UEX CORPORATION
Management’s Discussion and Analysis
For the Year Ended
December 31, 2016
Energy for the Future
TSX: UEX
www.uex-corporation.com
Message to Shareholders
2016 was a transformational year for our Company. In January, UEX acquired an option to earn a 70% interest
in the Christie Lake Project from JCU (Canada) Exploration Company Limited. Christie Lake is located in the
heart of the prolific eastern Athabasca Basin between the world’s largest and highest grade uranium mines,
McArthur River and Cigar Lake. A mere 9 km northeast and along strike of Cameco’s flagship McArthur River
Mine, the Project hosts the extension of the P2 Fault Corridor.
I’ve had my eye on acquiring an interest in Christie Lake for over 10 years and this acquisition marks the first time
that a publicly-listed uranium junior explorer and developer has owned a piece of this most coveted uranium-
bearing corridor. Christie Lake is a result of our efforts to grow our uranium resource base through discovery,
innovation, and acquisition in advance of the inevitable rise in uranium prices anticipated to occur in the near
future.
In 2016, we focused our energies along Christie Lake’s Yalowega Trend, a 1.5 km long mineralized feature within
the P2 Corridor that hosts the known Paul Bay and Ken Pen Deposits.
Our 2016 exploration program had five key objectives, all of which were achieved:
Expand the Paul Bay Deposit in the down-dip direction
Expand the Ken Pen Deposit at the unconformity and in the down-dip direction
Determine the key geological features of the deposits that could be applied to exploring the Yalowega
Trend
Develop a plan to explore the remainder of the Yalowega Trend starting in 2017
Meet the requirements to vest a 30% interest in the project
We grew both deposits and identified the presence of previously unknown high-grade shoots within the Paul Bay
Deposit. More importantly, our team discovered a parallel fault structure located 10 to 40 m below the main fault
that defines the Yalowega Trend. This parallel structure remains untested in the down-dip direction and also at
the unconformity northwest of and parallel to the Trend. This lower structure hosts all of the high-grade massive
uranium mineralization encountered by our team during the 2016 exploration program at the Paul Bay and Ken
Pen Deposits.
Identifying this key geological feature has essentially doubled the exploration potential of the Christie Lake Project
and was one of the factors that led to the selection of our early 2017 drill targets.
We commenced our 2017 program in early January with the primary objective of making a new discovery at
Christie Lake. In late January, we announced the discovery of Ōrora, a new high-grade unconformity zone located
500 m along strike and to the northeast of the Ken Pen Deposit, where the lower structure encounters the
unconformity. The discovery hole CB-109 intersected 42.25% U3O8 over 8.6 m.
The discovery of Ōrora has exceeded our earliest expectations. The structure intersected by CB-109 is untested
along the entire Yalowega Trend, except by one high-grade hole drilled by UEX at Ken Pen. This discovery has
changed our 2017 exploration program, as we will be focusing on determining the ultimate size of the Ōrora
Deposit. Holes drilled along strike to the northeast and southwest of CB-109 confirm that uranium mineralization
occurs along this new target trend.
Complementing our Ōrora discovery is the rapid positive shift in investor sentiment towards the uranium industry.
While most of 2016 was difficult for uranium explorers, as uranium prices dropped to a ten year low of US$18.25/lb
in late November, many experts have finally called ‘bottom’ for uranium prices, which have increased sharply
since November to over US$24.50/lb. Junior uranium stocks have likewise seen market capitalization increases
and improved access to capital.
Investors and analysts are beginning to realize what our Company has long believed - a supply shortfall is coming
in the next few years. Even at today’s increased spot prices, current prices will not spur the development of the
next generation of uranium deposits needed to meet the unstoppable growth in demand for uranium.
These same investors and analysts are awakening to the realization that in addition to our Company’s solid
foundation of existing uranium resources located in the world’s best mining jurisdiction, our continued success at
Christie Lake will be an enviable driver for growth of shareholder value.
I look forward to updating you on our progress in the coming months.
Roger Lemaitre
President & CEO
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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, 2016 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 14, 2017 and should be read in
conjunction with the audited annual financial statements and related notes for the years ended December 31,
2016 and 2015. 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
26
42
47
48
49
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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 our 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 30% owned Christie Lake Project (“Christie
Lake”) that hosts the Paul Bay, Ken Pen, and Ōrora 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 thirteen uranium projects located in the Athabasca Basin, the world’s richest uranium district,
which in 2015 accounted for approximately 22% of global primary uranium production. The Company’s projects
include two that are 100% owned and operated by UEX, one joint venture with AREVA Resources Canada Inc.
(“AREVA”) that is operated by UEX, eight 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 of the world’s largest nuclear service providers, and JCU is a private company with significant
investments in uranium projects in Canada.
TSX:UEX | Energy for the Future
2
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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 (Horseshoe, Raven and
West Bear) 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 year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Non-Compliant Resources
The Company holds a 30% direct interest in the Paul Bay, Ken Pen and Ōrora Uranium Deposits, located on the
Christie Lake Project. UEX can increase our ownership interest to a maximum 70% in the Christie Lake Project
through our option agreement with JCU. The ultimate size of the Paul Bay, Ken Pen and Ōrora Deposits has not
been fully defined. The Paul Bay and Ken Pen 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 N.I. 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 Project 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 at 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 dated October 2001, had special rights so long as it maintained a minimum 20% ownership interest
in UEX. In January 2016, Cameco chose not to exercise its pre-emptive right to maintain its equity ownership of
UEX and its equity ownership of UEX has now declined to 15.67% as of February 27, 2017. The drop in Cameco’s
equity ownership below the 20% level on January 22, 2016 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 year ended December 31, 2016 and 2015
(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.
Christie Lake Project
• Located in the eastern Athabasca
Basin, 9 km northeast and along
strike of the McArthur River Mine.
•
In early 2017, the Ōrora Zone was
discovered and determining the size
of the new zone will be UEX’s focus
during the winter 2017 program
• Two historical uranium deposits, with
historical non-compliant resource of
20.87 Mlbs at an average grade of
3.22%*.
• UEX signed an Option Agreement
January, 2016 to earn up to a 70%
interest, currently at a 30% interest.
• UEX signed a Joint Venture
agreement on July 15, 2016, to take
effect after the option is completed.
Historical Resource*
Ore Body
Paul Bay Deposit
Ken Pen Deposit
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 N.I. 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
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Number of claims
Hectares
Christie Lake
6
7,922
Acres
19,576
UEX
Ownership %
30.00
The Christie Lake Project is 70% owned by JCU (Canada) Exploration Company, Limited (“JCU”) and 30% 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 a 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. UEX increased its interest in the project to 30% by
making a $2,000,000 payment on December 22, 2016, and completing $2,500,000 of work in 2016.
On July 15, 2016, UEX and JCU signed a Joint Venture Agreement that sets the terms and conditions that will
govern all decisions related to the exploration, development and any future mining production from the Christie
Lake Project as well as the relationship between the Joint Venture participants. Although signed, the Joint Venture
Agreement will only take effect upon the completion of, or termination of, the Option Agreement.
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 N.I. 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.
This belief has been bolstered by the discovery of the Ōrora Zone in January 2017, located 500 m northeast and
along strike of the Ken Pen Zone. Many kilometres 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.
We are very happy with the Christie Lake acquisition and are optimistic about our future success on the Project.
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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
Exploration Work
Commitment
UEX Cumulative
Interest Earned
Completed:
Upon signing of the LOI
Before January 28, 2016
Before January 1, 2017
December 31, 2016
To be completed:
Before January 1, 2018
Before January 1, 2019
Before January 1, 2020
Total
$
$
$
$
250,000
1,750,000
2,000,000
$
-
-
2,500,000
1,546,253 (1)
4,000,000
$
4,046,253
1,000,000
1,000,000
1,000,000
3,000,000
7,000,000
953,747 (1)(2)
5,000,000
5,000,000
10,953,747
15,000,000
$
$
- %
10.00
30.00
45.00 %
60.00
70.00
70.00 %
(1) Excess exploration work completed in 2016 will be applied to future years’ work commitments.
(2) 2017 exploration commitment under the agreement is $2,500,000.
UEX can elect to proceed with or cease future cash payments and work commitments at any time and vest a
reduced interest in the project according to this schedule.
2016 Exploration Program
In January 2016, UEX and JCU approved a $2.5 million exploration drilling program for the Christie Lake Project
that commenced in February 2016. In September 2016, UEX and JCU increased the 2016 exploration drilling
program to $4.0 million. Field activities at Christie Lake were completed in late October.
The expanded program focused drilling primarily in the Paul Bay Deposit area and later in the Ken Pen Deposit
area. A total of 12,436 m of drilling was completed in twenty-two drill holes. The two main goals of the 2016
drilling program were 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 and by increasing the size of the newly defined high
grade portion of the Paul Bay Deposit.
A technical review of both deposits by the UEX exploration team in early 2016 led the Company to the conclusion
that the deposits are hosted in the basement fault structure below the classic unconformity setting for uranium
deposits and that the ultimate size of the deposits was not fully defined by previous exploration work.
The historical operator, whose last exploration campaign on the Christie Lake property occurred in 1997, focused
its principal efforts on defining uranium at the classic unconformity setting, consistent with the exploration
practices at that time. A consequence of this focus was that deposit extensions downwards into the basement
structure were not tested. These deeper basement settings 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
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
North Extension Deposits, our Shea Creek basement-hosted extensions, Millennium, 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 Ken Pen Deposit has not been closed off in the down-dip
direction or along strike in either direction.
The objectives and highlights of the 2016 exploration program at Christie Lake were:
1. To increase the total uranium resources defined at the Paul Bay and Ken Pen Deposits by growing the size
of both deposits by extending the deposits in the down-dip direction and by increasing the size of the high
grade zone at the Paul Bay Deposit. Having tested and confirmed the existence of the high grade zone, as
well as identifying the potential for a second high grade zone at Paul Bay, we have now turned our attention
to testing the down dip extension of the Ken Pen Deposit.
2. To commence a NI 43-101 uranium resource estimate report for the Paul Bay and Ken Pen Deposits to be
completed in 2017.
3. To 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.
Drilling at Paul Bay
Between early March and the end of October, UEX completed twenty-two drill holes on the project, testing the
Paul Bay and Ken Pen Deposits, which confirms that the Christie Lake Deposits host high grade uranium.
Three holes were completed from March to mid-April.
• Hole CB-092 intersected high grade uranium mineralization that averaged 9.30% U3O8 over 7.8 m (496.6
to 504.4 m), confirming the location and high grade characteristics of the Paul Bay Deposit. This
intersection included a higher grade core of 43.71% U3O8 over 2.0 m.
• Hole CB-090A intersected uranium mineralization that averaged 0.61% U3O8 over 9.8 m (534.2 to 544.0
m) including 5.33% U3O8 over 0.5 m.
• Hole CB-091B encountered only minor uranium mineralization when the hole deviated in a different
direction than hole CB-090A and missed its target by approximately 50 m to the west.
The summer phase of the 2016 program commenced in June and nineteen holes were completed by the end of
the October. Thirteen holes tested for extensions to the Paul Bay high grade zone and for extensions of the Paul
Bay deposit down-dip and along strike. Six holes were drilled to define both basement and unconformity-style
uranium mineralization at the Ken Pen Deposit.
One of the highlights of the 2016 program was the discovery of an ultra-high grade subzone within the Paul Bay
Deposit, defined by drill holes CB-092, CB-093 and historic hole CB-004.
• Hole CB-092 intersected 9.30%U3O8 over a 7.8 m interval from 496.6 – 504.4 m, including:
o 43.71% U3O8 over 2.0 m from 500.1 – 502.1 m
TSX:UEX | Energy for the Future
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
• Hole CB-093 encountered 14.74% U3O8 over 5.5 m from 492.2 – 497.7 m, including a subinterval of:
o 31.77% U3O8 over 2.5 m, which in turn included a subinterval of:
57.83% U3O8 over 1.2 m.
The last hole of the 2016 program, CB-102, also encountered high grade uranium mineralization located within
the lower portions of the Paul Bay Deposit in an area of very widely-spaced historic drill holes that all previously
intersected previously relatively low grade uranium intervals.
• Hole CB-102 intersected 2.60% U3O8 over 15.1 m from 527.4 – 542.5 m, including:
o 3.4% U3O8 over 11.2 m from 530.8 – 542.0 m
The results from hole CB-102 are significant and were unexpected. The mineralization which was encountered
suggests that there may be the potential for a second high grade zone within the Paul Bay Deposit, with further
drilling targets to be determined.
Drilling at Ken Pen
The first holes at Ken Pen intersected both unconformity-style and basement-hosted mineralization. Highlights
for these holes are as follows:
• Hole CB-100A intersected two zones of mineralization that included:
o Unconformity-hosted uranium mineralization averaging 1.92% U3O8 over 2.9 m from 435.6 –
438.5 m.
o Basement-hosted uranium mineralization that returned 1.57% U3O8 over 8.3 m from 450.3 –
458.6 m that included a subinterval of:
2.32% U3O8 over 4.9 m from 453.7 – 458.6 m
• Hole CB-106B encountered basement-hosted mineralization that returned an assay grade of 0.5% U3O8
over 6.8 m from 440.6 – 447.4 m,
• Hole CB-107A returned an interval of 0.88% U3O8 over 7.7 m from 424.0 – 431.7 m that included a
subinterval of:
o 1.06% U3O8 over 4.0 m from 424.0 – 428.0 m
Hole CB-104 also intersected uranium mineralization at the unconformity. Due to poor core recoveries where
approximately 50% of the core was lost, UEX determined that the Radiometric Equivalent Grade (“REG”)
determined from our downhole probes (see May 24, 2016 news release) likely estimates the true grade of the
mineralized interval more accurately than the assay grade. CB-104 returned an REG of 2.37% e U3O8 over 4.2
m from 438.7 – 442.9 m.
The drilling program was terminated in October and in December, UEX mobilized a crew to Christie Lake to
thicken the lake ice in advance of the 2017 winter exploration program.
TSX:UEX | Energy for the Future
9
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
First NI 43-101 Resource for Christie Lake
The Company has engaged a geological consulting firm to incorporate the historical results with 2016 program
results. In the third quarter a resource estimation geologist came to site to view mineralized drill core and to
discuss additional holes required for the report. It is our intention to have a maiden resource completed before
the end of 2017.
2017 Exploration Program
In 2016, the Company focused its exploration efforts on the Paul Bay and Ken Pen areas with the objective of
increasing the size of the known deposits, and to determine the key geological features of the two deposits that
could be applied to exploring the remainder of the property
In 2017, UEX is completing some follow-up drilling at Paul Bay and Ken Pen to answer key questions needed for
the NI 43-101 resource. UEX will also be commencing the exploration of the remainder of the 1.5 km long
Yalowega Uranium Trend along strike to the northeast of the Ken Pen Zone. As the rest of this trend is known to
host mineralization along its entire length, while being significantly less explored than the two known deposits,
management is very optimistic about the opportunities for additional discoveries along the trend.
In late January 2017, UEX announced the discovery of high-grade uranium mineralization along the Yalowega
Trend approximately 500 m northeast and along strike of the Ken Pen Zone. In February, UEX announced that
this new ‘off-scale’ unconformity-style mineralization from hole CB-109, which returned an assay interval of
22.81% U3O8 over 8.6 m, and that hole CB-110A drilled 20 m northeast and along strike had also encountered
uranium mineralization that returned 6.29% e U3O8 over 7.4 m from 471.85 – 479.25 m. Hole CB-109 is the best
hole drilled to date on the Project. This new discovery has been named the Ōrora Zone. Defining the ultimate
size of the Ōrora Zone will be the focus of the remainder of the 2017 winter exploration program.
TSX:UEX | Energy for the Future
10
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Hidden Bay Project
22 km
4 km
• 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)
• Three known deposits: Horseshoe,
Raven and West Bear.
• Proximal to 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.
• July 2016 metallurgical testing of
Horseshoe and Raven Deposit
mineralization indicates the deposits
could be amenable to heap leaching
extraction.
•
In December 2016, UEX received the
results of a scoping study to determine
the viability of a heap-leaching
operation at Horseshoe and Raven
(1) Source: 2015 Cameco Management Discussion and Analysis, February 2016
(2) Source: http://us.areva.com/EN/home-984/areva-resources-canada-mcclean-lake.html
Number of claims
Hectares
Acres
UEX
Ownership %
Hidden Bay
59
59,136
146,128
100.00
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 May of 2015, UEX acquired a 70% interest in the Umpherville River property (“Umpherville”) from Cameco 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 previously-owned 20% interest for each mineral produced from the project (equivalent to
TSX:UEX | Energy for the Future
11
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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 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.
Cumulative expenditures (inclusive of non-cash items) at December 31, 2016 by UEX on exploration and
evaluation at Hidden Bay were approximately $67.0 million and $7.8 million, respectively, with approximately
498,000 m of drilling completed.
Horseshoe and Raven Deposits
•
In 2011, a positive PA was completed at US$60/lb U3O8 – see discussion below
• Very shallow undeveloped uranium resource in the Athabasca Basin amenable to conventional mining
techniques
• 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
•
•
In July 2016, preliminary metallurgical testing indicated that the two deposits may be amenable to heap
leach extraction.
In December 2016, a scoping study of the Horseshoe and Raven Deposits that considered heap leach
extraction was completed. The objective of the study was to determine whether heap leach extraction
was as economically viable as the conventional tank leach process considered in the 2011 PA. The
results of the scoping study are attractive and further investigation is warranted.
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
12
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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 in 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.
• The PA recommended the Horseshoe and Raven deposits be advanced to a preliminary feasibility level.
• The PA for the 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
13
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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
little effort
targets with
unconformity
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. Substantial
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.
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 over 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.
TSX:UEX | Energy for the Future
14
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
2016 Activities
Exploration
UEX did not propose a field 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 focused the majority of its
financial resources on the Christie Lake Project in 2016.
In the second quarter, we received the results of the 2015 resistivity program at Dwyer Lake. The survey
highlighted several highly prospective follow up areas in the vicinity of the known clay alteration zone intersected
in the 2015 drilling program that will be targeted by drilling in future drill programs.
We had some very promising results during the 2015 drill program at the Wolf Lake exploration area at Hidden
Bay that we will follow up in a future drilling program.
Work continued in 2016 in reviewing and prioritizing the remaining eleven target areas for basement uranium
potential, and the completion of the 2015 Hidden Bay Assessment Report, which will be filed with the Government
of Saskatchewan in 2017.
Heap Leach Evaluation
In July 2016, UEX completed a metallurgical study of mineralization from the Raven and Horseshoe Deposits.
The study was conducted at the SGS Lakefield Laboratories and consisted 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 and from surplus material remaining from the 2011 testing completed in conjunction with the
PA. A total of three columns tests were conducted: two columns were loaded with the newly collected material
crushed to both 12.7 mm and 6.35 mm and one column was loaded with the 2011 test material crushed to 6.35
mm.
The column leach tests averaged 98% uranium recovery over a 60-day leaching period and for the newly collected
material crushed to 12.7 mm 95% recovery was achieved after 28 days of testing. We believe that the results of
the column leaching test program demonstrate that the Horseshoe and Raven Deposits are promising candidates
for heap leach uranium extraction.
Before proceeding with further metallurgical testing, UEX commissioned JDS Energy and Mining Inc. to undertake
a scoping study incorporating heap leaching to determine whether a reduction of the operating and capital costs
could be realized when compared to the Company’s 2011 PA, which considered conventional toll-milling at the
nearby Rabbit Lake uranium mill (see Hidden Bay Project - Mineral Resource Estimates section).
The Company received the scoping study results in the fourth quarter. Scoping studies do not meet NI 43-101
disclosure requirements.
The objective of the scoping study was to determine whether or not employing a heap leach extraction process
could be implemented that could produce uranium at the same or lower all-in cost of production on a per pound
recovered basis outlined in the 2011 PA. The Company is pleased with the findings of the scoping study and will
be contemplating the next steps of the development process, which could consist of a range of actions spanning
from the undertaking of additional metallurgical testing in a laboratory environment up to and including field trials
of the heap leaching process. A decision on the next step the Company will take will be made in 2017.
TSX:UEX | Energy for the Future
15
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
2017 Activities
Exploration
UEX has not proposed an exploration drilling program for the Hidden Bay Project in 2017 at this time. 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 focused
the majority of its financial resources on the Christie Lake Project in 2017 to date.
Work will continue on detailed evaluation of the Dwyer Lake and Wolf Lake areas was well as the remaining
eleven basement targeting areas on the Project, including reinterpretation of historical drill core. Based upon the
results of the evaluation, drill core relogging of higher priority target areas will likely be undertaken in the third
quarter of 2017 with the objective of proposing exploration drilling on the Property in 2018.
TSX:UEX | Energy for the Future
16
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Western Athabasca Projects (“WAJV”) – Overview
• Eight separate joint ventures:
o UEX 49.1%, AREVA 50.9% on six 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 WAJV 2013
Option Agreement below).
• Flagship project: Shea Creek Project (see
Shea Creek – 2016 Exploration Program).
• Four deposits: Kianna, Anne, Colette & 58B.
• 2017 exploration budget of $3.6 million
o UEX has elected to dilute its interests in the
early stage Mirror River, Laurie, Uchrich and
Nikita Projects in 2017.
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
Erica
Laurie
Mirror River
Nikita
Shea Creek
Uchrich
Total
3
9
19
4
5
6
14
1
61
8,010
13,993
36,600
8,778
17,400
15,131
27,343
2,263
19,793
34,577
90,441
21,691
42,996
37,390
67,566
5,592
129,518
320,046
AREVA
AREVA
AREVA
AREVA
AREVA
AREVA
AREVA
AREVA
49.0975
49.0975
49.0975
42.1827
41.9475
49.0975
49.0975
49.0975
50.9025
50.9025
50.9025
57.8173
58.0525
50.9025
50.9025
50.9025
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 includes Shea Creek. UEX successfully met its funding
target and earned its 49% interest in 2007. The current approximate 49.1% ownership interest for six of the eight
projects reflects additional amounts funded 100% by UEX under the WAJV 2013 Option Agreement dated April
4, 2013 (see discussion below). UEX’s interest in the Laurie Project was previously approximately 49.1% andwas
diluted to approximately 42.2% on December 31, 2015 as a result of UEX’s decision not to fund the Laurie 2015
exploration program.
TSX:UEX | Energy for the Future
17
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
UEX’s interest in the Mirror River Project was previously approximately 49.1% and was diluted to approximately
41.9% on December 31, 2016 as a result of UEX’s decision not to fund the Mirror River 2016 exploration program.
UEX elected not to participate in the 2015 Laurie exploration program, which focused exclusively on geophysics.
UEX’s decision to not fund exploration work at the Laurie Project 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 WAJV projects which remained at 49.1%, including the Company’s
ownership of the existing uranium resources at the Shea Creek Project.
The 2017 exploration programs have a combined budget of $3.6 million (Mirror River - $1.3 million, Laurie - $1.3
million, Uchrich - $500,000 and Nikita - $500,000). UEX has elected not to participate in the 2017 programs at all
four projects. The Company decided it was in shareholders’ best interests to employ its exploration capital on the
Christie Lake Project and not fund these four early grassroots exploration projects, especially since UEX
disagreed with the technical approach proposed by the project operator on two of the proposed programs.
Should AREVA complete all four 2017 exploration programs at the proposed budget levels, it is anticipated that
on December 31, 2017 UEX’s interest will have declined in all four projects as follows:
Ownership interest (%)
Uchrich
Nikita
Laurie
Mirror River
December 31, 2016
Projected interest, December 31, 2017
UEX
49.0975
49.0975
42.1827
41.9475
AREVA
50.9025
50.9025
57.8173
58.0525
Total
100.000
100.000
100.000
100.000
UEX
25.8546
40.0992
31.0372
31.8912
AREVA
74.1454
59.9008
68.9628
68.1088
Total
100.000
100.000
100.000
100.000
UEX’s ownership interest in the Shea Creek, Erica, Alexandra, and Brander Lake Projects will remain at 49.1%.
Cumulative expenditures (inclusive of non-cash items) by UEX on the Western Athabasca Projects at
December 31, 2016 on exploration and evaluation were $57.7 million and $7.4 million, respectively, with
approximately 278,000 m of drilling completed.
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, 2015, 2016 or 2017; however, the Company retains the ability to propose budgets that would
allow UEX to increase its ownership interest under the agreement. The Company does not anticipate that it will
incur any further Additional Expenditures on the Western Athabasca Projects before the expiry of the option on
December 31, 2018 and will likely allow the remainder of the option to expire.
TSX:UEX | Energy for the Future
18
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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 drill tested
electromagnetic targets on the southern
Shea Creek claims. Seven holes
totalling 4,099 m were completed in
2016.
Cumulative expenditures (inclusive of non-cash items) at December 31, 2016 by UEX on exploration and
evaluation were $46.8 million and $7.4 million, respectively, with approximately 269,000 m of drilling completed.
Shea Creek – Colette, 58B, Kianna and Anne Deposits
• One of the largest undeveloped
uranium resource projects in the
Athabasca Basin (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
19
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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 “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 – 2016 Exploration Program
In 2016, the WAJV completed a 7 hole - 4,099 m exploration program at Shea Creek testing the Shea South
(S14) conductor on the southernmost Shea Creek claims. UEX fully funded its share of the 2016 exploration
program.
The 2016 drilling program tested the S14 conductor systematically over a strike length of up to 3 km. The S14
conductor was undertested by drilling and is believed to be the southern strike extension of the Saskatoon Lake
conductor system, which hosts 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, drilled
during the 2015 program) had attempted to intersect the S14 conductor at the unconformity without success.
During the winter program, the joint venture completed seven holes totaling 4,099 m, testing the S14 conductor
along five grid lines (L5N, L15N, L20N, L25N, and L35N) spaced over a strike length of 3 km. All seven drill holes
failed to intersect a graphitic fault structure near the unconformity, significant uranium mineralization or visible
hydrothermal alteration commonly observed proximal to Athabasca-type uranium deposits.
TSX:UEX | Energy for the Future
20
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Western Athabasca Projects – Other Projects
The Western Athabasca Projects – Other Projects include Mirror River, Erica, Laurie, Alexandra, Brander Lake,
Nikita, Uchrich and Coppin Lake. See area map above under Western Athabasca Projects (“WAJV”) – Overview.
Mirror River Project
2016 Geophysical Program
The $0.65 million 2016 exploration program at Mirror River consisted 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 survey was completed in the second quarter of 2016, with the objective of prioritizing
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. The interpretation of the results of the survey are ongoing and the
results of the survey were provided to UEX in the fourth quarter and will be reviewed in 2017.
UEX elected not to participate in the 2016 Mirror River program. UEX’s decision not to fund exploration work at
the Mirror River Project has resulted in a reduction in the Company’s ownership interest in the Mirror River Project
to an estimated 41.9% effective December 31, 2016, which has yet to be officially confirmed between the partners
(see Western Athabasca Projects – Other Projects). The decision not to fund our share of the proposed Mirror
River program did not have an impact on UEX’s ownership interest in the other eight WAJV projects as of
December 31, 2016, six of which will remain at 49.1%, including the Company’s ownership of the existing uranium
resources at the Shea Creek Project.
Erica Project
2016 Exploration Program
There was no program or budget proposed for the Erica Project in 2016.
Laurie Project
2016 Exploration Program
There was no program or budget proposed for the Laurie Project in 2016.
Alexandra, Brander Lake, Nikita and Uchrich Projects
2016 Programs
There was no program or budget proposed for the Alexandra, Brander, Nikita or Uchrich projects in 2016.
Coppin Lake Project
There was no planned exploration activity at Coppin Lake in 2016 and the carrying value of $1,528 was reduced
to $Nil at December 31, 2015.
In early November of 2016, UEX sold its interest in Coppin Lake for proceeds of $17,184. UEX will also receive
its proportionate share of a 1.5% NSR royalty should uranium be produced from this project. The purchaser may
elect to purchase the royalty for $950,000, of which UEX would be entitled to 49.1%.
TSX:UEX | Energy for the Future
21
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Shea Creek – 2017 Exploration Program
There is no program or budget proposed for the Shea Creek Project in 2017.
Mirror River and Laurie Projects
2017 Programs
At both Mirror River and Laurie, there is a $1.3 million drilling program testing the shallowest areas of the
properties. Approximately 3,000 m (13 to 16 holes) will be drilled on each project.
UEX has elected not to fund the drilling programs at the Mirror River and Laurie Projects. UEX does not agree
with the technical approach of the operator on the Mirror River Project and has chosen to expend its exploration
capital on more advanced stage exploration projects.
Uchrich Project
2017 Program
A $0.5 million combined geophysics and drilling program has been proposed for the Uchrich Project, consisting
of 9 km of MLEM-SQUID surveying, followed up by one diamond drill hole in 2017.
UEX has elected not to fund the geophysics and drilling program at the Uchrich Project and has chosen to expend
its exploration capital on more advanced stage exploration projects.
Nikita Project
2017 Program
A $0.5 million geophysics program has been proposed for the Nikita Project, consisting of 36 km of MLEM-SQUID
surveying in 2017.
UEX has elected not to fund the geophysics program at the Nikita Project and has chosen to expend its
exploration capital on more advanced stage exploration projects.
Alexandra, Brander Lake, Erica
2017 Programs
There is no program or budget proposed for the Alexandra, Brander, or Erica projects in 2017.
TSX:UEX | Energy for the Future
22
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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
50.70
24.30
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.
No program was been proposed for 2016. AREVA, the project operator, has indicated that they will likely be
proposing an exploration program on the project to commence in 2018.
Black Lake Project
• Located at the northern edge of
the Athabasca Basin.
• 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
TSX:UEX | Energy for the Future
AREVA
Ownership
%
9.08
23
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Cumulative expenditures by UEX (inclusive of non-cash items) to December 31, 2016 on exploration at Black
Lake were $14.8 million, inclusive of non-option costs that are not covered under the earn-in agreement (which
has subsequently expired), 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, 2016, which includes 4,066 m of drilling funded by Uracan
Resources Ltd. (“Uracan”) under and option agreement that was terminated in January, 2017. The exploration
expenditures funded by Uracan are not reflected in UEX’s financial statements.
On January 20, 2017, UEX terminated the Black Lake Option Agreement with Uracan, dated January 24, 2013
and amended June 23, 2014, December 15, 2014 and November 25, 2015, due to Uracan’s inability to fund the
required annual exploration work commitments. Despite UEX extending the annual exploration commitments
required under the Option Agreement for three consective years, Uracan did not fund the remaining $1.4 million
necessary to complete its $3.0 million of work commitments by extended date of December 31, 2016.
The Black Lake claims remain in good standing until 2024, and UEX is currently considering opportunities to find
a new partner to advance the Black Lake Project.
Riou Lake Project
• Located at the northern edge of the
Athabasca Basin.
• Year-round access by road and air,
close to existing electric transmission
lines.
December
• Village of Stony Rapids provides
accommodation and other support
services.
• Uranium mineralization has been
encountered on three areas of the
Riou Lake Project.
UEX is actively seeking partners to advance the Riou Lake Project
Riou Lake
Number of
claims
7
Hectares
Acres
UEX
Ownership %
13,643
33,713
100.00
TSX:UEX | Energy for the Future
24
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
With the presence of radioactive boulders in glacial till on the property containing up to 11.3% uranium, graphite-
bearing gneiss units in the underlying basement rocks and local evidence of significant post-Athabasca reverse
faulting, the property is prospective for unconformity-style uranium deposits.
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 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
25
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Financial Update
Selected Financial Information
The following is selected financial data from the unaudited and restated financial statements of UEX for the last
three completed fiscal years. During the year ended December 31, 2016, the Company changed its accounting
policy related to exploration and evaluation expenditures on a retrospective basis. The data should be read in
conjunction with the audited financial statements for the years ended December 31, 2016, 2015, and 2014 and
the notes thereto.
Summary of Annual Financial Results
December 31, 2016
December 31, 2015 December 31, 2014
Interest income
Net loss for the year
$ 91,839
$ 106,027
$ 131,399
(5,981,098)
(6,111,444)
(8,185,857)
Write-off of mineral property acquisition costs
Basic and diluted loss per share
Exploration and evaluation expense
Capitalized acquisition costs
(1,500)
(0.021)
4,825,953
3,750,000
(1,528)
(0.025)
(4,337,496)
(0.036)
4,570,879
1,561,293
273,256
-
Total assets
$ 13,951,299
$ 11,131,280
$ 14,915,187
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)
2016
Quarter 4
2016
Quarter 3
2016
Quarter 2
2016
Quarter 1
2015
Quarter 4
2015
Quarter 3
2015
Quarter 2
2015
Quarter 1
Interest income
$ 23,216 $ 30,663 $ 22,494 $ 15,466 $ 20,265 $ 26,993 $ 27,168 $ 31,601
Net loss for the period
(1,112,795 )
(1,990,653 )
(1,214,190)
(1,663,460)
(726,486)
(1,222,891 )
(1,372,309)
(2,789,759)
Write-off of mineral
property acquisition
costs
Basic and diluted loss
per share
Exploration and
evaluation expense
Capitalized mineral
property acquisition
costs
(1,500 )
-
-
-
(1,528)
-
-
-
(0.004 )
(0.007 )
(0.005)
(0.006)
(0.003)
(0.005 )
(0.006)
(0.012)
945,533
1,740,777
711,539
1,428,104
225,797
759,045
794,877
2,791,160
2,000,000
-
-
1,750,000
249,076
10,300
13,880
-
Total assets
13,951,299
15,788,028
17,266,442
12,135,936
11,131,280
12,295,254
13,502,737
12,413,283
UEX’s business is not affected by seasonality as the Company is able to perform exploration and evaluation work
year round. Variations in 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. In 2016 and continuing
into 2017, UEX is focusing the majority of our exploration on the Christie Lake Project, where we are currently
earning up to a 70% interest from JCU.
TSX:UEX | Energy for the Future
26
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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. 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, discretionary exploration and evaluation expenditures levels are lower
than those in years before 2012.
In 2015, UEX focused its exploration efforts 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 2014.
In the fourth quarter of 2015, UEX paid $250,000 and signed a LOI to earn into the Christie Lake Project and in
the first quarter of 2016, a payment of $1,750,000 was made to complete the first option payment and vest our
10% interest in the project. In the fourth quarter of 2016, a payment of $2,000,000 was made to increase our
interest in Christie Lake to 30%, in addition to exploration commitments of $2,500,000 being fulfilled during the
year.
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 and the timing of the recognition of deferred
taxes associated with the renunciation of tax benefits related to flow-through expenditures.
•
Impairment:
o There were five claims that were staked in October 2014, and included in the Hidden Bay Project,
that lapsed on January 6, 2017. As there was no work budgeted of planned for the claims, an
impairment charge of $1,500 was been recorded in the fourth quarter of 2016. These claims did not
form a key part of the Hidden Bay Project and no exploration work had been completed on them.
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 49.1% 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 let the claims
lapse in the third quarter of 2016. A write down of acquisition / staking costs of $1,528 was recorded
for the project in the fourth quarter of 2015.
• Renunciation of tax benefits:
o Approximately $2.291 million in flow-through expenditures from the May 2016 placement was
incurred by December 31, 2016. The associated tax benefits were renounced to eligible shareholders
in February 2017 effective December 31, 2016, resulting in a deferred tax recovery in the fourth
quarter of 2016.
o The remaining $1.815 million in required flow-through expenditures from the May 2015 placement
was renounced to eligible subscribers in February 2016, effective December 31, 2015 (under the
look-back rule) and this tax impact has been reflected in the first quarter of 2016.
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 deferred tax recovery in the fourth quarter of 2015.
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 effective December 31, 2014) as the
renunciation was filed in February 2015.
TSX:UEX | Energy for the Future
27
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Share Capital
The Company is authorized to issue an unlimited number of common shares without par value, 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.
• 296,538,879 common shares were issued and outstanding as at December 31, 2016 and 319,238,873 as
at March 14, 2017;
• 20,904,000 common shares related to director, employee and consultant share purchase options were
reserved by the Company as at December 31, 2016 and 20,204,000 at March 14, 2017. The share
purchase options are exercisable into common shares at exercise prices ranging from $0.15 per share to
$1.45 per share;
• 24,761,905 share purchase warrants with a weighted average exercise price of $0.22 per share were
outstanding as at December 31, 2016 and 41,442,899 share purchase warrants with a weighted average
exercise price of $0.30 as at March 14, 2017.
Results of Operations for the Three-Month Period Ended December 31, 2016
For the three-month period ended December 31, 2016, the Company earned interest income of $23,216 (Q4
2015 - $20,265). The increase in interest income was primarily due to maintaining a higher bank balance during
the current three-month period, which reflects $5.25 million in flow-through funds raised May 17, 2016 versus
$3.3 million in flow-through funds raised on May 11, 2015. In the fourth quarter of 2016, the Company had an
average cash balance invested of approximately $8.7 million versus $5.5 million in the comparative period.
For the three-month period ended December 31, 2016, the Company incurred expenses of $1,319,332 (Q4 2015
- $896,750) with significant changes from the comparative period identified as follows:
• Exploration and evaluation expense of $945,533 (Q4 2015 - $225,798) was higher than in the
comparative period as a larger exploration program was underway at Christie Lake in the current period
than occurred at Hidden Bay in the comparative period.
• Salaries expense of $165,660 (Q4 2015 - $297,844) decreased because the offsetting management fees
related to the Christie Lake drilling program in Q4 2016 were higher than the offsetting management fees
related to the Black Lake exploration program in Q4 2015 ($80,700 vs. $88). Unadjusted salaries expense
for Q4 2016, excluding the management fee offsets, was slightly lower than unadjusted salaries expense
for Q4 2015 due to bonuses for 2015 that were approved and accrued in Q4 2015; comparable bonuses
were not accrued for 2016.
• Office expenses of $46,531 (Q4 2015 - $121,658) decreased primarily due to consulting fees which were
paid to the former CEO and consultants in Q4 2015 that were not incurred in Q4 2016. All office relocation
costs occurred in Q4 2015; no such cost were incurred in Q4 2016.
• Legal and audit expenses of $24,122 (Q4 2015 - $41,422) decreased and reflect auditor costs associated
with a Q3 2015 review; no comparable costs were incurred in Q4 2016.
• Travel and promotion expenses of $21,794 (Q4 2015 - $44,219) decreased primarily due to attendance
at an investor conference in Q4 2015 that the Company did not attend in Q4 2016.
The vesting of share purchase options during the three-month period ended December 31, 2016 resulted in total
share-based compensation of $68,984 (Q4 2015 - $77,158), of which $8,404 was allocated to exploration and
evaluation expenses (Q4 2015 - $5,017) and the remaining $60,580 was expensed to share-based compensation
(Q4 2015 - $72,141).
TSX:UEX | Energy for the Future
28
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Results of Operations for the Year Ended December 31, 2016
For the year ended December 31, 2016, the Company earned interest income of $91,839 (2015 - $106,027). The
decrease in interest income was due to slightly lower cash balances during the current period, as well as lower
average interest rates on invested amounts. In 2016, the Company had an average cash balance invested of
approximately $6.4 million versus $6.6 million in 2015. The Company also incurred $2,043 of Part XII.6 tax (2015
- $940) on unspent flow-through funds that has been netted against interest income.
For the year ended December 31, 2016, the Company incurred expenses of $6,407,509 (2015 - $6,982,703) with
significant changes from the comparative period identified as follows:
• Exploration and evaluation expense of $4,825,953 increased as compared to $4,570,879 in the
comparative period due to differences in the exploration programs that were completed.
o 2016 had an exploration program at Christie Lake, as well an exploration program on the Western
Athabasca projects; there was no 2015 program at Christie Lake in the period as the acquisition /
earn-in agreement was not yet signed.
o 2015 had an exploration program at Hidden Bay for basement targeting and geophysics, with no
comparable programs in 2016. There was a slightly larger amount expended for the Western
Athabasca Projects in 2015 than in 2016. In both years UEX elected not to fund work on geophysics
and our ownership interest was decreased on the Laurie Project in 2015 and the Mirror River Project
in 2016.
• Salaries expense of $513,933 (2015 - $869,489) decreased primarily as a result of the higher offsetting
project operator management fees of $367,860 (2015 - $38,216) which are netted against salaries
expense.
o The higher operator management fees in 2016 reflect a larger exploration program at the Christie
Lake Project of $4.0 million compared to the 2015 Black Lake Project of $0.4 million.
o Unadjusted salaries expense for 2016, excluding the drilling program management fee offsets, were
slightly lower than unadjusted salaries expense for 2015 due to 2015 bonuses being approved and
accrued in 2015; there were no bonuses accrued in 2016. The decrease in unadjusted salary
expense is offset by recruiting fees incurred in 2016.
• Office expenses of $189,035 (2015 - $452,737) decreased primarily due to consulting fees which were
paid to the former CEO and consultants primarily relating to a database transition project in 2015 that
were not incurred in 2016, and office supplies expense decreased due to no office relocation in 2016 and
less in-house printing related to investor communications.
• Travel and promotion expenses of $119,925 (2015 - $223,198) decreased due to a significant reduction
in promotional activity and production of advertising materials by the Company.
• Maintenance expense of $13,679 primarily relates to repairs of probing equipment, while comparative
period costs of $49,750 related primarily to repairs at the Raven exploration camp.
• An impairment charge of $1,500 was recorded in 2016 for claims staked in October 2014 at Hidden Bay
that lapsed on January 6, 2017. No exploration work had been done on these claims. An impairment
charge of $1,528 was recorded in 2015 related to the Coppin Lake claims due to lack of planned
exploration activity. The Coppin Lake claims were sold in November 2016 for proceeds of $17,184.
TSX:UEX | Energy for the Future
29
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
The vesting of share purchase options during the year ended December 31, 2016 resulted in total share-based
compensation of $406,561 (2015 - $391,997), of which $38,753 was allocated to exploration and evaluation
expenditures (2015 - $30,902) and the remaining $367,808 was expensed to share-based compensation (2015
- $361,095).
Deferred income tax recovery for the year ended December 31, 2016 was $334,572 (2015 – $754,732). The
difference primary relates to the larger flow-through premium on renouncements from the September 2014
placement that were renounced under the lookback rule effective February 2, 2015, compared to the smaller
flow-through premium on flow-through renouncements from the May 2015 and May 2016 flow-through
placements that were renounced in 2016.
The following table outlines cumulative exploration and evaluation expenditures on uranium projects,
cumulatively as at and for the year ended December 31, 2016 and 2015.
Project
Beatty River
Black Lake
Christie Lake
Hidden Bay (2)
Deposit Areas
Exploration Areas
Western Athabasca
Alexandra
Brander
Erica
Laurie
Mirror
Nikita
Shea Creek
Uchrich
Cumulative (1) to
December 31, 2014
Expenditures
in the period
Cumulative to
December 31, 2015
Expenditures
in the period
Cumulative to
December 31, 2016
2015
2016
$
869,392
$
14,504,723
-
66,555,664
5,692,131
1,204,397
1,352,463
1,590,050
1,586,528
1,987,612
1,951,521
52,190,981
543,091
3,677
4,170
58,689
156,267
2,292,310
854
900
663,035
-
-
810
1,390,166
-
$
873,069
$
14,508,893
-
16
58,689
4,021,603
66,711,931
7,984,441
1,205,251
1,353,363
2,253,085
1,586,528
1,987,612
1,952,331
53,581,147
543,091
143,746
42,556
-
-
-
-
-
-
618,032
-
$
873,069
14,508,909
4,080,292
66,855,677
8,026,997
1,205,251
1,353,363
2,253,085
1,586,528
1,987,612
1,952,331
54,199,179
543,091
All Projects Total
$
150,028,553
$
4,570,878
$
154,599,431
$
4,825,953
$
159,425,384
(1) Exploration and evaluation expenditures have been presented on a cumulative basis from July 17, 2002.
(2) Deposit areas include Raven, Horseshoe and West Bear Deposits. Exploration areas are all other areas included in Hidden Bay.
Exploration and evaluation expenditures in the year ended December 31, 2016 for all projects include non-cash
share-based compensation of $38,753 (2015 - $30,902) and depreciation of $41,101 (2015 - $35,915).
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.
TSX:UEX | Energy for the Future
30
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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 as at December 31, 2016 and March 14, 2017:
Ownership interest (%)
Beatty River
Black Lake
Christie Lake
Western Athabasca
Laurie Project
Mirror River Project
All other projects
Financing Activities
UEX
25.0000
90.9200
30.0000
42.1827
41.9745
49.0975
JCU
Total
AREVA
50.7020
9.0800
24.2980
-
-
70.0000
57.8173
58.0525
50.9025
-
-
-
100.0000
100.0000
100.0000
100.0000
100.0000
100.0000
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 February 27, 2017, the Company completed a private placement of 15,999,994 units at a price of
$0.25 per unit and 6,700,000 flow-through common shares at a price of $0.30 per share, for gross
proceeds of $6,099,999. Share issue costs included a cash commission of $360,600, the fair value of
brokers warrants of $105,755 and other issuance costs of approximately $160,000. Each unit consisted
of one common share and one full share purchase warrant exercisable at a price of $0.42 per share for
a period of three years. The Company also issued 681,000 full share broker warrants as part of the
placement. Each broker warrant is exercisable at a price of $0.30 per share for a period of two years. As
a result of this placement, Cameco’s ownership interest in UEX declined from approximately 16.87% to
approximately 15.67%
The proposed use of proceeds from the February 27, 2017 flow-through private placement is presented
in the table below:
PROPOSED USE OF PROCEEDS (1)
ACTUAL USE OF PROCEEDS
Flow-through Private Placement
Use of Proceeds
Remaining to be Spent
Christie Lake Project
Hidden Bay Project
TOTAL
$ 1,510,000
500,000
$ 2,010,000
$
$
-
-
-
$
$
1,510,000
500,000
2,010,000
(1) Expenses related to the flow-through placement were funded out of the February 27, 2017 unit placement proceeds.
TSX:UEX | Energy for the Future
31
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
The proceeds from the February 27, 2017 $4.0 million unit placement will be used for general and
administrative costs, net of issue costs related to the flow-through and unit placements.
• On May 17, 2016, the Company completed a private placement of 21,000,000 flow-through common
shares at a price of $0.25 per share for gross proceeds of $5,250,000 and 9,523,810 units at a price of
$0.21 per unit for gross proceeds of $2,000,000. Total gross proceeds were $7,250,000 with share issue
costs of $505,882. Each unit consisted of one common share and one-half share purchase warrant
exercisable at a price of $0.30 per share for a period of two years. A flow-through premium related to the
sale of the associated tax benefits was determined to be $420,000. As a result of this placement,
Cameco’s ownership interest in UEX declined from approximately 18.80% to approximately 16.87%.
The use of proceeds from the May 17, 2016 flow-through private placement as at December 31, 2016 is
presented in the table below:
PROPOSED USE OF PROCEEDS (1)
ACTUAL USE OF PROCEEDS
Flow-through Private Placement
Use of Proceeds
Remaining to be Spent
Christie Lake Project
Western Athabasca
Hidden Bay Project
TOTAL
$ 4,400,000
$
2,214,506
$
2,185,494
750,000
100,000
66,870
10,124
683,130
89,876
$ 5,250,000
$
2,291,500
$
2,958,500
(2) Expenses related to the flow-through placement were funded out of the May 17, 2016 unit placement proceeds.
The net proceeds from the May 17, 2016 unit private placement of $2.0 million will fund approximately
$100,000 of ongoing heap leach evaluation work at the Hidden Bay Project, with the remainder allocated
to working capital and general corporate expenses.
The Company renounced the income tax benefit of the May 17, 2016 private placement to its subscribers
effective December 31, 2016 and incurred Part XII.6 tax at a rate of Nil% for January 2017 and 1% per
month thereafter on unspent amounts. As a March 14, 2017, an estimated $3.2 million of the placement
proceeds have been expended and a Part XII.6 tax expense of approximately $1,700 has been incurred.
• 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 with issue costs of $42,744. 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 thus
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.
• 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.
Cameco did not exercise its pre-emptive right to participate in the offering and thus its ownership interest
in UEX declined from approximately 21.28% to approximately 20.33%.
TSX:UEX | Energy for the Future
32
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
• The use of proceeds from the May 11, 2015 flow-through private placement as at December 31, 2016 is
presented in the table below:
PROPOSED USE OF PROCEEDS (2)
ACTUAL USE OF PROCEEDS
Flow-through Private Placement
Use of Proceeds
Remaining to be Spent
Hidden Bay
Western Athabasca
Christie Lake
TOTAL
$ 1,300,000
$ 356,808
$ 943,192
2,000,000
-
1,632,249
1,310,943
$ 3,300,000
$ 3,300,000
367,751
(1,310,943)
$ -
(3) Expenses of $243,558 related to the offering were funded from existing working capital.
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 December 31, 2016, the Company had spent, on qualified expenditures, $3,300,000
(December 31, 2015 - $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. The
Company incurred $2,043 in Part XII.6 tax on unspent flow-through monies in the year ended December 31, 2016
(2015 - $940), which has been netted against interest income.
No share purchase options were exercised during the year ended December 31, 2016 or 2015.
No share purchase warrants were exercised during the year ended December 31, 2016 and no such warrants
existed in the comparative period.
Liquidity and Capital Resources
Working capital as at December 31, 2016 was $3,852,198 compared to working capital of $4,825,590 as at
December 31, 2015 and includes the following:
• Current assets as at December 31, 2016 and December 31, 2015 were $4,385,175 and $5,302,127
respectively, including:
o Cash and cash equivalents of $4,136,636 at December 31, 2016 and $5,139,814 at December 31,
2015. 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, 2016 and December 31, 2015 were $532,975
and $476,537, respectively:
o The balance at December 31, 2016 was comprised of $296,295 in trade payables and other liabilities,
with the remainder due to the flow-through share premium liability of $236,680 related to the May 17,
2016 flow-through private placement.
o The balance at December 31, 2015 was comprised of $325,285 in trade payables and other liabilities,
with the remainder due to the flow-through share premium liability of $151,252 related to the May 11,
2015 flow-through private placement.
TSX:UEX | Energy for the Future
33
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
The Company has sufficient financial resources for exploration, evaluation, and administrative costs for at
least, but not limited to, twelve months from the end of the reporting period. The Company will require
additional financing 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.
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 are as
follows:
2017
2018
2019
2020
December 31
2016
$ 71,502
67,774
61,446
53,130
UEX has agreements with partners to fund exploration and make acquisition related payments that if not made
would result in project dilution or potentially loss of a project in its entirety.
Exploration Commitments – Western Athabasca
As at December 31, 2016, UEX has decided not to fund its share of the 2017 Western Athabasca exploration
budget ($0.5 million for geophysics on Nikita, $0.5 million for geophysics and drilling on Uchrich, $1.3 million each
for drilling on Laurie and Mirror River). UEX’s interest in Uchrich and Nikita is anticipated to drop from the current
49.1% interest to approximately 25.9% and 40.1%, respectively, should AREVA complete the approved programs.
UEX’s interest in Laurie is anticipated to drop from the current 42.2% to 31.0% and UEX’s interest in Mirror River
is anticipated to drop from the current 41.9% to 31.9%, should AREVA complete the approved programs.
UEX decided not to fund its share of the 2016 geophysical program at the Mirror River Project. As a result, UEX’s
interest in this project dropped from a 49.1% interest to 41.9% as AREVA completed the approved program. This
dilution only applies to UEX’s interest in the Mirror River Project.
TSX:UEX | Energy for the Future
34
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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. UEX has made the required cash payments to JCU of $0.25
million on October 23, 2015, $1.75 million on January 22, 2016 and $2.0 million on December 22, 2016 and
completed the required exploration commitment of $2.5 million by December 31, 2016. UEX has currently vested
a 30% ownership 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
Exploration Work
Commitment
UEX Cumulative
Interest Earned
Completed:
Upon signing of the LOI
$
250,000
$
Before January 28, 2016
Before January 1, 2017
1,750,000
2,000,000
-
-
2,500,000
1,546,253 (1)
As at December 31, 2016
$
4,000,000
$
4,046,253
To be completed:
Before January 1, 2018
Before January 1, 2019
Before January 1, 2020
Total
1,000,000
1,000,000
1,000,000
3,000,000
7,000,000
$
$
953,747 (1)(2)
5,000,000
5,000,000
$
$
10,953,747
15,000,000
- %
10.00
30.00
45.00 %
60.00
70.00
70.00 %
(1) Excess exploration work completed in 2016 will be applied to 2017 work commitments.
(2) 2017 exploration commitment under the agreement is $2,500,000.
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.
During the year ended December 31, 2016, the Company completed a $4.0 million exploration program at Christie
Lake, $1.5 million in excess of the 2016 exploration earn-in required. The Company will apply the excess funding
to reduce future years’ commitments to the ownership milestones. In early 2017, the Company began a further
$3.0 million exploration program at Christie Lake, which is 100% funded by UEX. As at March 14, 2017, UEX had
completed the exploration component of the 2017 Christie Lake earn-in commitment.
Uracan Exploration Agreement – Black Lake
In early 2013, UEX signed an agreement with Uracan Resources Ltd. (“Uracan”) whereby Uracan could earn a
60% interest in Black Lake. Amendments to this original agreement were signed on June 23, 2014, December
15, 2014 and November 25, 2015. As at December 31, 2016, Uracan had not met the earn-in commitments
under the Black Lake Project earn-in agreement and UEX did not extend the funding deadline. On January 20,
2017, UEX terminated the earn-in agreement with Uracan, with Uracan earning no interest in the Black Lake
Project. UEX is currently seeking partners interested in earning into the Black Lake Project.
TSX:UEX | Energy for the Future
35
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements.
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 profit and loss.
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.
TSX:UEX | Energy for the Future
36
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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, 2016 revaluation date, as compared to December 31, 2015. 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,
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, 2016 and December 31, 2015, 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:
December 31, 2016
December 31, 2015
June 23, 2014
Agreement
Amendment (1)
February 13,
2013 Agreement
(expired) (2)
June 23, 2014
Agreement
Amendment (1)
February 13,
2013 Agreement
(expired) (2)
Number of warrants – Uracan
Expected forfeiture rate
Weighted-average valuation date share price
Expected volatility
Risk-free interest rate
Dividend yield
Expected life
Weighted-average valuation date fair value
25,000
0.00%
$ 0.06
107.45%
0.76%
0.00%
0.47 years
$ 0.01
N/A
-
-
-
-
-
-
-
25,000
0.00%
$ 0.02
150,000
0.00%
$ 0.02
163.43%
330.38%
0.48%
0.00%
0.48%
0.00%
1.48 years
0.12 years
$ 0.01
$ 0.00
(1) The 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.
(2) The 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.
TSX:UEX | Energy for the Future
37
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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 year ended December 31, 2016 and
2015.
Related party transactions include the following payments which were made to related parties other than key
management personnel:
Cameco Corporation (1)
Management advisory board share-based payments (2)
Panterra Geoservices Inc. (3)
Year ended December 31
2016
2015
$
1,323
9,055
-
10,378
$
12,000
15,141
2,400
29,541
$
$
(1)
2016 payments related to fees paid for use of the Cameco airstrip at the McArthur River mine. 2015 payment represents an amount paid to
Cameco (20.33% shareholder of UEX Corporation at the date of the transaction) in May of 2015 to acquire Cameco’s 70% interest in the
Umpherville joint venture (see Note 8(i)).
(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) 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.
TSX:UEX | Energy for the Future
38
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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:
Salaries and short-term employee benefits (1)(2)
Share-based payments (3)
Other compensation (4)
Year ended December 31
2016
2015
740,259
$
338,449
-
676,127
322,770
183,000
1,078,708
$
1,181,897
$
$
(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 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.
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.
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.
Accounting Policy Change
Effective September 30, 2016, the Company changed its accounting policy for exploration and evaluation costs
under IFRS 6 from a recognition as exploration and evaluation assets to expensing as incurred. The accounting
treatment of mineral property acquisition costs has not changed. This change in accounting policy has been
applied retrospectively. Please refer to the December 31, 2016 audited financial statements for the new
accounting policy and the impact of this policy change.
The Company believes that this change in our accounting policy will provide more relevant and useful information
to the users of the financial statements.
TSX:UEX | Energy for the Future
39
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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 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 capitalized as mineral property 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
40
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
All amounts capitalized in mineral properties 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 capitalized
acquisitions cost is determined to be impaired, this amount is recorded as a write-down of 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, 2016 and has concluded that there are no indicators
of impairment.
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 unaudited condensed interim
financial statements for the year ended December 31, 2016. 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
41
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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.
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.
TSX:UEX | Energy for the Future
42
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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.
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 27, 2017, is US$31.00 /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.
TSX:UEX | Energy for the Future
43
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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
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.
TSX:UEX | Energy for the Future
44
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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.
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.
TSX:UEX | Energy for the Future
45
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(Expressed in Canadian dollars, unless otherwise noted)
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
46
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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
47
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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, 2016 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
48
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2016 and 2015
(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
49
Audited Financial Statements of
UEX CORPORATION
Years end December 31, 2016 and 2015
KPMG LLP
Chartered Professional Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
Telephone
Telephone
Fax
Fax
Internet
Internet
(604) 691-3000
(604) 691-3000
(604) 691-3031
(604) 691-3031
www.kpmg.ca
www.kpmg.ca
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, 2016, December 31, 2015 and January 1, 2015, the statements
of operations and comprehensive loss, changes in equity and cash flows for the years ended
December 31, 2016 and December 31, 2015, 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 audits 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, 2016, December 31, 2015 and January 1, 2015, and its
financial performance and its cash flows for the years ended December 31, 2016 and December 31,
2015 in accordance with International Financial Reporting Standards.
KPMG LLP (Signed)
Chartered Professional Accountants
March 14, 2017
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, 2016, 2015 and January 1, 2015
Assets
Current assets
Cash and cash equivalents
Amounts receivable
Prepaid expenses
Investments – current portion
Non-current assets
Deposits
Equipment
Mineral properties
Investments
Total assets
Notes
December 31
2016
December 31
2015
Restated
(see Note 21)
January 1,
2015
Restated
(see Note 21)
$
3
4
5
8(v), 9, 15
6
7
8
8(v), 9, 15
4,136,636
106,036
142,357
144
4,385,173
44,377
267,184
9,233,565
21,000
$
5,139,814
62,010
100,177
126
5,302,127
44,704
292,202
5,485,065
7,182
$
9,321,596
141,170
106,540
-
9,569,306
-
111,885
5,211,809
22,187
$
13,951,299
$
11,131,280
$
14,915,187
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and other liabilities
10
$
532,975
$
476,537
$
1,322,439
Total liabilities
532,975
476,537
1,322,439
Shareholders’ equity
Share capital
Share-based payments reserve
Accumulated other comprehensive income (loss)
Deficit
12(b)
12(c)
15
186,603,862
3,231,238
14,000
(176,430,776)
178,279,744
3,067,912
-
(170,692,913 )
175,498,302
2,787,954
(10,500)
(164,683,008)
Total liabilities and shareholders’ equity
$
13,951,299
$
11,131,280
$
14,915,187
13,418,324
10,654,743
13,592,748
Nature and continuance of operations
Commitments
Subsequent events
1
8(iv)(vii), 12(d), 13
8(v), 12(b)(c)(e)
See accompanying notes to the financial statements.
Approved on behalf of the Board and authorized for issue on March 14, 2017.
“signed” “signed”
Director
Roger M. Lemaitre
Emmet A. McGrath
Director
TSX:UEX | Energy for the Future
1
UEX CORPORATION
Statements of Operations and Comprehensive Loss
Years ended December 31, 2016 and 2015
Revenue
Interest income
Expenses
Bank charges and interest
Depreciation
Notes
2016
2015
Restated
(see Note 21)
$
91,839
$
106,027
4,126
30,109
Exploration and evaluation expenditures
17
4,825,953
Filing fees and stock exchange
Gain on sale of mineral property
Legal and audit
Loss on disposal of equipment
Maintenance
Office expenses
Project investigation
Rent
Salaries, net of project management fees
Share-based compensation
Travel and promotion
8(iv)
18
19
12(c)
Unrealized fair value loss on available-for-sale financial assets
8(v), 9, 15
Unrealized fair value loss on held-for-trading financial assets
8(v), 9, 15
Write-down of mineral properties
8(i)(iv)
78,743
(17,184 )
140,181
278
13,679
189,035
-
139,259
513,933
367,808
119,925
-
164
1,500
5,308
19,282
4,570,878
85,147
-
139,095
423
49,750
452,737
21,938
157,456
869,489
361,095
223,198
22,750
2,629
1,528
Loss before income taxes
Deferred income tax recovery
6,407,509
6,982,703
(6,315,670 )
(6,876,676)
11
334,572
754,732
Loss for the year
$
(5,981,098 )
$
(6,121,944)
Other comprehensive income (loss)
Available-for-sale financial assets net change in fair value
8(v), 9, 15
14,000
10,500
Comprehensive loss for the year
Basic and diluted loss per share
Basic and diluted weighted-average number of shares
outstanding
See accompanying notes to the financial statements.
$
$
(5,967,098 )
(0.021 )
$
$
(6,111,444)
(0.025)
284,020,404
242,094,261
TSX:UEX | Energy for the Future
2
UEX CORPORATION
Statements of Changes in Equity
Years ended December 31, 2016 and 2015
Number of
common
shares
Share
capital
Share-based
payments reserve
Accumulated
other
comprehensive
income
Deficit
Total
235,015,069 $ 175,498,302
$
2,787,954
$
(10,500)
$ (164,683,008)
$
13,592,748
(6,121,944)
(6,121,944)
11,000,000
3,300,000
(243,558)
(275,000)
3,300,000
(243,558)
(275,000)
10,500
391,997
112,039
-
10,500
391,997
(112,039)
December 31, 2014
(Restated – see note 21)
Loss for the year
Issued pursuant to private
placements
Share issuance costs
Value attributed to flow-
through premium on
issuance
Other comprehensive income
(loss)
Fair value change in AFS
financial assets
Share-based payment
transactions
Transfer to deficit on expiry
of share purchase options
December 31, 2015
(Restated – see note 21)
Loss for the year
Issued pursuant to private
placements
Share issuance costs
Value attributed to flow-
through premium on
issuance
Other comprehensive income
(loss)
Fair value change in AFS
financial assets
Share-based payment
transactions
Transfer to deficit on expiry
of share purchase options
246,015,069
178,279,744
3,067,912
-
(170,692,913)
10,654,743
(5,981,098)
(5,981,098)
50,523,810
9,250,000
(505,882)
(420,000)
9,250,000
(505,882)
(420,000)
14,000
406,561
243,235
-
14,000
406,561
(243,235)
December 31, 2016
296,538,879 $ 186,603,862
$
3,231,238
$
14,000
$ (176,430,776)
$
13,418,324
See accompanying notes to the financial statements.
TSX:UEX | Energy for the Future
3
UEX CORPORATION
Statements of Cash Flows
Years ended December 31, 2016 and 2015
Cash provided by (used for):
Operating activities
Loss for the year
Adjustments for:
Depreciation
Deferred income tax recovery
Equipment charged to exploration on disposal
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 mineral properties
Purchase of equipment
Proceeds on sale of furniture
Financing activities
Proceeds from common shares issued
Share issuance costs
Decrease in cash and cash equivalents during the year
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
Supplementary information
Non-cash transactions
Increase in other liabilities due to flow-through premiums
Decrease in other liabilities due to partial extinguishment of flow-
through premiums on December 31, 2016 renouncements
Decrease in other liabilities due to partial extinguishment of flow-
through premiums on December 31, 2016 and 2015
renouncements
Decrease in other liabilities due to extinguishment of remaining
2014 flow-through premium on February 2, 2015 renouncement
(Look-Back Rule)
Non-cash share-based compensation included in exploration and
evaluation expenditures
Depreciation included in exploration and evaluation expenditures
See accompanying notes to the financial statements.
TSX:UEX | Energy for the Future
Notes
2016
2015
Restated
(see Note 21)
$
(5,981,098 )
$
(6,121,944)
12(d)
8(i)(iv)
12(b)
12(b)
$
$
81,678
(334,572 )
1,522
(91,839 )
278
(2,043 )
406,561
-
164
1,500
(35,377 )
(41,853 )
(28,990 )
55,197
(754,732)
-
(106,027)
423
(940)
391,997
22,750
2,629
1,528
50,664
(38,341)
(366,170)
(6,024,069 )
(6,862,966)
85,233
(3,750,000 )
(58,737 )
277
135,463
(274,784)
(236,756)
819
(3,723,227 )
(375,258)
9,250,000
(505,882 )
8,744,118
(1,003,178 )
5,139,814
3,300,000
(243,558)
3,056,442
(4,181,782)
9,321,596
4,136,636
5,139,814
420,000
(183,320 )
275,000
-
(151,252 )
(123,748)
-
(630,984)
38,753
53,092
30,902
35,915
4
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
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, 2016 and has concluded that there are no
indicators of impairment.
The Company has sufficient financial resources for exploration, evaluation, and administrative costs for at
least, but not limited to, twelve months from the end of the reporting period. The Company will require
additional financing 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. During the year ended December 31, 2016, the
Company changed its accounting policy related to exploration and evaluation expenditures on a
retrospective basis (see Note 21). 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 14, 2017.
(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.
TSX:UEX | Energy for the Future
5
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
2.
Basis of preparation and significant accounting policies (continued)
(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) 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).
(iv)
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.
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).
TSX:UEX | Energy for the Future
6
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
2.
Basis of preparation and significant accounting policies (continued)
(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.
(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.
TSX:UEX | Energy for the Future
7
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
2.
Basis of preparation and significant accounting policies (continued)
(f) Financial assets (continued)
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 (“OCI”). 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.
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.
TSX:UEX | Energy for the Future
8
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
2.
Basis of preparation and significant accounting policies (continued)
(g) Financial liabilities
Financial liabilities are classified as either financial liabilities at fair value through profit or loss 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, 2016 and 2015
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 and expenses
The Company capitalizes all costs relating to the acquisition of mineral claims. All exploration and
evaluation costs are expensed until properties are determined to have economically recoverable
resources. Once a decision to proceed with development has been approved, all subsequent costs
incurred for development will be capitalized as a component of property and equipment. 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 mineral properties 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
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. 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.
All capitalized mineral properties 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
capitalized acquisition cost is determined to be impaired, this amount is recorded as a write-down of
interest in mineral properties in the statement of operations and comprehensive loss in the period.
TSX:UEX | Energy for the Future
10
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
2.
Basis of preparation and significant accounting policies (continued)
(j) Mineral properties (continued)
Development properties
When mineral reserves have been determined and the decision to proceed with development has been
approved, capitalized mineral property costs 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 testing 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 costs and
classified as a component of property, plant and equipment. 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.
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, 2016 and 2015
2.
Basis of preparation and significant accounting policies (continued)
(k) Provisions (continued)
Environmental rehabilitation provision (continued)
The environmental rehabilitation obligation is recorded as a liability and the offset is capitalized as part of
the carrying amount of the associated long-lived asset. The capitalized 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.
TSX:UEX | Energy for the Future
12
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
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. 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. 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. The offset to the recorded cost is to share-based
payments reserve. 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.
(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. The calculation of diluted earnings (loss)
per share excludes the effects of share purchase options and warrants that would be anti-dilutive.
TSX:UEX | Energy for the Future
13
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
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. 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.
(s) Reclassification of Comparative Period Presentation
Certain comparative period amounts have been reclassified to conform with the current year’s
presentation. See Note 21 Change in Accounting Policy.
3.
Cash and cash equivalents
Cash
Short-term deposits
4.
Amounts receivable
Interest receivable
Other receivables
December 31
2016
290,603
3,846,033
4,136,636
December 31
2016
53,564
52,472
106,036
$
$
$
$
December 31
2015
132,659
5,007,155
5,139,814
December 31
2015
45,082
16,928
62,010
$
$
$
$
Interest receivable reflects unpaid interest earned on short-term deposits. Other receivables include $51,826
of Goods and Services Tax (GST) receivable as at December 31, 2016 (December 31, 2015 - $15,964).
TSX:UEX | Energy for the Future
14
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
5.
Prepaid expenses
Advances to vendors
Prepaid expenses
6.
Deposits
Deposits
December 31
2016
50,000
92,357
142,357
$
$
December 31
2015
30,000
70,177
100,177
$
$
December 31
2016
December 31
2015
$
44,377
$
44,704
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, 2014
$
99,327
$
331,684
$
257,698 $
32,632
$
721,341
Additions
Disposals
Balance at December 31, 2015
Additions
Disposals
Balance at December 31, 2016
Accumulated depreciation and
Impairment
Balance at December 31, 2014
Depreciation charge for the year
Disposals
Balance at December 31, 2015
Depreciation charge for the year
Disposals
Balance at December 31, 2016
Net book value
Balance at December 31, 2014
Balance at December 31, 2015
Balance at December 31, 2016
$
$
$
$
$
$
TSX:UEX | Energy for the Future
-
-
99,327
-
-
68,300
(5,120)
394,864
31,358
(3,811)
86,710
(41,777 )
302,631
12,754
(1,311 )
81,746
(19,046)
95,332
14,625
(7,422)
236,756
(65,943)
892,154
58,737
(12,544)
99,327
$
422,411
$
314,074 $
102,535
$
938,347
48,111
$
314,920
$
222,441 $
23,984
$
609,456
7,883
-
55,994
7,883
-
63,877
51,216
43,333
35,450
$
$
$
$
17,150
(5,120)
326,950
23,822
(2,288)
348,484
16,764
67,914
73,927
$
$
$
$
22,595
(41,200 )
203,836
30,004
(1,311 )
7,569
(18,381)
13,172
19,969
(6,868)
232,529 $
26,273
35,257 $
8,648
98,795 $
82,160
81,545 $
76,262
$
$
$
$
55,197
(64,701)
599,952
81,678
(10,467)
671,163
111,885
292,202
267,184
15
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
8. Mineral properties
Exploration and evaluation assets – acquisition costs
Hidden Bay
(i)
Western
Athabasca
(iv)
Balance at December 31, 2014
$
4,451,500
$
Additions
24,180
924
604
Impairment charge for the year
-
(1,528 )
Balance at December 31, 2015
4,475,680
Additions
Impairment charge for the year
-
(1,500 )
Balance at December 31, 2016
$
4,474,180
$
-
-
-
-
Black Lake
Christie Lake
Total
(v)
(vii)
$
759,385
$
-
$
5,211,809
-
-
250,000
274,784
-
(1,528)
759,385
250,000
5,485,065
-
-
3,750,000
3,750,000
-
(1,500)
$
759,385
$ 4,000,000
$
9,233,565
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, including the Horseshoe, Raven and West Bear
Deposits, is located in the eastern Athabasca Basin of northern Saskatchewan, Canada.
Umpherville River, 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 expenditures are included with Hidden Bay. The mineral claims that make up
Umpherville River are subject to a 2% NSR royalty on 20% of the project for each mineral produced
(equivalent to a 0.4% NSR on the total project) with the NSR on uranium capped at $10 million.
In December 2016, the Company wrote off $1,500 relating to five claims, which were staked in October
2014 and lapsed on January 6, 2017, on which no exploration work had been completed. These claims
did not form a key part of the Hidden Bay Project.
(ii) Riou Lake Project
The Company holds a 100% interest in the Riou Lake Project located in the northern Athabasca
Basin. Mineral property acquisition costs associated with its Riou Lake Project were written off in
2014 due to a lack of ongoing exploration activity. UEX continues to maintain several Riou Lake
claims in good standing.
TSX:UEX | Energy for the Future
16
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
(iii) Northern Athabasca Projects
The Northern Athabasca Project consisted of the Butler Lake Property and the La Roque Property. The
two claims comprising the Butler Lake Project expired on February 5, 2017, and the three claims that
comprised the La Roque Property expired on December 17, 2016.
The Northern Athabasca Project was written off in 2010 due to a lack of planned exploration activity at
that time.
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 with the Company holding an approximate 49.1% interest and AREVA Resources Canada
Inc. (“AREVA”) holding an approximate 50.9% interest in all projects as at December 31, 2016 and
2015, except for the Laurie Project, where the Company has an approximate 42.2% interest as at
December 31, 2016 and 2015, and the Mirror River Project, where the Company has an approximate
42.3% interest as at December 31, 2016 and 49.1% interest as at December 31, 2015. The Company
is in the process of negotiating joint-venture agreements with AREVA.
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.
In 2016, UEX decided not to fund its share of the 2016 geophysical program at the Mirror River Project.
UEX’s interest in this project has dropped from the current 49.1% interest to approximately 41.9%. This
dilution only applied to UEX’s interest in the Mirror River Project.
In 2017, AREVA proposed budgets of $0.5 million each on Uchrich and Nikita and $1.3 million each on
Laurie and Mirror River, of which UEX has decided not to fund. Interests on these projects are
anticipated to drop as follows, should AREVA complete the approved programs. This decision does not
impact the ownership interest in the Shea Creek, Erica, Brander, or Alexandra Projects.
December 31, 2016
Projected interest, December 31, 2017
Ownership interest (%)
Uchrich
Nikita
Laurie
Mirror River
UEX
49.0975
49.0975
42.1827
41.9475
AREVA
50.9025
50.9025
57.8173
58.0525
Total
100.000
100.000
100.000
100.000
UEX
25.8546
40.0992
31.0372
31.8912
AREVA
74.1454
59.9008
68.9628
68.1088
Total
100.000
100.000
100.000
100.000
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 2016.
TSX:UEX | Energy for the Future
17
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
(iv) Western Athabasca Projects (continued)
In July of 2014, UEX and AREVA each staked claims which became the Coppin Lake Project. A budget
for geophysics and line cutting was proposed for 2016, of which UEX would have been responsible for
funding its 49.097% share. 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 UEX recorded a $1,528 impairment charge in 2015. In early
November of 2016, UEX sold its interest in Coppin Lake for proceeds of $17,184. UEX will also receive
its proportionate share of a 1.5% NSR royalty should uranium be produced from this project. The
purchaser may elect to purchase the royalty for $950,000, of which UEX would be entitled to 49.1%.
(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 and AREVA holding a 9.08% interest as at December 31, 2016
and 2015.
In early 2013, UEX signed an agreement with Uracan Resources Ltd. (“Uracan”) whereby Uracan could
earn a 60% interest in Black Lake. Amendments to this original agreement were signed on June 23,
2014, December 15, 2014 and November 25, 2015.
As part of the original earn-in agreement, Uracan issued 300,000 shares and 150,000 share purchase
warrants to UEX, exchangeable for 150,000 Uracan shares at $0.15 per warrant for three years. The
combined value of $35,931 upon receipt was recorded as a reduction of the carrying value of Black
Lake in 2013 (see Note 9).
As part of the first amendment, Uracan issued 50,000 shares and 25,000 share purchase warrants to
UEX, exchangeable for 25,000 Uracan shares at $0.12 per warrant for three years. The combined value
of $3,639 upon receipt was recorded as a reduction of the carrying value of Black Lake in 2014 (see
Note 9).
Under the agreement, Uracan was to have funded 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.
Under the amended earn-in agreement, Uracan was to have expended $3.0 million by December 31,
2016. UEX would remain the project operator and was entitled to a 10% management fee under the
Black Lake joint venture agreement until such time as Uracan had earned its 60% interest in Black
Lake.
Uracan also granted to UEX a 1% NSR royalty from their ownership interest, to a maximum of $10.0
million of royalty payments.
Uracan did not meet the $3.0 million in exploration expenditures required under the amended Black
Lake Project earn-in agreement by December 31, 2016 and UEX did not extend the funding deadline.
As of January 20, 2017, UEX terminated the earn-in agreement with Uracan, with Uracan earning no
interest in the Black Lake Project.
TSX:UEX | Energy for the Future
18
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
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. AREVA is the operator of this project.
(vii) Christie Lake Project
The Company has a 30% interest in the Christie Lake Project, which is located in the eastern Athabasca
Basin and JCU (Canada) Exploration Company Limited (“JCU”) holds a 70% interest. UEX is the
operator of this 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”). On January 19, 2016, UEX signed an Option
Agreement with JCU formalizing the terms upon which UEX may earn up to a 70% interest in the
Christie Lake Project. The project contains historical non-compliant resources (deposits). The
consideration includes cash payments and exploration commitments as outlined in the following table.
Date
Cash Payment
Exploration Work
Commitment
UEX Cumulative
Interest Earned
Completed:
Upon signing of the LOI
$
250,000
$
Before January 28, 2016
Before January 1, 2017
1,750,000
2,000,000
As at December 31, 2016
$
4,000,000
To be completed:
Before January 1, 2018
Before January 1, 2019
Before January 1, 2020
1,000,000
1,000,000
1,000,000
-
-
2,500,000
1,546,253 (1)
4,046,253
953,747 (1)(2)
5,000,000
5,000,000
- %
10.00
30.00
45.00
60.00
70.00
Total
7,000,000
15,000,000
70.00 %
$
3,000,000
$
10,953,747
(1) Excess exploration work completed in 2016 will be applied to 2017 work commitments.
(2) 2017 exploration commitment under the agreement is $2,500,000.
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.
TSX:UEX | Energy for the Future
19
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
UEX is party to the following joint arrangements:
Ownership interest (%)
UEX
AREVA JCU
Total
UEX AREVA JCU
Total
December 31, 2016
December 31, 2015
Beatty River
Black Lake
Christie Lake (1)
Western Athabasca
Laurie Project (2)
Mirror River Project (3)
All other projects (4)
25.0000 50.7020 24.2980 100.0000
25.0000 50.7020 24.2980 100.0000
90.9200
9.0800 - 100.0000
90.9200
9.0800
- 100.0000
30.0000
-
70.0000 100.0000
-
- 100.0000 100.0000
42.1827 57.8173
- 100.0000
42.1827 57.8173
- 100.0000
41.9475 58.0525 - 100.0000
49.0975 50.9025
- 100.0000
49.0975 50.9025 - 100.0000
49.0975 50.9025
- 100.0000
(1) Upon making cash payments to JCU of $250,000 on October 26, 2015, $1,750,000 on January 22, 2016, $2,000,000 on
December 22, 2016, and completing the minimum $2,500,000 in exploration work, UEX vested a 30% ownership interest in the
Christie Lake Project as at December 31, 2016.
(2) 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 was diluted from 49.1% as at December 31, 2014 to 42.2% as at December 31, 2015.
(3) As a result of UEX’s decision not the fund 2016 exploration programs at the Mirror River Projects, its ownership interest was
diluted from 49.1% as a at December 31, 2015 to 41.9% as at December 31, 2016.
(4) Western Athabasca includes the Alexandra, Brander River, Erica, Nikita, Shea Creek, Uchrich, Mirror River and Laurie Projects;
however, due to a decision not to fund 2016 and 2015 exploration programs at Mirror River and Laurie, respectively, UEX’s
ownership interest has decreased in these two projects only. The Company’s ownership interest in Mirror River and 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. In 2016, 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 25,000 warrant certificates of Uracan. In early 2013, UEX received
300,000 shares and 150,000 warrants from Uracan 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 February 13, 2016,
these warrants expired.
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.
TSX:UEX | Energy for the Future
20
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
9.
Investments (continued)
The investments also include shares which have been classified as Available-for-sale (“AFS”) financial assets
and are carried at fair value (Note 15).
Investments – current portion
Warrants held – Uracan (Note 15)
Investments
Common shares held – Uracan (1) (TSX.V: URC) (Note 15)
Warrants held – Uracan (Note 15)
December 31
2016
December 31
2015
$
144
$
126
December 31
2016
December 31
2015
$
$
21,000
$
-
21,000
$
7,000
182
7,182
(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 25,000 warrants issued
on June 23, 2014 exercisable for $0.12 per warrant. The 150,000 warrants which were issued on February 13,
2013, having an exercise price of $0.15 per warrant, expired on February 13, 2016.
The fair value of the Uracan shares is based on the closing market price for these actively traded securities.
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:
December 31, 2016
December 31, 2015
June 23, 2014
Agreement
Amendment (2)
February 13, 2013
Agreement
(expired) (3)
June 23, 2014
Agreement
Amendment (2)
February 13, 2013
Agreement
(expired) (3)
Number of warrants – Uracan
Expected forfeiture rate
Weighted-average valuation date share price
Expected volatility
Risk-free interest rate
Dividend yield
Expected life
Weighted-average valuation date fair value
25,000
0.00%
$ 0.06
107.45%
0.76%
0.00%
0.47 years
$ 0.01
N/A
-
-
-
-
-
-
-
25,000
0.00%
$ 0.02
150,000
0.00%
$ 0.02
163.43%
330.38%
0.48%
0.00%
0.48%
0.00%
1.48 years
0.12 years
$ 0.01
$ 0.00
(2) The 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 weighted-average assumptions: Pre-vest forfeiture rate – 0.00%; Expected volatility –
132.48%; Risk-free interest rate – 1.23%; and Expected life of warrants – 3.00 years.
(3) The 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 weighted-average assumptions: Pre-vest forfeiture rate – 0.00%; Expected volatility –
127.26%; Risk-free interest rate – 1.22%; and Expected life of warrants – 3.00 years.
TSX:UEX | Energy for the Future
21
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
10. Accounts payable and other liabilities
Trade payables
Other liabilities
Flow-through share premium
December 31
2016
December 31
2015
$
$
57,427
$
238,868
236,680
532,975
$
70,029
255,256
151,252
476,537
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, 2016 represents the difference between the subscription
price of $0.25 per share and the market price at issuance of $0.23 per share related to the May 17, 2016
flow-through private placement of 21,000,000 shares ($420,000). Flow-through premium of $183,320 relating
to flow-through renunciation under the general rule was extinguished during the year ended December 31,
2016. In February 2017, the flow-through share premium of $236,680 relating to unspent amounts of
$2,958,500 at December 31, 2016 from the May 17, 2016 flow-through placement was extinguished on the
filing and renouncement of the tax benefits to the subscribers of that placement effective December 31, 2016.
The flow-through share premium at December 31, 2015 represented 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 placement of 11,000,000 shares ($275,000). In February 2016, the flow-through share premium
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 and renouncement of the tax benefits to the subscribers
of that placement effective December 31, 2015.
11.
Income taxes
The tax effect (computed by applying the Canadian federal and provincial statutory rate) of the significant
temporary differences, which comprise deferred income tax assets and liabilities, is as follows:
Canadian statutory income tax rate
Loss before income taxes
Income tax recovery at statutory rate
Tax effect of:
Permanent differences
Flow-through expenditures renounced and other
Valuation allowance
2016
27.00%
2015
27.00%
$ (6,315,670 )
$ (6,876,676)
1,705,231
1,856,703
24,752
(736,113 )
(659,298 )
(47,246)
(382,376)
(672,349)
Income tax provision
$ 334,572
$ 754,732
TSX:UEX | Energy for the Future
22
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
11.
Income taxes (continued)
The Company recognized a deferred income tax recovery of $334,572 for the year ended December 31, 2016
(2015 - $754,732) related to the extinguishment of the flow-through premium related to flow-through shares
renounced during the year ended December 31, 2016. Flow-through premiums related to the following
placements as renounced resulted in a deferred tax recoveries as follows:
September 29, 2014 placement flow-through premium of $681,757
May 11, 2015 placement flow-through premium of $275,000
May 17, 2016 placement flow-through premium of $420,000
Year ended December 31
2015
2016
$
$
-
$
151,252
183,320
630,984
123,748
-
334,572
$
754,732
At December 31, 2016, the Company has Canadian non-capital income tax losses carried forward of
approximately $16,852,331 which are available to offset future years’ taxable income. These losses expire
as follows:
2036
2035
2034
2033
2032
2031
2030
2029
2028
December 31
2016
1,455,378
2,157,909
2,128,882
1,870,696
1,787,321
1,684,498
1,642,206
2,666,670
1,458,771
16,852,331
$
$
The unrecognized deductible temporary differences at December 31, 2016 and 2015 are as follows:
Non-capital loss carryforwards
Charitable donations
Equipment
Investments
Mineral resource expenditure pool
Share issuance costs
Year ended December 31
2016
2015
$
16,852,331
$
15,396,953
9,000
795,700
18,426
11,250
719,108
32,262
82,509,540
81,726,297
669,446
533,790
$
100,854,443
$
97,939,660
The Company also has available mineral resource related expenditure pools totaling approximately
$91,743,105, which may be deducted against future taxable income on a discretionary basis.
TSX:UEX | Energy for the Future
23
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
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, 2014
Issued pursuant to private placement in 2015
Share issuance costs
Value attributed to flow-through premium on issuance (Note 10)
Balance, December 31, 2015
Issued pursuant to private placement in 2016
Share issuance costs
Value attributed to flow-through premium on issuance (Note 10)
Number of
shares
Value
235,015,069
$ 175,498,302
11,000,000
3,300,000
(243,558)
(275,000)
246,015,069
178,279,744
50,523,810
9,250,000
(505,882)
(420,000)
Balance, December 31, 2016
296,538,879
$ 186,603,862
On February 27, 2017, the Company completed a private placement of 15,999,994 units at a price of
$0.25 per unit and 6,700,000 flow-through common shares at a price of $0.30 per share, for gross
proceeds of $6,099,999. Share issue costs included a cash commission of $360,600, the fair value of
brokers warrants of $105,755 and other issuance costs of approximately $160,000. Each unit consisted
of one common share and one full share purchase warrant exercisable at a price of $0.42 per share for
a period of three years. The Company also issued 681,000 full share broker warrants as part of the
placement. Each broker warrant is exercisable at a price of $0.30 per share for a period of two years.
On May 17, 2016, the Company completed a private placement consisting of 21,000,000 flow-through
common shares at a price of $0.25 per share and 9,523,810 units at a price of $0.21 per unit for gross
proceeds of $7,250,000 with issue costs of $463,138. Each unit consists of one common share and
one-half share purchase warrant exercisable at a price of $0.30 per share for a period of two years. A
flow-through premium related to the sale of the associated tax benefits was determined to be $420,000.
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 with issue costs of $42,744. 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.
As Cameco’s ownership interest in UEX dropped below 20.00% in the first quarter of 2016, 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. As at December 31, 2016, Cameco’s ownership interest in UEX was 16.87%, with its
interest falling to 15.67% after the February 27, 2017 private placement was completed.
TSX:UEX | Energy for the Future
24
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
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, 2016
and December 31, 2015 and changes during the years ended on these dates is presented below:
Outstanding, December 31, 2014
15,861,000
$ 0.84
Number of share
purchase options
Weighted-average
exercise price
Granted
Cancelled
Expired
Outstanding, December 31, 2015
Granted
Cancelled
Outstanding, December 31, 2016
2,085,000
(280,000)
(350,000)
17,316,000
4,426,667
(838,667)
20,904,000
0.28
0.29
0.60
0.79
0.23
0.54
$ 0.68
In the year ended December 31, 2016, a total of $243,235 was transferred from the share-based
payments reserve to deficit relating to the expiry and cancellation of 838,667 share purchase options. In
the year ended December 31, 2015, $112,039 was transferred from the share-based payments reserve
to deficit relating to the expiry and cancellation of 630,000 share purchase options.
Subsequent to December 31, 2016, the Company granted 400,000 share purchase options to a new
director pursuant to the Company’s share option plan. The share purchase options were issued at an
exercise price of $0.245 and expire on January 1, 2022. On February 14, 2017, the Company granted
50,000 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 $0.385 and expire on February 14, 2022.
On January 30, 2017, the Company cancelled 1,150,000 share purchase options with a weighted-
average exercise price $0.92.
TSX:UEX | Energy for the Future
25
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
12. Share capital (continued)
(c) Share-based compensation (continued)
Additional information regarding stock options outstanding as at December 31, 2016 is as follows:
Range of
exercise prices
Number of
share
purchase
options
Outstanding
Weighted-
average
exercise price
Weighted-
average
remaining
contractual life
(years)
Exercisable
Number of
share
purchase
options
Weighted-
average
exercise price
$ 0.15 – 0.33
7,610,000
$ 0.26
0.34 – 0.99
7,464,000
1.00 – 1.45
5,830,000
0.64
1.28
20,904,000
$ 0.68
3.61
2.84
2.73
3.09
4,220,002
$ 0.27
7,464,000
5,830,000
0.64
1.28
17,514,002
$ 0.76
The share-based payments reserve values of $3,231,238 as at December 31, 2016 and $3,067,912 as
at December 31, 2015 on the balance sheet reflect the expensed 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, 2016 is $406,561 (2015 - $391,997). The amount included in exploration and evaluation
expenditures for the year ended December 31, 2016 is $38,753 (2015 - $30,902) and the remaining
$367,808 (2015 - $361,095) was expensed to share-based compensation.
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
(d) Flow-through shares
December 31
2016
December 31
2015
4,426,667
1.69%
$ 0.23
63.46%
0.59%
0.00%
4.21 years
$0.11
2,085,000
1.06%
$ 0.28
63.00%
0.85%
0.00%
4.09 years
$0.13
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, 2016, the Company had spent, on qualified expenditures, all (December 31, 2015 -
$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. The
Company incurred $2,043 in Part XII.6 tax on unspent flow-through monies in the year ended
December 31, 2016 (2015 - $940), which has been netted against interest income.
TSX:UEX | Energy for the Future
26
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
12. Share capital (continued)
(d) Flow-through shares (continued)
As at December 31, 2016, the Company has also spent approximately $2,291,500 of the $5,250,000
flow-through monies raised in the May 17, 2016 private placement. The Company renounced the income
tax benefit of this issue to its subscribers effective December 31, 2016 and will begin incurring Part XII.6
tax on unspent amounts relating to this placement subsequent to December 31, 2016.
(e) Warrants
Outstanding share purchase warrants entitle their holders to purchase common shares of the Company
at a price outlined in the warrant agreements. The following table summarizes the continuity of share
purchase warrants for the Company:
Balance, December 31, 2014 and December 31, 2015
Issued pursuant to private placements in 2016
Exercised
Balance, December 31, 2016
Number of
Warrants
Weighted Average
Exercise Price
-
24,761,905
-
24,761,905
$
$
-
0.22
-
0.22
As at December 31, 2016 the Company’s outstanding share purchase warrants had expiry dates and
exercise prices as follows:
Expiry Date for Warrants
January 22, 2018 (2 year life)
May 17, 2018 (2 year life)
Balance, December 31, 2016
Number of
Warrants
Exercise Price
20,000,000
4,761,905
24,761,905
$
$
0.20
0.30
0.22
Subsequent to year end, the following warrants were issued in relation to a private placement in February
2017:
Expiry Date for Warrants
February 27, 2019 (2 year life)
February 27, 2020 (3 year life)
Number of
Warrants
681,000
15,999,994
16,680,994
Exercise Price
$
$
0.30
0.42
0.42
TSX:UEX | Energy for the Future
27
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
13. Commitments
The Company has obligations under operating leases for its office premises, which expire between July 31,
2018 and October 31, 2020. The future minimum payments are as follows:
2017
2018
2019
2020
14. Management of capital
December 31
2016
$
71,502
67,774
61,446
53,130
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.
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.
TSX:UEX | Energy for the Future
28
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
15. Management of financial risk (continued)
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 – as at December 31, 2015
Level 1
Level 2
Level 3
Total
Shares – Uracan (TSX-V: URC)
Warrants – Uracan (1)
Warrants – Uracan (current portion) (1)
$ 7,000
$ -
$ -
$ 7,000
-
-
182
126
182
126
$ 7,000
$ -
$ 308
$ 7,308
Investments – as at December 31, 2016
Level 1
Level 2
Level 3
Total
Shares – Uracan (TSX-V: URC)
Warrants – Uracan (current portion) (1)
$ 21,000
$ -
$ -
$ 21,000
-
-
144
144
$ 21,000
$ -
$ 144
$ 21,144
(1) Black-Scholes inputs for the Uracan warrant valuation are disclosed in Note 9 Investments.
TSX:UEX | Energy for the Future
29
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
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, 2014
Gains (losses) for the three months ended March 31, 2015
Gains (losses) for the three months ended June 30, 2015
Gains (losses) for the three months ended September 30, 2015
Gains (losses) for the three months ended December 31, 2015
Number of
Shares
Change in
Fair Value
350,000
Fair Value
$ 19,250
(7,000 )
(7,000 )
(1,750 )
3,500
Changes in fair value – total unrealized gain (loss) on financial assets at
AFS (shares) – year ended December 31, 2015
(12,250 )
(12,250)
Balance, December 31, 2015
350,000
7,000
Gains (losses) for the three months ended March 31, 2016
Gains (losses) for the three months ended June 30, 2016
Gains (losses) for the three months ended September 30, 2016
Gains (losses) for the three months ended December 31, 2016
3,500
7,000
10,500
(7,000 )
Changes in fair value – total unrealized gain (loss) on financial assets at
AFS (shares) – year ended December 31, 2016
14,000
14,000
Balance, December 31, 2016
350,000
$ 21,000
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. This resulted in a fair value loss of $10,500, which had been recognized in OCI in 2014, to be
reclassified to 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. In the year ended December 31, 2016,
AFS shares experienced an increase in their fair value, which warranted the unrealized gains to be recognized
through OCI.
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.
TSX:UEX | Energy for the Future
30
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
15. Management of financial risk (continued)
The following table shows a reconciliation from the beginning balances to ending balances for Level 3 fair
value measurements:
Number of
Warrants
Change in
Fair Value
Fair Value (1)
175,000
$ 2,937
Balance, December 31, 2014
Gains (losses) for the three months ended March 31, 2015
Gains (losses) for the three months ended June 30, 2015
Gains (losses) for the three months ended September 30, 2015
Gains (losses) for the three months ended December 31, 2015
Changes in fair value – total unrealized gain (loss) on held-for-trading
financial assets (warrants) – year ended December 31, 2015
Balance, December 31, 2015
Expiry of warrants
175,000
(150,000 )
Gains (losses) for the three months ended March 31, 2016
Gains (losses) for the three months ended June 30, 2016
Gains (losses) for the three months ended September 30, 2016
Gains (losses) for the three months ended December 31, 2016
Changes in fair value – total unrealized gain (loss) on held-for-trading
financial assets (warrants) – year ended December 31, 2016
(2,332 )
(536 )
163
76
(2,629 )
(2,629)
(126 )
153
249
119
(559 )
(164 )
308
(164)
Balance, December 31, 2016
25,000
$ 144
(1) See Note 9 for Black-Scholes assumptions.
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.
TSX:UEX | Energy for the Future
31
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
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. Exploration and evaluation expenditures
Project
Beatty River
Black Lake
Christie Lake
Hidden Bay (2)
Deposit Areas
Exploration Areas
Western Athabasca
Alexandra
Brander
Erica
Laurie
Mirror
Nikita
Shea Creek
Uchrich
Cumulative (1) to
December 31, 2014
Expenditures
in the period
Cumulative to
December 31, 2015
Expenditures
in the period
Cumulative to
December 31, 2016
2015
2016
$
869,392
$
14,504,723
-
66,555,664
5,692,131
1,204,397
1,352,463
1,590,050
1,586,528
1,987,612
1,951,521
52,190,981
543,091
3,677
4,170
58,689
156,267
2,292,310
854
900
663,035
-
-
810
1,390,166
-
$
873,069
$
14,508,893
-
16
58,689
4,021,603
66,711,931
7,984,441
1,205,251
1,353,363
2,253,085
1,586,528
1,987,612
1,952,331
53,581,147
543,091
143,746
42,556
-
-
-
-
-
-
618,032
-
$
873,069
14,508,909
4,080,292
66,855,677
8,026,997
1,205,251
1,353,363
2,253,085
1,586,528
1,987,612
1,952,331
54,199,179
543,091
All Projects Total
$
150,028,553
$
4,570,878
$
154,599,431
$
4,825,953
$
159,425,384
(1) Exploration and evaluation expenditures have been presented on a cumulative basis from July 17, 2002.
(2) Deposit areas include Raven, Horseshoe and West Bear Deposits. Exploration areas are all other areas included in Hidden Bay.
Exploration and evaluation expenditures for the year ended December 31, 2016 and 2015 include the
following non-cash expenditures:
Depreciation
Share-based compensation
Project management fee
Year ended December 31
2015
2016
53,092
$
38,753
367,860
35,915
30,902
38,216
459,705
$
105,033
$
$
TSX:UEX | Energy for the Future
32
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
17. Exploration and evaluation expenditures (continued)
Hidden Bay Project
During the year ended December 31, 2016, total expenditures at Hidden Bay included evaluation
expenditures of $143,746, (2015 - $71,755) in deposit areas. These amounts reflect costs associated with
the continuing evaluation of and advancement of Hidden Bay, and include the heap leach evaluation and
various component technical studies.
Western Athabasca Projects
As at December 31, 2016, UEX has decided not to fund its share of the 2017 Western Athabasca exploration
budget ($0.5 million each for geophysics on Uchrich and Nikita, $1.3 million each for drilling on Laurie and
Mirror River). UEX’s decision to not fund exploration work at the Laurie Project 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 WAJV projects which remained at 49.1%, including
the Company’s ownership of the existing uranium resources at the Shea Creek Project.
UEX decided not to fund its share of the 2016 geophysical program at the Mirror River Project. As a result,
UEX’s interest in this project dropped from a 49.1% interest to 41.9% as AREVA completed the approved
program. This dilution only applies to UEX’s interest in the Mirror River Project.
Christie Lake Project
During the year ended December 31, 2016, the Company completed a $4.0 million exploration program at
Christie Lake, $1.5 million in excess of the 2016 exploration earn-in required. The Company will apply the
excess funding to reduce future years’ commitments to the ownership milestones. In early 2017, the
Company began a further $3.0 million exploration program at Christie Lake, which is 100% funded by UEX.
UEX is the project operator and is entitled to a 10% management fee, which is offset against salaries and is
deemed to be an expenditure for the exploration work commitment portion of the project earn-in (see Note
19).
Costs associated with reviewing the project prior to signing the LOI were expensed as project investigation
costs in 2015.
18. Office expenses
Insurance
Office supplies and consulting
Telephone
Year ended December 31
2015
2016
$
51,710
125,510
11,815
189,035
$
51,664
385,995
15,078
452,737
$
$
TSX:UEX | Energy for the Future
33
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
19. Salaries, net of project management fees
Gross salaries
Non-cash management fee offset:
Christie Lake – 10%
Black Lake – 10%
Year ended December 31
2015
2016
881,793
$
907,705
(367,841)
(19)
-
(38,216)
513,933
$
869,489
$
$
The Christie Lake non-cash operator management fee offset above arises from the 10% management fee
deemed to be an expenditure for the exploration work commitment portion of the project earn-in, as per the
January 19, 2016 Option Agreement with JCU.
20. 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:
Cameco Corporation (1)
Management advisory board share-based payments (2)
Panterra Geoservices Inc. (3)
Year ended December 31
2015
2016
1,323 $
9,055
-
10,378 $
12,000
15,141
2,400
29,541
$
$
(1) 2016 payments related to fees paid for use of the Cameco airstrip at the McArthur River mine. 2015 payment represents an amount paid
to Cameco (20.33% shareholder of UEX Corporation at the date of the transaction) in May of 2015 to acquire Cameco’s 70% interest in
the Umpherville joint venture (see Note 8(i)).
(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) 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.
TSX:UEX | Energy for the Future
34
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
20. Related party transactions (continued)
(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
2015
2016
740,259 $
338,449
-
676,127
322,770
183,000
1,078,708 $
1,181,897
$
$
(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 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
35
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
21. Change in Accounting Policy
Effective September 30, 2016, the Company changed its accounting policy related to exploration and
evaluation expenditures. This change requires exploration expenditures to be expensed as incurred rather
than capitalized to mineral properties. The treatment of acquisition and staking costs, as well as costs incurred
prior to obtaining rights, has not changed. This change in accounting policy has been applied retrospectively.
The Company has applied IFRS 6 Exploration for and evaluation of mineral properties since its transition to
IFRS. Under IFRS 6, the Company recognized as assets its mineral exploration and evaluation costs on a
historical cost basis. These capitalized amounts were assessed for impairment at each reporting period.
Except as previously recorded by the Company, the historical cost amounts capitalized are not impaired. The
Company decided to change its accounting policy for exploration and evaluation costs with a view to providing
more relevant, reliable and understandable information to financial statement users. The reasons for the
change in policy include aligning the accounting treatment of mineral exploration and evaluation costs with
other companies in the industry including those that report under US GAAP, which allows shareholders to
more easily understand and compare our financial statements with others, and the Company has determined
that the treatment of exploration and evaluation costs as an operating expense better reflects the economic
substance of our operating activities during the fiscal periods presented.
The accounting policy change has been applied retrospectively in preparing the comparative statements as
follows:
Balance Sheets as at January 1, 2015 and December 31, 2015;
Statement of Operations and Comprehensive Loss for the year ended December 31, 2015; and
Statement of Cash Flows for the year ended December 31, 2015.
The effect of the change in accounting policy on the Company’s balance sheets is summarized below as
debits and (credits).
Mineral
properties
DIT liability Share capital
AOCI
Deficit
Reclassified exploration expenditures
$ (150,028,554) $ - $ - $ - $150,028,554
Not recognizing DITL
Not recognizing DIT on issue costs
Not recognizing DIT on AFS assets (OCI)
-
-
-
12,107,958
-
(2,044,309)
2,044,309
-
-
(12,107,958)
-
-
-
1,418
(1,418)
January 1, 2015, total policy change impact:
(150,028,554)
10,063,649
2,044,309
1,418
137,919,178
Reclassified exploration expenditures
(4,570,878)
-
Not recognizing DITL
Not recognizing DIT on issue costs
Not recognizing DIT on AFS assets (OCI)
-
-
-
597,504
(65,761)
1,418
-
-
65,761
-
-
-
-
(1,418)
4,570,878
(597,504)
-
-
December 31, 2015, total policy change impact:
$ (154,599,432) $ 10,596,810 $ 2,110,070 $ - $141,892,552
As a result of the retrospective application of the policy change, the Company no longer presents a net
deferred tax liability. In no longer presenting a net deferred tax liability, the deferred tax impact on share
issue costs has been reversed to deferred tax liability in the periods in which it occurred.
TSX:UEX | Energy for the Future
36
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
21. Change in Accounting Policy (continued)
Balance sheet – as at January 1, 2015
Assets
Current assets
Cash and cash equivalents
Amounts receivable
Prepaid expenses
Non-current assets
Deposits
Equipment
Mineral properties
Investments
Total assets
January 1, 2015
As previously
reported
January 1, 2015 Note
Effect of policy
change
Restated under
new policy,
January 1, 2015
$
9,321,596
141,170
106,540
9,569,306
$
$
-
-
-
-
-
111,885
155,240,363
22,187
1
-
(150,028,554 )
-
9,321,596
141,170
106,540
9,569,306
-
111,885
5,211,809
22,187
$
164,943,741
$
(150,028,554 ) $
14,915,187
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and other liabilities
$
1,322,439
$
-
$
1,322,439
Non-current liabilities
Deferred tax liability
Total liabilities
Shareholders’ equity
Share capital
Share-based payments reserve
Accumulated other comprehensive income
(loss)
Deficit
2
3
10,063,649
11,386,088
177,542,611
2,787,954
(9,082)
(26,763,830)
153,557,653
(10,063,649 )
-
(10,063,649 )
1,322,439
(2,044,309 )
-
175,498,302
2,787,954
(1,418 )
(137,919,178 )
(10,500)
(164,683,008 )
(139,964,905 )
13,592,748
Total liabilities and shareholders’ equity
$
164,943,741
$
(150,028,554 ) $
14,915,187
1. Cumulative since inception effect of accounting policy change reclassifying evaluation and expenditure costs to income statement. Balance
2.
remaining reflects cumulative acquisition costs of mineral properties at January 1, 2015.
Increased deductible temporary differences due to expensing exploration and evaluation costs resulted in a deferred tax asset, which will
not be recognized until the Company is confident that it can be used against future taxable income.
3. Cumulative effect of deferred tax no longer being recognized on share issuance costs.
TSX:UEX | Energy for the Future
37
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
21. Change in Accounting Policy (continued)
Balance sheet – as at December 31, 2015
Assets
Current assets
Cash and cash equivalents
Amounts receivable
Prepaid expenses
Investments – current portion
Non-current assets
Deposits
Equipment
Mineral properties
Investments
Total assets
December 31, 2015
As previously
reported
December 31,
2015 Note
Effect of policy
change
Restated under
new policy,
December 31,
2015
$
$
5,139,814
62,010
100,177
126
5,302,127
$
-
-
-
-
44,704
292,202
160,084,497
7,182
1
-
-
(154,599,432 )
-
5,139,814
62,010
100,177
126
5,302,127
44,704
292,202
5,485,065
7,182
$
165,730,712
$
(154,599,432 ) $
11,131,280
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and other liabilities
$
476,537
$
-
$
476,537
Non-current liabilities
Deferred tax liability
Total liabilities
Shareholders’ equity
Share capital
Share-based payments reserve
Deficit
2
3
10,596,810
11,073,347
180,389,814
3,067,912
(28,800,361)
154,657,365
(10,596,810 )
-
(10,596,810 )
476,537
(2,110,070 )
-
(141,892,552 )
178,279,744
3,067,912
(170,692,913)
(144,002,622 )
10,654,743
Total liabilities and shareholders’ equity
$
165,730,712
$
(154,599,432 ) $
11,131,280
1. Cumulative since inception effect of accounting policy change reclassifying evaluation and expenditure costs to income statement. Balance
2.
remaining reflects cumulative acquisition costs of mineral properties at December 31, 2015.
Increased deductible temporary differences due to expensing exploration and evaluation costs resulted in a deferred tax asset, which will
not be recognized until the Company is confident that it can be used against future taxable income.
3. Cumulative effect of deferred tax no longer being recognized on share issuance costs.
TSX:UEX | Energy for the Future
38
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
21. Change in Accounting Policy (continued)
Statement of Operations and Comprehensive Loss
As previously
reported Note
Year ended December 31, 2015
Effect of policy
change
Restated under
new policy
Revenue
Interest income
Expenses
Bank charges and interest
Depreciation
Exploration and evaluation expenditures
Filing fees and stock exchange
Legal and audit
Loss on disposal of equipment
Maintenance
Office expenses
Project investigation
Rent
Salaries, net of management fees
Share-based compensation
Travel and promotion
Unrealized loss on available-for-sale financial assets
Unrealized fair value loss (gain) on held-for-trading
financial assets
Write-down of mineral properties
$
106,027
$
- $
106,027
1
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
2,629
1,528
-
-
4,570,878
-
-
-
-
-
-
-
-
-
-
-
-
-
5,308
19,282
4,570,878
85,147
139,095
423
49,750
452,737
21,938
157,456
869,489
361,095
223,198
22,750
2,629
1,528
2,411,825
4,570,878
6,982,703
Loss before income taxes
(2,305,798)
(4,570,578)
(6,876,676)
Deferred income tax recovery
157,228
2
597,504
754,732
Loss for the year
(2,148,570)
(3,973,374)
(6,121,944)
Other comprehensive income (loss)
Losses on available-for-sale assets transferred to
earnings
Deferred income tax expense on change in fair value
of available-for-sale financial assets
10,500
(1,418)
2
Comprehensive loss for the year
Basic and diluted loss per share
9,082
(2,139,488)
(0.009)
$
$
-
1,418
1,418
10,500
-
10,500
$
$
(3,971,956) $
(6,111,444)
(0.016)
$
(0.025)
Basic and diluted weighted-average number of
shares outstanding
242,094,261
242,094,261
1. Exploration and evaluation costs are presented on the statement of operations and comprehensive loss, reflecting retrospective
application of the accounting policy change.
2. Deferred tax recovery reflects extinguishment of flow-through premium upon renunciation; reflective of policy change, deferred taxes not
recognized on OCI items.
TSX:UEX | Energy for the Future
39
UEX CORPORATION
Notes to the Financial Statements
For the years ended December 31, 2016 and 2015
21. Change in Accounting Policy (continued)
Statement of Cash Flows
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 mineral properties
Purchase of equipment
Proceeds on sale of furniture
Financing activities
Proceeds from common shares issued
Share issuance costs
Year ended December 31, 2015
As previously
reported
Not
e
Effect of
policy change
Restated under
new policy
$
(2,148,570)
$
(3,973,374 ) $
(6,121,944)
1
2
3
4
4
5
19,282
(157,228)
(106,027)
423
(940)
361,095
22,750
2,629
1,528
44,826
(38,341)
(291,957)
(2,290,530)
135,463
(4,847,220)
(236,756)
819
(4,947,694)
3,300,000
(243,558)
3,056,442
35,915
(597,504 )
-
-
-
30,902
-
-
-
5,838
-
(74,213 )
55,197
(754,732)
(106,027)
423
(940)
391,997
22,750
2,629
1,528
50,664
(38,341)
(366,170)
(4,572,436 )
(6,862,966)
-
4,572,436
-
-
4,572,436
-
-
-
-
-
-
135,463
(274,784)
(236,756)
819
(375,258)
3,300,000
(243,558)
3,056,442
(4,181,782)
9,321,596
$
5,139,814
Decrease in cash and cash equivalents during the year
(4,181,782)
Cash and cash equivalents, beginning of year
9,321,596
Cash and cash equivalents, end of year
$
5,139,814
$
1. Reflects depreciation included in exploration and evaluation expense, rather than capitalized to mineral properties.
2. Deferred tax recovery reflects extinguishment of flow-through premium upon renunciation.
3. Reflects share-based compensation included in exploration and evaluation expense, rather than capitalized to mineral properties.
4. Reflects the amounts receivable and accounts payable related to mineral properties that was included in investing activities.
5. Amounts spent on exploration and evaluation activities are presented in loss for the year; amounts remaining are mineral property
acquisition costs.
TSX:UEX | Energy for the Future
40
Corporate Information
Board of Directors
Legal Counsel
Graham C. Thody, Chairman
Vancouver, British Columbia
Roger M. Lemaitre
President and CEO
Saskatoon, Saskatchewan
Suraj P. Ahuja, Lead Director
Vancouver, British Columbia
Mark P. Eaton
Toronto, Ontario
Emmet A. McGrath
Vancouver, British Columbia
Catherine A. Stretch
Toronto, Ontario
Officers
Roger M. Lemaitre
President and CEO
Ed Boney
CFO and Corporate Secretary
Nan Lee
Vice-President, Project Development
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