UEX CORPORATION
Management’s Discussion and Analysis
For the Year Ended
December 31, 2017
TSX: UEX
Energetically Growing by Discovery, Innovation and Acquisition
www.uex-corporation.com
Message to Shareholders
For UEX shareholders, 2017 was a very busy year. While UEX share prices rose 44% during the year, there
were certainly several ups and downs along the way.
Early in the year our first hole of the winter exploration program at Christie Lake encountered high-grade uranium
mineralization that became part of the new high-grade Ōrora Deposit discovery. Drilling over the remainder of
the year defined continuous unconformity-style uranium mineralization over a strike length of 150 m that remains
open for expansion along strike in both directions. In December, we announced that UEX had vested a 45%
interest in the Christie Lake Project and remained on track to earn our 70% interest. UEX is currently engaged
in a winter drilling program that will be testing the Yalowega Trend northeast of the Ōrora Deposit and for strike
extensions to the Orora Deposit itself.
While uranium prices started 2017 on a sharp upswing, moving from US$20.25/lb at the beginning of the year
and peaking at US$26.50/lb in mid-February, stubbornly low uranium prices returned by spring. Uranium
investors retreated from the sector impacting the share prices of all uranium companies and UEX was no
exception.
The prolonged and stubbornly low uranium prices have finally begun to impact uranium suppliers. It was not
surprising that in 2017 higher cost producers curtailed production, electing to fill their uranium sales contract with
purchases of cheap uranium from the spot market. Kazatomprom announced significant production cutbacks in
Kazakhstan. However, it was Cameco’s announcement of the suspension of production at McArthur River that
has shown the market that even the lowest cost producers cannot survive today’s uranium price environment.
Suppliers have drawn their line in the sand and have told utilities that they are not willing to sign future sales
contracts or make investments to increase or maintain primary uranium supply without significant increase in
uranium price. Every single uranium producer in the world cannot continue to indefinitely produce uranium to
supply a growing market at a loss forever. Blessed with a substantial uranium resource base due to our ownership
in 10 uranium deposits in the low-cost Athabasca Basin, UEX shareholders are well positioned to take advantage
of the inevitable rise in uranium prices.
In addition to benefiting from our uranium resource base, UEX shareholders have the opportunity to capitalize on
the rapidly growing push towards electric vehicles (“EV") that in turn is powering the skyrocketing demand for
battery chemicals, particularly cobalt. In the past eighteen months, cobalt prices have tripled due to the lack of
readily available, secure, stable and ethically-sourced cobalt needed to fabricate the batteries to power EVs.
Currently, 98% of all cobalt is derived as a by-product of either nickel or copper production, and 65% of that cobalt
is sourced from the DRC. To power the EV revolution, the world desperately needs cobalt production from
operations whose primary focus and economic drivers are geared towards the extraction of cobalt.
In 2002, UEX discovered the West Bear Cobalt-Nickel Prospect while exploring along strike of the West Bear
Uranium Deposit. In 2004 and 2005, UEX drilled thirteen holes that defined continuous high-grade cobalt-nickel
mineralization over a 175 m x 75 m area. The Prospect was put on the shelf in 2006 after cobalt prices peaked
in 2005.
The rapid appreciation of cobalt prices in 2017 prompted UEX to re-evaluate the potential of the West Bear Cobalt-
Nickel Prospect. In November, the Company began the process determining how the Prospect could best
enhance shareholder value. In January, UEX announced plans to spin-out the West Bear Cobalt-Nickel Prospect
through our newly formed 100%-owned subsidiary CoEX Metals Corporation.
UEX believes that the West Bear Cobalt-Nickel Prospect compares very favorably to the current crop of global
cobalt deposits. It is high-grade, open-pit amenable, open for expansion in all directions, surrounded by excellent
infrastructure and is located in the world’s number two mining investment jurisdiction, Saskatchewan. Our
exploration team has a unique set of skills and understanding of these Athabasca-type cobalt-nickel deposits,
which provides UEX a substantial competitive advantage.
We believe that West Bear Cobalt -Nickel Prospect has the potential to be a key source of stable, secure, ethically-
sourced cobalt, where production is keyed to the dynamics of the cobalt market and not as a fortunate by-product
of the production of other commodities.
Currently, UEX has embarked on a $1.5 million, 30 to 40 hole drill program with the objective of growing the high-
grade West Bear Cobalt-Nickel Project in advance of the possible spin-out of CoEX Metals. I am eagerly looking
forward to reporting the drilling results at West Bear to shareholders in the coming weeks.
With high investor interest in the fledgling cobalt sector, our West Bear Cobalt-Nickel Prospect will likely be driving
UEX shareholder value over the next few months. Long-term, the Company’s uranium resource holdings and
high-quality uranium exploration portfolio should provide shareholders with excellent exposure to what should be
the inevitable rise in uranium prices.
Roger Lemaitre
President & CEO
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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, 2017 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 19, 2017 and should be read in
conjunction with the Company’s audited annual consolidated financial statements and related notes for the years
ended December 31, 2017 and 2016. The audited annual consolidated 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
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
6
31
45
50
51
52
2
5
26
42
46
47
48
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Introduction
Overview
UEX’s fundamental goal is to remain one of the leading global uranium and cobalt explorers and to advance our
portfolio of Athabasca Basin uranium and cobalt 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 four advanced projects, three in the eastern Athabasca
Basin and one in the western Athabasca Basin. Eastern Athabasca Basin advanced uranium projects include the
Horseshoe and Raven Project (“Horseshoe-Raven”, formerly a part of the Hidden Bay Project) that hosts the
Horseshoe and Raven Deposits and the 45% 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 eastern Athabasca Basin advanced cobalt project is the 100%-owned West Bear Cobalt-
Nickel Prospect (“West Bear”, formerly part of the Hidden Bay Project), that hosts the West Bear Cobalt-Nickel
Zone and the West Bear Uranium Deposit. The western Athabasca Basin advanced project is the 49.1% owned
Shea Creek Project (“Shea Creek”) that hosts the Kianna, Anne, Colette and 58B Deposits.
UEX is involved in sixteen uranium projects located in the Athabasca Basin, the world’s richest uranium district,
which in 2016 accounted for approximately 22.6% of global primary uranium production. The Company’s uranium
projects include:
•
six that are 100% owned and operated by UEX (West Bear, Horseshoe-Raven, Hidden Bay, Laurie
North, Riou Lake and Parry Lake),
• one project under option from JCU and operated by UEX (Christie Lake),
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
2
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
• one joint venture with Orano Canada Inc. (formerly AREVA Resources Canada Inc.) (“Orano”) that is
under option to and operated by ALX Uranium (Black Lake),
• eight projects joint-ventured with and operated by Orano (Western Athabasca Joint Venture projects
Shea Creek, Erica, Brander Lake, Alexandra, Nikita, Mirror River, Laurie and Uchrich),
• one project joint-ventured with Orano and JCU (Canada) Exploration Company Limited (“JCU”) that is
operated by Orano (Beatty River).
Orano is part of the Orano group, one of the world’s largest nuclear service providers, and JCU is a private
Japanese company with significant investments in several uranium projects in Canada.
UEX is involved in one cobalt-nickel exploration project located in the Athabasca Basin of northern Saskatchewan.
The West Bear Project was formerly part of UEX’s Hidden Bay Project and contains the West Bear Cobalt-Nickel
Prospect and the West Bear Uranium Deposit.
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 Orano in the western Athabasca
Basin. The following charts summarize UEX’s ownership share of these mineral resources.
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
N.I. 43-101 Mineral Resource Estimates
(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) 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.
(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 Horseshoe, Raven, and West Bear mineral resources were estimated at a cut off of 0.05% U3O8, and are documented in the
“Preliminary Assessment Technical Report on the Horseshoe and Raven Deposits, Hidden Bay Project, Saskatchewan, Canada” (The
Preliminary Assessment Technical Report”, the “PA” or the Horseshoe-Raven Report”) with an effective date of February 15, 2011 which
was filed on SEDAR at www.sedar.com on February 23, 2011.
(3) Certain amounts presented in the Hidden Bay 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, Horseshoe-Raven and West Bear sections of this MD&A.
Non-Compliant Resources
The Company holds a 45% 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
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
4
TonnesGrade (wt% U3O8) U3O8 (lbs) UEX Share (lbs) Tonnes Grade (wt% U3O8) U3O8 (lbs) UEX Share (lbs) Shea Creek (49.1% interest)Kianna1,034,500 1.52634,805,000 17,088,385 560,700 1.364 16,867,000 8,281,275 Anne564,000 1.99124,760,000 12,156,541 134,900 0.880 2,617,000 1,284,882 Colette327,800 0.7865,680,000 2,788,738 493,200 0.716 7,780,000 3,819,786 58B141,800 0.7742,417,000 1,186,687 83,400 0.505 928,000 455,625 Total - Shea Creek2,067,900 1.48467,663,000 33,220,841 1,272,200 1.005 28,192,000 13,841,567 Deposit Indicated Resources (at 0.30% U3O8 Cut-Off) Inferred Resources (at 0.30% U3O8 Cut-Off) TonnesGrade (wt% U3O8) U3O8 (lbs) UEX Share (lbs) Tonnes Grade (wt% U3O8) U3O8 (lbs) UEX Share (lbs) Horseshoe-Raven (100% interest)Horseshoe5,119,700 0.20322,895,000 22,895,000 287,000 0.166 1,049,000 1,049,000 Raven5,173,900 0.10712,149,000 12,149,000 822,200 0.092 1,669,000 1,669,000 Total - Horseshoe-Raven10,293,600 0.15435,044,000 35,044,000 1,109,200 0.111 2,715,000 2,715,000 West Bear (100% interest)West Bear Uranium78,900 0.9081,579,000 1,579,000 - - - - Deposit Indicated Resources (at 0.05% U3O8 Cut-Off) Inferred Resources (at 0.05% U3O8 Cut-Off)
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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 has completed additional infill drilling on the
deposits during the option period to upgrade these historic resources to indicated and inferred. A qualified person
has not yet 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 and the geology of the Christie Lake Project is available under the Christie
Lake Project section of this MD&A and is documented in the Technical Report on the Christie Lake Project,
Saskatchewan with an effective date of December 31, 2016, which was filed on SEDAR at www.sedar.com on
March 28, 2017.
Growth Strategy – UEX
• To extract value for UEX shareholders from our West Bear Cobalt-Nickel Prospect to take advantage of
the rapid growth in the demand for cobalt due to the anticipated growth in electric vehicle manufacturing.
• 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 continue the exploration and evaluation work required to delineate and develop economic uranium
resources at Shea Creek.
• To advance the evaluation/development process at our 100%-owned Horseshoe and Raven uranium
deposits to a production decision once uranium commodity prices have demonstrated a sustained
recovery from current spot and long-term prices.
• To find new uranium deposits at the 100%-owned Hidden Bay Project and at the Western Athabasca
Projects with our joint-venture partner Orano.
• To evaluate and make timely acquisitions of uranium and cobalt projects in favorable, low-cost
jurisdictions.
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5
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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. In 2018 UEX will focus
on determining the size of the Ōrora
zone and testing similar geological
features along strike to the northeast.
• Two historical uranium deposits, with
historical non-compliant resource of
20.87 Mlbs at a grade of 3.22%*.
• UEX signed an Option Agreement
January 2016 to earn up to a 70%
interest, currently at a 45% 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. 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 has completed
additional infill drilling on the deposits during the option earn-in period to upgrade these historic resources to indicated and inferred resources. A
qualified person has not yet 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.
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Number of claims
Hectares
Christie Lake
6
7,922
Acres
19,576
UEX
Ownership %
45.00
The Christie Lake Project is currently 55% owned by JCU (Canada) Exploration Company, Limited (“JCU”) and
45% 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. As of the date of this document, UEX has made cash payments of $5.0 million and spent
approximately $8.0 million on exploration. UEX current has earned a 45% interest in the Christie Lake Project
and is on track to earn a 70% interest in the property.
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 the required $2,500,000 of work in 2016.
UEX earned a 45% interest in the project on December 7, 2017 by making a cash payment of $1,000,000 and
completing the required $2,500,000 of work as required in 2017 under the Option Agreement.
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 by Q2 2018. Beyond the known
mineralized zones, management believes that the full potential of this 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 Deposit. 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.
Further information on the geology of the Christie Lake Project is documented in the Technical Report on the
Christie Lake Project, Saskatchewan with an effective date of December 31, 2016, which was filed on SEDAR at
www.sedar.com on March 28, 2017.
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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
Required
Cash
Payments
Completed
Exploration
Work
Required
Exploration
Work
Completed(1)
Interest
Earned (%)
Upon signing of the LOI
$
250,000
$
250,000
Before January 28, 2016
1,750,000
1,750,000
Before January 1, 2017
2,000,000
2,000,000 $
2,500,000
$
2,500,000
Before January 1, 2018
1,000,000
1,000,000
2,500,000
2,500,000
Before January 1, 2019
Before January 1, 2020
1,000,000
1,000,000
5,000,000
5,000,000
2,962,022
Total
$
7,000,000
$
15,000,000
Completed as of
December 31, 2017
$
5,000,000
$
7,962,022
10
30
45
60
70
70
45
(1) Cumulative exploration work completed does not include $100,159 of share based compensation relating to the Christie Lake Project, which is not an
eligible earn-in expenditure.
UEX can elect to proceed with or cease future cash payments and work commitments at any time and vest in the
project according to this schedule.
2017 Exploration Program
In 2017, UEX commenced exploration on the 1.5 km long Yalowega Uranium Trend (the “Trend”) along strike to
the northeast of the Ken Pen Deposit. As the Trend is known to host mineralization along its entire length, UEX
believes that both the basement-hosted uranium potential and the unconformity potential, where the lower breccia
structure intersects the unconformity northwest of the Trend, are both vastly underexplored. Management
continues to be very optimistic about the opportunities for additional discoveries along the Trend. In addition,
UEX completed follow-up drilling at Paul Bay and Ken Pen to answer key questions related to the upcoming
NI 43-101 resource report.
During the winter of 2017, UEX was able to complete an 18 hole - 8,171 m drilling program at a cost of
approximately $2.5 million. The summer program focused on expanding the Ōrora Zone to the southwest along
strike and consisted of ten holes totaling 4,541 m.
In 2017, UEX has completed 28 drill holes totaling 12,712 m at a cost of approximately $3.9 million.
Ōrora Zone Discovery
In late January 2017, UEX announced the discovery of high-grade uranium mineralization, which has been named
the “Ōrora Zone”, located approximately 500 m northeast and along strike of the Ken Pen Deposit. In February
2017, UEX announced that discovery hole CB-109 returned an assay interval of 22.81% U3O8 over 8.6 m, which
is the best hole (as defined by grade x thickness) drilled to date on the Christie Lake Project.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
The Ōrora Zone has a minimum strike length of
150 m and remains open for expansion along
strike to the southwest and to the northeast.
Several of the holes following up CB-109
encountered
very high grade uranium
mineralization. Highlights from the assay
results received from Ōrora Zone drill holes to
date include:
• CB-109 which returned 11.43% U3O8
over 17.7 m, including a subinterval of
22.81% U3O8 over 8.6 m;
• CB-110A, drilled 20 m northeast and
along strike returned 2.28% U3O8 over
18.0 m and included a subinterval of
9.86% U3O8 over 3.5 m;
• CB-114C which returned 2.58% U3O8
over 3.0 m;
• CB-116A which returned 17.11% U3O8
over 10.0 m, including 20.00% U3O8
over 8.5 m;
• CB-116A-1
intersected 0.91%
U3O8 over 12.5 m; including 2.90%
U3O8 over 3.1 m; and
that
• CB 116A-2 which returned 1.77% U3O8
over 6.5 m; including 3.06% U3O8 over
3.5 m.
Paul Bay Deposit Drilling
Five holes were drilled to tighten the spacing between existing holes within the high grade subzone and to
determine the size of the new lower high grade zone defined by hole CB-102, discovered at the conclusion of
the 2016 drill program.
Hole CB-113 successfully confirmed the presence of the high grade subzone between holes CB-092 and CB-
004, encountering 5.77% U3O8 over 7.6 m, including a subinterval of 8.48% U3O8 over 4.9 m.
Hole CB-112-1 filled a gap between CB-092 and CB-093 within the high grade subzone, intersecting 3.60% U3O8
over 1.8 m.
Holes CB-108A and CB-108-1 significantly expanded the size of the lower high grade zone defined by hole CB-
102. CB-108A intersected 2.92% U3O8 over 6.7 m approximately 15 m southwest of CB-102. Located 28 m
northeast of CB-102, hole CB-108A-1 encountered 2.42% U3O8 over 12.6 m, extending the strike length of the
lower high grade zone to at least 43 m in an area of the Paul Bay Deposit previously believed to be comprised of
exclusively low grade uranium mineralization.
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Ken Pen Deposit Drilling
Due to the success at Ōrora, UEX chose to complete only two holes in 2017 with the objective of expanding the
Ken Pen Deposit.
Hole CB-107A-1 was drilled to test the unconformity up-dip of the mineralization encountered in hole CB-107
located at the southwestern margin of the Ken Pen Deposit and encountered a modest interval of weak uranium
mineralization .
Hole CB-115 was drilled to test 25 m along strike of the CB-107 mineralization and encountered narrow intervals
of low grade uranium mineralization.
Additional drilling will be required to define the ultimate limits of the Ken Pen Deposit along strike to the northeast
and at depth to the southwest. This work is intended to be completed in future UEX drilling campaigns.
First NI 43-101 Resource for Christie Lake
The Company has engaged a geological consulting firm to incorporate the historical results with the results of
UEX’s 2016 and 2017 programs. In September, a resource estimation geologist came to site to view mineralized
drill core from all three deposits. The UEX exploration team and the consulting firm are working together and are
on track to complete a maiden NI 43-101 compliant resource before the end of Q2-2018.
2018 Exploration Program
In late January 2018, UEX commenced a
$1.5 million drill program consisting of
approximately 4,500 m of drilling in 9 holes.
The program will focus on testing targets
located along strike and northeast of the
Ōrora Deposit.
The winter program will test unconformity
targets northwest and up-dip of modest
basement-hosted uranium mineralization
drilled by the previous operator in the
1990s. Similar testing by UEX in 2017 led
to the discovery of the Ōrora Deposit.
The winter program may test the immediate
north-east and south-west strike extensions
of the Ōrora Deposit. The extension drill
testing program may be deferred until the
summer program. Should the lake ice
conditions on East End Lake remain
favorable, drilling will continue to focus on
testing the northeastern Yalowega Trend.
Extension drilling at Ōrora can be
performed during the summer from land.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
West Bear Cobalt-Nickel Prospect
• The West Bear Cobalt-Nickel
Prospect was initially discovered by
UEX in 2002
• The West Bear Cobalt-Nickel
Prospect is located east of the West
Bear Uranium Deposit but does not
itself contain uranium.
• The shallowest Co-Ni deposit in
Canada
• Open-pit amenable as cobalt is
currently defined between 15-55 m
depths and remains open in all
directions
• The presence of cobalt at West Bear
was not recognized or tested for by
previous explorers
West Bear Cobalt-Nickel Prospect
• Very high-grade cobalt was encountered in thirteen holes drilled by UEX over a 175 m by 75
m area between 2002 and 2005.
• The known Co-Ni mineralization remains open for expansion in all directions
• Many historical holes have been drilled in the area but most do not intersect the structure that
hosts the Co-Ni mineralization. On the rare occasion when a historical hole actually tested the
structure, samples were often not analyzed for cobalt
• UEX has formed a wholly-owned subsidiary, CoEX Metals Corporation (“CoEx”), which has
been tasked with the exploration and development of the West Bear Cobalt-Nickel Prospect.
• UEX is exploring options to enhance shareholder value by spinning out CoEX as a new
company
West Bear Uranium 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 | Energetically Growing by Discovery, Innovation and Acquisition
11
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Mineral Resource Estimates
For details of the West Bear Resource estimate for the West Bear Uranium Deposit, please see the next section,
Mineral Resource Estimates, Horseshoe and Raven Project, as the uranium resources at the West Bear Uranium
Deposit were estimated as part of the Horseshoe-Raven Report. There has not been a resource estimate
completed on the West Bear Cobalt-Nickel Prospect at this time.
Number of claims
Hectares
West Bear
20
6,378
Acres
15,760
UEX
Ownership %
100.00
The West Bear Co-Ni Prospect lands are 100% owned by UEX with the exception of Mineral Lease 5424 which
is a joint venture between UEX (77.575%), Empresa Nacional Del Uranio S.A. (7.680%), Nordostschweizerische
Kraftwerke A.G. (7.68%) and Encana (7.066%). West Bear was acquired from Cameco upon UEX’s formation in
2001 as part of the Hidden Bay Project, which established Cameco’s initial equity position in UEX.
UEX has elected to separate West Bear from the Hidden Bay Project due to its advanced stage of exploration
and development compared to the remainder of the original project lands and due to the fact that future exploration
focus will be on expanding cobalt-nickel resources instead of uranium resources. The West Bear Uranium
Deposit is located on the West Bear Co-Ni Prospect lands and has uranium resources that have been subject to
advanced studies including a Preliminary Feasibility Study ( https://uex-corporation.com/projects/west-bear/ ).
Historical Work
Exploration activities on the West Bear Land prior to UEX were conducted by two groups, one being Gulf Minerals,
and the other the Conwest Joint Venture. The ownership interests of both groups were eventually consolidated
by Saskatchewan Mineral Development Corporation which was a predecessor of Cameco Corporation.
Cameco’s interest were passed onto UEX as part of UEX’s formation in 2001.
In addition to the West Bear Co-Ni Prospect, the Property hosts one uranium deposit and several occurrences
and showings including the West Bear Uranium Deposit (“WBU Deposit”), the Pebble Hill Uranium Occurrence,
the Mitchel Lake Uranium Occurrences, and the Umpherville Uranium Occurrence. The WBU Deposit has been
the subject of several NI-43-101 resource reports and a pre-feasibility study commissioned by UEX ( https://uex-
corporation.com/projects/west-bear/ ).
Exploration on different portions of the property commenced in the 1970’s by several explorers including Gulf
Minerals, Noranda, and the Conwest Exploration Joint Venture that continued through the 1980’s and led to the
discovery of the WBU Deposit and nearby uranium showings. Historical exploration efforts focused exclusively
on discovering classic unconformity uranium deposits of the Cigar Lake-style, which meant that drill holes tested
the intersection of graphitic pelites with the unconformity surface. Exploration drill holes rarely penetrated more
than 15 m below the unconformity surface.
Upon acquisition of the West Bear Project, UEX completed significant exploration work between 2002 and 2009
that included the definition of the WBU Deposit and the discovery and only partial definition of the West Bear
Cobalt-Nickel Prospect in thirteen drill holes. The grades and widths of the cobalt concentrations in these thirteen
holes are shown in the table below. These grades and thicknesses compare favorably to the grades and
intersection lengths reported from worldwide cobalt deposits.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
12
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Composite Grades from 2002-2005 UEX Holes – West Bear Co-Ni Project
Hole
WBE-019
WBE-027
WBE-028
WBE-029
WBE-070
WBE-071
WBE-072
WBE-075
WBE-077
WBE-078
including
WBE-079
WBE-080
Depth From
Depth To
(m)
33.80
44.00
50.50
43.75
38.30
56.60
37.50
42.30
45.10
52.50
36.10
32.40
22.20
36.60
43.90
50.30
67.50
(m)
34.00
45.00
51.00
44.87
39.70
57.90
39.50
48.80
53.50
56.30
40.30
41.20
25.90
50.90
49.20
72.50
75.30
Core Length
(m)
Cobalt
(wt% Co)
Nickel
(wt% Ni)
0.2
1.0
0.5
1.1
1.4
1.3
2.0
0.5
8.4
3.8
4.2
8.8
2.7
14.3
5.3
22.2
8.1
9.94
0.39
3.60
0.21
0.32
0.85
0.73
2.09
2.15
1.05
0.62
0.57
0.25
0.79
1.58
1.12
0.24
2.97
1.49
3.11
0.26
0.28
1.38
0.70
2.71
0.91
1.15
.47
0.19
0.18
0.60
0.83
0.80
0.30
The West Bear Co-Ni Prospect is located just east of the WBU Deposit within the intensely clay-altered West
Bear Fault. Mineralization consists of disseminated cobaltite and nicoline predominately located at the base of
the very strongly clay-altered West Bear Fault package that in turn is located at the bottom of the graphitic rock
sequence. As currently defined, mineralization ranges from 15-55 m in vertical depth over a strike length of 175
m and remains open in all directions. Cobalt-nickel mineralization is also known to exist within the same clay-
altered fault structure down-dip of the WBU Deposit. Wherever UEX has encountered cobalt mineralization, high
nickel concentrations are most often present.
Despite the large number of historical holes drilled in the West Bear area, the vast majority of these holes failed
to test the West Bear Fault structure below its intersection with the Athabasca Basin unconformity.
On the rare occasion when the West Bear Fault was intersected in historical holes below the unconformity, past
explorers such as Gulf Minerals often failed to assay samples for cobalt. UEX has identified several areas in the
vicinity of the West Bear Co-Ni Prospect and the WBU Deposit where very high concentrations of nickel are
present that were not assayed for cobalt.
The WBU Deposit has been defined over a strike length of 530 m, ranges in width between 20 m and 70 m,
ranges in thickness from 0.1 m to over 15 m and is located at vertical depths between 15 m to 35 m. The WBU
Deposit is a classic cigar-shaped body similar to the Cigar Lake and McClean Lake deposits and is hosted at and
above the intersection of faulted graphitic metapelites with the unconformity with the overlying Athabasca Group
sandstone. For more details of the WBU Deposit including an estimate of the contained resources, please review
the latest technical report filed on SEDAR and on our website accessible from this link: https://uex-
corporation.com/projects/west-bear/
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
13
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
2018 Exploration Program
In late February 2018, UEX received all necessary exploration permits and commenced a $1.5 million winter
drilling program on the West Bear Co-Ni Prospect with the objective of growing the size of the known Co-Ni
mineralized zone and following up other known intersections of Co-Ni discovered by UEX and previous explorers
in the immediate area of the Prospect.
The program will consist of approximately 30-40 holes and will initially test the down-dip extension of the known
mineralization. The winter drilling program is likely to conclude in mid-April.
Once the program is completed, UEX will work towards completing an NI-43-101-compliant technical report on
the West Bear Cobalt-Nickel Prospect. Depending upon the results of this program, this report may include a
maiden resource estimate.
On March 7, 2018, UEX entered into a purchase agreement with Denison Mines Corp. (“Denison”) to acquire a
single 890 ha claim which was incorporated into the West Bear Project. In consideration to acquire 100% interest
in the property UEX made a cash payment of $11,000 and granted a 1.5% net smelter return royalty to Denison
which can be purchased anytime for a cash payment of $950,000. This claim partially completes a gap within
UEX’s land claim holdings in the West Bear area.
Proposed 2018 Exploration Areas – West Bear Cobalt-Nickel Prospect
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
14
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Horseshoe and Raven Project
• Cameco’s Rabbit Lake Mill (including Eagle Point),
currently on care and maintenance, has produced
over 203.3 million pounds of U3O8 to date (1)
• Orano’s McLean Lake JEB Mill has produced
close to 50 million pounds of U3O8 to date and is
currently being used to process Cigar Lake ore (2)
• Two known deposits: Horseshoe and
Raven.
• Proximal to uranium mills, year-round
access by road and air, electric
transmission lines transect the
property.
• Two of the shallowest deposits in the
Athabasca Basin ranging from 50 – 450
m depth exclusively hosted in
competent basement rocks with no
sandstone cover and can be mined
using conventional hard rock mining
techniques.
• 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 positive scoping study
determining the viability of a heap-
leaching operation at Horseshoe and
Raven
(1) Source: https://www.cameco.com/businesses/uranium-operations/canada/rabbit-lake
(2) Source: http://us.areva.com/EN/home-984/areva-resources-canada-mcclean-lake.html
Number of claims
Hectares
Horseshoe & Raven
1
4,486
Acres
11,085
UEX
Ownership %
100.00
The Horseshoe and Raven Project (“Horseshoe-Raven”) was acquired from Cameco upon UEX’s formation in
2001 as part of the Hidden Bay Project, which established Cameco’s initial equity position in UEX.
UEX has elected to separate Horseshoe-Raven from the Hidden Bay Project due to its advanced stage of
exploration and development compared to the remainder of the original project lands. Horseshoe-Raven has
significant uranium resources that have been subject to advanced studies including a Preliminary Assessment
and a heap leach scoping study.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
15
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Horseshoe and Raven Deposits
•
In 2011, a positive PA was completed using a commodity price of 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 Orano’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 processing.
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 processing
was as economically viable as the conventional tank leach process considered in the 2011 PA. The
results of the scoping study were positive and further investigation is warranted.
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
“Horseshoe-Raven 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(1)
TOTAL(2)
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) Mineral resource estimates for the West Bear Deposit are located on the Hidden Bay Project but are included in this table as
they were estimated, evaluated, and included within the Horseshoe-Raven Report.
(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.
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 U 3O8, 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
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
16
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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.
2016 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 processing.
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 heap leach processing 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 ranging from
the undertaking of additional metallurgical testing in a laboratory environment up to and including field trials of the
heap leaching process.
2017 and 2018 Activities
UEX did not conduct an exploration drilling program at Horseshoe-Raven in 2017.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
17
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Hidden Bay Project
• 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 Have identified new targets for
basement-hosted uranium
mineralization
• Thirteen high-priority areas identified
for additional exploration focusing on
basement-hosted uranium deposits
• Over 380 km of conductor trends and
1,800 drill holes that barely tested
basement structure where the new
generation of Athabasca uranium
deposits are located.
• Covered by 0 to 175 m of Athabasca
Sandstone cover
• Cameco’s Rabbit Lake Mill (including Eagle Point),
currently on care and maintenance, has produced
over 203.3 million pounds of U3O8 to date (1)
• Orano’s McLean Lake JEB Mill has produced
close to 50 million pounds of U3O8 to date and is
currently being used to process Cigar Lake ore (2)
(1) Source: https://www.cameco.com/businesses/uranium-operations/canada/rabbit-lake
(2) Source: http://us. .com/EN/home-984/areva-resources-canada-mcclean-lake.html
Number of claims
Hectares
Acres
UEX
Ownership %
Hidden Bay
49
53,817
132,985
100.00
Hidden Bay, along with the Horseshoe and Raven Project and West Bear Project, was acquired from Cameco
upon UEX’s formation in 2001 establishing Cameco’s initial equity position in UEX.
The Hidden Bay Project is comprised of the Tent-Seal, Telephone-Shamus, Rabbit West, Wolf Lake, Rhino,
Dwyer-Mitchell and Umpherville target areas. The Hidden Bay Property originally included the Horseshoe-Raven
Project and West Bear, which were separated from the Hidden Bay Project due to its more advanced stage of
exploration and development and in the case of West Bear, the focus on cobalt as an exploration target.
Acquisition costs for Horseshoe-Raven and West Bear Projects are included in the Hidden Bay Project and
evaluated as a group given their proximity to each other and the ability to spread assessment credits.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
18
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
In July 2017, three non-core Hidden Bay claims were allowed to expire. These claims were staked to expand the
property in 2015, but no exploration work was completed on these claims prior to their expiry. UEX is currently
disputing the termination of these claims with the Saskatchewan government.
In December 2017, UEX acquired 14 claims totaling 5,782 hectares via staking. The majority of these claims
were staked between the Dwyer Lake and Wolf Lake target areas, closing the gap between the north and south
claim blocks. Claims were also acquired for staking in the Hidden Bay Landing area to cover the extension of a
known electromagnetic conductor trend.
In December 2017, 19 claims totaling 5,488 hectares were removed from the Hidden Bay Project lands and used
to form the West Bear Project, which hosts both the West Bear Co-Ni Prospect and the WBU Deposit.
Basement Targeting at Hidden Bay
Work completed between 2015 and 2016 has confirmed that previous operators on the Hidden Bay Project
focused primarily on testing unconformity targets with little effort 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 the unconformity to test for basement uranium mineralization
potential.
UEX’s existing unconformity-focused exploration database confers a substantial competitive advantage, as it can
be used to generate high-quality basement targets with limited capital outlay. Substantial investment in
geophysics, prospecting and drilling would be required to obtain a fraction of the information that UEX already
possesses and is using to vector toward basement-hosted deposits.
2017 Activities
Exploration
UEX did not conduct a drilling or geophysical exploration program for the Hidden Bay Project in 2017. 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.
During the first and second quarter of 2017, detailed evaluation of the Dwyer Lake and Wolf Lake areas as well
as the remaining eleven basement targeting areas on the Project was undertaken. Drill core re-logging of some
of the higher priority target areas identified in the first half of 2017 was completed in September and as a result,
a new high-priority area was identified along the West Rabbit Lake Fault and the south Wolf Lake area. The
objective of the re-logging programs was to prioritize targets and develop an exploration proposal on the property
for 2018.
The 2015 Hidden Bay Assessment Report was filed with the Government of Saskatchewan in July 2017.
2018 Exploration Program
UEX is not planning to conduct a drilling or geophysical exploration program for the Hidden Bay Project in 2018.
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 uranium industry, the Company
focused the majority of its financial resources on the Christie Lake Uranium Project and on exploration of the
West Bear Cobalt-Nickel Prospect (formerly part of the Hidden Bay Project) in 2018.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
19
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Western Athabasca Projects (“WAJV”) – Overview
• Eight separate joint ventures:
o UEX 49.1%, Orano 50.9% on four of
the joint ventures including Shea
Creek.
• Flagship project: Shea Creek Project
o Four deposits: Kianna, Anne,
Colette & 58B.
• 2018 exploration budget of $2.8 million
o UEX has elected to dilute its interests
in the early stage Alexandra and
Nikita Projects in 2018.
• Orano’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 %
Orano
Ownership %
Alexandra
Brander Lake
Erica
Laurie
Mirror River
Nikita
Shea Creek
Uchrich
Total
3
9
20
4
5
6
18
1
66
8,010
13,993
36,992
8,778
17,400
15,131
32,962
2,263
19,793
34,577
91,409
21,691
42,996
37,390
81,451
5,592
135,529
334,899
Orano
Orano
Orano
Orano
Orano
Orano
Orano
Orano
49.0975
49.0975
49.0975
32.9876
32.3354
42.0413
49.0975
30.4799
50.9025
50.9025
50.9025
67.0124
67.6646
57.9587
50.9025
69.5201
In 2004, UEX entered into an agreement with Cogema (predecessor of AREVA, in turn predecessor to Orano) to
fund $30 million of exploration costs in exchange for a 49% interest in the Western Athabasca Projects, which
included Shea Creek. UEX successfully met its funding target and earned its 49% interest in 2007. The current
approximate 49.1% ownership interest for four of the eight projects reflects additional amounts funded 100% by
UEX under the WAJV 2013 Option Agreement dated April 4, 2013 (see discussion below).
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
20
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
In February 2018, UEX received notification that our WAJV partner AREVA Resources Canada Inc. changed their
name to Orano Canada Inc. (“Orano”).
UEX’s interest in the Mirror River Project 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’s interest in the Laurie Project was
diluted to approximately 42.1% on December 31, 2015 as a result of UEX’s decision not to fund the Laurie 2015
exploration program.
The 2017 WAJV exploration programs had a combined budget of $3.6 million (Mirror River - $1.3 million, Laurie
- $1.3 million, Uchrich - $500,000 and Nikita - $500,000) and were funded by Orano. UEX 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 some of the
proposed programs.
The decision not to fund our share of the proposed 2017 exploration programs did not have an impact on UEX’s
ownership interest in the other WAJV projects, including the Company’s ownership of the existing uranium
resources at the Shea Creek Project which remains at 49.0975%.
Orano has reported its 2017 expenditures on the Uchrich, Nikita, Laurie, and Mirror River projects in January
2018. However, UEX and Orano have not yet exchanged formal notification of the change in the ownership
interests in the four projects as a result of the 2017 exploration programs. UEX is projecting based on Orano’s
2017 reported expenditures that the Company’s interest in these four projects as shown in the table above.
UEX’s ownership interest in the Shea Creek, Erica, Alexandra, and Brander Lake Projects remain at 49.0975%
as of December 31, 2017.
WAJV 2013 Option Agreement
Pursuant to this agreement with Orano 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, 2017 or 2018. The Company does not anticipate that it will incur any further
additional expenditures on the Western Athabasca Projects and has no intention to abandon these projects.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
21
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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.
In July 2017, UEX and Orano acquired two small mineral claims from Eagle Plains Resources in exchange for a
2% NSR royalty. These two claims abut the southern portion of the Shea Creek project and will be added to the
Shea Creek asset.
In December 2017, UEX acquired two claims totalling 4,272 hectares, one located at the north end of the project
and one that covered a segment of the Saskatoon Lake Conductor system. Both claims were incorporated into
the Shea Creek Property.
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 | Energetically Growing by Discovery, Innovation and Acquisition
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LegendPerched MineralizationUnconformity MineralizationBasement MineralizationAnne DepositKiannaDeposit58BDepositColetteDeposit2.9 kmKianna DepositAnne DepositKianna East Zone1.4 km
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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 – 2017 Exploration Program
Orano did not propose a program or budget for the Shea Creek Project in 2017.
Shea Creek – 2018 Exploration Program
Orano did not propose a program or budget for the Shea Creek Project in 2018.
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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, and Uchrich. See area map above under Western Athabasca Projects (“WAJV”) – Overview.
Mirror River Project
2017 Program
At Mirror River, a $1.2 million drilling program was completed in 2017 testing the shallowest areas of the property
along the southern property margin.
Eleven holes totaling 3,707 m were completed on the Mirror River Project in February and March, testing a wide
basement resistivity anomaly in the vicinity of broad airborne MegaTEM anomalies in an area where the
Athabasca sandstone depth ranges from 50 – 200 m near the southern margin of the property.
All 11 holes drilled by Orano failed to intersect the unconformity-deposit structural target, where faulted graphitic
pelites intersect the unconformity surface. In four holes, the presence of the targeted geophysical anomalies was
not explained by drilling. The overall drill results failed to explain the Operator’s geophysical interpretation upon
which the exploration program was targeting.
No significant radiometric anomalies, hydrothermal alteration or anomalous geochemistry were reported by Orano
during the winter program.
UEX elected not to fund its share of the drilling programs at the Mirror River Project in 2017. UEX did not support
the technical approach of the operator on the Mirror River Project and chose to expend its exploration capital on
more advanced stage exploration projects. UEX has no intention to abandon the Mirror River Project.
Laurie Project
2017 Program
At Laurie, a $1.0 million drilling program was completed in 2017 testing the shallowest areas of the property along
the southern property margin.
Fourteen holes totaling 3,217 m were completed on the Laurie Project in January and February, testing a wide
basement resistivity anomaly in the vicinity of moving loop electromagnetic anomalies in an area where the
Athabasca sandstone depth ranges from 50 – 200 m.
All 14 holes drilled by Orano during the winter program failed to intersect the unconformity-deposit structural
target, where faulted graphitic pelites intersect the unconformity surface. The drill results failed to explain the
Operator’s geophysical interpretation upon which the exploration program was targeting.
No significant radiometric anomalies, hydrothermal alteration or anomalous geochemistry were reported to UEX
by Orano.
UEX elected not to fund its share of the drilling program at the Laurie Project for 2017 and chose to expend its
exploration capital on more advanced stage exploration projects. UEX has no intention to abandon the Laurie
Project.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Uchrich Project
2017 Program
A $0.5 million combined geophysics and drilling program was proposed for the Uchrich Project, consisting of 9
km of MLEM-SQUID surveying, followed up by one diamond drill hole.
The MLEM-SQUID survey was completed in February. Orano initiated a drill hole on the project testing the
moving loop EM target but abandoned the hole at a depth of 600 m before intersecting the unconformity or the
source of the electromagnetic anomaly when warm weather conditions made access to the drill difficult. The
casing was removed from the hole during abandonment, making it difficult to complete the hole to target depth in
the future.
UEX has elected not to fund the geophysics and drilling program at the Uchrich Project for 2017 and chose to
expend its exploration capital on Company-operated exploration projects. UEX has no intention to abandon the
Uchrich Project.
Nikita Project
2017 Program
A $0.5 million geophysics program was proposed for the Nikita Project, consisting of 36 km of MLEM-SQUID
surveying in 2017.
Linecutting was completed in March and the geophysical team mobilized to the project on March 14, 2017. The
geophysical survey commenced on April 2, 2017 and due to the spring thaw and lack of snow, the survey was
terminated on April 5, 2017. The survey was completed in December.
UEX has elected not to fund the geophysics program at the Nikita Project for 2017 and chose to expend its
exploration capital on Company-operated exploration projects. UEX has no intention to abandon the Nikita
Project.
Alexandra, Brander Lake, Erica
2017 Programs
No programs or budgets were proposed for the Alexandra, Brander, or Erica projects in 2017.
In December 2017, Orano staked one claim totaling 332 hectares that was incorporated into the Erica Project.
UEX has no intention to abandon these projects.
2018 Exploration Programs at Nikita and Alexandra
Orano, the Operator of the Nikita and Alexandra projects, provided 2018 exploration proposals and budgets for
these two projects during the joint venture meetings on November 9, 2017.
The proposed 2018 Nikita Program and budget is $2.2 million and would consist a combined 40.2 km SQUID EM
geophysical survey and 7-10 drill holes totaling 4,500 m. UEX’s projected share of its expenditures would have
been approximately $882,200.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
The proposed 2018 Alexandra Program and budget is $600,000 and would consist of 2-3 drill holes totaling
1,900 m to test the 2009 Moving Loop EM conductor. UEX’s projected share of expenditures would have been
approximately $294,600.
UEX has elected not to participate in the 2018 programs at Nikita and Alexandra. As a result, UEX’s ownership
interest in the Nikita Project is anticipated to drop to 22.7809% and on the Alexandra Project to 39.6127% on
December 31, 2018.
Beatty River Project
Number
of claims
Hectares
Acres
Project
Operator
UEX
Ownership
%
Orano
Ownership
%
JCU
Ownership
%
Beatty River
7
6,688
16,526
Orano
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 proposed for 2017.
Orano, the Operator of the Beatty River Project, provided a 2018 exploration proposal and budget during the joint
venture meeting on November 9, 2017.
The proposed 2018 Beatty River Program and budget is $0.6 million and would consist a combined 41.30 km
SQUID EM geophysical survey. UEX’s projected share of its expenditures would be approximately $150,000.
UEX has elected not to participate in the 2018 program at Beatty River. As a result, should Orano complete the
2018 program and budget as proposed, UEX’s ownership interest in the Beatty River Project is anticipated to
drop to 22.49%.
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Black Lake Project
• Located at the northern edge of
the Athabasca Basin.
• The property is currently under
option to ALX Uranium
• Year-round access by road and
air, power lines transect the
property
• Nearby 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
Orano
Ownership
%
9.08
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.
On April 6, 2017, ALX Uranium Corp. (“ALX”) entered into a letter of intent (“LOI”) with UEX to complete a due
diligence review of the Black Lake Project. On July 26, 2017, ALX informed the Company that they had completed
their review and wished to proceed with an option to acquire up to a 75% interest in the Project.
On September 5, 2017, ALX and UEX entered into an Option Agreement, under which ALX will have the right to
earn a 75% interest in three stages as follows:
• Stage 1 - By completing $1,000,000 in exploration work on the project and issuing to UEX a total of
5,000,000 shares of ALX to earn an initial 40% interest in the project by September 5, 2018;
• Stage 2 - By completing an additional $2,000,000 (for a cumulative total of $3,000,000) in exploration
work and issuing a further 4,000,000 shares of ALX to the Company (for a cumulative total of 9,000,000
ALX shares) to earn an additional 11% interest in the project (cumulative interest of 51%) by March 5,
2020;
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
• Stage 3 - By completing an additional $3,000,000 (for a cumulative total of $6,000,000) in exploration
work and issuing a further 3,000,000 shares of ALX to the Company (for a cumulative total of 12,000,000
ALX shares) to earn an additional 24% interest in the project (cumulative interest of 75%) by
September 5, 2021.
ALX paid $25,000 to UEX and completed approximately $87,000 in exploration work during the due diligence
period that will be credited towards the Stage 1 exploration work commitment. Upon vesting any interest, ALX
will become a party to the existing Black Lake Joint Venture.
ALX will be earning its interest in the Black Lake Project exclusively from UEX’s 90.92% interest in the Joint
Venture. Orano has agreed to waive their first right of refusal on the transfer of any of UEX’s ownership interest
to ALX.
In September 2017, ALX commenced their first exploration program on the Black Lake Project which consisted
of an approximately 725 km of airborne ZTEM EM geophysical survey and five drill holes totaling approximately
2,830 m testing targets identified on the northern portion of the project. ALX announced on November 20, 2017
that two holes encountered minor pitchblende veinlets just below the unconformity.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Riou Lake Project
• Located at the northern edge of the
Athabasca Basin.
• Year-round access by road and air,
close to existing power lines.
• Nearby Stony Rapids provides
accommodation and other support
services.
• Uranium mineralization has been
encountered in three areas.
UEX is actively seeking partners to advance the Riou Lake Project
Riou Lake
Number of
claims
10
Hectares
Acres
UEX
Ownership %
16,548
40,891
100.00
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 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 July 2017. UEX continues to maintain 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.
UEX staked four claims at Riou Lake in January 2018 to cover highly prospective areas of the property as
determined from previous drill programs. These four claims cover lands that had previously been covered by
mineral claims owned by UEX that had lapsed in 2017.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Other Projects
In December 2017, UEX acquired two new projects via staking. Both projects are located in southwest corner of
the Athabasca Basin.
The Parry Lake Project was acquired via staking due to its proximity to the Patterson Lake Corridor and its
potential to host different types of uranium deposits.
The Laurie North Project was also acquired via staking. The claims cover the gap between the Laurie and Uchrich
projects that is believed to overlie extensions of electromagnetic conductively between the existing projects. Such
electromagnetic conductive trends are considered prospective uranium exploration targets in the Athabasca
Basin.
An ownership position in both projects were offered to Orano as per area of interest provisions of the Western
Athabasca Option Agreement. Orano elected not to exercise its rights to acquire a stake in the two projects at
this time. Orano can elect to participate in these projects by January 2021.
For a location of these two claims, please refer to the map in Section 1 – Introduction, Overview.
Number of
claims
11
5
Hectares
Acres
11,456
1,138
28,307
2,811
UEX
Ownership %
100.00
100.00
Parry Lake
Laurie North
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 | Energetically Growing by Discovery, Innovation and Acquisition
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Financial Update
Selected Financial Information
The following is selected financial data from the unaudited and restated consolidated 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 consolidated financial statements for the years ended December 31, 2017,
2016, and 2015 and the notes thereto.
Summary of Annual Financial Results
December 31, 2017
December 31, 2016 December 31, 2015
Interest income
Net loss for the year
$ 66,539
$ 91,839
$ 106,027
(5,865,743)
(5,981,098)
(6,121,944)
Write-off of mineral property acquisition costs
Basic and diluted loss per share
Exploration and evaluation expense
Capitalized acquisition costs
(900)
(0.019)
4,224,084
1,014,840
(1,500)
(0.021)
4,825,953
3,750,000
(1,528)
(0.025)
4,570,879
274,784
Total assets
$ 15,868,986
$ 13,951,299
$ 11,131,280
The following quarterly financial data is derived from the unaudited condensed interim consolidated financial
statements of UEX as at (and for) the three-month periods indicated below.
Summary of Quarterly Financial Results (Unaudited)
2017
Quarter 4
2017
Quarter 3
2017
Quarter 2
2017
Quarter 1
2016
Quarter 4
2016
Quarter 3
2016
Quarter 2
2016
Quarter 1
Interest income
$ 15,305 $ 18,518 $ 19,544 $ 13,172 $ 23,216 $ 30,663 $ 22,494 $ 15,466
Net loss for the period
(787,878 )
(1,635,424 )
(1,276,131 )
(2,166,310 )
(1,091,795 )
(2,001,153 )
(1,221,190 )
(1,666,960 )
Write-off of mineral
property acquisition
costs
Basic and diluted loss
per share
Exploration and
evaluation expense
Capitalized mineral
property acquisition
costs
Total assets
-
(900 )
-
-
(1,500 )
-
-
-
(0.003 )
(0.005 )
(0.004 )
(0.007 )
(0.004 )
(0.007 )
(0.005 )
(0.006 )
304,315
1,336,971
518,621
2,064,177
945,533
1,740,777
711,539
1,428,104
1,014,840
-
-
-
2,000,000
-
-
1,750,000
15,868,986
14,715,173
16,268,322
18,044,420
13,951,299
15,788,028
17,266,442
12,135,936
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
31
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
UEX’s business is not affected by seasonality as the Company is able to perform exploration and evaluation work
year round. 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 2017, UEX is focussed
the majority of our exploration efforts on the Christie Lake Project, where we are currently earning up to a 70%
interest from JCU. In 2018, UEX is focussing its exploration efforts on the Christie Lake and West Bear Cobalt-
Nickel Projects.
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. During the fourth quarter of 2017, UEX paid $1,000,000 to increase our interest in Christie Lake to 45%, in
addition to the completion of $2,500,000 of exploration commitments during the year.
Through most of 2017, UEX had two exploration drills running concurrently at the Christie Lake Project and the
majority of exploration expenditures were related to this project. UEX chose not to fund its share of exploration
on the Western Athabasca Projects for 2017 and we will have our ownership diluted on certain projects but
maintain our 49.1% interest in the Shea Creek project, where significant uranium resources have been found.
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.
•
Impairment:
o Three claims that were staked in 2015, and included in the Hidden Bay Project, lapsed on
July 22, 2017. As there was no work budgeted of planned for the claims, an impairment charge of
$900 was recorded in the third quarter of 2017. These claims did not form a key part of the Hidden
Bay Project and no exploration work was completed on them.
o There were five claims that were staked in 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 recorded in the fourth quarter of 2016. These claims did not form a key part of the
Hidden Bay Project and no exploration work was completed on them.
• Renunciation of tax benefits:
o Approximately $2.010 million of flow-through expenditures from the February 2017 placement were
renounced to eligible shareholders in January 2018 effective December 31, 2017. Approximately
$744,000 of flow-through expenditures were incurred by December 31, 2017 and the remaining
$1.257 million of flow-through expenditures are expected to be incurred during the remainder of 2018.
o Approximately $2.002 million of flow-through expenditures from the December 2017 placement were
renounced to eligible shareholders in January 2018 effective December 31, 2017 and are expected
to be incurred during the remainder of 2018.
o The remaining $2.959 million in flow-through expenditures from the May 2016 placement was
renounced to eligible subscribers in February 2017, effective December 31, 2016 (under the look-
back rule) and the resulting tax recovery is reflected in the first quarter of 2017.
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.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
32
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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.
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.
• 325,188,073 common shares were issued and outstanding as at December 31, 2017 and 347,949,978
were issued and outstanding as at March 19, 2018;
• 24,097,000 and 24,597,000 common shares related to director, employee and consultant share purchase
options were reserved by the Company as at December 31, 2017 and March 19, 2018 respectively. The
share purchase options are exercisable into common shares at exercise prices ranging from $0.15 per
share to $1.45 per share. As the number of options currently outstanding is 24,597,000 (representing 7.1%
of the Company’s current issued and outstanding common shares), the number of options available for
grant as of March 19, 2018 is 10,197,998 (representing 2.9% of the Company’s current issued and
outstanding common shares);
• During January 2018, 22,761,905 warrants were exercised and 2,000,000 warrants expired. Accordingly,
the Company issued 22,761,905 common shares for gross proceeds of $5,028,572.
• 41,665,299 and 16,903,394 share purchase warrants with a weighted average exercise price of $0.30 and
$0.42 per share were outstanding as at December 31, 2017 and March 19, 2018 respectively.
Results of Operations for the Three-Month Period Ended December 31, 2017
For the three-month period ended December 31, 2017, the Company earned interest income of $15,305 (Q4
2016 - $23,216). The decrease in interest income was primarily due to the lower monthly average cash balance
invested over the period. In the fourth quarter of 2017, the Company had an average cash balance invested of
approximately $4.7 million versus $6.5 million in the comparative period.
For the three-month period ended December 31, 2017, the Company incurred expenses of $803,913 (Q4 2016 -
$1,319,331) with significant changes from the comparative period identified as follows:
• Exploration and evaluation expenses of $304,315 (Q4 2016 - $945,533) were lower than in the
comparative period as the Company focused its exploration efforts at Christie Lake and conducted
minimal work on its Western Athabasca projects.
• Office expenses of $129,850 (Q4 2016 - $46,531) increased primarily due to financial advisory, Interim
CFO, and website consulting services, which were not incurred in the comparative period.
• Legal and audit expenses of $43,184 (Q4 2016 - $24,122) increased due to legal fees associated with
employment matters in the current period, which were not incurred in the comparative period.
• Salaries expense of $160,835 (Q4 2016 - $165,660) slightly decreased due to fewer staff members.
• Travel and promotion expenses of $14,126 (Q4 2016 - $21,794) decreased primarily due to attendance
of fewer investor conferences in 2017 than in 2016.
The vesting of share purchase options during the three-month period ended December 31, 2017 resulted in total
share-based compensation of $106,770 (Q4 2016 - $68,984), of which $16,096 was allocated to exploration and
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
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UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
evaluation expenses (Q4 2016 - $8,404) and the remaining $90,674 was expensed to share-based compensation
(Q4 2016 - $60,580). The higher share-based compensation expense is due primarily to more options being
granted in 2017 than in 2016.
Results of Operations for the Year Ended December 31, 2017
For the year ended December 31, 2017, the Company earned interest income of $66,539 (2016 - $91,839). The
decrease in interest income was primarily due lower average interest rate in 2017 compared to 2016. During
2017, the Company had an average cash balance invested of approximately $6.0 million versus $6.7 million in
the comparative period.
For the year ended December 31, 2017, the Company incurred expenses of $6,168,962 (2016 - $6,407,509) with
significant changes from the comparative period identified as follows:
• Exploration and evaluation expenses of $4,224,084 (2016 - $4,825,953) decreased primarily due to
decision not to fund the 2017 Western Athabasca joint venture projects with Orano.
• Filing fees and stock exchange expenses of $106,837 (2016 - $78,743) increased due to filing fees which
were calculated based on a higher market capitalization in 2017 and costs associated with renewing the
stock option plan.
• Office expenses of $333,913 (2016 - $189,035) increased primarily due to financial advisory consulting
services, Interim CFO services, office relocation costs including broker commissions, and website update
consulting fees which were not incurred in the comparative period.
• Salaries expense of $556,830 (2016 - $513,933) increased due to an accrual for severance. Gross salaries
expense is reduced by offsetting management fees related to the Christie Lake drilling program in 2017,
which were less than the offsetting management fees in 2016 ($355,734 vs. $367,860).
• Travel and promotion expenses of $134,855 (2016 - $119,925) increased primarily due to non-project
chargeable site visits in 2017 that were not taken in 2016.
The vesting of share purchase options during the year ended December 31, 2017 resulted in total share-based
compensation of $567,012 (2016 - $406,561), of which $83,927 was allocated to mineral property expenditures
(2016 - $38,753) and the remaining $483,085 was expensed (2016 - $367,808). The higher share-based
compensation expense is due primarily to more options being granted in 2017 than in 2016.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
34
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
The following table outlines cumulative exploration and evaluation expenditures on projects, cumulatively as at
and for the year ended December 31, 2017 and 2016.
Project
Beatty River
Black Lake
Christie Lake
Hidden Bay (2)
Horseshoe-Raven
West Bear Co-Ni
Western Athabasca
Alexandra
Brander
Erica
Laurie
Mirror
Nikita
Shea Creek
Uchrich
2016
2017
Cumulative (1) to
Expenditures
December 31, 2015
in the period
Cumulative to
December 31, 2016
Expenditures
in the period
Cumulative to
December 31, 2017
$
873,069
$
-
$
873,069
$
2,136
$
875,205
14,508,893
16
58,689
4,021,603
33,026,660
41,669,712
-
1,205,251
1,353,363
2,253,085
1,586,528
1,987,612
1,952,331
53,581,147
543,091
42,556
143,746
-
-
-
-
-
-
-
618,032
-
14,508,909
4,080,292
33,069,216
41,813,458
-
1,205,251
1,353,363
2,253,085
1,586,528
1,987,612
1,952,331
54,199,179
543,091
(20,402)
3,981,889
200,905
8,413
38,359
1,457
-
-
2,774
2,774
1,826
3,289
664
14,488,507
8,062,181
33,270,121
41,821,871
38,359
1,206,708
1,353,363
2,253,085
1,589,302
1,990,386
1,954,157
54,202,468
543,755
All Projects Total
$
154,599,431
$
4,825,953
$
159,425,384
$
4,224,084
$
163,649,468
(1) Exploration and evaluation expenditures have been presented on a cumulative basis from July 17, 2002.
(2)
Includes the West Bear Deposit and all other Hidden Bay exploration areas: Tent-Seal, Telephone-Shamus, Rabbit West, Wolf
Lake, Rhino, Dwyer-Mitchell, and Umpherville River.
Exploration and evaluation expenditures for the year ended December 31, 2017 and 2016 include the
following non-cash expenditures:
Depreciation
Share-based compensation
Project management fee
Year ended December 31
2016
2017
70,431
$
83,927
355,734
510,092
$
53,092
38,753
367,860
459,705
$
$
For further information regarding expenditures on the projects shown in the table above, please refer to
Exploration and Evaluation Activities. Also please refer to the Critical Accounting Estimates, Valuation of mineral
properties section.
The Company has an interest in several joint operations relating to the exploration and evaluation of various
properties in the western, eastern and northern Athabasca Basin. These interests are governed by contractual
arrangements but have not been organized into separate legal entities or vehicles. The joint arrangements that
the Company is party to in some cases entitle the Company, or its joint venture partner, to a right of first refusal
on the projects should one of the partners choose to sell their interest. The joint arrangements are governed by
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
35
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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, 2017 and March 19, 2018:
Ownership interest (%)
UEX
ORANO
JCU
Total
Beatty River
Black Lake
Christie Lake
Western Athabasca
Alexandra
Brander
Erica
Laurie
Mirror River
Nikita
Shea Creek
Uchrich
Financing Activities
25.0000
90.9200
45.0000
49.0975
49.0975
49.0975
32.9876
32.3354
42.0413
49.0975
30.4799
50.7020
9.0800
24.2980
-
-
55.0000
50.9025
50.9025
50.9025
67.0124
67.6646
57.9587
50.9025
69.5201
-
-
-
-
-
-
-
-
100.0000
100.0000
100.0000
100.0000
100.0000
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 December 14, 2017, the Company completed a flow-through private placement of 5,560,000 common
shares at a price of $0.36 per common share, for gross proceeds of $2,001,600. Share issue costs
included the agent’s commission of $140,112 equal to 7% of the aggregate gross proceeds of the
financing paid in common shares of the Company at a price of $0.36 per common share, the fair value
of brokers warrants of $29,520 and other issuance costs of $64,392. The agent also received 222,400
broker warrants equal to 4% of the number of flow-through shares placed by the agent. Each broker
warrant is exercisable for one common share of the Company for a period of two years at a price of $0.42
per common share. As the quoted market price of the Company’s common shares exceeded the flow
through issuance price at the time flow-through shares were issued in 2017, no share premium liability
was recorded in 2017.
The initial fair value of the broker warrants on December 14, 2017 was determined using the Black-
Scholes option-pricing model with the following assumption: Pre-vest forfeiture rate – 0.00%; Expected
volatility – 73.42%; Risk-free interest rate – 1.56%; Dividend yield – 0.00%; and Expected life of warrants
– 2.00 years.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
36
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
The proposed use of proceeds from the December 14, 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
West Bear Cobalt-
Nickel Prospect
Christie Lake Project
TOTAL
$ 1,570,000
$
431,600
$ 2,001,600
$
-
-
-
$
$
1,570,000
431,600
2,001,600
(1) Expenses related to the flow-through placement were funded out of the December 14, 2017 unit placement proceeds.
The Company renounced the income tax benefit of the December 14, 2017 private placement to its
subscribers effective December 31, 2017 and will incur Part XII.6 tax at a rate of Nil% for January 2018
and 1% per month thereafter on unspent amounts.
•
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 common share, for
gross proceeds of $6,009,999. 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 $204,938. Each unit
consisted of one common share and one common share purchase warrant exercisable at a price of $0.42
per common share for a period of three years. The Company also issued 681,000 common share broker
warrants as part of the placement. Each broker warrant is exercisable at a price of $0.30 per common
share for a period of two years.
The initial fair value of the brokers warrants on February 27, 2017 was determined using the
Black-Scholes option-pricing model with the following assumptions: Pre-vest forfeiture rate – 0.00%;
Expected volatility – 67.84%; Risk-free interest rate – 0.76%; Dividend yield – 0.00%; and Expected life
of warrants – 2.00 years.
The use of proceeds from the February 27, 2017 flow-through private placement as at December 31,
2017 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
$ 1,510,000
$
611,774
$
898,226
500,000
-
-
35,329
102,777
2,299
464,671
(102,777)
(2,299)
$ 2,010,000
$
752,179
$
1,257,821
Christie Lake Project
West Bear Cobalt-
Nickel Prospect
Hidden Bay Project
Western Athabasca
TOTAL
(1) Expenses related to the flow-through placement were funded out of the February 27, 2017 unit placement proceeds.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
37
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
The Company renounced the income tax benefit of the February 27, 2017 private placement to its
subscribers effective December 31, 2017 and will incur Part XII.6 tax at a rate of Nil% for January 2018
and 1% per month thereafter on unspent amounts.
• 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 common 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 common 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.
The use of proceeds from the May 17, 2016 flow-through private placement as at December 31, 2017 is
presented in the table below:
PROPOSED USE OF
PROCEEDS (1)
Flow-through Private
Placement
ACTUAL USE OF
PROCEEDS
Use of Proceeds
Christie Lake Project
$ 4,400,000
$
5,104,650
Western Athabasca
Hidden Bay Project
Black Lake Project
Beatty River Project
750,000
100,000
-
-
72,883
71,061
956
450
TOTAL
$ 5,250,000
$
5,250,000
(1) 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 funded 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 at December 31, 2017, all of the flow-through placement
proceeds have been expended and a Part XII.6 tax expense of approximately $4,249 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 common share
for a period of two years. The placement was fully subscribed by a former CEO of the Company, with no
commission payable.
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 for general working capital.
No share purchase options were exercised during the year ended December 31, 2017 or 2016.
No share purchase warrants were exercised during the year ended December 31, 2017 or 2016.
During January 2018, 22,761,905 warrants were exercised and 2,000,000 warrants expired. Accordingly, the
Company issued 22,761,905 common shares for gross proceeds of $5,028,572.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
38
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Liquidity and Capital Resources
Working capital as at December 31, 2017 was $4,956,732 compared to working capital of $3,852,198 as at
December 31, 2016 and includes the following:
• Current assets as at December 31, 2017 and 2016 were $5,315,843 and $4,385,173 respectively,
including:
o Cash and cash equivalents of $5,106,761 at December 31, 2017 and $4,136,636 at December 31,
2016. 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, 2017 and 2016 were $359,111 and $532,975,
respectively:
o The balance at December 31, 2017 was comprised of trade payables and other liabilities. There was
no flow-through premium liability related to the February 27, 2017 and December 14, 2017
placement.
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.
The Company has sufficient financial resources for exploration, evaluation, and administrative costs. 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. During January 2018, 22,761,905 warrants were exercised and 2,000,000 warrants expired. Accordingly,
the Company issued 22,761,905 common shares for gross proceeds of $5,028,572.
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 February 29, 2024. Future minimum lease payments are as
follows:
2018
2019
2020
2021
2022 and beyond
December 31
2017
$ 134,907
116,121
107,805
54,675
166,050
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.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
39
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Exploration Commitments – Western Athabasca
Due to uranium market conditions, UEX did not propose supplemental program budgets for the Western
Athabasca for 2014, 2015, 2016, 2017 or 2018. The Company does not anticipate that it will incur any further
additional expenditures on the Western Athabasca Projects.
Exploration and Earn-in Commitments – Christie Lake
The Company has earned a 45% interest in the Christie Lake Project by making $5 million in cash payments and
completing $7.9 million in exploration work. The Project is located in the eastern Athabasca Basin and JCU
(Canada) Exploration Company Limited (“JCU”) holds a 55% interest. UEX is the operator of this project and has
an option to earn up to a 70% interest in the project by making a total of $7 million in cash payments and
completing $15 million in exploration on the property. A summary of cash payments and exploration expenditures
made to date and commitments remaining is summarized in the table below.
Completed:
As at December 31, 2017
$
5,000,000
$
7,962,022 (1)(2)
45.00 %
Cash payments
Exploration work
UEX Cumulative
Interest Earned
To be completed:
Before January 1, 2019
Before January 1, 2020
1,000,000
1,000,000
2,000,000
2,037,978 (2)
5,000,000
7,037,978
60.00
70.00
Total
$
7,000,000
$
15,000,000
70.00 %
(2) Cumulative exploration work completed does not include $100,159 of share based compensation relating to the Christie Lake Project, which is not an
eligible earn-in expenditure.
(3) Exploration work completed in excess of the minimum yearly commitment is applied to future years’ commitments. Exploration work commitments
remaining per the earn-in agreement are as follows:
•
•
•
•
$2,500,000 before January 1, 2017 (completed),
$2,500,000 before January 1, 2018 (completed),
$5,000,000 before January 1, 2019 ($2,962,022 completed), and
$5,000,000 before January 1, 2020.
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.
In 2016, UEX incurred approximately $1.5 million over and above the exploration expenditures required under
the agreement for 2016. These amounts have been applied to the 2017 exploration work commitment of $2.5
million.
In 2017, the Company began a further $4.0 million exploration program at Christie Lake. As at
December 31, 2017, UEX had completed the exploration work component of the 2017 Christie Lake earn-in
commitment, with an approximate $3.0 million carried over to the 2018 exploration work commitment.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
40
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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 | Energetically Growing by Discovery, Innovation and Acquisition
41
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
Investments are recorded at fair value. The Company holds 350,000 shares of Uracan. 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 are being held for long-term investment purposes.
On June 23, 2017, 25,000 Uracan common share purchase warrants expired. Accordingly, the Company does
not hold any outstanding warrants of Uracan.
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, 2017 and 2016, the financial statement fair value dates.
Related Party Transactions
The Company was involved in the following related party transactions for the year ended December 31, 2017 and
2016.
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)
Year ended December 31
2017
2016
1,324
6,329
7,653
$
$
1,323
9,055
10,378
$
$
(1) Payments related to fees paid for use of the Cameco airstrip at the McArthur River mine.
(2) Share-based compensation expense is the fair value of options granted which have been calculated using the Black-Scholes option-pricing
model and the assumptions disclosed in Note 12(c) of the audited consolidated financial statements.
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
2017
2016
696,749
$
399,104
15,750
740,259
338,449
-
1,111,603
$
1,078,708
$
$
(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) of the audited consolidated financial statements.
(4) Represents payments to Altastra Office Systems Inc., a company owned by Mr. Hui, for Interim CFO services rendered to UEX.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
42
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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 consolidated 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.
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 consolidated 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 consolidated financial statements in accordance with IFRS, which require
management to estimate various matters that are inherently uncertain as of the date of the consolidated 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 consolidated financial statements. The Company’s significant accounting policies are discussed
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
43
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
in the consolidated 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.
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, 2017 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 audited consolidated financial
statements for the year ended December 31, 2017. 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
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
44
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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).
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 consolidated
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.
On May 28, 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers establishes a
comprehensive framework for determining whether, how much and when revenue is recognized. It replaces
existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13
Customer Loyalty Programs. The effective date is for reporting periods beginning on or after January 1, 2018
with early application permitted. The Company does not expect this standard to have a significant impact to the
consolidated financial statements.
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
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
45
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
establish reserves by drilling and to construct mining and processing facilities at a site. There is no assurance
that the current exploration programs of UEX will result in profitable commercial uranium mining operations. UEX
may abandon an exploration project because of poor results or because UEX feels that it cannot economically
mine the mineralization.
Joint ventures
UEX participates in certain of its projects (such as the Western Athabasca, Black Lake, Beatty River and Christie
Lake projects) through joint ventures (referred to as “joint operations” in the consolidated 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 Orano 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 March 19, 2018 is US$30.00/lb. Given that the PA presented three economic scenarios using prices ranging
from US$60 to US$80 /lb of U3O8, the economic analysis which uses U3O8 prices higher than the prevailing market
price may no longer be accurate and readers of the PA are therefore cautioned when reading or relying on the
PA.
Competition for properties could adversely affect UEX
The international uranium industry is highly competitive and significant competition exists for the limited supply of
mineral lands available for acquisition. Many participants in the mining business include large, established
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
46
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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.
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
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
47
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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.
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.
TSX:UEX | Energetically Growing by Discovery, Innovation and Acquisition
48
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(Expressed in Canadian dollars, unless otherwise noted)
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 | Energetically Growing by Discovery, Innovation and Acquisition
49
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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 this
MD&A and the related audited consolidated financial statements 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 December 31,
2017. 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 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 | Energetically Growing by Discovery, Innovation and Acquisition
50
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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 consolidated 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, 2017 the Company’s internal control over
financial reporting was effective to provide reasonable assurance regarding the preparation of the Company’s
consolidated 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 | Energetically Growing by Discovery, Innovation and Acquisition
51
UEX CORPORATION
Management’s Discussion and Analysis
For the year ended December 31, 2017 and 2016
(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, cobalt, and nickel 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, cobalt, and nickel price fluctuations;
the economic analysis contained in the 2011 technical report on UEX’s Horseshoe-Raven 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 | Energetically Growing by Discovery, Innovation and Acquisition
52
Audited Financial Statements of
UEX CORPORATION
Years end December 31, 2017 and 2016
KPMG LLP
Chartered Professional Accountants
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
Telephone (604) 691-3000
(604) 691-3031
Fax
www.kpmg.ca
Internet
To the Shareholders of UEX Corporation
Independent Auditors’ Report
We have audited the accompanying consolidated financial statements of UEX Corporation, which comprise the
consolidated balance sheets as at December 31, 2017 and December 31, 2016, the consolidated statements of
operations and comprehensive loss, changes in equity and cash flows for the years ended December 31, 2017 and
December 31, 2016, and notes, comprising a summary of significant accounting policies and other explanatory
information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in
accordance with International Financial Reporting Standards, and for such internal control as management
determines is necessary to enable the preparation of consolidated 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 consolidated 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 consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on our judgment, including the assessment of
the risks of material misstatement of the consolidated 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
consolidated 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 consolidated 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.
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
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial
position of UEX Corporation as at December 31, 2017 and December 31, 2016 and its consolidated financial
performance and its consolidated cash flows for the years ended December 31, 2017 and December 31, 2016 in
accordance with International Financial Reporting Standards.
Chartered Professional Accountants
Vancouver, Canada
March 19, 2018
UEX CORPORATION
Consolidated Balance Sheets
As at December 31, 2017 and 2016
Assets
Current assets
Cash and cash equivalents
Amounts receivable
Prepaid expenses
Investments – current portion
Non-current assets
Deposits
Equipment
Mineral properties
Investments
Total assets
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable and other liabilities
Non- current liabilities
Security deposits
Total liabilities
Shareholders’ equity
Share capital
Share-based payments reserve
Accumulated other comprehensive income
Deficit
Notes
2017
2016
3
4
5
15
6
7
8
9, 15
$
5,106,761
38,033
171,049
-
5,315,843
52,867
244,021
10,247,505
8,750
$
4,136,636
106,036
142,357
144
4,385,173
44,377
267,184
9,233,565
21,000
$
15,868,986
$ 13,951,299
10
$
359,111
$
532,975
20,864
379,975
-
532,975
12(b)
12(c)
15
193,850,256
2,544,760
1,750
(180,907,755)
186,603,862
3,231,238
14,000
(176,430,776 )
15,489,011
13,418,324
Total liabilities and shareholders’ equity
$
15,868,986
$ 13,951,299
Nature and continuance of operations
Commitments
Subsequent events
Contingencies
1
12(d), 13
12(e), 21
22
See accompanying notes to the consolidated financial statements.
Approved on behalf of the Board and authorized for issue on March 19, 2018.
“signed” “signed”
Director
Roger M. Lemaitre
Emmet A. McGrath
TSX:UEX | Energy for the Future
Director
1
UEX CORPORATION
Consolidated Statements of Operations and Comprehensive Loss
Years ended December 31, 2017 and 2016
Revenue
Interest income
Expenses
Bank charges and interest
Depreciation
Exploration and evaluation expenditures
17
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
Unrealized fair value loss on held-for-trading financial assets
Write-down of mineral properties
18
19
12(c)
15
8
Notes
2017
2016
$
66,539
$
91,839
4,471
29,197
4,224,084
106,837
-
125,760
12,347
8,419
333,913
4,782
143,338
556,830
483,085
134,855
144
900
4,126
30,109
4,825,953
78,743
(17,184 )
140,181
278
13,679
189,035
-
139,259
513,933
367,808
119,925
164
1,500
Loss before income taxes
Deferred income tax recovery
6,168,962
6,407,509
(6,102,423 )
(6,315,670 )
11
236,680
334,572
Loss for the year
$
(5,865,743 )
$
(5,981,098 )
Other comprehensive income (loss)
Available-for-sale financial assets net change in fair value
9, 15
(12,250 )
14,000
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 consolidated financial statements.
$
$
(5,877,993 )
(0.02 )
$
$
(5,967,098 )
(0.02 )
315,987,328
284,020,404
TSX:UEX | Energy for the Future
2
UEX CORPORATION
Consolidated Statements of Changes in Equity
Years ended December 31, 2017 and 2016
Number of
common
shares
Share
capital
Share-based
payments reserve
Accumulated
other
comprehensive
income
Deficit
Total
December 31, 2015
246,015,069 $ 178,279,744 $
3,067,912
$
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
-
-
50,523,810
9,250,000
-
-
-
-
-
(505,882 )
(420,000 )
-
-
-
-
-
-
-
-
406,561
(243,235 )
-
-
-
-
-
14,000
-
-
$ (170,692,913 ) $ 10,654,743
(5,981,098 )
(5,981,098 )
-
-
-
-
-
9,250,000
(505,882 )
(420,000 )
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
Loss for the year
Issued pursuant to private
placements
28,259,994
8,011,599
-
Share issuance costs
389,200
(765,205 )
135,274
-
-
Other comprehensive income
(loss)
Fair value change in AFS
financial assets
Share-based payment
transactions
Transfer to deficit on expiry
of share purchase options
-
-
-
-
(12,250 )
-
-
567,012
-
(1,388,764 )
-
-
(5,865,743 )
(5,865,743 )
-
-
-
-
8,011,599
(629,931 )
(12,250 )
567,012
1,388,764
-
December 31, 2017
325,188,073 $ 193,850,256 $
2,544,760
$
1,750 $ (180,907,755 ) $ 15,489,011
See accompanying notes to the consolidated financial statements.
TSX:UEX | Energy for the Future
3
UEX CORPORATION
Consolidated Statements of Cash Flows
Years ended December 31, 2017 and 2016
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 held-for-trading financial assets
Write-down of mineral properties
Changes in:
Amounts receivable
Prepaid expenses and deposits
Accounts payable and other liabilities
Security deposit liability
Investing activities
Interest received
Investment in mineral properties
Purchase of equipment
Proceeds on sale of furniture or equipment
Financing activities
Proceeds from common shares issued
Share issuance costs
Increase (decrease) in cash and cash equivalents during the year
Cash and cash equivalents, beginning of year
Notes
2017
2016
$
(5,865,743 )
$
(5,981,098 )
12(d)
8(i)
12(b)
12(b)
99,629
(236,680 )
-
(66,539 )
12,347
4,249
567,012
144
900
21,544
(37,182 )
62,816
20,864
81,678
(334,572 )
1,522
(91,839 )
278
(2,043 )
406,561
164
1,500
(35,377 )
(41,853 )
(28,990 )
-
(5,416,639 )
(6,024,069 )
108,749
(1,014,840 )
(93,113 )
4,300
85,233
(3,750,000 )
(58,737 )
277
(994,904 )
(3,723,227 )
8,011,599
(629,931 )
7,381,668
970,125
4,136,636
9,250,000
(505,882 )
8,744,118
(1,003,178 )
5,139,814
Cash and cash equivalents, end of year
$
5,106,761
4,136,636
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, 2017 and 2016
renouncements
Non-cash share-based compensation included in exploration and
evaluation expenditures
Depreciation included in exploration and evaluation expenditures
See accompanying notes to the consolidated financial statements.
$
-
-
420,000
(183,320 )
(236,680 )
(151,252 )
83,927
70,431
38,753
53,092
TSX:UEX | Energy for the Future
4
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
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 Unit 200 – 3530 Millar Avenue, Saskatoon,
Saskatchewan, Canada S7P 0B6. 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 exploration programs
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 for its mineral
properties as at December 31, 2017 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 consolidated 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 consolidated financial statements. The consolidated
financial statements of UEX Corporation were reviewed by the Audit Committee and approved and
authorized for issue by the Board of Directors on March 19, 2018.
(b) Functional and presentation currency
These consolidated 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 Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(c) Basis of consolidation:
These consolidated financial statements include the accounts of the Company and its subsidiaries.
Subsidiaries are entities controlled by the Company. Control is having power over the entity, rights to
variable returns from its involvement with the entity, and the ability to use its power to affect the amount
of returns. All intercompany transactions and balances are eliminated on consolidation.
(d) Use of estimates and judgments
The preparation of consolidated 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 consolidated 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 consolidated
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 consolidated 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 consolidated financial
statements (see Note 1 Nature and continuance of operations, Note 2(k) 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(j) 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(l) Provisions).
(iv)
Interpretation of new accounting guidelines and assessing their potential impact on the Company’s
consolidated financial statements requires judgment with respect to company-specific facts and
circumstances.
(v) Ongoing review of the Company’s ability to continue to operate as a going concern. These
consolidated financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities in the normal course of
business.
TSX:UEX | Energy for the Future
6
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(d) Use of estimates and judgments (continued)
Significant areas requiring assumptions and estimation that have a significant risk of resulting in a
material adjustment within the next financial year relate to:
(i)
Estimates and/or assumptions used in determining the fair value of share-based compensation,
including Black-Scholes inputs such as the expected forfeiture rate, volatility and 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(j) 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 consolidated financial statements in the future. Estimates would relate
to the expected inflation rate, estimated mine life and the discount rates applied (see Note 2(l)
Provisions).
(e) 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 consolidated 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.
(f) 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.
(g) 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.
TSX:UEX | Energy for the Future
7
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(g) Financial assets (continued)
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 in other public companies (classified as held-for-
trading) which are presented as non-current assets unless management intends to dispose of these
assets within 12 months of the end of the reporting period.
Held-to-maturity investments
Investments are measured at amortized cost using the effective interest rate method. Transaction costs
are added and amortized to the statement of operations over the life of the financial instrument on an
effective yield basis. The Company does not have any assets classified as held-to-maturity investments.
Available-for-sale (“AFS”) financial assets
Short-term investments are classified as available-for-sale and are carried at fair value (where
determinable based on market prices of actively traded securities) with changes in fair value recorded in
other comprehensive income (“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 and deposits 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.
TSX:UEX | Energy for the Future
8
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(g) Financial assets (continued)
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.
(h) 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.
(i)
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.
(j) 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.
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.
TSX:UEX | Energy for the Future
9
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(j) Equipment (continued)
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
(k) Mineral properties
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
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
reserves. 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 reserves, 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.
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 Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(k) 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.
(l) 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.
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.
TSX:UEX | Energy for the Future
11
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(m) 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.
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.
(n) 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 to profit or loss when the qualifying expenditures are incurred and the tax benefits are
renounced. 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.
(o) 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.
(p) 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 value recorded in shareholders’ equity under warrant reserve.
TSX:UEX | Energy for the Future
12
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(q) 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.
(r) 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.
(s) 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 consolidated 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.
TSX:UEX | Energy for the Future
13
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
2.
Basis of preparation and significant accounting policies (continued)
(s) Recent accounting announcements (continued)
On May 28, 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers establishes a
comprehensive framework for determining whether, how much and when revenue is recognized. It
replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction
Contracts and IFRIC 13 Customer Loyalty Programs. The effective date is for reporting periods beginning
on or after January 1, 2018 with early application permitted. The Company does not expect this standard
to have a significant impact to the consolidated financial statements.
(t) Reclassification of Comparative Period Presentation
Certain comparative period amounts have been reclassified to conform with the current year’s
presentation.
3.
Cash and cash equivalents
Cash
Short-term deposits
4.
Amounts receivable
Interest receivable
Other receivables
December 31
2017
253,081
4,853,680
5,106,761
December 31
2016
15,605
22,428
38,033
$
$
$
$
December 31
2016
290,603
3,846,033
4,136,636
December 31
2016
53,564
52,472
106,036
$
$
$
$
Interest receivable reflects unpaid interest earned on short-term deposits. Other receivables include $22,428
of Goods and Services Tax (GST) receivable as at December 31, 2017 (December 31, 2016 - $51,826).
5.
Prepaid expenses
Advances to vendors
Prepaid expenses
December 31
2017
109,976
61,073
171,049
$
$
December 31
2016
50,000
92,357
142,357
$
$
TSX:UEX | Energy for the Future
14
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
6.
Deposits
Deposits
December 31
2017
December 31
2016
$
52,867
$
44,377
The Company paid deposits in 2017 relating to new operating leases for its premises. The leases expire
between July 31, 2018 and February 29, 2024 (see Note 13 Commitments).
7.
Equipment
Cost
Exploration
camp
Exploration
equipment
Computing
equipment
Furniture
and fixtures
Total
Balance at December 31, 2015
$
99,327
$
394,864
$
302,631 $
95,332
$
892,154
Additions
Disposals
Balance at December 31, 2016
Additions
Disposals
-
-
99,327
-
-
31,358
(3,811 )
422,411
76,770
12,754
(1,311 )
314,074
15,319
14,625
(7,422 )
102,535
1,024
(20,861 )
(41,891 )
(12,333 )
58,737
(12,544 )
938,347
93,113
(75,085 )
Balance at December 31, 2017
$
99,327
$
478,320
$
287,502 $
91,226
$
956,375
Accumulated depreciation and
Impairment
Balance at December 31, 2015
Depreciation charge for the year
Disposals
Balance at December 31, 2016
Depreciation charge for the year
Disposals
Balance at December 31, 2017
Net book value
Balance at December 31, 2015
Balance at December 31, 2016
Balance at December 31, 2017
$
55,994
$
326,950
$
203,836 $
13,172
$
599,952
7,883
-
63,877
7,218
-
23,822
(2,288 )
348,484
37,081
(11,126 )
30,004
(1,311 )
232,529
35,206
(41,891 )
19,969
(6,868 )
26,273
20,124
(5,421 )
81,678
(10,467 )
671,163
99,629
(58,438 )
71,095
$
374,439
$
225,844 $
40,976
$
712,354
43,333 $
67,914
35,450
28,232
$
$
73,927
103,881
$
$
$
98,795 $ 82,160
81,545 $
76,262
61,658 $
50,250
$
$
$
292,202
267,184
244,021
$
$
$
$
TSX:UEX | Energy for the Future
15
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
8. Mineral properties
Exploration and evaluation assets – acquisition costs
Hidden Bay
Black Lake Christie Lake
(i) (ii) (iii)
(vii)
(ix)
Other
(iv)
Total
Balance at December 31, 2015
$
4,475,680
$
759,385
$
250,000
$
Additions
Impairment charge for the year
-
(1,500 )
-
-
3,750,000
-
Balance at December 31, 2016
4,474,180
759,385
4,000,000
-
-
-
-
$ 5,485,065
3,750,000
(1,500 )
9,233,565
Additions
Impairment charge for the year
3,126
(900 )
-
-
1,000,000
11,714
1,014,840
-
-
(900 )
Balance at December 31, 2017
$
4,476,406
$
759,385
$ 5,000,000
$
11,714
$ 10,247,505
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 includes exploration areas Tent Seal, Telephone-
Shamus, Rabbit West, Wolf Lake, Rhino, Dwyer-Mitchell, and Umpherville River and is located in the
eastern Athabasca Basin of northern Saskatchewan, Canada.
The Umpherville River mineral claims that are included as part of the Hidden Bay Project 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.
(ii) Horseshoe-Raven Project
The Company’s 100% owned Horseshoe-Raven Project includes the Horseshoe and Raven Deposits
and is located in the eastern Athabasca Basin of northern Saskatchewan, Canada. Acquisition costs
for Horseshoe-Raven Project are included in the Hidden Bay Project and evaluated as a group given
their proximity to each other and the ability to spread assessment credits.
TSX:UEX | Energy for the Future
16
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
100% owned projects (continued)
(iii) West Bear Co-Ni Prospect
The West Bear Co-Ni Prospect lands are 100% owned by UEX with the exception of Mineral Lease
5424 which is a joint venture between UEX (77.575%), Empresa Nacional Del Uranio S.A. (7.680%),
Nordostschweizerische Kraftwerke A.G. (7.68%) and Encana (7.066%). West Bear was acquired from
Cameco upon UEX’s formation in 2001 as part of the Hidden Bay Project, which established Cameco’s
initial equity position in UEX. Acquisition costs for the West Bear Co-Ni Prospect are included in the
Hidden Bay Project and evaluated as a group given their proximity to each other and the ability to
spread assessment credits.
(iv) Other Projects
UEX acquired the Parry Lake Project and Laurie North Project via staking.
The Parry Lake Project was acquired due to its proximity to the Patterson Lake Corridor and its potential
to host different types of uranium deposits.
The Laurie North Project claims cover the gap between the Laurie and Uchrich projects that is believed
to overlie extensions of electromagnetic conductively between the existing projects.
An ownership position in both projects were offered to Orano as per area of interest provisions of the
Western Athabasca Option Agreement. Orano elected not to exercise its rights to acquire a stake in
the two projects.
(v) Riou Lake Project
The Company holds a 100% interest in the Riou Lake Project located in the northern Athabasca Basin.
UEX continues to maintain several Riou Lake claims in good standing. Mineral property acquisition
costs associated with the Riou Lake Project were written off previously due to a lack of ongoing
exploration activity.
Joint operations
(vi) Western Athabasca Projects
On April 10, 2013, an agreement was signed with Orano Canada Inc. (“Orano”) (formerly AREVA
Resources Canada Inc.) which grants UEX the option to increase its ownership interest in the Western
Athabasca Projects (the “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.
TSX:UEX | Energy for the Future
17
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
(vi) Western Athabasca Projects (continued)
The Projects, located in the western Athabasca Basin, which include the Kianna, Anne, Colette and
58B Deposits located at the Shea Creek Project, are eight joint ventures with the Company holding an
approximate 49.1% interest and Orano holding an approximate 50.9% interest in all projects as at
December 31, 2017 and 2016, except for:
•
•
•
•
the Laurie Project, where the Company has an approximate 33.0% interest as at
December 31, 2017 and 42.2% interest as at December 31, 2016;
the Mirror River Project, where the Company has an approximate 32.3% interest as at
December 31, 2017 and 41.9% interest as at December 31, 2016;
the Nikita Project where the Company has an approximate 42.0% interest as at December
31, 2017 and 49.1% interest as at December 31, 2016; and
the Uchrich Project where the Company has an approximate 30.5% interest as at
December 31, 2017 and 49.1% interest as at December 31, 2016.
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 2018, Orano proposed budgets of $0.6 million on Alexandra and $2.2 million on Nikita of which UEX
has decided not to fund. Interests on these projects are anticipated to drop as follows, should Orano
complete the approved programs. This decision does not impact the ownership interest in the Brander,
Erica, Laurie, Mirror River, Shea Creek, and Uchrich Projects. Although acquisition costs associated
with the Western Athabasca Projects were previously written off, UEX has no intention to abandon
these projects.
December 31, 2017
Projected interest, December 31, 2018
Ownership interest (%)
Alexandra
Nikita
UEX
49.0975
42.0413
Orano
50.9025
57.9587
Total
100.0000
100.0000
UEX
39.6127
22.7809
Orano
60.3873
77.2191
Total
100.0000
100.0000
TSX:UEX | Energy for the Future
18
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
(vii) 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 Orano holding a 9.08% interest as at December 31, 2017
and December 31, 2016.
Uracan Resources Ltd. (“Uracan”) had an option to earn into the Black Lake Project but did not meet
the exploration expenditures required under the amended Black Lake Project earn-in agreement by
December 31, 2016 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.
On April 6, 2017, ALX Uranium Corp. (“ALX”) entered into a letter of intent (“LOI”) with UEX to complete
a due diligence review of the Black Lake Project. On July 26, 2017, ALX informed the Company that
they had completed their review and wished to proceed with an option to acquire up to a 75% interest
in the Project.
On September 5, 2017, ALX and UEX entered into an Option Agreement, under which ALX will have
the right to earn a 75% interest in three stages as follows:
• Stage 1 - By completing $1,000,000 in exploration work on the project and issuing to UEX a total
of 5,000,000 common shares of ALX to earn an initial 40% interest in the project by September 5,
2018;
• Stage 2 - By completing an additional $2,000,000 (for a cumulative total of $3,000,000) in
exploration work and issuing a further 4,000,000 common shares of ALX to the Company (for a
cumulative total of 9,000,000 ALX common shares) to earn an additional 11% interest in the project
(cumulative interest of 51%) by March 5, 2020;
• Stage 3 - By completing an additional $3,000,000 (for a cumulative total of $6,000,000) in
exploration work and issuing a further 3,000,000 common shares of ALX to the Company (for a
cumulative total of 12,000,000 ALX common shares) to earn an additional 24% interest in the
project (cumulative interest of 75%) by September 5, 2021.
Upon signing of the LOI, ALX paid $25,000 to UEX and were permitted to conduct up to $100,000 in
exploration work. ALX completed $87,000 of exploration work that will be credited towards the Stage
1 exploration work commitment. Upon vesting any interest, ALX will become a party to the Black Lake
Joint Venture.
ALX will be earning its interest in the Black Lake Project exclusively from UEX’s 90.92% interest in the
Joint Venture. Orano has agreed to waive their first right of refusal on the transfer of any of UEX’s
ownership interest to ALX.
TSX:UEX | Energy for the Future
19
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
(viii) Beatty River Project
The Company has a 25% interest in the Beatty River Project, which is located in the western Athabasca
Basin. Orano is the operator of this project. Although acquisition costs associated with the Beatty River
Project were previously written off, UEX has no intention to abandon this project.
(ix) Christie Lake Project
The Company has earned a 45% interest in the Christie Lake Project by making $5 million in cash
payments and completing $8.0 million in exploration work. The Project is located in the eastern
Athabasca Basin and JCU (Canada) Exploration Company Limited (“JCU”) holds a 55% interest. UEX
is the operator of this project and has an option to earn up to a 70% interest in the project by making a
total of $7 million in cash payments and completing a total of $15 million in exploration on the property.
A summary of cash payments and exploration expenditures made to date and commitments remaining
is summarized in the table below.
Date
Cash Payments
Exploration Work
UEX Cumulative
Interest Earned
Completed:
As at December 31, 2017
$
5,000,000
7,962,022 (1)(2)
45.00 %
To be completed:
Before January 1, 2019
Before January 1, 2020
Total
1,000,000
1,000,000
2,000,000
7,000,000
$
$
2,037,978 (2)
5,000,000
7,037,978
15,000,000
$
$
60.00 %
70.00 %
70.00 %
(1) Cumulative exploration work completed does not include $100,159 of share based compensation relating to the Christie Lake Project, which
is not an eligible earn-in expenditure.
(2) Exploration work completed in excess of the minimum yearly commitment is applied to future years’ commitments. Exploration work
commitments per the earn-in agreement are as follows:
$2,500,000 before January 1, 2017 (completed)
•
$2,500,000 before January 1, 2018 (completed),
•
$5,000,000 before January 1, 2019 ($2,962,022 completed); and
•
$5,000,000 before January 1, 2020.
•
TSX:UEX | Energy for the Future
20
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
8. Mineral properties (continued)
Exploration and evaluation assets (continued)
Joint operations (continued)
UEX is party to the following joint arrangements:
Ownership interest (%)
UEX
Orano JCU
Total
UEX
Orano JCU
Total
December 31, 2017
December 31, 2016
Beatty River
Black Lake
Christie Lake
Western Athabasca
Alexandra
Brander
Erica
Laurie
Mirror River
Nikita
Shea Creek
Uchrich
9.
Investments
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
45.0000
- 55.0000 100.0000 30.0000
- 70.0000 100.0000
49.0975 50.9025
- 100.0000 49.0975 50.9025
49.0975 50.9025
- 100.0000 49.0975 50.9025
49.0975 50.9025
- 100.0000 49.0975 50.9025
32.9876 67.0124
- 100.0000 42.1827 57.8173
32.3354 67.6646
- 100.0000 41.9475 58.0525
- 100.0000
- 100.0000
- 100.0000
- 100.0000
- 100.0000
42.0413 57.9587
- 100.0000 49.0975 50.9025
- 100.0000
49.0975 50.9025
- 100.0000 49.0975 50.9025
- 100.0000
30.4799 69.5201
- 100.0000 49.0975 50.9025
- 100.0000
The Company holds 350,000 common shares of Uracan. In early 2013, UEX received 300,000 common
shares and 150,000 common share purchase 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(vii)). 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 common shares and 25,000
common share purchase warrants. On June 23, 2017, these warrants expired.
These common shares are being held for long-term investment purposes. The shares have been classified
as Available-for-sale (“AFS”) financial assets and are carried at fair value, with changes in fair value reflected
in other comprehensive income.
Investments
December 31
2017
December 31
2016
Common shares held – Uracan (1) (TSX.V: URC) (see Note 15)
$
8,750
$
21,000
(1) The initial fair value of the shares was $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 fair value of the Uracan common shares is based on the market price for these actively traded securities.
TSX:UEX | Energy for the Future
21
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
10. Accounts payable and other liabilities
Trade payables
Other liabilities
Flow-through share premium
December 31
2016
December 31
2016
$
85,547
$
273,564
-
$
359,111
$
57,427
238,868
236,680
532,975
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 as the
funds were spent on qualifying expenditures during 2017.
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
Income tax provision
2017
26.75%
2016
27.00%
$ (6,102,423)
$ (6,315,670 )
1,632,398
1,705,231
(153,494 )
(1,769,020 )
526,796
24,752
(736,113 )
(659,298 )
$ 236,680
$ 334,572
The Company recognized a deferred income tax recovery of $236,680 for the year ended December 31, 2017
(2016 - $334,572) related to the extinguishment of the flow-through premium related to flow-through shares
renounced during the year ended December 31, 2017. Flow-through premiums related to the following
placements as renounced resulted in deferred tax recoveries as follows:
May 11, 2015 placement flow-through premium of $275,000
May 17, 2016 placement flow-through premium of $420,000
TSX:UEX | Energy for the Future
Year ended December 31
2017
2016
$
$
-
$
236,680
236,680
$
151,252
183,320
334,572
22
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
11.
Income taxes (continued)
At December 31, 2017, the Company has Canadian non-capital income tax losses carried forward of
approximately $18.5 million which are available to offset future years’ taxable income. These losses expire
as follows:
2037
2036
2036
2035
2034
2033
2032
2031
2030
2029
2028
December 31
2017
1,691,543
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
18,543,874
$
$
The unrecognized deductible temporary differences at December 31, 2017 and 2016 are as follows:
Non-capital loss carryforwards
Charitable donations
Equipment
Investments
Mineral resource expenditure pool
Share issuance costs
12. Share capital
(a) Authorized
Year ended December 31
2017
2016
$
18,543,874
$
2,000
923,160
30,820
78,239,492
953,702
$
98,693,048
$
16,852,331
9,000
795,700
18,426
82,509,540
669,446
100,854,443
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. As of December 31, 2017, no preferred shares
have been issued.
TSX:UEX | Energy for the Future
23
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
12. Share capital (continued)
(b) Issued and outstanding – common shares
Balance, December 31, 2015
Issued pursuant to private placement in 2016
Share issuance costs
Value attributed to flow-through premium on issuance (Note 10)
Balance, December 31, 2016
Issued pursuant to private placements in 2017
Share issuance costs
Balance, December 31, 2017
Number of
shares
Value
246,015,069 $ 178,279,744
50,523,810
9,250,000
(505,882 )
(420,000 )
296,538,879
$ 186,603,862
28,259,994
8,011,599
389,200
(765,205 )
325,188,073
$ 193,850,256
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.
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 common share, for
gross proceeds of $6,009,999. 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 $204,938. Each unit consisted
of one common share and one common share purchase warrant exercisable at a price of $0.42 per
common share for a period of three years. The Company also issued 681,000 common share broker
warrants as part of the placement. Each broker warrant is exercisable at a price of $0.30 per common
share for a period of two years.
On December 14, 2017, the Company completed a flow-through private placement of 5,560,000 common
shares at a price of $0.36 per common share, for gross proceeds of $2,001,600. Share issue costs
included the agent’s commission of $140,112 equal to 7% of the aggregate gross proceeds of the
financing paid in common shares of the Company at a price of $0.36 per common share, the fair value of
brokers warrants of $29,520 and other issuance costs of $64,392. The agent also received 222,400
broker warrants equal to 4% of the number of flow-through shares placed by the agent. Each broker
warrant is exercisable for one common share of the Company for a period of two years at a price of $0.42
per common share. As the quoted market price of the Company’s common shares exceeded the flow
through issuance price at the time flow-through shares were issued in 2017, no share premium liability
was recorded in 2017.
TSX:UEX | Energy for the Future
24
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
12. Share capital (continued)
(b) Issued and outstanding – common shares (continued)
The fair value of the brokers warrants issued for each respective financing was determined using the
Black-Scholes pricing model with the following weighted-average assumptions:
Number of broker warrants 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
(c) Share-based compensation
December 14
2017
February 27
2017
222,400
0.00%
$ 0.365
73.42%
1.56%
0.00%
2.00 years
$ 0.13
681,000
0.00%
$ 0.36
67.84%
0.76%
0.00%
2.00 years
$ 0.16
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, 2017
and December 31, 2016 and changes during the years ended on these dates is presented below:
Outstanding, December 31, 2015
Granted
Cancelled
Outstanding, December 31, 2016
Granted
Cancelled
Expired
Outstanding, December 31, 2017
Number of share
purchase options
Weighted-
average
exercise
price
17,316,000
$ 0.79
4,426,667
(838,667)
0.23
0.54
20,904,000
0.68
6,725,000
(2,107,000 )
(1,425,000 )
0.20
0.57
0.80
24,097,000
$ 0.55
The 24,097,000 options outstanding as of December 31, 2017 represent 7.4% of the Company’s issued
and outstanding common shares. The number of options available for grant as of December 31, 2017 is
8,421,807 representing 2.6% of the Company’s issued and outstanding common shares.
TSX:UEX | Energy for the Future
25
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
12. Share capital (continued)
(c) Share-based compensation (continued)
Additional information regarding stock options outstanding as at December 31, 2017 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
13,085,000
$ 0.23
0.34 – 0.99
5,782,000
1.00 – 1.45
5,230,000
0.59
1.30
24,097,000
$ 0.55
4.54
2.34
1.55
3.36
7,398,332
$ 0.24
5,748,667
5,230,000
0.59
1.30
18,376,999
$ 0.65
The share-based payments reserve values of $2,684,872 as at December 31, 2017 and $3,321,238 as
at December 31, 2016 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, 2017 is $567,012 (2016 - $406,561). The amount included in exploration and evaluation
expenditures for the year ended December 31, 2017 is $83,927 (2016 - $38,753) and the remaining
$483,085 (2016 - $367,808) 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
2017
6,725,000
2.27%
$0.20
65.15%
1.06%
0.00%
4.46 years
$0.10
December 31
2016
4,426,667
1.69%
$ 0.23
63.46%
0.59%
0.00%
4.21 years
$0.11
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, 2017, the Company had spent, on qualified expenditures, all (December 31, 2016 -
$2,291,500) of the $5,250,000 flow-through monies raised in the May 17, 2016 placement. The Company
renounced the income tax benefit of this issue to its subscribers effective December 31, 2016. The
Company incurred $4,249 in Part XII.6 tax on unspent flow-through monies in the year ended December
31, 2017 (2016 - $2,043), which has been netted against interest income.
TSX:UEX | Energy for the Future
26
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
12. Share capital (continued)
(d) Flow-through shares (continued)
As at December 31, 2017, the Company had spent $744,139 of the $2,010,000 flow-through monies
raised in the February 27, 2017 placement and had yet to spend any of the $2,001,600 flow-through
monies raised in the December 14, 2017 placement. The Company renounced the income tax benefit of
both private placements to its subscribers effective December 31, 2017 and will begin incurring Part XII.6
tax on unspent amounts relating to this placement subsequent to December 31, 2017.
(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, 2015
Issued pursuant to private placements in 2016
Balance, December 31, 2016
Issued pursuant to private placements in 2017
Balance, December 31, 2017
Number of
Warrants
Weighted Average
Exercise Price
-
$
24,761,905
24,761,905
16,903,394
41,665,299
$
-
0.22
0.22
0.42
0.30
As at December 31, 2017 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)
February 27, 2019 (2 year life)
February 27, 2020 (3 year life)
December 14, 2019 (2 year life)
Balance, December 31, 2017
Number of
Warrants
Exercise Price
20,000,000
$
4,761,905
681,000
15,999,994
222,400
41,665,299
$
0.20
0.30
0.30
0.42
0.42
0.30
During January 2018, 22,761,905 warrants were exercised and 2,000,000 warrants expired. Accordingly,
the Company issued 22,761,905 common shares for gross proceeds of $5,028,572.
TSX:UEX | Energy for the Future
27
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
13. Commitments
The Company has obligations under operating leases for its office premises, which expire between July 31,
2018 and February 29, 2024. The future minimum payments are as follows:
2018
2019
2020
2021
2022 and beyond
14. Management of capital
December 31
2017
$
134,907
116,121
107,805
54,675
166,050
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, amounts receivable
and deposits. 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,
amounts receivable and deposits. The Company’s investment policy is to invest its cash in highly liquid short-
term interest-bearing investments that are redeemable 90 days or less from the original date of acquisition.
Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will
affect the Company’s income. The Company is subject to interest rate risk on its cash and cash equivalents.
The Company reduces this risk by investing its cash in highly liquid short-term interest-bearing investments
that earn interest on a fixed rate basis.
All financial instruments measured at fair value are categorized into one of three hierarchy levels, described
below, for disclosure purposes. Each level is based on the transparency of the inputs used to measure the
fair values of assets and liabilities:
TSX:UEX | Energy for the Future
28
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
15. Management of financial risk (continued)
● 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 cash and cash equivalents, 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, 2016
Level 1
Level 2
Level 3
Total
Shares – Uracan (TSX-V: URC)
$ 21,000
$ -
$ -
$ 21,000
Warrants - Uracan (current portion)
-
-
144
144
$ 21,000
$ -
$ 144
$ 21,144
Investments – as at December 31, 2017
Level 1
Level 2
Level 3
Total
Shares – Uracan (TSX-V: URC)
$ 8,750
$ -
$ -
$ 8,750
$ 8,750
$ -
$ -
$ 8,750
TSX:UEX | Energy for the Future
29
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
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, 2015
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
Number of
Shares
Change in
Fair Value
350,000
Fair Value
$ 7,000
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
Gains (losses) for the three months ended March 31, 2017
Gains (losses) for the three months ended June 30, 2017
Gains (losses) for the three months ended September 30, 2017
Gains (losses) for the three months ended December 31, 2017
(3,500 )
(7,000 )
3,500
(5,250 )
Changes in fair value – total unrealized gain (loss) on financial assets at
AFS (shares) – year ended December 31, 2017
(12,250 )
(12,250)
Balance, December 31, 2017
350,000
$ 8,750
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.
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.
TSX:UEX | Energy for the Future
30
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
17. Exploration and evaluation expenditures
Project
Beatty River
Black Lake
Christie Lake
Hidden Bay (2)
Horseshoe-Raven
West Bear Co-Ni
Western Athabasca
Alexandra
Brander
Erica
Laurie
Mirror
Nikita
Shea Creek
Uchrich
2016
2017
Cumulative (1) to
December 31, 2015
Expenditures
in the period
Cumulative to
December 31, 2016
Expenditures
in the period
Cumulative to
December 31, 2017
$
873,069
$
-
$
873,069
$
2,136
$
875,205
14,508,893
16
58,689
4,021,603
33,026,660
41,669,712
-
1,205,251
1,353,363
2,253,085
1,586,528
1,987,612
1,952,331
53,581,147
543,091
42,556
143,746
-
-
-
-
-
-
-
618,032
-
14,508,909
4,080,292
33,069,216
41,813,458
-
1,205,251
1,353,363
2,253,085
1,586,528
1,987,612
1,952,331
54,199,179
543,091
(20,402)
3,981,889
200,905
8,413
38,359
1,457
-
-
2,774
2,774
1,826
3,289
664
14,488,507
8,062,181
33,270,121
41,821,871
38,359
1,206,708
1,353,363
2,253,085
1,589,302
1,990,386
1,954,157
54,202,468
543,755
All Projects Total
$
154,599,431
$
4,825,953
$
159,425,384
$
4,224,084
$
163,649,468
(1) Exploration and evaluation expenditures have been presented on a cumulative basis from July 17, 2002.
(2)
Includes the West Bear Deposit and all other Hidden Bay exploration areas: Tent-Seal, Telephone-Shamus, Rabbit West, Wolf
Lake, Rhino, Dwyer-Mitchell, and Umpherville River.
Exploration and evaluation expenditures for the year ended December 31, 2017 and 2016 include the
following non-cash expenditures:
Depreciation
Share-based compensation
Project management fee
Western Athabasca Projects
Year ended December 31
2016
2017
70,431
$
83,927
355,734
510,092
$
53,092
38,753
367,860
459,705
$
$
UEX did not 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) which resulted in
a dilution of interest in certain properties (see Note 8(vi)).
Christie Lake Project
During the year ended December 31, 2017, the Company completed a $4.0 million exploration program at
Christie Lake. The Company to date has completed $8.0 million of exploration work and will apply the excess
expenditures to reduce future years’ commitments to the ownership milestones. 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).
TSX:UEX | Energy for the Future
31
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
18. Office expenses
Insurance
Office supplies and consulting
Telephone
19. Salaries, net of project management fees
Gross salaries
Non-cash management fee offset:
Christie Lake – 10%
Black Lake – 10%
$
$
$
Year ended December 31
2016
2017
51,587 $
268,331
13,995
333,913 $
51,710
125,510
11,815
189,035
Year ended December 31
2016
2017
912,564 $
881,793
(367,841 )
(19 )
513,933
(355,734 )
-
$
556,830 $
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)
Year ended December 31
2016
2017
1,324 $
6,329
1,323
9,055
7,653 $
10,378
$
$
(1) Payments related to fees paid for use of the Cameco airstrip at the McArthur River mine.
(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).
TSX:UEX | Energy for the Future
32
UEX CORPORATION
Notes to the Consolidated Financial Statements
For the years ended December 31, 2017 and 2016
20. Related party transactions (continued)
(b) Key management personnel compensation
Key management personnel compensation includes management and director compensation as follows:
Year ended December 31
2016
2017
Salaries and short-term employee benefits (1)(2)
$
696,749 $
Share-based payments (3)
Other compensation (4)
399,104
15,750
740,259
338,449
-
$
1,111,603 $
1,078,708
(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 payments to Altastra Office Systems Inc., a company owned by Mr. Hui, for Interim CFO services rendered to UEX.
21. Subsequent event
During January 2018, 22,761,905 warrants were exercised and 2,000,000 warrants expired. Accordingly, the
Company issued 22,761,905 common shares for gross proceeds of $5,028,572.
On March 7, 2018, UEX entered into a purchase agreement with Denison Mines Corp. (“Denison”) to acquire
a single 890 hectare claim which was incorporated into the West Bear Project. In consideration to acquire
100% interest in the property UEX made a cash payment of $11,000 and granted a 1.5% net smelter return
royalty to Denison which can be purchased anytime for a cash payment of $950,000.
22. Contingencies
Due to the size, complexity, and nature of the Company’s operations various legal matters are outstanding
from time to time. By their nature, contingencies will only be resolved when one or more future events occur
or fail to occur. The Company accrues for such items when a liability is both probable and the amount can be
reasonably estimated. In the opinion of management, based on the information currently available, these
matters will not have a material adverse effect on the consolidated financial statements of the Company.
TSX:UEX | Energy for the Future
33
Corporate Information
Board of Directors
Legal Counsel
Graham C. Thody, Chairman
Vancouver, British Columbia
Roger M. Lemaitre
President and CEO
Warman, 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
Laurie Thomas
Vice President, Corporate Relations
Wylie Hui
Interim CFO
Bernard Poznanski
Corporate Secretary
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
Home Office
Unit 200 – 3530 Millar Avenue
Saskatoon, SK
Canada S7P 0B6
Telephone:
Fax:
Email:
Website:
(306) 979-3849
(604) 669-1240
uex@uex-corporation.com
www.uex-corporation.com
Satellite Office
Unit 101 – 1093 West Broadway
Vancouver, BC
Canada V6H 1E5
Telephone:
Fax:
(604) 669-2349
(604) 669-1240