar assets in order to evaluate the appropriateness of the carrying value presented in the
financial statements (see Note 1 Nature and continuance of operations, Note 2(j) Mineral
properties and Note 8 Mineral properties).
(ii) Review of asset carrying values and impairment assessments for the Company considering
whether circumstances have occurred which have impacted the estimated useful life of the
assets such as damage or obsolescence, as well as the timing of impairments and the
determination of recoverable amounts (see Note 2(i) Equipment and Note 7 Equipment).
(iii) Determination of deferred income tax assets relating to management’s assessment of the
probability that future taxable profit will be available to utilize deferred tax assets (see Note 11
Income taxes).
(iv) Evaluating company-specific facts and circumstances to determine whether accruals or
recognition of liabilities may be required with respect to asset retirement obligations or other
circumstances (see Note 2(k) Provisions).
(v)
Interpretation of new accounting guidelines and assessing their potential impact on the
Company’s financial statements requires judgment with respect to company-specific facts and
circumstances.
TSX:UEX | Energy for the Future
6
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(c) Use of estimates and judgments (continued)
Significant areas requiring assumptions and estimation that have a significant risk of resulting in a
material adjustment within the next financial year relate to:
(i)
Estimates and/or assumptions used in determining the fair value of non-cash share-based
compensation, including Black-Scholes inputs such as the expected forfeiture rate and the
expected life of share-purchase options (see Note 12(c) Share-based compensation).
(ii)
Assumptions used to estimate the useful lives of property, plant and equipment for determining
appropriate depreciation rates (see Note 2(i) Equipment and Note 7 Equipment).
(iii) Estimates that would be used, should the recording of a rehabilitation provision or asset
retirement obligation be required in the financial statements in the future. Estimates would relate
to the expected inflation rate, estimated mine life and the discount rates applied (see Note 2(k)
Provisions).
(d) Joint arrangements
Joint arrangements are arrangements of which the Company has joint control, established by contracts
requiring unanimous consent for decisions about the activities that significantly affect the arrangements’
returns. They are classified and accounted for as follows:
(i)
Joint operation – when the Company has rights to the assets, and obligations for the liabilities,
relating to an arrangement, it accounts for each of its assets, liabilities and transactions, including
its share of those held or incurred jointly, in relation to the joint operation.
(ii)
Joint venture – when the Company has rights only to the net assets of the arrangement, it
accounts for its interest using the equity method.
The Company has an interest in several joint operations relating to the exploration and evaluation of
various properties in the western and northern Athabasca Basin. The financial statements include the
Company’s proportionate share of the joint operations’ assets, liabilities, revenue and expenses with
items of a similar nature on a line-by-line basis from the date that the joint arrangement commences
until the date that the joint arrangement ceases. These interests are governed by contractual
arrangements but have not been organized into separate legal entities or vehicles.
The Company does not have any joint arrangements that are classified as joint ventures.
(e) Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, deposits in banks and highly liquid investments
with an original maturity of three months or less.
TSX:UEX | Energy for the Future
7
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(f) Financial assets
The Company classifies its financial assets in the following categories:
Financial assets at fair value through profit or loss (“FVTPL”);
(i)
(ii) Held-to-maturity investments;
(iii) Available-for-sale financial assets; and
(iv) Loans and receivables.
The classification depends on the purpose for which the financial assets were acquired. Management
determines the classification of financial assets at initial recognition.
Financial assets at FVTPL
Financial assets are classified as FVTPL when the financial asset is held for trading or is designated as
FVTPL. A financial asset is classified as held for trading when it is purchased and incurred with the
intention of generating profits in the near term, part of an identified portfolio of financial instruments that
the Company manages and has an actual pattern of short-term profit-taking; or a derivative that is not
designated as a hedging instrument.
Financial assets classified as FVTPL are stated at fair value with any resultant gain or loss recognized
in profit or loss. The net gain or loss recognized incorporates any dividend or interest earned on the
financial asset. Financial assets at FVTPL include warrants (classified as held-for-trading) which are
presented as non-current assets unless management intends to dispose of these assets within
12 months of the end of the reporting period.
Held-to-maturity investments
Investments are measured at amortized cost using the effective interest rate method. Transaction
costs are added and amortized to the statement of operations over the life of the financial instrument on
an effective yield basis. The Company does not have any assets classified as held-to-maturity
investments.
Available-for-sale (“AFS”) financial assets
Short-term investments are classified as available-for-sale and are carried at fair value (where
determinable based on market prices of actively traded securities) with changes in fair value recorded
in other comprehensive income. When financial assets classified as available-for-sale are sold or
determined to be impaired, the cumulative fair value adjustments recognized in accumulated other
comprehensive income are recognized in profit and loss. AFS assets are included in non-current
assets unless the investment matures or management intends to dispose of it within 12 months of the
end of the reporting period. The Company’s AFS assets include marketable securities that are not held
for the purpose of trading.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in
an active market. Such assets are classified as current or non-current assets based on their maturity
date and are measured initially at fair value and subsequently at amortized cost using the effective
interest rate method. The Company has cash and cash equivalents, as well as trade and other
amounts receivable classified as loans and receivables.
TSX:UEX | Energy for the Future
8
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(f) Financial assets (continued)
De-recognition of financial assets
A financial asset is de-recognized when the contractual right to the asset’s cash flows expires or if the
Company transfers the financial asset and substantially all risks and rewards of ownership to another
entity.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each period
end. Financial assets are impaired when there is objective evidence that, as a result of one or more
events that occurred after the initial recognition of the financial asset, the estimated future cash flows of
the investment have been impacted.
(g) Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss (“FVTPL”)
or financial liabilities at amortized cost.
Financial liabilities
Financial liabilities at amortized cost are initially measured at fair value, net of transaction costs incurred
and subsequently measured at amortized cost. Any difference between the amounts originally
received, net of transaction costs, and the redemption value is recognized in profit or loss over the
period to maturity using the effective interest method.
Financial liabilities are classified as current or non-current based on their maturity dates. The Company
has classified accounts payable and other liabilities as other financial liabilities.
De-recognition of financial liabilities
The Company de-recognizes financial liabilities when, and only when, the Company’s obligations are
discharged, cancelled or they expire.
(h) Impairment of non-financial assets
Non-financial assets are evaluated at least annually by management for indicators that carrying value is
impaired and may not be recoverable. When indicators of impairment are present, the recoverable
amount of an asset is evaluated at the level of a cash generating unit (“CGU”), the smallest identifiable
group of assets that generates cash inflows that are largely independent of the cash inflows from other
assets or groups of assets. The recoverable amount of a CGU is the greater of the CGU’s fair value
less costs to sell and its value in use. An impairment loss is recognized in profit or loss to the extent the
carrying amount exceeds the recoverable amount.
(i) Equipment
Equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost
comprises the fair value of consideration given to acquire or construct an asset and includes the direct
charges associated with bringing the asset to the location and condition necessary for putting it into
use, along with the future cost of dismantling and removing the asset.
TSX:UEX | Energy for the Future
9
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(i) Equipment (continued)
When parts of an item of equipment have different useful lives, they are accounted for as separate
items (major components) of equipment. The costs of the day-to-day servicing of equipment are
recognized in profit or loss as incurred.
Depreciation
Depreciation is based on the cost of an asset less its residual value. Depreciation is provided over the
expected useful lives of the assets.
Depreciation methods and expected useful lives are reviewed at each reporting date and adjusted as
required. All assets are depreciated on a straight-line basis over their useful lives as follows:
Asset
Exploration camp
Exploration equipment
Computer equipment
Office furniture
Leasehold improvements
Basis
Straight line
Straight line
Straight line
Straight line
Straight line
Useful Life
5 - 20 years
3 - 5 years
1 - 5 years
3 - 5 years
Lesser of term of lease or 10 years
(j) Mineral properties
Exploration and evaluation assets
All acquisition, exploration and development costs are capitalized until such time as the project to which
they relate is put into commercial production, sold, abandoned or the recovery of costs is determined to
be unlikely. Upon reaching commercial production (operating in the manner intended by management),
these capitalized costs are amortized over the estimated reserves on a unit-of-production basis. For
properties which do not yet have proven reserves, the amounts shown represent costs to date and are
not intended to represent present or future values. The underlying value of all properties is dependent
on the existence and economic recovery of mineral resources in the future which includes acquiring the
necessary permits and approvals. Management has not identified any exploration and evaluation
assets to be classified as an intangible asset. Expenditures incurred before the Company has obtained
the legal rights to explore a specific area are expensed as incurred.
The recovery of amounts shown for exploration and evaluation assets is dependent upon the discovery
of economically recoverable resources, the ability of the Company to obtain financing to complete
exploration and development of the properties and on future profitable production or proceeds of
disposition. The Company recognizes in income costs recovered on mineral properties when amounts
received or receivable are in excess of the carrying amount. Upon transfer of exploration and
evaluation assets into development properties, all subsequent expenditures on the exploration,
construction, installation or completion of infrastructure facilities are capitalized within development
properties.
TSX:UEX | Energy for the Future
10
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(j) Mineral properties (continued)
Exploration and evaluation assets (continued)
All capitalized exploration and evaluation assets are monitored for indications of impairment. Where a
potential impairment is indicated, assessments are performed for each area of interest. To the extent
that the exploration expenditures are not expected to be recovered, this amount is recorded as a
write-down of interest in mineral properties in the statement of operations and comprehensive loss in
the period.
Development properties
When mineral reserves have been determined and the decision to proceed with development has been
approved, exploration and evaluation assets are tested for impairment then reclassified as a component
of property, plant and equipment. The expenditures related to development and construction are
capitalized as construction-in-progress. Costs associated with the commissioning of new assets
incurred in the period before they are operating in the manner intended by management, are
capitalized. Development expenditures are net of the proceeds of the sale of metals from ore extracted
during the development phase (before the assets are operating in the manner intended by
management). Interest on borrowings related to the construction and development of assets are
capitalized as pre-production stripping costs and classified as a component of property, plant and
equipment.
Reserve and resource estimates
The Company estimates its reserves and mineral resources based on information compiled by Qualified
Persons as defined in accordance with Canadian Securities Administrators National Instrument 43-101
(Standards for Disclosure of Mineral Projects). Reserves are used when performing impairment
assessments on the Company’s mineral properties once they have moved from Exploration and
Evaluation to Development. There are numerous uncertainties inherent in the estimation of mineral
reserves and assumptions that are valid at the time of estimation may change significantly when new
information becomes available. Changes in the forecasted prices of commodities, exchange rates,
production costs or recovery rates may change the economic status of reserves and may, ultimately,
result in the reserves being revised.
(k) Provisions
General
Provisions are recorded when a present legal or constructive obligation exists as a result of past events
where it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate of the amount of the obligation can be made. The expense
relating to any provision is presented in profit or loss net of any reimbursement.
Environmental rehabilitation provision
The Company recognizes the fair value of a liability for environmental rehabilitation in the period in
which the Company is legally or constructively required to remediate, if a reasonable estimate of fair
value can be made, based on an estimated future cash settlement of the environmental rehabilitation
obligation, discounted at a pre-tax rate that reflects the current market assessments of the time value of
money and the risks specific to the obligation.
TSX:UEX | Energy for the Future
11
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(k) Provisions (continued)
Environmental rehabilitation provision (continued)
The environmental rehabilitation obligation is capitalized as part of the carrying amount of the
associated long-lived asset and a liability is recorded. The environmental rehabilitation cost is
amortized on the same basis as the related asset. The liability is adjusted for the accretion of the
discounted obligation and any changes in the amount or timing of the underlying future cash flows.
Significant judgments and estimates are involved in forming expectations of the amounts and timing of
environmental rehabilitation cash flows. The Company has assessed each of its mineral projects and
determined that no material environmental rehabilitations exist as the disturbance to date is minimal.
(l)
Income taxes
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the
extent that it relates to a business combination, or items recognized directly in equity or in OCI.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year
and any adjustment to the tax payable or receivable in respect of previous years. It is measured using
tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax
arising from dividends. Current tax assets and liabilities are offset only if certain criteria are met.
The Company uses the balance sheet method of accounting for income taxes. Under the balance
sheet method, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
substantively enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Deferred tax assets also result from
unused loss carry-forwards, resource-related income tax pools and timing differences for other
deductions. A deferred tax asset is recognized for unused tax losses, tax credits and deductible
temporary differences to the extent that it is probable that future taxable profits will be available against
which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to
the extent that it is no longer probable that the related tax benefit will be realized.
(m) Flow-through shares
Under Canadian income tax legislation, a company is permitted to issue shares whereby the company
agrees to incur qualifying expenditures and renounce the related income tax deductions to the
investors. To account for flow-through shares, the Company allocates total proceeds from the issuance
of flow-through shares between the offering of shares and the sale of tax benefits.
The total amount allocated to the offering of shares is based on the quoted price of the underlying
shares. The remaining amount which is allocated to the sale of tax benefits is recorded as a liability
and is reversed when the tax benefits are renounced. The difference between the amount originally
recorded as a liability and the estimated income tax benefits on date of renouncement is recognized as
a gain or loss in earnings. The tax effect of the renunciation is recorded at the time the Company
makes the renunciation, which may differ from the effective date of renunciation. If the flow-through
shares are not issued at a premium, a liability is not established and on renunciation the full value of the
tax assets renounced is recorded as a deferred tax expense.
TSX:UEX | Energy for the Future
12
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(n) Share capital
Common shares are classified as equity. The Company records proceeds from share issuances net of
direct issue costs and any tax effects. Common shares issued for consideration, other than cash, are
valued at the quoted market price on the date the shares are issued.
(o) Valuation of warrants
The Company has adopted the residual value method with respect to the measurement of shares and
warrants issued as part of units. The residual value method first allocates value to common shares
issued in the private placements at their fair value, as determined by the closing quoted bid price on the
announcement date or the price protection date, if applicable. The balance remaining, if any, is
allocated to the warrants with the fair value recorded in shareholders’ equity under warrant reserve.
(p) Share-based payments
The Company has a share option plan which is described in Note 12(c). The fair value of all
share-based awards is estimated using the Black-Scholes option-pricing model at the grant date and
amortized over the vesting periods. An individual is classified as an employee when the individual is an
employee for legal or tax purposes (direct employee) or provides services similar to those performed by
a direct employee, including directors of the Company. Share-based payments to non-employees are
measured at the fair value of the goods or services received or the fair value of the equity instruments
issued if it is determined the fair value of the goods or services cannot be reliably measured and are
recorded at the date the goods or services are received. The amount recognized as an expense is
adjusted to reflect the number of awards expected to vest.
None of the Company’s awards call for settlement in cash or other assets. Upon the exercise of the
share purchase options, consideration paid together with the amount previously recognized in
contributed surplus is recorded as an increase in share capital. The offset to the recorded cost is to
share-based payments reserve. Consideration received on the exercise of share purchase options is
recorded as share capital and the related share-based payments reserve is transferred to share capital.
Charges for share purchase options that are forfeited before vesting are reversed from share-based
payments reserve. For those share purchase options that expire or are forfeited after vesting, the
amount previously recorded in share-based payments reserve is transferred to deficit. The calculation
of diluted earnings (loss) per share excludes the effects of share purchase options and warrants that
would be anti-dilutive.
(q) Earnings (loss) per share
Basic earnings (loss) per share is calculated using the weighted-average number of common shares
outstanding and earnings (loss) available to shareholders. For all periods presented, earnings (loss)
available to shareholders equals reported earnings (loss). The treasury share method is used to
calculate diluted earnings per share. Under the treasury share method, the weighted-average number
of common shares outstanding for the calculation of diluted loss per share assumes that the proceeds
received on exercise of diluted share purchase options and share purchase warrants are used to
repurchase outstanding shares at average market prices during the period.
TSX:UEX | Energy for the Future
13
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
2.
Basis of preparation and significant accounting policies (continued)
(r) Recent accounting announcements
The International Accounting Standards Board has issued IFRS 9 Financial Instruments (“IFRS 9”) to
replace IAS 39 Financial Instruments, which is intended to reduce the complexity in the measurement
and classification of financial instruments. The current version of IFRS 9 has a mandatory effective
date of January 1, 2018 and is available for early adoption. The Company does not expect IFRS 9 to
have a material impact on the financial statements and does not intend to early adopt. The
classification and measurement of the Company’s financial assets is not expected to change under
IFRS 9 because of the nature of the Company’s operations and the types of financial assets that it
holds.
In January of 2016 the IASB issued IFRS 16 Leases (“IFRS 16”), which replaces the existing leasing
standard, IAS 17 Leases. The new standard effectively eliminates the distinction between operating and
finance leases for lessees, while lessor accounting remains largely unchanged with the distinction
between operating and finance leases retained. IFRS 16 takes effect on January 1, 2019, with earlier
application permitted. The Company has not yet evaluated the impact of adopting this standard and
does not intend to early adopt.
3.
Cash and cash equivalents
Cash
Short-term deposits
4.
Amounts receivable
Interest receivable
Other receivables
December 31
2015
$ 132,659
5,007,155
$ 5,139,814
December 31
2014
$ 351,961
8,969,635
$ 9,321,596
December 31
2015
$ 45,082
16,928
December 31
2014
$ 73,578
67,592
$ 62,010
$ 141,170
Interest receivable reflects unpaid interest earned on short-term deposits. Other receivables include
$15,964 of Goods and Services Tax (GST) receivable as at December 31, 2015 ($22,753 as at
December 31, 2014) and a mineral claim deposit of $nil related to the Black Lake Project ($43,344 as at
December 31, 2014).
5.
Prepaid expenses
Advances to vendors
Prepaid expenses
December 31
2015
$ 30,000
70,177
December 31
2014
$ 16,357
90,183
$ 100,177
$ 106,540
TSX:UEX | Energy for the Future
14
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
6.
Deposits
Deposits
December 31
2015
$ 44,704
December 31
2014
$ -
The Company paid deposits in 2015 relating to new operating leases for its premises. The leases expire
between July 31, 2018 and October 31, 2020 (see Note 13 Commitments).
7.
Equipment
Cost
Exploration
camp
Exploration
equipment
Computing
equipment
Furniture
and
fixtures
Total
Balance at December 31, 2013
$ 99,327
$ 313,384
$ 237,884
$ 29,020
$ 679,615
Additions
Disposals
-
-
18,300
-
28,051
(8,237)
3,612
-
49,963
(8,237)
Balance at December 31, 2014
$ 99,327
$ 331,684
$ 257,698
$ 32,632
$ 721,341
Additions
Disposals
-
-
68,300
(5,120)
86,710
81,746
236,756
(41,777)
(19,046 )
(65,943)
Balance at December 31, 2015
$ 99,327
$ 394,864
$ 302,631
$ 95,332
$ 892,154
Accumulated depreciation and
impairment
Balance at December 31, 2013
Depreciation charge for the year
Disposals
$ 40,227
$ 289,602
$ 210,371
$ 14,384
$ 554,584
7,884
-
25,318
-
19,794
(7,724)
9,600
-
62,596
(7,724)
Balance at December 31, 2014
$ 48,111
$ 314,920
$ 222,441
$ 23,984
$ 609,456
Depreciation charge for the year
Disposals
7,883
-
17,150
(5,120)
22,595
7,569
55,197
(41,200)
(18,381 )
(64,701)
Balance at December 31, 2015
$ 55,994
$ 326,950
$ 203,836 $ 13,172
$ 599,952
Net book value
Balance at December 31, 2013
$ 59,100
$ 23,782
$ 27,513
$ 14,636
$ 125,031
Balance at December 31, 2014
$ 51,216
$ 16,764
$ 35,257
$ 8,648
$ 111,885
Balance at December 31, 2015
$ 43,333
$ 67,914
$ 98,795
$ 82,160
$ 292,202
TSX:UEX | Energy for the Future
15
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
8. Mineral properties
Exploration and evaluation assets
Balance at December 31, 2013
$ 76,223,469 $ 10,425,937 $ 61,357,244 $ 15,230,180
$ 869,391
$ - $ 164,106,221
Hidden Bay Riou Lake
(i)
(ii)
Western
Athabasca
(iv)
Black Lake
(v)
Beatty
River
(vi)
Christie
Lake
(vii)
Total
Additions
Fair value consideration (Note 8(v))
Impairment charge for the year
Balance at December 31, 2014
Additions
475,827
-
-
76,699,296
2,472,758
Impairment charge for the year
-
-
-
(10,425,937)
1,050,323
37,568
-
-
(3,639)
-
-
-
-
62,407,567
15,264,109
869,391
-
-
-
-
1,563,718
(3,639)
(10,425,937)
155,240,363
2,056,368
4,170
3,678
308,688
4,845,662
(1,528)
-
-
-
(1,528)
-
-
-
Balance at December 31, 2015
$ 79,172,054 $ - $ 64,462,407 $ 15,268,279
$ 873,069
$ 308,688 $ 160,084,497
The Company’s mineral property interests include both 100% owned projects as well as joint operations in
which the Company has less than 100% ownership. The joint operations are governed by contractual
arrangements but have not been organized into separate legal entities or vehicles.
The joint arrangements that the Company is party to in some cases entitle the Company to a right of first
refusal on the projects should one of the partners choose to sell their interest. The joint arrangements are
governed by a management committee which sets the annual exploration budgets for these projects.
Should the Company be unable to, or choose not to, fund its required contributions as outlined in the
agreement, there is a risk that the Company’s ownership interest could be diluted. As a result of decisions
to fund exploration programs for the joint arrangements, the Company may choose to complete further
equity issuances or fund these amounts through the Company’s general working capital.
100% owned projects
(i) Hidden Bay Project
The Company’s 100% owned Hidden Bay Project (“Hidden Bay”) is comprised of the Tent-Seal,
Telephone-Shamus, Rabbit Lake, Raven, Wolf Lake, Rhino, Dwyer-Mitchell and Umpherville River
project exploration areas and includes the Horseshoe, Raven and West Bear deposits. Hidden Bay is
located in the eastern Athabasca Basin of northern Saskatchewan, Canada. In 2015, total
exploration and evaluation expenditures of $2,472,758 at Hidden Bay included evaluation
expenditures of $71,755 (2014 - $19,392) primarily relating to component technical studies. Total
evaluation costs of $7,383,446 are included in the $79,172,054 balance as at December 31, 2015
(December 31, 2014 - $7,311,691) representing costs associated with the continuing evaluation of
and advancement of Hidden Bay, and include the West Bear Preliminary Feasibility Study
(February 24, 2010) the Hidden Bay Preliminary Assessment Technical Report (February 23, 2011)
and various component technical studies.
TSX:UEX | Energy for the Future
16
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
100% owned projects (continued)
(i) Hidden Bay Project (continued)
Umpherville River (“Umpherville”) is located in the eastern Athabasca Basin, was acquired in stages
in 2015 and is now 100% owned by UEX. The claims are contiguous to other mineral claims included
in the Hidden Bay Project and acquisition/project expenditures are included with Hidden Bay.
In May of 2015, the Company acquired a 70% interest in Umpherville from Cameco (20.33%
shareholder of UEX Corporation) for cash consideration of $12,000. This amount is included in
2015 additions to Hidden Bay.
On October 7, 2015, the Company acquired a further 20% interest in Umpherville from
Glencore for cash consideration of $10,000 plus an agreement to pay to Glencore a 2% NSR
royalty on Glencore’s current 20% interest for each mineral produced from the project
(equivalent to a 0.4% NSR on the total project) with the NSR on uranium capped at $10 million.
In November of 2015, Esso Resources (1989) Ltd., a subsidiary of Imperial Oil, forfeited their
10% ownership interest in the project by failing to fund their proportional share of project
expenditures.
(ii) Riou Lake Project
The Company holds a 100% interest in the Riou Lake Project (“Riou Lake”) located in the northern
Athabasca Basin. During the quarter ended June 30, 2014, the Company wrote off the deferred
mineral property costs associated with its Riou Lake Project of $10,425,937 as the Company did not
have budgets or exploration activity planned for the area. UEX continues to maintain several Riou
Lake claims in good standing. In March 2016, one Riou Lake claim lapsed. The lapsing had no
impact on the financial results of the Company as the claim was written off in 2014.
(iii) Northern Athabasca Projects
The Company holds a 100% interest in the Northern Athabasca Projects located in the northern
Athabasca Basin. The Company wrote off the deferred mineral property costs associated with its
Northern Athabasca Projects in 2010 due to a lack of ongoing exploration activity. The Munroe Lake
and Fond du Lac claims lapsed on February 6, 2015 as a decision was made not to post deposits to
hold the claims in good standing for an additional year. The lapsing had no impact on the financial
results of the Company as these claims were written off in 2010. UEX continues to maintain mineral
claims comprising the Butler Lake and La Roque projects.
TSX:UEX | Energy for the Future
17
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations
(iv) Western Athabasca Projects
The Western Athabasca Projects (the “Projects”), located in the western Athabasca Basin, which
include the Kianna, Anne, Colette and 58B deposits located at the Shea Creek Project, are nine joint
ventures (Alexandra, Brander Lake, Coppin Lake, Douglas River, Erica, Laurie, Mirror River, Nikita,
Shea Creek and Uchrich) with the Company holding an approximate 49.1% interest and AREVA
Resources Canada Inc. (“AREVA”) holding an approximate 50.9% interest as at December 31, 2015
and 2014 in all projects except Laurie, where the Company has an approximate 42.2% interest as at
December 31, 2015 and 49.1% as at December 31, 2014. The Company is in the process of
preparing joint-venture agreements with AREVA. As at December 31, 2015 and December 31, 2014,
total exploration and evaluation assets for Western Athabasca include evaluation expenditures of
$7,370,026.
The Kianna, Anne and Colette deposits are subject to a royalty of US$0.212 per pound of U3O8 sold
to a maximum royalty of US$10,000,000.
As at December 31, 2015, UEX committed to fund approximately $0.66 million of the $1.35 million
2016 Western Athabasca exploration budget. UEX has decided not to fund its share of $650,000 for
the 2016 geophysical program, or approximately $319,000 at the Mirror River Project. UEX’s interest
in this project is anticipated to drop from the current 49.097% interest to approximately 41.449%
should AREVA complete the approved program. This dilution would only apply to UEX’s interest in
the Mirror River Project. In addition, UEX has decided not to fund its share of the $10,000 2016
budget for the Laurie Project, or approximately $4,200. UEX’s interest in this project is anticipated to
drop from the current 42.183% interest to approximately 42.066% should AREVA complete the
approved program. This dilution would only apply to UEX’s interest in the Laurie Project.
As a result of UEX’s decision not to fund its share of $509,861 for the geophysical program at the
Laurie Project, or approximately $250,326, UEX’s interest in this project has dropped from 49.097%
at December 31, 2014 to approximately 42.183% effective December 31, 2015. This dilution only
applies to UEX’s interest in the Laurie Project.
On April 10, 2013 an agreement was signed with AREVA which grants UEX the option to increase its
ownership interest in the Western Athabasca Projects, which includes the Shea Creek Project, by
0.9% to a maximum interest of 49.9% by spending $18.0 million on exploration over the six-year
period ending December 31, 2018. UEX is under no obligation to propose a budget in any year of the
agreement. The ownership interest for the Projects shall be increased at the end of the year by the
proportional amount of the additional exploration expenditures incurred in the year which are in
addition to the budget amounts proposed by AREVA. UEX may propose an additional exploration
budget of up to $4.0 million in any single year without the prior approval of AREVA, who remains the
project operator. UEX did not propose a supplemental exploration program for 2015.
In July of 2014, UEX and AREVA each staked claims which became the Coppin Lake Project. A
budget of $200,000 for geophysics and line cutting was proposed for 2016, of which UEX would have
been responsible for funding its 49.097% share, or approximately $98,000. When bids were received
to perform the proposed work, they were much higher than expected. Given the higher than
expected costs and small area involved, AREVA made a decision to cancel the program and will let
the claims lapse in the third quarter of 2016. As there is no work budgeted or planned for the project
and the claims will be allowed to lapse in 2016, an impairment charge of $1,528 has been recorded
for the project.
TSX:UEX | Energy for the Future
18
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
(v) Black Lake Project
The Black Lake Project (“Black Lake”), located in the northern Athabasca Basin, is a joint venture with
the Company holding a 90.92% interest (December 31, 2014 - 90.69%) and AREVA holding a 9.08%
interest (December 31, 2014 - 9.31%) as at December 31, 2015.
In early 2013, UEX signed an agreement with Uracan Resources Ltd. (“Uracan”) whereby Uracan can
earn a 60% interest in Black Lake. Amendments to the original agreement were signed on June 23,
2014, December 15, 2014 and November 25, 2015.
Uracan must fund a total of $10.0 million of project expenditures by December 31, 2023, to earn their
60% interest in Black Lake from UEX, with no partial earn-in permitted. UEX remains the project
operator and is entitled to a 10% management fee under the Black Lake joint venture agreement until
such time as Uracan has earned its 60% interest in Black Lake. Uracan has also granted to UEX a
1% NSR royalty from their ownership interest and upon UEX receiving a total of $10.0 million in
royalty payments, the NSR royalty will terminate.
Black Lake Option Agreement –
Amendments
Agreement signed (1)
First amendment (2)
Second amendment (3)
Third amendment (4)
Date
Uracan Shares
Uracan Warrants
January 23, 2013
June 23, 2014
December 15, 2014
November 25, 2015
December 31, 2015
300,000
50,000
-
-
150,000
25,000
-
-
350,000
175,000
(1) As part consideration for the earn-in, Uracan issued 300,000 shares and 150,000 share purchase warrants to UEX (see
Note 9 Investments). These warrants are exchangeable for 150,000 Uracan shares. The warrants are exercisable for
three years at a price of $0.15 for each warrant. The opening value upon receipt was determined to be $27,000 for the
Uracan shares and $8,931 for the Uracan warrants. The combined amount of $35,931 was recorded as a reduction in
the carrying value of the Black Lake Project in 2013.
(2) On June 23, 2014, Uracan issued 50,000 shares and 25,000 share purchase warrants as consideration for the deferral
of $422,440 in exploration commitments from 2014 to 2015 (see Note 9 Investments). These warrants are exercisable
for three years at a price of $0.12 for each warrant and are exchangeable for 25,000 Uracan shares. The fair value
upon receipt was determined to be $2,750 for the Uracan shares and $889 for the Uracan warrants. The combined
amount of $3,639 was recorded as a reduction in the carrying value of the Black Lake Project in 2014. The amended
earn-in agreement reduced the 2014 expenditure requirement from $2,000,000 to $1,577,560. The $422,440 reduction
to the 2014 expenditure requirement was added to the 2015 requirement, increasing it from $1,000,000 to $1,422,440.
(3) On December 15, 2014 Uracan was granted an extension of the deadline to complete their 2014 exploration
expenditures by January 31, 2015.
(4) On November 25, 2015, the agreement was amended such that an aggregate of $3,000,000 for the first, second, third
and fourth calendar years in exploration expenditures are required to be paid by December 31, 2016. The 2015
funding requirement of $1,422,440 was reduced to $Nil and deferred to 2016, with all payments after 2016 extended by
one year, which caused the agreement expiry date to be extended to December 31, 2023 from December 31, 2022.
TSX:UEX | Energy for the Future
19
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
(v) Black Lake Project (continued)
The following table summarizes Uracan’s exploration funding commitments under the Black Lake
Project earn-in agreement.
Black Lake Option Agreement
Earn-in Funding Schedule
Project earn-in funded
2013 earn-in funding
2014 earn-in funding required (June 23, 2014 amendment)
Minimum funding required to meet 2014 expenditure requirement
Excess funding over minimum 2014 requirement completed in January 2015,
net of funds remaining returned to Uracan (1)
2015 funding requirement (November 25, 2015 amendment)
$ 104,060
1,473,500
1,577,560
45,319
-
Black Lake exploration funded by Uracan as at December 31, 2015
1,622,879
1,622,879
Project earn-in funding required
Funding required by December 31, 2016
Excess funding carry forward to reduce 2016 commitments
Cumulative funding required by December 31, 2023 (2)
1,422,440
(45,319 )
7,000,000
Black Lake exploration to be funded by Uracan
8,377,121
8,377,121
Black Lake earn-in
$ 10,000,000
(1) Excess funding of $45,319 was partially settled by interest earned of $3,647 on program prepayments invested by UEX.
(2) Required funding of $1,000,000 for exploration expenditures by December 31 of each year from 2017 to 2023 inclusive.
As at December 31, 2015, Uracan has $Nil in prepayments remaining for the 2014 exploration
program, completed in 2015 (December 31, 2014 - $424,034).
TSX:UEX | Energy for the Future
20
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
(vi) Beatty River Project
The Company has a 25% interest in the Beatty River Project, which is located in the western
Athabasca Basin and earned into JCU (Canada) Exploration Company, Limited’s (“JCU”) interest.
AREVA is the operator of this project.
(vii) Christie Lake Project
On October 26, 2015, the Company signed a Letter of Intent (“LOI”) with JCU to acquire up to a 70%
interest in the Christie Lake Project (“Christie Lake”). The project contains historical non-compliant
resources (deposits). JCU is UEX’s partner on the Beatty River Project. The consideration includes
cash payments and exploration commitments as outlined in the following table:
Exploration Work
Commitment
$ -
UEX Cumulative
Interest Earned
- %
Date
Cash Payment
Upon signing of the LOI
Before January 28, 2016
Before January 1, 2017
Before January 1, 2018
Before January 1, 2019
Before January 1, 2020
$ 250,000
1,750,000
(1)
2,000,000
1,000,000
1,000,000
1,000,000
-
2,500,000
2,500,000
5,000,000
5,000,000
$ 7,000,000
$ 15,000,000
10.00
30.00
45.00
60.00
70.00
70.00 %
(1) On January 22, 2016, UEX made the required payment to JCU and earned a 10% ownership interest in the Christie
Lake Project.
On January 19, 2016, UEX signed an Option Agreement with JCU formalizing the terms upon which
UEX may earn up to 70% interest in the Christie Lake Project.
Capitalized expenditures of $308,688 at Christie Lake in 2015 related to planning for the 2016
exploration program and include the $250,000 initial payment to JCU upon signing the LOI. Costs
associated with reviewing the project prior to signing the LOI have been expensed as project
investigation costs in 2015.
UEX has committed to make cash payments to JCU and to fund exploration work as outlined in the
table above for the Christie Lake Project. Should UEX choose to fund more exploration work than is
required in any year, the excess funding is carried forward and reduces the following year’s
commitment. The funding commitments and cash payments are required to be made in full in order
to achieve each ownership increment.
TSX:UEX | Energy for the Future
21
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
UEX is party to the following joint arrangements:
December 31, 2015
December 31, 2014
Ownership interest (%)
UEX AREVA JCU
Total
UEX AREVA JCU
Total
Beatty River
Black Lake (1)
Christie Lake (2)
Western Athabasca
Laurie Project (3)
Western Athabasca
All other projects (4)
25.000
50.702
24.298 100.000
25.000
50.702
24.298 100.000
90.920
9.080 -
100.000
90.690
9.310
-
100.000
-
-
100.000 100.000
-
-
100.000 100.000
42.183
57.817 -
100.000
49.097
50.903
-
100.000
49.097
50.903 -
100.000
49.097
50.903
-
100.000
(1) In early 2016, UEX notified AREVA that their ownership interest in Black Lake had been diluted from 9.310% to 9.080% as a
result of their decision to not participate in the 2015 programs (see Note 8(v)). In 2013, UEX entered into an agreement with
Uracan Resources Ltd. whereby the Company will transfer to Uracan a 60% interest in the Black Lake Project upon completion
of their funding of $10 million in exploration expenditures on UEX’s behalf.
(2) Upon payments to JCU of $250,000 on October 26, 2015 and $1,750,000 on January 22, 2016, UEX vested a 10% ownership
interest in the Christie Lake Project in January 2016 (see Note 8(vii)).
(3) As a result of UEX’s decision not to fund 2015 exploration programs comprised of geophysics and line cutting at the Laurie
Project, its ownership interest has been diluted from 49.097% as at December 31, 2014 to 42.183% as at December 31, 2015.
Previously, the Laurie Project was presented with the other Western Athabasca Projects.
(4) Western Athabasca includes the Alexandra, Brander River, Coppin Lake, Erica, Mirror River, Nikita, Shea Creek, Uchrich and
Laurie Projects; however, due to a decision not to fund 2015 exploration programs at Laurie, UEX’s ownership interest has
decreased in this project only. The Company’s ownership interest in Laurie is presented separately from its interest in the
other Western Athabasca Projects due to the different ownership interest from the rest of the Western Athabasca Projects.
UEX chose not to propose/fund any additional exploration work under the terms of the optional six-year, $18 million, 0.9%
additional earn-in agreement, thus UEX’s ownership interest has not changed from the prior year under this option.
9.
Investments
The Company holds 350,000 share and 175,000 warrant certificates of Uracan. In early 2013, 300,000
shares and 150,000 warrants were received as partial consideration for the signing of an agreement which
allows Uracan to earn a 60% interest in the Black Lake Project (see Note 8(v)). On June 23, 2014, UEX
entered into an amendment to the earn-in agreement with Uracan which deferred $422,440 in exploration
commitments from 2014 and added these to the 2015 exploration commitments. Upon execution of this
agreement, UEX received from Uracan a further 50,000 shares and 25,000 share purchase warrants.
These shares and warrants are being held for long-term investment purposes. The investments include
warrants which have been classified as Financial Assets at Fair Value Through Profit or Loss (“FVTPL”) and
as such are stated at fair value with any changes in fair value recognized in profit or loss. The investments
also include shares which have been classified as Available-for-sale financial assets and are carried at fair
value. Changes in fair value are recognized in other comprehensive income with amounts in accumulated
other comprehensive income recognized in profit and loss when they are sold.
TSX:UEX | Energy for the Future
22
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
9.
Investments (continued)
Investments – current portion
Warrants held – Uracan (see Note 15)
Investments
Common shares held – Uracan (1) (TSX.V: URC)
(see Note 15)
Warrants held – Uracan (see Note 15)
December 31
2015
December 31
2014
$ 126
$ -
December 31
2015
December 31
2014
$ 7,000
$ 19,250
182
2,937
$ 7,182
$ 22,187
(1) The initial fair value of the shares is $29,750 based on the market closing prices on February 13, 2013 ($27,000) and June 23,
2014 ($2,750), the dates the shares were received.
The Uracan warrants have an expiry of three years after the original grant date, with 150,000 warrants
issued on February 13, 2013 exercisable for $0.15 per warrant and 25,000 warrants issued on June 23,
2014 exercisable for $0.12 per warrant. The fair value of the Uracan shares is based on the market price
for these actively traded securities.
On February 13, 2016, 150,000 Uracan warrants issued to UEX on February 13, 2013 as part of the original
Black Lake earn-in agreement with an exercise price of $0.15 per warrant expired unexercised.
The fair value of the warrants received from Uracan was determined using the Black-Scholes option-pricing
model with the following weighted-average assumptions as at the dates indicated:
February 13, 2013 Agreement
Number of warrants – Uracan (2)
Expected forfeiture rate
Valuation date share price
Expected volatility
Risk-free interest rate
Dividend yield
Expected life
Valuation date fair value
December 31
2015
150,000
December 31
2014
150,000
0.00%
$ 0.02
330.38%
0.48%
0.00%
0.12 years
$ 0.00
0.00%
$ 0.06
124.13%
1.01%
0.00%
1.12 years
$ 0.01
(2) Initial fair value of the 150,000 Uracan warrants at acquisition on February 13, 2013 was determined to be $8,931 using the
Black-Scholes option-pricing model with the following assumptions: Pre-vest forfeiture rate – 0.00%; Expected volatility –
127.26%; Risk-free interest rate – 1.22%; Dividend yield – 0.00%; and Expected life of warrants – 3.00 years.
TSX:UEX | Energy for the Future
23
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
9.
Investments (continued)
June 23, 2014 Agreement Amendment
Number of warrants – Uracan (3)
Expected forfeiture rate
Valuation date share price
Expected volatility
Risk-free interest rate
Dividend yield
Expected life
Valuation date fair value
December 31
2015
25,000
December 31
2014
25,000
0.00%
$ 0.02
163.43%
0.48%
0.00%
1.48 years
$ 0.01
0.00%
$ 0.06
121.77%
1.03%
0.00%
2.48 years
$ 0.03
(3) Initial fair value of the 25,000 Uracan warrants at acquisition on June 23, 2014 was determined to be $889 using the
Black-Scholes option-pricing model with the following assumptions: Pre-vest forfeiture rate – 0.00%; Expected volatility –
132.48%; Risk-free interest rate – 1.23%; Dividend yield – 0.00%; and Expected life of warrants – 3.00 years.
10. Accounts payable and other liabilities
Trade payables
Other liabilities
Uracan – Black Lake program prepayments
Flow-through share premium
December 31
2015
$ 70,029
255,256
-
151,252
December 31
2014
$ 199,851
67,570
424,034
630,984
$ 476,537
$ 1,322,439
Other liabilities comprise general and exploration costs incurred in the period for which invoices had not
been received at the balance sheet date.
The flow-through share premium at December 31, 2015 represents the difference between the subscription
price of $0.300 per share and the market price at issuance of $0.275 per share relating to the May 11, 2015
flow-through private placement of 11,000,000 shares ($275,000). In February of 2016, the flow-through
share premium liability of $151,252 relating to unspent amounts of $1,815,023 at December 31, 2015 from
the May 11, 2015 flow-through placement was extinguished on the filing of and the renouncement of the tax
benefits to the subscribers of that placement effective December 31, 2015.
The flow-through share premium at December 31, 2014 represented the difference between the
subscription price of $0.430 per share and the market price at issuance of $0.335 per share relating to the
September 29, 2014 flow-through placement of 7,176,390 shares ($681,757). In February of 2015, the
flow-through share premium liability of $630,984 relating to unspent amounts of $2,856,029 at
December 31, 2014 from the September 29, 2014 flow-through placement was extinguished on the filing of
and the renouncement of the tax benefits to the subscribers of that placement effective December 31, 2014.
TSX:UEX | Energy for the Future
24
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
11.
Income taxes
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and
liabilities at December 31, 2015 and 2014 are presented below:
Deferred tax assets
Losses carried forward
Charitable donations
Equipment
Share issuance costs
Investments
Deferred tax liabilities
Mineral properties
Net deferred tax liabilities
December 31
2015
December 31
2014
$ 4,157,177
3,038
194,159
144,123
4,355
4,502,852
15,099,662
$ 10,596,810
$ 3,512,468
8,438
179,648
151,005
2,347
3,853,906
13,917,555
$ 10,063,649
At December 31, 2015, the Company has non-capital losses available for income tax purposes totalling
approximately $15,396,953 (December 31, 2014 - $13,009,139) which may be carried forward to reduce
future years’ taxable income. These losses, if not utilized, will begin expiring in 2028, with the current
year’s non-capital losses expiring in 2035.
A reconciliation of income taxes at statutory rates with the reported taxes for the years ended December 31,
2015 and 2014 is as follows:
Loss before income taxes
Statutory rates
Income tax recovery at statutory rates
Non-deductible expenses and permanent differences
Exploration expenditures renounced net of flow-through premiums
Future corporate tax rate differences
Deferred income tax recovery
Deferred income tax recovery (expense)
– other comprehensive income
Year ended December 31
2014
2015
$ (2,305,798 )
$ (12,753,278)
27%
622,565
(47,997 )
(417,340 )
-
27%
3,443,385
(135,811)
(11,277)
-
$ 157,228
$ 3,296,297
$ (1,418 )
$ 1,418
TSX:UEX | Energy for the Future
25
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
12. Share capital
(a) Authorized
The authorized share capital of the Company consists of an unlimited number of common shares and
an unlimited number of (no par value) preferred shares issuable in series, of which 1,000,000 preferred
shares have been designated Series 1 Preferred Shares.
(b) Issued and outstanding – common shares
Balance, December 31, 2013
Issued pursuant to private placement in 2014
Share issuance costs
Value attributed to flow-through premium on issuance
Deferred income taxes on share issuance costs
Balance, December 31, 2014
Issued pursuant to private placement in 2015
Share issuance costs
Value attributed to flow-through premium on issuance
Deferred income taxes on share issuance costs
Number of
shares
227,838,679
Value
$ 175,316,661
7,176,390
3,085,848
(244,028)
(681,757)
65,887
235,015,069
177,542,611
11,000,000
3,300,000
(243,558)
(275,000)
65,761
Balance, December 31, 2015
246,015,069
$ 180,389,814
On January 21, 2016, UEX completed a private placement of 20,000,000 units at a price of $0.10 per
unit for gross proceeds of $2,000,000. Each unit consisted of one common share and one full common
share purchase warrant exercisable at $0.20 per share for a period of two years. The placement was
fully subscribed by a former CEO of the Company, with no commission payable. Cameco did not
exercise its pre-emptive right to participate in the offering and as a result, its ownership interest in UEX
declined from approximately 20.33% to approximately 18.80%. Now that Cameco’s ownership interest
in UEX has fallen below 20.00%, it no longer has a pre-emptive right to maintain its ownership interest
in UEX by participating in equity placements on a pro-rata basis.
On May 11, 2015, the Company completed a private placement of 11,000,000 flow-through common
shares at a price of $0.30 per share to raise gross proceeds of $3,300,000, with issue costs of $78,558
and paid an agent a cash commission of $165,000, both of which were paid from existing cash
reserves. A flow-through premium related to the sale of the associated tax benefits was determined to
be $275,000 and a related $65,761 deferred income tax was recorded in share capital. Cameco did not
exercise its pre-emptive right to participate in the offering and as a result, its ownership interest in UEX
declined from approximately 21.28% to approximately 20.33%.
TSX:UEX | Energy for the Future
26
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
12. Share capital (continued)
(c) Share-based compensation
Under the Company’s share-based compensation plan, the Company may grant share purchase
options to its key employees, directors, officers and others providing services to the Company. The
maximum number of shares issuable under the plan is a rolling number equal to 10% of the issued and
outstanding common shares of the Company from time to time. Under the plan, the exercise price of
each share purchase option shall be fixed by the Board of Directors but shall not be less than the
quoted closing market price of the shares on the Toronto Stock Exchange on the date prior to the share
purchase option being granted and a share purchase option’s maximum term is 10 years. The shares
subject to each share purchase option shall vest at such time or times as may be determined by the
Board of Directors.
A summary of the status of the Company’s share-based compensation plan as at December 31, 2015
and December 31, 2014 and changes during the years ended on these dates is presented below:
Outstanding, December 31, 2013
Granted
Cancelled
Expired
Outstanding, December 31, 2014
Granted
Cancelled
Expired
Outstanding, December 31, 2015
Number of share
purchase options
16,821,000
Weighted-average
exercise price
$ 0.97
2,795,000
(2,400,000)
(1,355,000)
15,861,000
2,085,000
(280,000)
(350,000)
17,316,000
0.34
1.10
0.92
0.84
0.28
0.29
0.60
$ 0.79
During the year ended December 31, 2015, the Company granted 2,085,000 share purchase options
pursuant to the Company’s share option plan.
On January 15, 2014, the Company granted 1,000,000 share purchase options to a new senior officer
pursuant to the Company’s share option plan. The share purchase options were issued at an exercise
price of $0.41 and expire on January 15, 2019.
In the year ended December 31, 2015, a total of $112,039 was transferred from the share-based
payments reserve to deficit relating to the expiry and cancellation of 630,000 share purchase options.
In the year ended December 31, 2014, $2,321,787 was transferred from the share-based payments
reserve to deficit relating to the expiry and cancellation of 3,755,000 share purchase options.
On February 22, 2016, the Company granted 60,000 share purchase options to a new employee
pursuant to the Company’s share option plan. The share purchase options were issued at an exercise
price of $0.15 and expire on February 22, 2021.
TSX:UEX | Energy for the Future
27
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
12. Share capital (continued)
(c) Share-based compensation (continued)
As at December 31, 2015, the Company had a total of 17,316,000 share purchase options outstanding
related to director, employee and consultant share purchase options, the details of which are as follows:
Range of
exercise prices
Number of
share
purchase
options
Outstanding
Weighted-
average
exercise price
$ 0.18 – 0.39
5,660,000
$ 0.32
0.40 – 0.99
5,726,000
1.00 – 1.45
5,930,000
0.74
1.28
17,316,000
$ 0.79
Weighted-
average
remaining
contractual life
(years)
3.50
5.14
3.73
4.12
Exercisable
Number of
share
purchase
options
Weighted-
average
exercise price
3,823,333
$ 0.33
5,392,667
5,930,000
0.76
1.28
15,146,000
$ 0.86
The share-based payments reserve values of $3,067,912 as at December 31, 2015 and $2,787,954 as
at December 31, 2014 on the balance sheet reflect the expensed and capitalized fair value of vested
share purchase options. If all options that are vested were exercised, the entire balance of the
share-based payments reserve would be transferred to share capital.
The estimated fair value expense of all share purchase options vested during the year ended
December 31, 2015 is $391,997 (2014 - $523,841). The amount included in mineral properties for the
year ended December 31, 2015 is $30,902 (2014 - $33,734) and the remaining $361,095 (2014 -
$490,107) was expensed. The unamortized balance of share-based compensation expense for share
purchase options that were not vested at December 31, 2015 is $144,169 (2014 - $283,693).
Number of options granted
Expected forfeiture rate
Weighted-average grant date share price
Expected volatility
Risk-free interest rate
Dividend yield
Expected life
Weighted-average grant date fair value
December 31
2015
2,085,000
1.06%
$ 0.28
63.00%
0.85%
0.00%
4.09 years
$0.13
December 31
2014
2,795,000
0.43%
$ 0.34
66.86%
1.43%
0.00%
4.18 years
$0.34
TSX:UEX | Energy for the Future
28
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
12. Share capital (continued)
(d) Flow-through shares
The Company has financed a portion of its exploration programs through the use of flow-through share
issuances. Income tax deductions relating to these expenditures are claimable by the investors and not
by the Company.
As at December 31, 2015, the Company has spent, on qualified expenditures, $1,484,977 of the
$3,300,000 flow-through monies raised in the May 11, 2015 placement. The Company renounced the
income tax benefit of this issue to its subscribers effective December 31, 2015 and will begin incurring
Part XII.6 tax on unspent amounts relating to this placement subsequent to December 31, 2015.
As at December 31, 2015, the Company has spent, on qualified expenditures, all (December 31, 2014 -
$229,819) of the $3,085,848 flow-through monies raised in the September 29, 2014 placement. The
Company renounced the income tax benefit of this issue to its subscribers effective December 31,
2014. The Company began incurring Part XII.6 tax on unspent amounts relating to this placement
subsequent to December 31, 2014. During the year ended December 31, 2015, $940 was incurred and
netted against interest income. Part XII.6 tax was not incurred in the comparative year.
13. Commitments
The Company has obligations under operating leases for its premises, which expire between July 31, 2018
and October 31, 2020. The future minimum payments are as follows:
2016
2017
2018
2019
2020
December 31
2015
$ 71,040
71,502
67,774
61,446
53,130
Other commitments in respect of the Company’s mineral properties are disclosed in Notes 8 and 12(d).
14. Management of capital
The Company’s objective when managing capital is to safeguard the Company’s ability to continue as a
going concern in order to pursue the exploration and evaluation programs on its mineral properties. The
Company manages its capital structure, consisting of shareholders’ equity, and makes adjustments to it,
based on funds available to the Company, in order to support the exploration and evaluation of its mineral
properties. Historically, the Company has relied exclusively on the issuance of common shares for its
capital requirements.
All of the Company’s cash and cash equivalents are available for exploration and evaluation programs and
administrative operations. The Company has not changed its approach to capital management during the
current period, and is not subject to any external capital restrictions.
TSX:UEX | Energy for the Future
29
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
15. Management of financial risk
The Company operates entirely in Canada and is therefore not subject to any significant foreign currency
risk. The Company’s financial instruments are exposed to limited liquidity risk, credit risk and market risk.
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
The Company manages liquidity risk through the management of its capital structure as outlined in Note 14.
Accounts payable and other liabilities are due within the current operating period.
Credit risk is the risk of an unexpected loss if a third party to a financial instrument fails to meet its
contractual obligations. The Company’s exposure to credit risk includes cash and cash equivalents and
amounts receivable. The Company reduces its credit risk by maintaining its bank accounts at large national
financial institutions. The maximum exposure to credit risk is equal to the carrying value of cash and cash
equivalents and amounts receivable. The Company’s investment policy is to invest its cash in highly liquid
short-term interest-bearing investments that are redeemable 90 days or less from the original date of
acquisition.
Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will
affect the Company’s income. The Company is subject to interest rate risk on its cash and cash
equivalents. The Company reduces this risk by investing its cash in highly liquid short-term interest-bearing
investments that earn interest on a fixed rate basis.
All financial instruments measured at fair value are categorized into one of three hierarchy levels, described
below, for disclosure purposes. Each level is based on the transparency of the inputs used to measure the
fair values of assets and liabilities:
● Level 1 - Values based on unadjusted quoted prices in active markets that are accessible at the
measurement date for identical assets or liabilities;
● Level 2 - Values based on quoted prices in markets that are not active or model inputs that are
observable either directly or indirectly for substantially the full term of the asset or liability; and
● Level 3 - Values based on prices or valuation techniques that require inputs that are both unobservable
and significant to the overall fair value measurement.
The carrying values of amounts receivable, and accounts payable and other liabilities are a reasonable
estimate of their fair values because of the short period to maturity of these instruments.
Cash and cash equivalents are classified as loans and receivables and are initially recorded at fair value
and subsequently at amortized cost with accrued interest recorded in accounts receivable.
The following table summarizes those assets and liabilities carried at fair value:
Investments
Level 1
Level 2
Level 3
Total
Shares – Uracan (TSX-V: URC)
$ 7,000
$ -
$ -
$ 7,000
Warrants – Uracan (1)
Warrants – Uracan (current portion) (1)
-
-
-
-
182
126
182
126
$ 7,000
$ -
$ 308
$ 7,308
(1) Black-Scholes inputs for the Uracan warrant valuation are disclosed in Note 9 Investments.
TSX:UEX | Energy for the Future
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UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
15. Management of financial risk (continued)
The following table shows a reconciliation from the beginning balances to ending balances for Level 1 fair
value measurements for investments:
Balance, December 31, 2013
Shares received as partial consideration for the Black Lake Project
earn-in agreement amendment (June 23, 2014) (see Note 8(v))
300,000
50,000
Number of
Shares
Change in
Fair Value
Fair Value
$ 27,000
2,750
Changes in fair value – total unrealized gain (loss) on financial assets
(shares) – year ended December 31, 2014
(10,500 )
(10,500)
Balance, December 31, 2014
Changes in fair value – total unrealized gain (loss) on financial assets
(shares) – year ended December 31, 2015
350,000
19,250
(12,250 )
(12,250)
Balance, December 31, 2015
350,000
$ 7,000
In the year ended December 31, 2015, AFS shares experienced a prolonged decline in their value, which
warranted the related unrealized losses previously recognized through OCI to be recognized through profit
and loss in the current period. This resulted in a fair value loss of $10,500, which had been recognized in
OCI in 2014, to be reclassified in the current period’s profit and loss, as well as a fair value loss of $12,250
related to 2015 to be recognized directly through profit and loss, for a total fair value impairment of
$22,750. Future changes to the fair value of these AFS shares will be recorded through profit and loss.
The Company’s policy is to recognize transfers out of Level 3 as of the date of the event or change in
circumstances that caused the transfer. There have been no transfers out of Level 3 in the period.
The following table shows a reconciliation from the beginning balances to ending balances for Level 3 fair
value measurements:
Balance, December 31, 2013
Warrants received as partial consideration for the Black Lake Project
earn-in agreement amendment (June 23, 2014) (see Note 8(v))
150,000
25,000
Number of
Warrants
Change in
Fair Value
(Expense)
Fair Value(1)
$ 4,733
889
Changes in fair value – total unrealized gain (loss) on held-for-trading
financial assets (warrants) – year ended December 31, 2014
(2,685 )
(2,685)
Balance, December 31, 2014
Changes in fair value – total unrealized gain (loss) on held-for-trading
financial assets (warrants) – year ended December 31, 2015
175,000
2,937
(2,629 )
(2,629)
Balance, December 31, 2015
175,000
$ 308
(1) See Note 9 for Black-Scholes assumptions.
TSX:UEX | Energy for the Future
31
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
15. Management of financial risk (continued)
The following table shows the valuation techniques used in the determination of fair values within Level 3 of
the hierarchy, as well as the key unobservable inputs used in the valuation model:
Level 3 item
Valuation approach Key unobservable inputs
Inter-relationship between key
unobservable inputs and fair
value measurement
Warrants – Uracan
The fair value has been
determined by using the
Black-Scholes option
pricing model.
Expected volatility for Uracan
shares, derived from the
shares’ historical prices
(weekly).
The estimated fair value for the
warrants increases as the volatility
increases.
16. Segmented information
The Company conducts its business as a single operating segment, being the mining and mineral
exploration business in Canada. All mineral properties and equipment are located in Canada.
17. Office expenses
Insurance
Office supplies and consulting
Telephone
Year ended December 31
2014
$ 50,708
334,062
17,496
2015
$ 51,664
385,995
15,078
$ 452,737
$ 402,266
TSX:UEX | Energy for the Future
32
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2015 and 2014
18. Related party transactions
The value of all transactions relating to key management personnel, close members of the family of persons
that are key management personnel and entities over which they have control or significant influence are as
follows:
(a) Related party transactions
Related party transactions include the following payments which were made to related parties other
than key management personnel:
Panterra Geoservices Inc.(1)
Panterra Geoservices Inc. share-based payments (1)(2)
Cameco Corporation (3)
Year ended December 31
2014
$ 2,000
2015
$ 2,400
9,532
12,000
18,654
-
$ 23,932
$ 20,654
(1) Panterra Geoservices Inc. is a company owned by David Rhys, a member of the management advisory board that provides
geological consulting services to the Company. The management advisory board members are not paid a retainer or fee; specific
services are invoiced as provided.
(2) Share-based compensation expense is the fair value of options granted which have been calculated using the Black-Scholes
option-pricing model and the assumptions disclosed in Note 12(c).
(3) Represents an amount paid to Cameco in May of 2015 to acquire its 70% interest in Umpherville River (20.33% shareholder of
UEX Corporation at the time of the transaction, 18.80% shareholder at January 21, 2016) (see Note 8(i)).
(b) Key management personnel compensation
Key management personnel compensation includes management and director compensation as
follows:
Salaries and short-term employee benefits (1)(2)
Share-based payments (3)
Other compensation (4)
Year ended December 31
2014
$ 854,565
2015
$ 676,127
322,770
183,000
455,512
183,000
$ 1,181,897
$ 1,493,077
(1) In the event of a change of control of the Company, certain senior management may elect to terminate their employment
agreements and the Company shall pay termination benefits of up to two times their respective annual salaries at that time and all
of their share purchase options will become immediately vested with all other employee benefits, if any, continuing for a period of
up to two years.
(2) In the event that Mr. Lemaitre’s (UEX’s President and CEO) employment is terminated by the Corporation for any reason other than
as a result of a change of control, death or termination for cause, the Corporation will pay a termination amount equal to one year’s
base salary plus any bonus owing. All other employee related benefits will continue for a period of one year following such
termination. Mr. Lemaitre may also terminate the employment agreement upon three months written notice to the Board and
receive a lump sum payment equal to his base salary plus benefits for three months.
(3) Share-based compensation expense is the fair value of options granted which have been calculated using the Black-Scholes
option-pricing model and the assumptions disclosed in Note 12(c).
(4) Represents amounts paid in January 2015 and January 2014 to Mr. Graham Thody, the Company’s former President and CEO,
under the terms of a retirement consulting agreement for consulting services up to December 31, 2015. During the term of this
agreement, Mr. Thody was not entitled to receive director’s fees; however, upon expiry of this agreement on December 31, 2015,
Mr. Thody became entitled to receive director’s fees in 2016 on the same terms as other non-management directors.
TSX:UEX | Energy for the Future
33
Corporate Information
Board of Directors
Colin C. Macdonald, Chairman
Saskatoon, Saskatchewan
Roger M. Lemaitre
President and CEO
Saskatoon, Saskatchewan
Suraj P. Ahuja
Vancouver, British Columbia
Mark P. Eaton
Toronto, Ontario
Emmet A. McGrath
Vancouver, British Columbia
Graham C. Thody
Vancouver, British Columbia
Officers
Roger M. Lemaitre
President and CEO
Edward R. Boney
CFO and Corporate Secretary
Nan H. Lee
Vice-President, Project Development
Legal Counsel
Koffman Kalef LLP
19th Floor, 885 West Georgia Street
Vancouver, British Columbia
Canada V6C 3H4
Auditors
KPMG LLP
777 Dunsmuir Street
Vancouver, British Columbia
Canada V7Y 1Q3
Registrar and Transfer Agent
Computershare Investor Services Inc.
2nd Floor, 510 Burrard Street
Vancouver, British Columbia
Canada V6C 3B9
Head Office
Suite 1700 – 750 West Pender Street
Vancouver, BC
Canada V6C 2T8
Telephone:
Fax:
Email:
Website:
(604) 669-2349
(604) 669-1240
uex@uex-corporation.com
www.uex-corporation.com
Exploration Office
Unit 1 – 706 45th Street West
Saskatoon, SK
Canada S7L 5X1