2017 ANNUAL REPORT
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2017 ANNUAL REPORT
TABLE OF CONTENTS
TMANAGEMENT'S DISCUSSION & ANALYSIS
TABOUT URANIUM PARTICIPATION CORPORATION
TURANIUM INDUSTRY OVERVIEW
TOVERALL PERFORMANCE
TOUTLOOK
TADDITIONAL INFORMATION
TCAUTIONARY STATEMENT REGARDING FORWARDING-LOOKING STATEMENTS
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TRESPONSIBILITY FOR FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
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ANNUAL CONSOLIDATED FINANCIAL STATEMENT 21
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Management’s Discussion & Analysis
This Management’s Discussion and Analysis (“MD&A”) of Uranium Participation Corporation and its subsidiary
(collectively, “UPC” or the “Corporation”) provides a detailed analysis of the Corporation’s business and compares its
financial condition and results of operations for the year ended February 28, 2017 to those of the previous year. This
MD&A is dated as of April 6, 2017 and should be read in conjunction with the Corporation’s audited annual consolidated
financial statements and related notes for the year ended February 28, 2017.
The audited annual consolidated financial statements are prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). All dollar amounts are
expressed in Canadian dollars, unless otherwise noted. All uranium prices are based on prices published by Ux
Consulting Company LLC (“UxC”). For all references to the net asset value (“NAV”), please refer to the “Non-IFRS
Financial Performance Measures” section.
ABOUT URANIUM PARTICIPATION CORPORATION
The Corporation invests substantially all of its assets in uranium, either in the form of uranium oxide in concentrates
(“U R3ROR8R”) or uranium hexafluoride (“UFR6R”) (collectively “uranium”), with the primary investment objective of achieving
appreciation in the value of its uranium holdings through increases in the uranium price. Denison Mines Inc. (the
“Manager”), under the direction of UPC’s Board of Directors, provides general administration and management services
to the Corporation. The common shares of UPC are listed and trade on the Toronto Stock Exchange (“TSX”) under the
symbol “U”.
Migration of Subsidiary
At February 29, 2016, the majority of the Corporation's uranium was held directly or indirectly through its wholly owned
subsidiary, Uranium Participation Cyprus Limited ("UPCL"). UPCL was incorporated under the laws of the Republic of
Cyprus on September 10, 2006. In August 2007, UPCL established a branch office in Luxembourg through which the
operations of UPCL were conducted.
UPCL migrated to Bermuda on March 11, 2016, upon receipt of approval from the Bermuda Monetary Authority, and
was registered by the Registrar of Companies in Bermuda under the name of Uranium Participation Bermuda Limited
(“UPBL”). Immediately following the migration, the branch office in Luxembourg was closed and all assets and liabilities
were transferred to UPBL. UPBL’s activities continue to consist of directly investing in, and holding, uranium. The
migration to Bermuda is expected to reduce the Corporation’s operating costs.
URANIUM INDUSTRY OVERVIEW
Uranium Industry Overview
In fiscal 2017, the uranium industry continued to face challenges as uranium prices endured their sixth consecutive
year of bear market conditions, which emerged following the Fukushima incident in March 2011. The uranium spot
price dropped 44% during the fiscal year, starting out at US$32.15 per pound UR3ROR8R at the beginning of the fiscal year,
hitting a 12-year low of US$18.00 per pound UR3ROR8R in November 2016 and recovering slightly to US$22.25 per pound
U R3ROR8 Rat fiscal 2017 year end in February 2017.
The depth and breadth of this uranium market downturn has finally begun to take a meaningful toll on the production
side of the supply and demand equation, with production cutbacks becoming the norm as higher priced legacy long
term contracts begin to fall off. Uranium prices in the low US$20.00 per pound UR3ROR8R range are unlikely to be
sustainable, given that the all-in production costs of the lowest cost producing mines, as reported by UxC, are higher
than the current depressed price level. Further, the current price environment fails to incentivize the majority of
undeveloped uranium projects towards construction.
The sustained low uranium price levels have persisted despite positive developments on the demand side during
calendar 2016. Per the U.S. Energy Information Administration and American Nuclear Society, 2015 and 2016 have
seen more new nuclear capacity additions to the global electricity grid than any other years in the past 25 year period.
Nuclear energy continues to expand globally due to its ability to deliver large amounts of reliable and constant baseload
energy, without carbon emissions or air pollution, at competitive generating costs compared to alternative forms of
electricity.
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Management’s Discussion & Analysis
Uranium Demand – Nuclear Energy Growth
Ten nuclear reactors were added to the global grid during the 2016 calendar year, exceeding the mark set in 2015 for
the highest rate of growth of nuclear power capacities in the past 25 years. The World Nuclear Association (“WNA”)
reports that 447 reactors are operable in 30 countries as of March 2017. These reactors generate 392 gigawatts of
electricity and supply over 11.5% of the world’s electrical requirements. Currently, 59 nuclear reactors are under
construction in 14 countries with the principal drivers of this expansion being China (21), Russia (7), India (5), the USA
(4), and the United Arab Emirates (“UAE”) (4). Additionally, based on the most recent statistics from the WNA, there
are a total of 164 reactors that are either on order or planned, and a further 350 reactors currently proposed to be built
in the coming years. China continues to be a leader in this growth story, expanding from the currently installed 31
gigawatts of capacity from 30 reactors to close to 100 gigawatts within 10 years, which will exceed the currently installed
U.S. capacity. The Chinese government has increased its emphasis on nuclear energy as a way to deliver vast amounts
of electricity without adding to the severe crisis-level air pollution and carbon emission conditions that exist in China’s
major cities. As a case in point, in 2017, China is expected to add five nuclear units to the grid and is expected to break
ground on an additional eight reactors. New nuclear countries, such as the UAE, continue to make progress in their
new build programs – most notable are the four new South Korean-built units at the Barakah site in Abu Dhabi, which
are under budget and on schedule to be producing electricity by 2020. Many of the established nuclear markets are
also committed to building and operating new nuclear energy stations, like the United Kingdom, where the government’s
current energy policy calls for a doubling of the installed capacity in the coming years through cooperation with French
and Chinese partners.
The United States has seen challenges to its growth plans, particularly in de-regulated markets, from highly subsidized
renewables and sustained low natural gas prices; however, recently there have been positive developments towards
the recognition of the value of nuclear energy in the overall energy mix, with its fuel cost advantages, grid stability,
reliable 24/7 supply, 95% capacity factors, and clean air and carbon avoidance attributes. A number of states have
introduced legislation, or are considering similar steps, to ensure the preservation of nuclear energy as a key contributor
of clean, baseload energy to their grids. In the regulated markets of the Southeast, four new large reactors are under
construction in South Carolina and Georgia, which, despite construction challenges inherent in projects of this massive
scope, will be the energy cornerstones of their service territories for many decades into the future. Furthermore,
throughout the United States, all existing nuclear reactors have received, or are applying for, license extensions that
will add 20-40 years to their operating lives.
Finally, the Japanese recovery, while slow and deliberate, now has 12 units approved by regulators for restart and as
many as seven reactors could be back on-line by the end of 2017. Although slower than expected - six years having
elapsed from the events of Fukushima - the progress is viewed as a positive development for both market fundamentals
and sentiment in the uranium industry.
Significant (and Growing) Uncommitted Reactor Requirements
The world’s fleet of operating reactors, and those nearing construction completion, are now expected to generate a
cumulative fuel requirement of 174 million pounds of U R3ROR8R in 2017. The fuel requirement level is forecasted to grow at
an average rate of 2% to 2.5% per year from the end of 2016 through 2030 according to UxC. While the demand for
uranium is fairly steady and predictable, the procurement decisions of utility companies can vary based on the level of
current contract coverage, existing inventories, forecasts of future prices and risk tolerance. The previous contracting
cycle, brought on by uranium price spikes in 2007 and 2010, resulted in utilities rushing to contract at higher prices and
for very long terms. While these old contracts are expiring, the utilities have not been moving to replace these contracts
and the forward coverage of utilities have therefore fallen appreciably, resulting in uncommitted needs continuously
building. UxC reports that these unfilled needs may total just under 1 billion pounds of UR3ROR8R over the coming ten years
and over 81% of expected reactor requirements are uncovered by 2027.
Primary Uranium Production – Rationalization Finally Underway
According to UxC, in their Uranium Market Outlook – Q1 2017 (the “Q1 Outlook”), global uranium production amounted
to 163 million pounds in the year ended December 2016. While this continued the trend of recent annual uranium
production increases in the face of low prices, the rate of increase has finally slowed and would support observations
that a “peaking” of mine production is occurring. A number of high profile production cutbacks have been announced,
including Cameco’s Saskatchewan and U.S. operations, Paladin’s Namibian Langer Heinrich mine and Kazakhstan’s
10% reduction in output, all pointing in that direction. The 10% reduction in output from Kazakhstan is particularly
significant, as Kazakhstan is the world’s largest producer of uranium, accounting for 40% of global mine supplies, and
signals a disciplined and responsible market approach. Going forward, it is reasonable to expect further global
production cutbacks as higher priced legacy supply contracts, signed in previous cycles, are expiring and ceasing to
provide protection for sources of higher-cost production. Furthermore, the incentive price for meaningful new uranium
production (new developments or mine expansions) to come to the market is estimated by BMO, in their March 2017
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Management’s Discussion & Analysis
uranium market outlook, to be higher than US$60 per pound UR3ROR8R. This, and the prolonged licensing and permitting
process required to bring on new production (as much as 10 years or more for a major conventional mine/mill complex),
make for an interesting situation as the uranium market is expected to move into a near term supply deficit amidst
higher contracting volumes.
Secondary Supplies – Still Meaningful, But Insufficient to Meet the Supply Gap Going Forward
The uranium market is unique among commodities, where since the late 1980’s, the industry has consumed more
uranium annually than it produces from global mine sources, with a combined production shortfall of approximately 1.4
billion pounds of U R3ROR8 Rfrom 1990 through 2015. This is due to the availability of secondary uranium supplies and has
been the basis of the secondary supply-driven market that has prevailed for decades. However, while these sources of
supply are still significant, they have finally begun to diminish in importance, and the shift to a production-driven market
is occurring. The end of the U.S./Russian highly-enriched uranium deal (the landmark nuclear weapons dismantlement
initiative), in 2013, removed approximately 24 million pounds annually from the market, which disproportionately fell on
the U.S. spot market. While this significant development was somewhat offset by the effects of Fukushima, it is an
example of the finite and diminishing nature of secondary supplies in a rising demand environment. The curtailment of
older-generation enrichment centrifuges, coupled with the renewed demand for enrichment services, is also expected
to result in reduced capacity available for so-called “underfeeding” of enrichment plants which has added to secondary
natural uranium supplies. Additionally, the U.S. Government (Department of Energy) inventory sales, which historically
totaled 5 to 8 million pounds per year, continue to be opposed by the domestic industry and compromise legislation
has been introduced to cap the amount of U.S. Department of Energy uranium that can be sold going forward.
Uranium Market Developments in 2017 – Turning the Corner?
In the early part of calendar 2017, uranium has bucked the trend of other commodities and spot prices have increased
on the improved fundamentals noted above, not the least of which was the Kazakhstan production cut announcement
in early January 2017. The spot price climbed from US$20.50 per pound U R3ROR8R at the start of 2017 to a peak of
US$26.50 per pound U R3ROR8R in mid-February 2017. Although the price retreated briefly by the end of February to
US$22.50 per pound U R3ROR8R, it has since recovered to US$23.50 per pound U R3ROR8R as of April 3, 2017. While these price
developments have been encouraging, much of the market activity appears to have been a result of speculative
purchases by traders, and not utility procurement for reactor needs. This leads the discussion to the key catalyst for a
sustained recovery of uranium prices over the course of 2017, which is the resumption of more robust utility
procurement levels. The market is beginning to see increased off-market and public tenders from end-users (including
meaningful demand from non-US utilities), and market observers will watch to see if this develops into a trend for the
rest of the year. As noted above, the substantial level of uncommitted uranium requirements in the coming years would
point to a future procurement cycle that may test the supply dynamics of an industry that has failed to be incentivized
to develop the next generation of uranium mines.
SELECTED ANNUAL FINANCIAL INFORMATION
(in thousands, except per share amounts)
February 28,
2017
February 29,
2016
February 28,
2015
Unrealized (losses) gains on investments in uranium
Net (loss) gain for the year
Net (loss) gain per common share – basic and diluted
$ (201,882) $ (71,181) $ 134,606
$ (206,034) $ (75,072) $ 128,680
$ (1.75) $ (0.65) $ 1.10
Total Assets
Total Liabilities
NAVP
(1)
$ 464,109
$ 1,764
$ 462,345
$ 651,550 $ 733,413
$ 2,071 $ 2,355
$ 649,479 $ 731,058
(1) The Net Asset Value or “NAV” is calculated as the value of total assets less the value of total liabilities. See “Non-IFRS Financial
Performance Measures” section below.
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Management’s Discussion & Analysis
SUMMARY OF QUARTERLY FINANCIAL INFORMATION
February 28,
2017
November 30,
2016
August 31,
2016
May 31,
2016
Uranium related (loss) gain (in thousands)
Net (loss) gain for the period (in thousands)
Net (loss) gain per common share – basic and diluted
$ 73,819
$ 74,078 $ (127,499)
$ (128,514)
$ 0.61 $ (1.09)
$ (35,717) $ (112,744)
$ (37,232) $ (114,107)
$ (0.32) $ (0.99)
(1)
P per share
NAVP
UR3ROR8R spot price (US$)
UFR6R spot price (US$)
Foreign exchange noon-rate (US$ to CAD$)
$ 3.83
$ 22.25
$ 64.00
1.3248
$ 3.22
$ 18.25
$ 53.40
1.3426
$ 4.63
$ 4.31
$ 25.25 $ 27.25
$ 77.00
$ 72.25
1.3100
1.3124
February 29,
2016
November 30,
2015
August 31,
2015
May 31,
2015
Uranium related gain (loss) (in thousands)
Net gain (loss) for the period (in thousands)
Net gain (loss) per common share – basic and diluted
$ (62,263) $ (8,563)
$ (63,467 $ (9,928)
$ (0.55) $ (0.09)
$ 68,190
$ 66,694
$ 0.57
$ (67,101)
$ (68,371)
$ (0.59)
(1)
NAVP
P per share
UR3ROR8R spot price (US$)
UFR6R spot price (US$)
Foreign exchange noon-rate (US$ to CAD$)
$ 5.62 $ 6.16
$ 32.15 $ 36.00
$ 90.00 $ 99.00
1.3523 1.3333
$ 6.24
$ 36.75
$ 101.00
1.3223
$ 5.67
$ 35.00
$ 98.50
1.2465
(1) The Net Asset Value or “NAV” is calculated as the value of total assets less the value of total liabilities. See “Non-IFRS Financial
Performance Measures” section below.
The quarterly net loss or gain of the Corporation is primarily driven by unrealized net losses or gains on investments in
uranium that are recognized in the period. Unrealized net losses or gains on investments in uranium are generally a
result of changes in the spot price of uranium and the U.S. dollar to Canadian dollar exchange rate – both of which can
fluctuate significantly between periods.
OVERALL PERFORMANCE
The net loss for the year ended February 28, 2017 was mainly driven by unrealized net losses on investments in
uranium of $201,882,000 and operating expenses of $4,971,000, slightly offset by income from uranium lending and
relocation agreements of $819,000. The net loss for the year ended February 29, 2016 was mainly due to unrealized
net losses on investments in uranium of $71,181,000 and operating expenses of $5,333,000, slightly offset by the
realized gain on sale of uranium of $1,027,000 and income from uranium lending agreements of $557,000.
Unrealized net losses on investments in uranium during the year ended February 28, 2017 were mainly due to the
decrease in the spot price for uranium. The spot prices during the fiscal year decreased to US$22.25 per pound UR3ROR8R
and US$64.00 per KgU as UFR6R at February 28, 2017, from US$32.15 per pound U R3ROR8R and US$90.00 per KgU as UFR6R
at February 29, 2016. The unrealized net loss on investments in uranium was also negatively impacted by the 2%
decrease in the U.S. dollar to Canadian dollar exchange rate during fiscal 2017.
During the fourth quarter of fiscal 2017, the Corporation recorded an unrealized net gain on investments in uranium of
$74,078,000 and a net gain for the period of $73,819,000. These results were predominantly driven by the increase in
the spot price of uranium from US$18.25 per pound UR3ROR8R and US$53.40 per KgU as UFR6R at November 30, 2016, to
US$22.25 and US$64.00 respectively at February 28, 2017. The impact of the increase in the price of uranium was
partially offset by a 1% decrease in the U.S. dollar to Canadian dollar foreign exchange rate in the period. During the
fourth quarter of fiscal 2016, the Corporation recorded an unrealized net loss on investments in uranium of $62,263,000
and a net loss for the period of $63,467,000. These losses were due to the decrease in the spot price of uranium from
US$36.00 per pound U R3ROR8R and US$99.00 per KgU as UFR6R at November 30, 2015, to US$32.15 and US$90.00
respectively at February 29, 2016, partially offset by an increase in the U.S. dollar to Canadian dollar foreign exchange
rate in the period.
Unrealized net losses on investments in uranium during the year ended February 29, 2016 were caused by an overall
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Management’s Discussion & Analysis
decrease in spot prices from US$38.75 per pound U R3ROR8R and US$107.00 per KgU as UFR6R at February 28, 2015 to
US$32.15 per pound U R3ROR8R and US$90.00 per KgU as UFR6R at February 29, 2016. The impact of the decrease in uranium
spot prices during fiscal 2016 was partially offset by a 7.5% increase in the U.S. dollar to Canadian dollar foreign
exchange rate during fiscal 2016.
UPC’s NAV per shareP
decreased to $462,345,000 at February 28, 2017, from $649,479,000 at February 29, 2016.
Pdecreased to $3.83 at February 28, 2017, from $5.62 at February 29, 2016. Total equity
The Corporation had an effective tax rate of nil for the years ended February 28, 2017 and February 29, 2016, primarily
due to the low tax rate in the jurisdiction of its subsidiary as well as the fact that the Corporation’s available tax shelter
and cost basis related to its investments in uranium in Canada give rise to a net deductible temporary difference – for
which the Corporation does not recognize deferred tax assets.
Operating Expenses
Operating expenses are comprised of storage costs, management fees, public company expenses, and general and
administrative expenses.
Storage fees, excluding the costs incurred to transfer UFR6R held with the United States Enrichment Facility (“USEC
Facility”) to other storage facilities, were $2,027,000 during the year ended February 28, 2017 (February 29, 2016 -
$2,347,000). The decrease in storage fees was due the transfer of uranium holdings to lower cost storage facilities,
partially offset by the increase in the volume of stored uranium due to the 610,000 pounds of U R3ROR8R purchased in fiscal
2017.
Management fees were $1,811,000 during the year ended February 28, 2017 (February 29, 2016 - $2,287,000). The
decrease in management fees was mainly due to the decrease in the NAV, on which the variable management fee is
based, offset by a one-time fee of $100,000 (February 29, 2016 - $nil) paid to the manager for work associated with
the completion of the migration of the Corporation’s subsidiary, and higher commissions paid to the Manager on the
purchases and sales of uranium ($173,000 for the year ended February 28, 2017 compared to $71,000 for the year
ended February 29, 2016).
Operating expenses of $4,971,000, partially offset by income from lending and/or relocation of uranium of $819,000,
for the year ended February 28, 2017, represents approximately 0.9% of the NAV at February 28, 2017 and 0.6% of
the NAV at February 29, 2016.
Investment Portfolio
UPC’s investment portfolio consists of the following as at February 28, 2017:
(in thousands, except quantity amounts)
Quantity
Cost
Fair Value
Investments in Uranium:
UR3ROR8
UFR6
10,080,024 lbs
1,903,471 KgU
$ 471,496 $ 297,127
$ 311,862 $ 161,390
$ 783,358
$ 458,517
U R3ROR8R average cost and market value per pound:
In Canadian dollars
In United States dollars
UFR6R average cost and fair value per KgU:
In Canadian dollars
In United States dollars
$ 46.78
$ 42.57
$ 29.48P
$ 22.25
(1)
P
$ 163.84
$ 151.62
$ 84.79P
$ 64.00
(1)
(1) Translation to Canadian dollars calculated at period-end foreign exchange noon-rate.
The fair value of UFR6R holdings reported at February 29, 2016 included a fair value adjustment loss of $1,276,000 to
reflect the risks associated with the Corporation’s material held with the USEC Facility. During the year ended February
28, 2017, the fair value adjustment was reduced to $nil, to reflect the transfer of all the remaining material from the
USEC Facility.
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P
P
Management’s Discussion & Analysis
Purchases of Uranium
During the year ended February 28, 2017, the Corporation purchased 610,000 pounds of U R3ROR8R at an average price of
US$20.75 per pound, for a total cash consideration of $17,008,000 (US$12,657,500). The purchases were funded by
the proceeds from the bought-deal equity financing completed by the Corporation in October 2016. No purchases were
made during the year ended February 29, 2016.
Sale of Uranium
No sales of uranium were made during the year ended February 28, 2017. During the third quarter of fiscal 2016, given
the significant discount of the Corporation’s share price relative to its NAV per share, the Corporation completed the
sale of 100,000 pounds of U R3ROR8R for cash consideration of $4,743,000 (US$3,625,000) and used the proceeds from the
sale of the uranium to fund the purchase of the Corporation’s shares during the same month. The Corporation
purchased 867,700 of its outstanding shares at an average cost of $5.185 per share. The realized gain on the sale of
the uranium was $1,027,000.
Sale of Conversion Components
During the year ended February 28, 2017, the Corporation made no sales of conversion components. During the year
ended February 29, 2016, the Corporation sold conversion components contained in 100,000 KgU as UFR6R in return for
261,285 pounds of UR3ROR8 Rand cash consideration of US$715,000. The loss on the sale of the conversion components
was $140,000 and there were no transaction fees relating to this sale.
Uranium Lending Arrangement
In March 2015, the Corporation entered into an agreement to loan 1,300,000 pounds of U R3ROR8R to an independent third
party with a return date in April 2017. The loan was subject to a loan fee of 1.0% per annum, with payments calculated
quarterly based on the average of the U R3ROR8R spot price per pound, as defined and published by UxC at the end of each
month for the previous three months. A bank guarantee was provided as collateral for the loan. At February 29, 2016,
the market value of the 1,300,000 pounds of U R3ROR8R loaned was $56,519,000 (US$41,795,000). In March 2016, the loan
was terminated early by mutual agreement. As a result of the early termination, the Corporation received cash
consideration of $559,000 (US$435,000) in April 2016 and the related bank guarantee was cancelled and returned to
the borrower.
Transfer of UFR6R held with the USEC Facility to an alternate storage facility
In May 2013, the USEC Facility announced that it ceased uranium enrichment at its Paducah Gaseous Diffusion Plant
in Kentucky. As a result, many utilities have sought enrichment services from other suppliers. With fewer enrichment
customers, there has been a decrease in the demand for UFR6R held with the USEC Facility. As such, the Corporation
recorded an initial fair value adjustment of $3,987,000, in fiscal 2014 to reflect the risk associated with its UFR6R held with
the USEC Facility.
During the year ended February 29, 2016, the Corporation transferred a total of 685,434 KgU as UFR6R held with the
USEC Facility to another storage facility. The costs associated with these transfers was $2,711,000, reducing the fair
value adjustment on the UFR6R held with the USEC Facility to $1,276,000.
During the year ended February 28, 2017, the Corporation transferred a total of 378,566 KgU as UFR6 Rheld with the
USEC Facility to an alternate storage facility. The cost associated with the transfer amounted to $1,427,000, of which
$1,276,000 was applied against the fair value adjustment loss recorded as at February 29, 2016, as described above,
and the remaining $151,000 was recorded to storage fees in the consolidated statement of comprehensive loss for the
current period. The transfers reduced the Corporation’s holdings of UFR6R with the USEC Facility to nil.
Uranium Relocation Agreement
In July 2016, the Corporation entered into an agreement with an independent third party to relocate a total of
700,000 KgU as UFR6R to an alternate storage facility. The relocations take place over a two year period, in three separate
tranches, in exchange for a fee payable to the Corporation of US$1.00 per KgU for the initial 12 months of each transfer
and US$0.50 per KgU for each subsequent year after the end of the initial 12 month period. The term of the agreement
requires the return and transfer of the 700,000 KgU as UFR6R back to the original storage facility in May 2020. The fee
received for the first tranche was recorded as income from relocation of uranium in the statement of comprehensive
loss.
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In July 2016, the Corporation completed the first of the three tranches, for a transfer of 300,000 KgU as UFR6R. During
the year ended February 28, 2017, the Corporation recorded $234,000 in income from the relocation of uranium. Refer
to SUBSEQUENT EVENTS for more details.
Management’s Discussion & Analysis
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were $5,109,000 at February 28, 2017 compared with $8,968,000 at February 29, 2016.
The decrease of $3,859,000 was primarily due to $18,900,000 in cash provided by financing activities, arising from the
net proceeds of the $20,020,000 equity financing completed in October 2016, which was offset by $17,008,000 in cash
used in investing activities, mainly for the purchase 610,000 pounds of UR3ROR8R, and $5,749,000 net cash used in
operations. Cash used in operations includes $1,427,000 in costs associated with the transfers of UFR6R held with the
USEC Facility to an alternate storage facility.
The Corporation’s capital structure consists of share capital and contributed surplus. Uranium purchases are normally
funded through common share offerings with at least 85% of the gross proceeds of share offerings invested in, or set
aside for, future purchases of uranium. At February 28, 2017, the Corporation has invested more than 85% of its
aggregate gross proceeds of share offerings in uranium. In strictly limited circumstances, the Corporation can enter
into short-term borrowing arrangements for up to 15% of its net asset value to facilitate the purchases of uranium. To
date, the Corporation has not entered into any short-term borrowing arrangements.
On October 31, 2014, the Corporation filed a short form base shelf prospectus (“2014 Prospectus”) with the securities
regulatory authorities in each of the provinces of Canada, other than Québec. Accordingly, the Corporation could issue
common shares or warrants or any combination of such securities as units (“Securities”), in amounts, at prices, and on
terms to be determined based on market conditions at the time of sale and as set forth in the 2014 Prospectus, for an
aggregate offering amount of up to $200,000,000 during the 25 month period ended November 30, 2016. In October
2016, the Corporation issued Securities for gross proceeds of $20,020,000 pursuant to the 2014 Prospectus.
On December 9, 2016, the Corporation filed a short form base shelf prospectus (“2016 Prospectus”) with the securities
regulatory authorities in each of the provinces of Canada, other than Québec. As a result, the Corporation may issue
Securities, in amounts, at prices, and on terms to be determined based on market conditions at the time of sale and as
set forth in the 2016 Prospectus, for an aggregate offering amount of up to $200,000,000 during the 25 month period
ending January 9, 2019. To date, the corporation has not issued any Securities pursuant to the 2016 Prospectus.
In January 2016, the Corporation filed a normal course issuer bid (“2016 NCIB”) with the TSX, authorizing the
Corporation to purchase up to 10,192,641 of the Corporation’s common shares during a 12 month period commencing
January 18, 2016 and ending on January 17, 2017. The Corporation did not make any purchases of its outstanding
shares under the 2016 NCIB.
In November 2014, the Corporation filed a normal course issuer bid (“2014 NCIB”) with the TSX, which authorized the
Corporation to purchase up to 7,500,000 of the Corporation’s common shares during a 12 month period that ended on
November 23, 2015. A total of 1,224,200 outstanding shares were purchased under the 2014 NCIB as detailed below:
• During March 2015, the Corporation purchased 356,500 of its outstanding shares, at an average cost of $5.60 per
share for a total expenditure of $1,996,000, excluding transaction costs of $3,000. The difference of $536,000
between the average historical proceeds on the shares and the total cash expenditure for the shares purchased
has been recorded as an increase in contributed surplus.
• During October 2015, the Corporation purchased an additional 867,700 of its outstanding shares, at an average
cost of $5.185 per share for a total expenditure of $4,499,000, excluding transaction costs of $9,000. The difference
of $1,662,000 between the average historical proceeds on the shares and the total cash expenditure for shares
purchased has been recorded as an increase in contributed surplus.
RELATED PARTY TRANSACTIONS
Management Services Agreement with Denison Mines Inc.
Pursuant to its management services agreement with the Manager dated April 1, 2013, the Corporation paid the
following fees to the Manager, as applicable: a) a commission of 1.5% of the gross value of any purchases or sales of
uranium completed at the request of the Board of Directors; b) a minimum annual management fee of $400,000 (plus
reasonable out-of-pocket expenses), plus an additional fee of 0.3% per annum based upon the Corporation’s net asset
8
Management’s Discussion & Analysis
value in excess of $100,000,000; and c) a fee, at the discretion of the Board of Directors, for on-going monitoring or
work associated with a transaction or arrangement (other than a financing, or the purchase or sale of uranium).
A new three year agreement was entered into between the Corporation and the Manager effective April 1, 2016. Under
the new management services agreement, the Manager will receive the following fees from the Corporation: a) a base
fee of $400,000 per annum, payable in equal quarterly installments; b) a variable fee equal to (i) 0.3% per annum of
the Corporation’s total assets in excess of $100,000,000 and up to and including $500,000,000, and (ii) 0.2% per annum
of the Corporation’s total assets in excess of $500,000,000; c) a fee, at the discretion of the Board of Directors, for on-
going monitoring or work associated with a transaction or arrangement (other than a financing, or the acquisition of or
sale of U R3ROR8 Ror UFR6R); and d) a commission of 1.0% of the gross value of any purchases or sales of U R3ROR8 Ror UFR6R, or
gross interest fees payable to the Corporation in connection with any uranium loan arrangements.
The following outlines the fees paid to the Manager for the years ended:
(in thousands)
Fees incurred with the Manager:
Base and variable fees
Discretionary fees
Commission fees
Total fees incurred with the Manager
February 28,
2017
February 29,
2016
$ 1,538
100
173
$ 2,216
-
71
$ 1,811 $ 2,287
As at February 28, 2017, trade and other payables included $170,000 (February 29, 2016: $260,000) due to the
Manager with respect to the fees indicated above.
Key Management Personnel
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the Corporation, directly or indirectly. The Corporation’s key management personnel are the members
of its Board of Directors.
The following compensation was awarded to key management personnel for the years ended:
(in thousands)
Directors’ fees & expenses
Total key management personnel compensation
February 28,
2017
February 29,
2016
$ 293
$ 293
$ 235
$ 235
FINANCIAL INSTRUMENTS AND OTHER INSTRUMENTS
The Corporation examines the various financial risks to which it is exposed and assesses the impact and likelihood of
those risks. These risks may include commodity price risk, currency risk, credit risk and liquidity risk.
Commodity Price Risk
The Corporation’s NAV is directly tied to the spot price of uranium published by UxC. At February 28, 2017, a 10%
increase in the uranium spot price would have increased the Corporation’s total equity by $44,400,000, while a 10%
decrease would have the opposite effect.
Currency Risk
Changes in the value of the Canadian dollar compared to foreign currencies will affect the value, as reported, of the
Corporation’s foreign denominated investments in uranium, cash and cash equivalents, trade and other receivables,
and trade and other payables.
As the prices of uranium are quoted in U.S. currency, fluctuations in the Canadian dollar relative to the U.S. dollar can
significantly impact the valuation of uranium from a Canadian dollar perspective. At February 28, 2017, a 10% increase
9
Management’s Discussion & Analysis
in the U.S. dollar to Canadian dollar exchange rate would have increased the Corporation’s total equity by $45,900,000,
while a 10% decrease would have the opposite effect.
Credit Risk
Credit risk is the risk of loss due to a counterparty’s inability to meet its obligations under a financial instrument or
contractual agreement that will result in a financial loss to the Corporation. The Corporation’s credit risk exposure
includes the carrying amounts of cash and cash equivalents, trade and other receivables, and investments in uranium.
Investments in uranium are held with licensed storage facilities owned by different organizations. The risk that these
organizations are not able to continue as a going concern could have a significant impact on UPC’s ability to recover
its investments in uranium held with the organizations.
To limit the credit risk exposure on its cash and cash equivalents, the Corporation holds its cash and cash equivalents
in credit worthy financial institutions. In order to ensure recoverability on the Corporation’s investments in uranium,
which are held with storage facilities owned by different organizations, the Corporation holds its investments in uranium
with organizations that are credible, financially stable, and/or essential to the global nuclear fuel cycle. Credit risk
exposure on its trade and other receivables related to uranium loans is limited since the Corporation lends uranium
exclusively to large organizations and ensures that adequate security is provided for any loaned uranium. The
Corporation regularly assesses the credit profile of these organizations for any indications of financial difficulty.
Liquidity Risk
Financial liquidity represents the Corporation’s ability to fund future operating activities. The Corporation may generate
cash from the lending, relocation, or sale of uranium, or the sale of additional equity securities. The Corporation funds
its ongoing operations with its existing cash balance and has the ability to sell some of its investments in uranium to
generate additional cash if required. Although the Corporation enters into commitments to purchase uranium
periodically, the commitments are normally funded by the Corporation’s available cash or are contingent on its ability
to raise funds through the sale of additional equity securities.
Fair Value of Investments, Financial Assets and Financial Liabilities
IFRS requires disclosures about the inputs to fair value measurements, including their classification within a hierarchy
that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:
•
•
•
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly;
and
Level 3 – Inputs that are not based on observable market data.
Investments in uranium are categorized in Level 2. Investments in uranium are measured at fair value at each reporting
period-end based on the most recent spot prices for uranium published by UxC and converted to Canadian dollars
using the month-end foreign exchange noon rate. Management may also adjust the fair value of the investments in
uranium based on its assessment of the valuation impact of risks associated with the third party storage facilities where
the uranium is stored.
All financial instruments’ fair values approximate their carrying values due to the short-term nature of these instruments.
All purchases and sales of financial assets are accounted for at settlement date.
The Corporation has not offset financial assets with financial liabilities.
OFF-BALANCE SHEET ARRANGEMENTS
The Corporation does not have any off-balance sheet arrangements.
SUBSEQUENT EVENTS
On March 29, 2017, the counterparty to the relocation agreement (see Uranium Relocation Agreement above) filed for
Chapter 11 bankruptcy protection in the United States of America. Pursuant to this agreement, 300,000 KgU as UFR6R,
which is contained in enriched uranium product (“EUP”), owned by the Corporation is currently being held at this
organization’s storage facility. The Corporation continues to hold title to the UFR6R that is stored at this facility and pursuant
to the terms of the relocation agreement, the counterparty is not permitted to transfer, sell, or assign the EUP containing
the Corporation’s UFR6R to any person. As at February 28, 2017, trade and other receivables included $64,000 of unbilled
10
Management’s Discussion & Analysis
income related to the relocation of uranium. For the three months ended March 31, 2017, US$74,000 was billed and is
payable within 30 days.
OUTSTANDING SHARE DATA
At April 6, 2017, there were 120,848,713 common shares issued and outstanding. There are no stock options or other
instruments issued and outstanding.
OUTLOOK
The Corporation’s NAV is directly linked to the spot price of uranium published by UxC. According to UxC’s 2017 Q1
Outlook, the spot price of U R3ROR8R is projected to rise over the next 13 years. The following chart displays the projected
future fair value of investments in uranium held by UPC, based on the low to high spot price projections from UxC.
Based on UxC’s projections, by 2025, the Corporation’s estimated future fair value of investments in uranium is
projected to increase up to a high of $1.1 billion, and by 2030, up to a high of almost $1.5 billion.
Projected Fair Value of Investments in Uranium P
(1)
i
m
u
n
a
r
U
n
i
)
s
n
o
i
l
l
i
m
n
i
(
s
t
n
e
m
t
s
e
v
n
I
f
o
e
u
l
a
V
r
i
a
F
1,600
1,400
1,200
1,000
800
600
400
200
-
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Year
High
Mid
Low
The estimated future fair value of investments in uranium held by the Corporation is projected as follows:
(in millions)
High Spot Price Projections P
Mid Spot Price Projections P
Low Spot Price Projections P
(2)
(3)
(4)
2020 P
(1)
2025 P
(1)
2030 P
(1)
$ 635 $ 1,071
$ 528 $ 972
$ 434 $ 724
$ 1,477
$ 1,211
$ 871
(1) The estimated fair value of investments in uranium calculated above are based on the following:
- Spot price projections from UxC’s 2017 Q1 Outlook and noted in (2), (3) and (4) below;
- The US to Canadian dollar foreign exchange noon-rate at February 28, 2017 of 1.3248; and
- The investments in uranium held by the Corporation on February 28, 2017.
(2) High spot price projections per pound UR3ROR8R for 2020, 2025 and 2030 were US$30.84, US$51.98 and US$71.72, respectively.
(3) Mid spot price projections per pound UR3ROR8R for 2020, 2025 and 2030 were US$25.66, US$47.19 and US$58.78, respectively.
(4) Low spot price projections per pound UR3ROR8R for 2020, 2025 and 2030 were US$21.09, US$35.17 and US$42.27, respectively.
11
Management’s Discussion & Analysis
CONTROLS AND PROCEDURES
The Corporation carried out an evaluation, under the supervision and with the participation of its management, of the
effectiveness of the design and operation of the Corporation’s “disclosure controls and procedures” (as defined in
National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings) as of the end of the
period covered by this report. Based on that evaluation, the President and Chief Executive Officer and Chief Financial
Officer concluded that the Corporation’s disclosure controls and procedures are effective.
The Corporation’s management is responsible for establishing and maintaining an adequate system of internal control
over financial reporting and conducted an evaluation of the effectiveness of internal control over financial reporting
based on the Internal Control – Integrated Framework, 2013 issued by the Committee of Sponsoring Organizations of
the Treadway Commission. Based on this evaluation, the President and Chief Executive Officer and Chief Financial
Officer concluded that the Corporation’s internal control over financial reporting was effective as of February 28, 2017.
There has not been any change in the Corporation’s internal control over financial reporting that occurred during the
year ended February 28, 2017 that has materially affected, or is reasonably likely to materially affect, the Corporation’s
internal control over financial reporting.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The preparation of consolidated financial statements in conformity with IFRS requires management to make accounting
estimates and judgments that affect the reported amounts of assets and liabilities as of the date of the consolidated
financial statements and income and expenses during the reporting period. Actual results could differ materially from
these estimates. Significant estimates and judgments made by management include:
Investments in Uranium
Investments in uranium are measured at fair value at each reporting period-end based on the most recent spot prices
for uranium published by UxC and converted to Canadian dollars using the month-end foreign exchange noon rate.
Management may also adjust the fair value of the investments in uranium based on its assessment of the valuation
impact of risks associated with the third party storage facilities at which the Corporation’s uranium is held.
Accounting Standards Issued But Not Yet Adopted
The Corporation has not yet adopted the following new accounting pronouncements which are effective for fiscal
periods of the Corporation beginning on or after January 1, 2017:
International Accounting Standard 7, Statement of Cash Flows (“IAS 7”) – Amendments
IAS 7 requires an entity to present a statement of cash flows as an integral part of its primary financial statements.
Cash flows are classified and presented into operating activities (either using the “direct” or “indirect” method), investing
activities and financing activities, with the latter two categories generally presented on a gross basis. The amendments
require additional disclosures with respect to changes in liabilities arising from financing activities. It is effective for
annual periods beginning on or after January 1, 2017.
The Corporation does not have any liabilities arising from financing activities and therefore has concluded that there
will be no material impact of adopting this standard.
International Financial Reporting Standard 9, Financial Instruments (“IFRS 9”)
In July 2014, the IASB published the final version of IFRS 9, which brings together the classification, measurement,
impairment and hedge accounting phases of the IASB’s project to replace IAS 39 Financial Instruments: Recognition
and Measurement (“IAS 39”). IFRS 9 replaces the multiple classifications for financial assets in IAS 39 with a single
principle based approach for determining the classification of financial assets based on how an entity manages its
financial instruments in the context of its business model and the contractual cash flow characteristics of the financial
assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment
methods in IAS 39. The final version of IFRS 9 is effective for periods beginning on or after January 1, 2018; however,
it is available for early adoption.
The Corporation has not evaluated the impact of adopting this standard.
12
Management’s Discussion & Analysis
International Financial Reporting Standard 15, Revenue from Contracts with Customers (“IFRS 15”)
IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of financial
statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s
contracts with customers. Under IFRS 15, revenue is recognized when a customer obtains control of a good or service.
The standard replaces IAS 18 “Revenue” and IAS 11 “Construction Contracts” and related interpretations. The standard
is effective for annual periods beginning on or after January 1, 2018 and earlier application is permitted.
The Corporation has not evaluated the impact of adopting this standard.
International Financial Reporting Standard 16, Leases (“IFRS 16”)
In January 2016, the IASB issued IFRS 16 which replaces existing standards and interpretations under IAS 17 “Leases”.
IFRS 16 requires all leases, including financing and operating leases, to be reported on the balance sheet with the
intent of providing greater transparency for a company’s lease assets and liabilities. IFRS 16 is effective for annual
periods beginning on or after January 1, 2019 with early adoption permitted.
The Corporation has not evaluated the impact of adopting this standard.
RISK FACTORS
An investment in securities of UPC is highly speculative and involves significant risks, which should be carefully
considered by prospective investors before purchasing such securities. There are a number of factors that could
negatively affect UPC’s business and the value of UPC’s securities, including the factors listed below. Such factors
could materially affect the Corporation’s future operating results and could cause actual events to differ materially from
those described in forward-looking statements relating to the Corporation. The following information pertains to the
outlook and conditions currently known to UPC that could have a material impact on the financial condition of UPC.
This information, by its nature, is not all-inclusive and is not a guarantee that other factors will not affect UPC in the
future.
Uranium Price Volatility from Demand and Supply Factors
Since almost all of the Corporation’s activities involve investing in uranium, the value of its securities will be highly
sensitive to fluctuations in the prices of uranium. Historically, the fluctuations in these prices have been, and are
expected to continue to be, affected by numerous factors beyond the Corporation’s control. Such factors include, among
others: demand for nuclear power; political and economic conditions in uranium producing and consuming countries;
public and political response to a nuclear accident; improvements in nuclear reactor efficiencies; reprocessing of used
reactor fuel and the re-enrichment of depleted uranium tails; sales of excess inventories by governments and industry
participants; and production levels and production costs in key uranium producing countries.
Since UFR6R is a different commodity than UR3ROR8R, its price is affected by its own supply/demand balance as well as the
supply/demand balances of U R3ROR8R and for conversion services. As a result, the UFR6R spot price may move differently
than the spot price of UR3ROR8R or the spot conversion price alone. The factors that affect the UFR6R spot price will affect the
NAV of the Corporation, which in turn may affect the price of the Corporation’s securities.
Set out in the table below is the spot price for UR3ROR8R per pound and the UFR6R spot price per KgU at the end of the last
the five fiscal yearsP
P.
(1)
(1)
U R3ROR8RP
(1)
UFR6RP
2013
$42.00
$120.00
2014
$35.50
$99.00
2015
$38.75
$107.00
2016
$32.15
$90.00
2017
$22.25
$64.00
(1)
P As published by UxC in US dollars.
Public Acceptance of Nuclear Energy and Competition from Other Energy Sources
The growth of the uranium and nuclear power industry 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. An accident at a nuclear reactor anywhere in the
13
P
Management’s Discussion & Analysis
world could impact the continued acceptance by the public and regulatory authorities of nuclear energy and the future
prospects for nuclear generators, which could have a material adverse effect on the Corporation.
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. Sustained lower
prices of oil, natural gas, coal and hydro-electricity, as well as the possibility of developing other low cost sources for energy,
may result in lower demand for uranium. Technical advancements in renewable and other alternate forms of energy, such as
wind and solar power, could make these forms of energy more commercially viable and put additional pressure on the
demand for uranium concentrates.
Impact of Global Economic Conditions
Global financial conditions continue to be volatile, and the economies of certain countries have experienced instability
in recent years. The Corporation takes precautions to mitigate against risks associated with carrying on business in
uncertain financial conditions and markets. However, there is no guarantee that the Corporation will not be adversely
impacted by risks arising from global financial conditions and unstable economies in the future.
Spot market volumes may also be impacted by global economic conditions, which can cause downward or upward
pressure on the spot prices for uranium. Global economic conditions may influence the availability of financing or credit
at various stages in the uranium market, such as the construction of new reactors, production from uranium producers
or uranium exploration and development. In addition, global economic conditions can impact the amount of incremental
supply of uranium made available to the market from remaining excess inventories.
Risks Associated with 7
TFacilities7
T
All uranium is stored at licensed uranium conversion, enrichment, or fuel fabrication facilities owned by different
organizations (each one, a “Facility” or collectively, the “Facilities”). Under the management services agreement, the
Manager is required to arrange for all uranium to be stored at Facilities and to ensure that the Facilities provide
satisfactory indemnities for the benefit of the Corporation or ensure that the Corporation has the benefit of insurance
arrangements obtained on standard industry terms. There is no guarantee that either the indemnities or insurance in
favour of the Corporation will fully cover or absolve the Corporation in the event of loss or damage. The Corporation
may be financially and legally responsible for losses and/or damages not covered by indemnity provisions or insurance.
Such responsibility could have a material adverse effect on the financial condition of the Corporation.
As the number of duly licensed Facilities is limited, there can be no assurance that new arrangements that are
commercially beneficial to the Corporation will be readily available. Failure to negotiate commercially reasonable
storage terms with the Facilities may have a material adverse effect on the financial condition of the Corporation.
By holding its investments in uranium with various licensed Facilities, the Corporation is exposed to the credit risks of
these Facilities and their operators. There is no guarantee that the Corporation can fully recover all of its investments
in uranium held with the Facilities. Failure to recover all uranium holdings could have a material adverse effect on the
financial condition of the Corporation.
On March 29, 2017, the counterparty to the relocation agreement (see Uranium Relocation Agreement above) filed for
Chapter 11 bankruptcy protection in the United States of America. Pursuant to this agreement, 300,000 KgU as UFR6R
contained in enriched uranium product (“EUP”) owned by the Corporation is currently on deposit with the counterparty
and is being held at this organization’s storage facility. The Corporation continues to hold title to the UFR6R that is stored
at this facility and pursuant to the terms of the relocation agreement, the counterparty is not permitted to transfer, sell,
or assign the EUP containing the Corporation’s UFR6R to any person. As at February 28, 2017, trade and other receivables
included $64,000 of unbilled income related to the relocation of uranium. For the three months ended March 31, 2017,
US$74,000 was billed and is payable within 30 days.
Foreign Exchange Rates
The Corporation maintains its accounting records, reports its financial position and results, and pays certain operating
expenses in Canadian currency. In addition, its securities trade in Canadian currency. As the price of uranium is quoted
in U.S. currency, fluctuations in the U.S. currency exchange rate relative to the Canadian currency can significantly
impact the valuation of uranium and the associated purchase price from a Canadian currency perspective. Because
exchange rate fluctuations are beyond the Corporation’s control, there can be no assurance that such fluctuations will
not have an adverse effect on the Corporation’s operations or on the trading value of its securities.
14
Management’s Discussion & Analysis
TUranium Lending
The Corporation may, from time to time, enter into uranium lending or relocation arrangements. As a matter of practice,
the Corporation has, and will in the future, ensure that adequate security is provided with respect to any loaned uranium.
However, there is a risk that the borrower may not be able to pay the associated costs of the loan or relocation, and
may not be able to return the uranium in accordance with the terms of the agreement. In such cases, the Corporation
may have to collect on its security or the borrower may, in lieu, repay the equivalent value of borrowed uranium in cash.
In such circumstances, given the replacement cost of U R3ROR8R and UFR6R and the resolutions available to the Corporation,
the Corporation may not be able to ultimately recover the amount of uranium holdings originally loaned or relocated,
which could have a material adverse effect on the financial condition of the Corporation.
No Public Market for Uranium
There is no public market for the sale of uranium. The uranium futures market on the New York Mercantile Exchange
does not provide for physical delivery of uranium, only cash on settlement, and the trading forum by certain buyers
does not offer a formal market but rather facilitates the introduction of buyers to sellers. The Corporation may not be
able to acquire uranium or, once acquired, sell uranium for a number of weeks. The pool of potential purchasers and
sellers is limited, and each transaction may require the negotiation of specific provisions. Accordingly, a purchase or
sale cycle may take several weeks to complete. In addition, as the supply of uranium is limited, the Corporation may
experience additional difficulties purchasing uranium in the event that it is a significant buyer. The inability to purchase
and sell on a timely basis in sufficient quantities could have a material adverse effect on the securities of the
Corporation.
From time to time, the Corporation enters into commitments to purchase UR3ROR8R or UFR6R. Such commitments are generally
subject to conditions in favour of both the vendor and the Corporation, and there is no certainty that the purchases
contemplated by such commitments will be completed.
Industry Competition for the Supply of Uranium
The international uranium industry, including the supply of uranium concentrates, is competitive. Uranium supplies are
available from a number of sources, including: a relatively small number of uranium mining companies; excess inventory
from utilities and government sources; reprocessed uranium and plutonium from used reactor fuel; and excess
enrichment capacity, which can be used for underfeeding or re-enriching depleted uranium tails. Worldwide supply of
uranium is also tied to political and economic conditions in uranium producing countries. The variety of sources, and
the impact of a change in costs, government policies and other factors which are beyond the control of the Corporation,
may impact the supply of uranium and its market price.
For example, the supply of uranium from Russia is, to some extent, impeded by a number of international trade
agreements and policies. These agreements and any similar future agreements, governmental policies or trade
restrictions are beyond the control of the Corporation and may affect the supply of uranium available in the United
States and Europe, which are the largest markets for uranium in the world.
TLack of Operational Liquidity
During the fiscal year ended February 28, 2017, the Corporation had negative cash flow from operating activities. The
Corporation anticipates it will continue to have negative cash flow from operating activities in future periods. The
expenses of the Corporation are funded from cash on hand that is not otherwise invested in uranium and revenue from
the lending or relocation of uranium. Once such available cash has been expended, the Corporation may generate
additional cash from either the lending or sale of uranium, or the sale of additional equity securities. There is no
guarantee that the Corporation will be able to sell additional equity or equity related securities on terms acceptable to
the Corporation in the future, that the Corporation will be able to sell uranium in a timely or profitable manner, or that
the Corporation will be able to generate revenue through lending arrangements.
NAV
The NAV is calculated as the value of total assets less the value of total liabilities. To arrive at NAV per share, the NAV
is divided by the total number of common shares outstanding as at a specific date. The total asset value is significantly
dependent on the spot price of uranium published by UxC. The liabilities may include estimated liabilities for future
income taxes. Accordingly, the NAV per share may not necessarily reflect the actual realizable value of uranium held
by the Corporation attributable to each common share.
15
7
7
Management’s Discussion & Analysis
Market Price and Liquidity of Common Shares
The Corporation cannot predict whether the common shares will, in the future, trade above, at or below the NAV per
share. Securities of companies in, or investing in, the natural resource sector 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 UPC's securities is also likely to be significantly affected by short-term changes in
commodity prices, other mineral prices, currency exchange fluctuation, changes in its financial condition or results of
operations as reflected in its periodic reports and changes in general market interest in UPC's securities. If an active
market for the common shares does not continue, the liquidity of an investor's investment may be limited and the price
of the securities of the Corporation may decline such that investors could lose their entire investment in the Corporation.
As a result of any of these factors, the market price of the securities of UPC at any given point in time may not accurately
reflect the long-term value of UPC.
The Corporation’s principal source of funds is from the sale or lending of uranium by the Corporation. Accordingly, the
Corporation may not have the resources to declare any dividends or make other cash distributions unless and until a
determination is made to sell a portion of its uranium holdings for such purpose. Since inception, the Corporation has
not declared any dividends, and the Corporation has no current intention to declare any dividends.
TReliance on Board of Directors and Manager
The Corporation is a self-governing corporation that is governed by the Board appointed and elected by the holders of
the Corporation’s common shares. The Corporation will, therefore, be dependent on the services of its Board for
directing the affairs and for investment and other material decisions and the Manager for administration and
management services.
TResignation by Manager
The Manager may terminate the Management Services Agreement in accordance with the terms thereof. The
Corporation may not be able to readily secure similar services or at management fees comparable to those under the
Management Services Agreement, and its operations may therefore be adversely affected.
Conflict7
T of Interest
Directors and officers of the Corporation may provide investment, administrative and other services to other entities
and parties. The directors and officers of the Corporation have devoted, and have undertaken to devote, such
reasonable time as is required to properly fulfill their responsibilities in respect to the business and affairs of the
Corporation as they arise from time to time.
TRegulatory Change
The Corporation may be affected by changes in regulatory requirements, customs, duties or taxes. Such changes
could, depending on their nature, benefit or adversely affect the Corporation.
Anti-Bribery and Anti-Corruption Laws
UPC is subject to anti-bribery and anti-corruption laws, including the Corruption of Foreign Public Officials Act (Canada).
Failure to comply with these laws could subject the Corporation to, among other things, reputational damage, civil or
criminal penalties, other remedial measures and legal expenses which could adversely affect the Corporation’s
business, results in operations, and financial condition. It may not be possible for UPC to ensure compliance with anti-
bribery and anti-corruption laws in every jurisdiction in which its employees, agents or sub-contractors are located or
may be located in the future.
Disclosure and 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. Disclosure controls and procedures are designed to ensure that information required to be
disclosed by a company in reports filed with securities regulatory authorities is recorded, processed, summarized and
reported on a timely basis and is accumulated and communicated to company’s management, including its chief
executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. A
control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with
respect to the reliability of reporting, including financial reporting and financial statement preparation.
16
7
7
7
Management’s Discussion & Analysis
Information Systems and Cyber Security
The Corporation’s operations depend upon the availability, capacity, reliability and security of its information technology
(IT) infrastructure, and the IT infrastructure of Manager, to conduct its operations. UPC and the Manager rely on various
IT systems in all areas of its operations, including financial reporting, contract management and communications with
employees and third parties.
These IT systems could be subject to network disruptions caused by a variety of sources, including computer viruses,
security breaches and cyber-attacks, as well as network and/or hardware disruptions resulting from incidents such as
unexpected interruptions or failures, natural disasters, fire, power loss, vandalism and theft. The failure of UPC’s or the
Manager’s IT systems or a component thereof could, depending on the nature of any such failure, adversely impact
the UPC’s reputation and results of operations.
NON-IFRS FINANCIAL PERFORMANCE MEASURES
This MD&A contains references to “Net Asset Value” or “NAV”, which is a non-IFRS financial performance measure.
The NAV is calculated as the value of total assets less the value of total liabilities. To arrive at NAV per share, the NAV
is then divided by the total number of common shares outstanding as at a specific date. The term NAV does not have
any standardized meaning according to IFRS and therefore may not be comparable to similar measures presented by
other companies. The NAV equals the Corporation’s total equity balance as reported in the Corporation’s consolidated
financial statements. NAV per share does not have a comparable IFRS financial measure presented in UPC’s
consolidated financial statements and thus there is no applicable quantitative reconciliation for this non-IFRS financial
performance measure. The Corporation has calculated NAV and NAV per share consistently for many years and
believes these measures provide information useful to its shareholders in understanding UPC’s performance and may
assist in the evaluation of the Corporation’s business relative to that of its peers.
ADDITIONAL INFORMATION
Additional information regarding UPC, including the Corporation's press releases, quarterly and annual reports and
Annual Information Form, are available under the Corporation's profile at www.sedar.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained or incorporated by reference in this MD&A constitutes forward looking statements or
forward looking information. These statements can be identified by the use of forward looking terminology such as
“may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “should”, “believe” or “continue” or the negative thereof
or variations thereon or similar terminology.
By their very nature, forward looking statements involve numerous factors, assumptions and estimates. A variety of
factors, many of which are beyond the control of UPC, may cause actual results to differ materially from the expectations
expressed in the forward looking statements. For a list of the principal risks of an investment in UPC, please refer to
the “RISK FACTORS” section in this MD&A.
These and other factors should be considered carefully, and readers are cautioned not to place undue reliance on
these forward looking statements. Although management reviews the reasonableness of its assumptions and
estimates, unusual and unanticipated events may occur which render them inaccurate. Under such circumstances,
future performance may differ materially from those expressed or implied by the forward looking statements. Except
where required under applicable securities legislation, UPC does not undertake to update any forward looking
information.
17
Annual Consolidated Financial Statements
Responsibility for Financial Reporting
Uranium Participation Corporation’s (the “Corporation”) management is responsible for the integrity and fairness of the
presentation of these consolidated financial statements. The consolidated financial statements have been prepared
by management, in accordance with International Financial Reporting Standards as issued by the International
Accounting Standards Board, for review by the Audit Committee and approval by the Board of Directors.
The preparation of consolidated financial statements requires the selection of appropriate accounting policies in
accordance with International Financial Reporting Standards and the use of estimates and judgments by management
to present fairly and consistently the consolidated financial position of the Corporation. Estimates are necessary when
transactions affecting the current period cannot be finalized with certainty until future information becomes available.
The Board of Directors carries out its responsibility for the consolidated financial statements principally through its Audit
Committee, which is comprised solely of independent directors. The Audit Committee reviews the Corporation’s
consolidated financial statements and recommends their approval to the Board of Directors. The consolidated financial
statements have been audited by PricewaterhouseCoopers LLP, our independent auditor. Its report outlines the scope
of its examination and expresses its opinion on the consolidated financial statements. The independent auditor has full
access to the Audit Committee with or without management present.
David Cates
`
President and Chief Executive Officer
Mac McDonald
Chief Financial Officer
April 6, 2017
18
April 6, 2017
Independent Auditor’s Report
To the Shareholders of
Uranium Participation Corporation
We have audited the accompanying consolidated financial statements of Uranium Participation
Corporation and its subsidiaries, which comprise the consolidated statements of financial position as
at February 28, 2017 and February 29, 2016 and the consolidated statements of comprehensive loss,
consolidated statements of changes in equity, and consolidated statements of cash flows for the years
then ended, and the related notes, which comprise 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.
Auditor’s 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 audit 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 the auditor’s 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, the auditor considers
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.
PricewaterhouseCoopers LLP
PwC Tower, 18 York Street, Suite 2600, Toronto, Ontario, Canada M5J 0B2
T: +1 416 863 1133, F: +1 416 365 8215, www.pwc.com/ca
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of Uranium Participation Corporation and its subsidiaries as at February 28, 2017
and February 29, 2016 and their financial performance and their cash flows for the years then ended in
accordance with International Financial Reporting Standards.
Chartered Professional Accountants, Licensed Public Accountants
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Expressed in thousands of Canadian dollars except for share amounts)
At February 28,
2017
At February 29,
2016
Annual Consolidated Financial Statements
ASSETS
Current
Cash and cash equivalents
Trade and other receivables
Non-Current
Investments in uranium (note 5)
Total assets
LIABILITIES
Current
Trade and other payables
Total liabilities
EQUITY
Share capital (note 8)
Contributed surplus
Deficit
Total equity
Total liabilities and equity
Common shares
Issued and outstanding (note 8)
Subsequent Events (note 12)
$ 5,109
483
$ 8,968
469
5,592
9,437
458,517
$ 464,109
642,113
$ 651,550
$ 1,764
1,764
$ 2,071
2,071
841,243
6,762
(385,660)
462,345
$ 464,109
822,343
6,762
(179,626)
649,479
$ 651,550
120,848,713
115,648,713
The accompanying notes are an integral part of these annual consolidated financial statements.
O N B E H AL F O F T H E B O A R D O F U R A N I U M P A R T I C I P A T I O N C O R P O R A T I O N
Richard H. McCoy
Director
Garth A. C. MacRae
Director
21
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Annual Consolidated Financial Statements
(Expressed in thousands of Canadian dollars except for share and per share amounts)
URANIUM RELATED LOSS
Unrealized losses on investments in uranium (note 5)
Realized loss on sale of conversion components (note 5)
Income from lending of uranium (note 6)
Income from relocation of uranium (note 6)
Realized gain on sale of uranium (note 5)
OPERATING EXPENSES
Storage fees
Management fees (note 9)
Public company expenses
General office and miscellaneous
Legal and other professional fees
Transaction fees
Interest income
Foreign exchange gain (loss)
Net loss before taxes
Income tax expense (note 7)
Net and comprehensive loss for the year
Net loss per common share
Basic and diluted
Years Ended
February 28,
2017
February 29,
2016
$ (201,882)
-
585
234
-
(201,063)
$ (71,181)
(140)
557
-
1,027
(69,737)
(2,347)
(2,178)
(2,287)
(1,811)
(485)
(566)
(332)
(279)
(139)
(180)
(14)
(4)
144
62
127
(15)
(5,333)
(4,971)
(206,034)
(75,070)
- (2)
$ (206,034)
$ (75,072)
$ (1.75)
$ (0.65)
Weighted average number of common shares outstanding
Basic and diluted
117,415,288
116,192,169
The accompanying notes are an integral part of these annual consolidated financial statements.
22
Annual Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Expressed in thousands of Canadian dollars)
Share
Capital
Contributed
Surplus
Deficit
Total Equity
Balance at February 28, 2015
Common shares purchased
Net loss for the year
Balance at February 29, 2016
Common shares issued (note 8)
Net loss for the year
Balance at February 28, 2017
$ 831,048
(8,705)
-
$ 822,343
$ 4,564
2,198
-
$ 6,762
$ 731,058
$ (104,554)
-
(6,507)
(75,072) (75,072)
$ 649,479
$ (179,626)
18,900
-
-
-
- 18,900
(206,034)
(206,034)
$ 841,243
$ 6,762
$ (385,660)
$ 462,345
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of Canadian dollars)
Operating Activities
Net loss for the year
Adjustment for:
Unrealized losses on investments in uranium (note 5)
Realized loss on sale of conversion components (note 5)
Realized gain on the sale of uranium (note 5)
Costs associated with transfer of uranium (note 5)
Changes in non-cash working capital:
Change in trade and other receivables
Change in trade and other payables
Net cash used in operating activities
Investing Activities
Purchase of uranium (note 5)
Sale of uranium (note 5)
Sale of conversion components, net of costs (note 5)
Net cash generated (used) by investing activities
Financing Activities
Common shares issued, net of transaction costs (note 8)
Common shares purchased, including transaction costs (note 8)
Net cash generated by (used) financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents – beginning of the year
Foreign exchange effects
Cash and cash equivalents – end of the year
Years Ended
February 28,
2017
February 29,
2016
$ (206,034)
$ (75,072)
201,882
-
-
(1,276)
71,181
140
(1,027)
(2,711)
(14)
(307)
(5,749)
(139)
(284)
(7,912)
(17,008)
-
-
(17,008)
-
4,743
891
5,634
18,900
-
18,900
-
(6,507)
(6,507)
(3,857)
8,968
(2)
$ 5,109
(8,785)
17,753
-
$ 8,968
The accompanying notes are an integral part of these annual consolidated financial statements.
23
Annual Consolidated Financial Statements
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 28, 2017 AND FEBRUARY 29, 2016
(Expressed in Canadian dollars, unless otherwise noted)
1. URANIUM PARTICIPATION CORPORATION
Uranium Participation Corporation (“UPC”) was established under the Business Corporations Act (Ontario) on
March 15, 2005. The address of its registered head office is 40 University Avenue, Suite 1100, Toronto, Ontario,
Canada, M5J 1T1.
UPC, including its subsidiary (collectively, the “Corporation”), invests substantially all of its assets in uranium oxide
in concentrates (“U R3ROR8R“) and uranium hexafluoride (“UFR6R“) (collectively “uranium”) with the primary investment
objective of achieving appreciation in the value of its uranium holdings through increases in the uranium price.
Denison Mines Inc. (the “Manager”), under the direction of the Corporation’s Board of Directors, provides general
administration and management services to the Corporation. The common shares of UPC are listed and trade on
the Toronto Stock Exchange (“TSX”) under the symbol “U”.
2. BASIS OF PRESENTATION
These audited annual consolidated financial statements of the Corporation as at and for the years ended February
28, 2017 and February 29, 2016 have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and with interpretations
of the International Financial Reporting Interpretations Committee which the Canadian Accounting Standards
Board has approved for incorporation into Part 1 of the Chartered Professional Accountants Canada Handbook –
Accounting.
All dollar amounts are expressed in Canadian dollars, unless otherwise noted.
These audited annual consolidated financial statements were approved by the Corporation’s Board of Directors on
April 6, 2017.
3. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies used in the preparation of these annual consolidated financial statements are
described below:
(a) Consolidation
The accompanying consolidated financial statements consolidate the accounts of the Corporation and its wholly
owned subsidiary. A subsidiary is an entity over which the Corporation has control. The Corporation controls an
entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity. A subsidiary is fully consolidated from the date
on which control is obtained by the Corporation and deconsolidated from the date that control ceases. All
intercompany balances and transactions are eliminated on consolidation.
(b) Foreign Currency Translation
(i) Functional and Presentation Currency
Functional currencies are determined based on the currency of the primary economic environment for the
Corporation and its subsidiary.
(ii) Transactions and Balances
Foreign currency transactions are translated into the functional currency using the exchange rate
prevailing at the dates of the transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions and the re-measurement of monetary items at the date of the consolidated
statement of financial position are recognized in net gain (loss). Non-monetary items measured at fair
24
Annual Consolidated Financial Statements
value are translated using the exchange rate at the date of the consolidated statement of financial
position.
(c) Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term highly liquid
investments with original maturities of three months or less which are subject to an insignificant risk of changes in
value.
(d) Financial Instruments
The Corporation’s financial instruments consist of cash and cash equivalents, trade and other receivables, and
trade and other payables. Cash and cash equivalents and trade and other receivables are categorized as loans
and receivables. Trade and other payables are categorized as financial liabilities at amortized cost. All financial
instruments’ fair values approximate their carrying values due to the short-term nature of these instruments.
(e) Investments in Uranium
Investments in uranium are initially recorded at cost, on the date that significant risks and rewards of ownership of
the uranium pass to the Corporation. Cost is calculated as the purchase price excluding transaction fees, which
are expensed as incurred. Subsequent to initial recognition, investments in uranium are measured at fair value
at each reporting period end, based on the most recent spot prices for uranium published by Ux Consulting
Company, LLC (“UxC”) and converted to Canadian dollars using the month-end foreign exchange noon rate. The
Bank of Canada ceased reporting foreign exchange noon and closing rates effective March 1, 2017. As a result,
starting March 1, 2017, the Corporation will utilize the Bank of Canada’s month-end indicative foreign exchange
rate for the purposes of measuring the fair value of its investments in uranium. Related fair value increment gains
and losses are recorded in the consolidated statement of comprehensive gain (loss) as “Unrealized gains (losses)
on investments in uranium” in the period in which they arise.
Due to the lack of specific IFRS guidance on accounting for investments in uranium, the Corporation
considered IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors, to develop and apply an accounting policy that would result in information that is most
relevant
IFRS accounting
framework. Consequently, the uranium investments are presented at fair value based on the application of IAS 40
Investment Property, which allows the use of a fair value model for assets held for long-term capital appreciation.
the economic decision-making needs of users within
the overall
to
(f) Lending of Uranium
Uranium on loan remains part of the Corporation’s investment portfolio and is carried at fair value. The lending of
uranium is accounted for as an operating lease. Income earned from lending of uranium is included in the
consolidated statement of comprehensive gain (loss) and is recognized when earned.
(g) Sale of Uranium
The sale of uranium is recognized when the significant risks and rewards of ownership of the uranium passes to
the buyer. The realized gain or loss from the sale of uranium is calculated as the difference between the
consideration received and the historical cost of the uranium.
(h) Sale of Conversion Components
The sale of conversion components is recognized when the significant risks and rewards of ownership of
conversion components passes to the buyer. The realized gain or loss from the sale of conversion components is
calculated as the difference between the consideration received and the historical cost of the conversion
components.
(i)
Income Taxes
The Corporation follows the liability method of accounting for income taxes. Current income taxes are the expected
taxes payable on the taxable income for the period, calculated at tax rates enacted at the reporting date and
adjusted for taxes payable in respect of prior periods.
Deferred income tax assets and liabilities are determined based on temporary differences between the financial
reporting and tax bases of assets and liabilities, and are measured using the enacted or substantively enacted tax
25
Annual Consolidated Financial Statements
rates and laws that are expected to apply when the differences are expected to reverse. The benefit of tax losses
which are available to be carried forward are recognized as assets to the extent that they are likely to be utilized
against future taxable income.
Tax assets and liabilities are offset if there is a legally enforceable right to offset the assets and liabilities, and they
relate to income taxes levied by the same tax authority on either the same tax entity or different taxable entities
where there is an intention to settle the balance on a net basis.
(j) Net Gain (Loss) per Common Share
Net gain (loss) per common share is calculated by dividing the net gain (loss) for the period attributable to equity
holders of the Corporation by the weighted average number of common shares outstanding.
(k) Operating Segment
The Corporation manages its business under a single operating segment, consisting of holdings of assets in U R3ROR8R
and UFR6R, for the primary purpose of achieving appreciation in the value of its uranium holdings through increases
in the uranium price. All of the Corporation’s assets and income are attributable to this single operating segment
and are held with storage facilities and financial institutions in Canada, United States and Europe.
The operating segment is reported in a manner consistent with the internal reporting provided to executive
management who, under the direction of the Corporation’s board of directors, act as the chief operating decision-
maker. Executive management, under the direction of the Corporation’s board of directors, is responsible for
allocating resources and assessing performance of the operating segment.
Accounting Standards Issued But Not Yet Adopted
The Corporation has not yet adopted the following accounting pronouncements effective for the Corporation’s fiscal
periods beginning on or after March 1, 2017:
IAS 7 – Statement of Cash Flows – Amendments
IAS 7 requires an entity to present a statement of cash flows as an integral part of its primary financial statements.
Cash flows are classified and presented into operating activities (either using the “direct” or “indirect” method),
investing activities and financing activities, with the latter two categories generally presented on a gross basis. The
amendments require additional disclosures with respect to changes in liabilities arising from financing activities. It
is effective for annual periods beginning on or after January 1, 2017.
The Corporation does not have any liabilities arising from financing activities and therefore has concluded that
there will be no material impact of adopting this standard.
IFRS 9 – Financial Instruments
In July 2014, the IASB published the final version of IFRS 9 Financial Instruments (“IFRS 9”), which brings together
the classification, measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39
Financial Instruments: Recognition and Measurement. IFRS 9 replaces the multiple classifications for financial
assets in IAS 39 with a single principle based approach for determining the classification of financial assets based
on how an entity manages its financial instruments in the context of its business model and the contractual cash
flow characteristics of the financial assets. The new standard also requires a single impairment method to be
used, replacing the multiple impairment methods in IAS 39. The final version of IFRS 9 is effective for periods
beginning on or after January 1, 2018; however, it is available for early adoption.
The Corporation has not evaluated the impact of adopting this standard.
IFRS 15 – Revenue from Contracts with Customers
IFRS 15 deals with revenue recognition and establishes principles for reporting useful information to users of
financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an
entity’s contracts with customers. Revenue is recognized when a customer obtains control of a good or service.
The standard replaces IAS 18 “Revenue” and IAS 11 ”Construction Contracts” and related interpretations. The
standard is effective for annual periods beginning on or after January 1, 2018 and earlier application is permitted.
The Corporation has not evaluated the impact of adopting this standard.
26
Annual Consolidated Financial Statements
IFRS 16 – Leases
In January 2016, the IASB issued IFRS 16 which replaces existing standards and interpretations under IAS 17
“Leases”. IFRS 16 requires all leases, including financing and operating leases, to be reported on the balance
sheet with the intent of providing greater transparency on a company’s lease assets and liabilities. IFRS 16 is
effective for annual periods beginning on or after January 1, 2019, with early adoption permitted if IFRS 15 has
been adopted.
The Corporation has not evaluated the impact of adopting this standard.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of consolidated financial statements in conformity with IFRS requires management to make
accounting estimates and judgements that affect the reported amounts of assets and liabilities as of the date of
the consolidated financial statements and income and expenses during the reporting period. Actual results could
differ materially from these estimates. Significant estimates and judgements made by management include:
(a) Investments in Uranium
Investments in uranium are measured at fair value at each reporting period-end based on the most recent
spot prices for uranium published by UxC and converted to Canadian dollars using the month-end foreign
exchange noon rate. The Corporation may also adjust the fair value of the investments in uranium based on
its assessment of the valuation impact of risks associated with the third party storage facilities at which the
Corporation’s uranium is held.
5.
INVESTMENTS IN URANIUM
The investments continuity summary is as follows:
(in thousands)
Cost
Fair Value
Adjustment
Fair
Value P
(1)(2)
Balance at February 28, 2015
$ 771,095
$ (55,765) $ 715,330
Unrealized net loss on investments in uranium
before sales
Sale of conversion components
Sale of uranium
USEC UFR6R fair value adjustment P
(2)
Balance at February 29, 2016
-
(70,250)
(70,250)
(935)
96
(1,031)
(4,743)
(1,027)
(3,716)
-
2,711
2,711
$ 766,348 $ (124,235) $ 642,113
Unrealized net losses on investments in uranium
Purchase of uranium
USEC UFR6R fair value adjustment P
(2)
-
17,010
-
(202,853)
971
1,276
(202,853)
17,981
1,276
Balance at February 28, 2017
$ 783,358 $ (324,841)
$ 458,517
27
Annual Consolidated Financial Statements
The balance of investments in uranium consists of:
(in thousands, except quantity amounts)
Quantity
Cost
Fair Value
Adjustment
Fair
Value P
(1)(2)
UR3ROR8
(2)
UFR6R P
Balance at February 28, 2017
10,080,024 lbs
$ 471,496 $ (174,369) $ 297,127
1,903,471 KgU
311,862
(150,472)
161,390
$ 783,358 $ (324,841)
$ 458,517
(1)
(2)
Investments in uranium are categorized in Level 2 of the fair value hierarchy. Fair values as at February 28, 2017 reflect spot prices published
by UxC of US$22.25 per pound UR3ROR8R and US$64.00 per KgU as UFR6R, translated at the foreign exchange noon rate of 1.3248.
Included in the fair value at February 28, 2015 was a fair value adjustment of $3,987,000 reducing the fair value to reflect the risks associated
with the Corporation’s UFR6R held with the United States Enrichment Facility (“USEC Facility”). During the year ended February 29, 2016, the
fair value adjustment was reduced to $1,276,000, to reflect the reduction in the material held with the USEC Facility. During the year ended
February 28, 2017, the fair value adjustment was further reduced to $nil, to reflect the transfer of all the remaining material from the USEC
facility.
The following is an analysis of the Corporation’s non-current investments in uranium by location:
(in thousands)
Canada
United States
Europe
Total non-current assets
Purchases of Uranium
February 28,
2017
February 29,
2016
$ 20,781 $ 30,651
$ 163,007 $ 251,180
$ 274,729 $ 360,282
$ 458,517 $ 642,113
During the year ended February 28, 2017, the Corporation purchased 610,000 pounds of U R3ROR8R at an average
price of US$20.75 per pound U R3ROR8R, resulting in an increase of $17,010,000 in the Corporation’s investments in
uranium. The total cash consideration for the purchases was $17,008,000 (US$12,657,500) based on the foreign
exchange rate on the payment dates. The Corporation recorded a $2,000 foreign exchange gain due to the
favourable movement in the U.S. dollar to Canadian dollar exchange rate between the date the Corporation
received the shipments of UR3ROR8R and the date that the payments were made.
Sale of Uranium
In October 2015, the Corporation completed the sale of 100,000 pounds of U R3ROR8R for cash consideration of
$4,743,000 (US$3,625,000), resulting in a realized gain of $1,027,000.
Sale of Conversion Components
In November 2014, the Corporation agreed to the sale of the conversion component contained in 250,000 KgU as
UFR6R to occur over three tranches:
1) conversion component contained in 100,000 KgU as UFR6R in return for 261,285 pounds of U R3ROR8 Rand cash
consideration of US$700,000 that was completed in December 2014;
2) conversion component contained in 50,000 KgU as UFR6R in return for 130,643 pounds of U R3ROR8 Rand cash
consideration of US$357,500 that was completed in February 2015; and
3) conversion component contained in 100,000 KgU as UFR6R in return for 261,285 pounds of U R3ROR8 Rand cash
consideration of US$715,000 that was completed in May 2015.
The loss on the sale of the final tranche of conversion components in May 2015 was $140,000. There were no
transaction fees relating to this sale.
Transfer of UFR6R held with the USEC Facility to another storage facility
During the year ended February 28, 2017, the Corporation transferred a total of 378,566 KgU UFR6 R(2016: 685,434
KgU) held with the USEC Facility to an alternate storage facility. The cost associated with the transfer amounted
28
to $1,427,000, of which $1,276,000 was applied against the fair value adjustment loss recorded as at February 29,
2016, as described above (2016: $2,711,000) and the remaining $151,000 was recorded to storage fees in the
consolidated statement of comprehensive loss for the current period (2016: $nil). The transfers reduced the
Corporation’s holdings of UFR6R with the USEC Facility to nil (February 29, 2016: 378,566 KgU).
Annual Consolidated Financial Statements
6. URANIUM ARRANGEMENTS
Lending Agreement
In March 2015, the Corporation entered into an agreement to loan 1,300,000 pounds of U R3ROR8 Rto an independent
third party with a return date in April 2017. The loan was subject to a loan fee of 1.0% per annum, with payments
to be calculated quarterly based on the average of the U R3ROR8 Rspot price per pound, as defined and published by
UxC at the end of each month for the previous three months. Collateral for the loan, in the form of an irrevocable
bank guarantee, was provided in the amount of US$56,000,000, which allowed for adjustments based on
movements in the uranium price.
In March 2016, the Corporation and borrower agreed to terminate the loan one year before the original return date.
As a result of the early termination, the Corporation received cash consideration of $559,000 (US$435,000) in April
2016 and the related bank guarantee was cancelled and returned to the borrower. The consideration received
was recorded as income from lending of uranium in the statement of comprehensive loss.
Relocation Agreement
In July 2016, the Corporation entered into an agreement with an independent third party to relocate a total of
700,000 KgU as UFR6R to an alternate storage facility. The transfers are expected to be made over the next two
years in three separate tranches, and will be completed in exchange for a fee payable to the Corporation of
US$1.00 per KgU for the initial 12 months of each transfer and US$0.50 per KgU for each subsequent year after
the end of the initial 12 month period. The term of the agreement requires the return and transfer of the 700,000
KgU as UFR6R back to the original storage facility in May 2020. The fee received is recorded as income from
relocation of uranium in the statement of comprehensive loss.
In July 2016, the Corporation completed the first of the three tranches, for a transfer of 300,000 KgU as UFR6R.
During the year ended February 28, 2017, the Corporation recorded $234,000 in income related to this relocation
agreement. Refer to note 12 SUBSEQUENT EVENTS for more details.
7.
INCOME TAXES
The Corporation is subject to varying rates of taxation due to its operations in multiple tax jurisdictions. Income
tax expense is comprised of the following for the years ended:
(in thousands)
Current tax expense
Total income tax expense
February 28,
2017
February 29,
2016
$ - $ 2
$ - $ 2
29
Annual Consolidated Financial Statements
Reconciliations of the combined Canadian federal and provincial income tax rates in effect in Ontario, Canada to
the Corporation’s effective rate of income tax for the years ended are as follows:
(in thousands)
February 28,
2017
February 29,
2016
Net gain (loss) before taxes
Combined federal and provincial income tax rate
Computed income tax expense
$ (206,034)
$ (75,072)
26.50%
$ (54,599)
26.50%
$ (19,894)
Difference in current tax rates applicable in other jurisdictions
Change in deferred tax assets not recognized
Permanent differences
Other
Total income tax expense
15,876
3,886
48,224
4,700
1,963
(288)
$ - $ 2
135
The components of the Corporation’s deferred tax balances for the years ended are comprised of temporary
differences as presented below:
(in thousands)
Deferred tax assets
Tax loss carry forwards
Deferred tax assets - gross
Set-off against deferred tax liabilities
Deferred tax assets P
(1)
Deferred tax liabilities
Unrealized gains on investments
Deferred tax liabilities - gross
Set-off by deferred tax assets
Deferred tax liabilities P
(1)
February 28,
2017
February 29,
2016
$ -
$ -
$ 486
$ 486
-
(486)
$ - $ -
$ -
$ -
$ (486)
$ (486)
-
486
$ -
$ -
(1) Deferred tax assets and liabilities relate to temporary differences expected to reverse 12 months or more after the respective reporting date.
The Corporation believes that it is not probable that sufficient taxable income will be available in future years to
allow the benefit of the following deferred tax assets not recognized to be utilized:
(in thousands)
Deductible temporary differences
Tax losses
Total deferred tax assets not recognized
February 28,
2017
February 29,
2016
$ 6,937
$ 3,873
6,453
5,341
$ 10,326 $ 12,278
30
Annual Consolidated Financial Statements
A geographic split of the Corporation’s tax losses not recognized and the associated expiry dates of those losses
are as follows:
(in thousands)
Expiry Date
February 28,
2017
February 29,
2016
Tax losses – gross
Canada
Cyprus
Luxembourg
Tax losses – gross
2030-2037
unlimited
unlimited
Tax benefit at tax rates between 2.92% to 26.50%
Set-off against deferred tax liabilities
Total tax loss assets not recognized
$ 24,350 $ 21,139
- 480
- 5,656
$ 24,350 $ 27,275
6,453 5,827
-
(486)
$ 6,453 $ 5,341
In March 2016, the Corporation’s wholly owned subsidiary, Uranium Participation Cyprus Limited (UPCL) migrated
to Bermuda under the name Uranium Participation Bermuda (UPBL). At the time of the migration, UPCL’s branch
office in Luxembourg was also closed. As a result, the Corporation is no longer subject to income tax in Cyprus
and Luxembourg, and any Cyprus and Luxembourg tax attributes accumulated prior to the migration have been
reduce to $nil.
8. COMMON SHARES
The Corporation is authorized to issue an unlimited number of common shares without par value. A continuity
schedule of the issued and outstanding common shares is as follows:
(in thousands, except common share amounts)
Balance at February 28, 2015
Common shares purchased in March 2015
Common shares purchased in October 2015
Balance at February 29, 2016
Common shares issued
Share issue costs
Balance at February 28, 2017
Number of
Common Shares
Amount
$ 831,048
116,872,913
(356,500) (2,535)
(6,170)
(867,700)
115,648,713
5,200,000
-
$ 822,343
20,020
(1,120)
120,848,713
$ 841,243
In October 2016, the Corporation completed a bought-deal equity financing and issued 5,200,000 common shares,
at a price of $3.85 per share, for gross proceeds of $20,020,000. The Corporation also incurred share issue costs
of $1,120,000. The majority of the net proceeds were used to fund the purchase of 610,000 pounds of U R3ROR8R, with
the balance to be used to fund the operating expenses of the Corporation.
On December 9, 2016, the Corporation filed a short form base shelf prospectus (“2016 Prospectus”) with the
securities regulatory authorities in each of the provinces of Canada, other than Québec. The Corporation may
issue common shares or warrants or any combination of such securities as units (“Securities”), in amounts, at
prices, and on terms to be determined based on market conditions at the time of sale and as set forth in the 2016
Prospectus, for an aggregate offering amount of up to $200,000,000 during the 25 month period ending January
9, 2019. To date, the corporation has not issued any Securities pursuant to the 2016 Prospectus.
On October 31, 2014, the Corporation filed a short form base shelf prospectus (“2014 Prospectus”) with the
securities regulatory authorities in each of the provinces of Canada, other than Québec. Accordingly, the
Corporation could issue Securities, in amounts, at prices, and on terms to be determined based on market
conditions at the time of sale and as set forth in the 2014 Prospectus, for an aggregate offering amount of up to
$200,000,000 during the 25 month period ending November 30, 2016. In October 2016, the Corporation issued
$20,020,000 in Securities pursuant to the 2014 Prospectus.
31
Annual Consolidated Financial Statements
In January 2016, the Corporation filed a normal course issuer bid (“2016 NCIB”) with the TSX, authorizing the
Corporation to purchase up to 10,192,641 of the Corporation’s common shares during a 12 month period
commencing January 18, 2016 and ended on January 17, 2017. The Corporation did not make any purchases of
its outstanding shares under the 2016 NCIB.
In November 2014, the Corporation filed a normal course issuer bid (“2014 NCIB”) with the TSX, which authorized
the Corporation to purchase up to 7,500,000 of the Corporation’s common shares during a 12 month period that
ended on November 23, 2015. A total of 1,224,200 outstanding shares were purchased under the 2014 NCIB as
detailed below:
• During March 2015, the Corporation purchased 356,500 of its outstanding shares, at an average cost of $5.60
per share for a total expenditure of $1,996,000, excluding transaction costs of $3,000. The difference of
$536,000 between the average historical proceeds on the shares and the total cash expenditure for the shares
purchased has been recorded as an increase in contributed surplus.
• During October 2015, the Corporation purchased an additional 867,700 of its outstanding shares, at an
average cost of $5.185 per share for a total expenditure of $4,499,000, excluding transaction costs of $9,000.
The difference of $1,662,000 between the average historical proceeds on the shares and the total cash
expenditure for shares purchased has been recorded as an increase in contributed surplus.
9. RELATED PARTY TRANSACTIONS
Management Services Agreement with Denison Mines Inc.
Pursuant to its management services agreement with the Manager dated April 1, 2013, the Corporation paid the
following fees to the Manager: a) a commission of 1.5% of the gross value of any purchases or sales of uranium
completed at the request of the Board of Directors; b) a minimum annual management fee of $400,000 (plus
reasonable out-of-pocket expenses), plus an additional fee of 0.3% per annum based upon the Corporation’s net
asset value in excess of $100,000,000; and c) a fee, at the discretion of the Board of Directors, for on-going
monitoring or work associated with a transaction or arrangement (other than a financing, or the purchase or sale
of uranium).
The management services agreement expired on March 31, 2016.
A new three year agreement was entered into between the Corporation and the Manager effective April 1, 2016
(“Renewed Management Services Agreement”). Under the Renewed Management Services Agreement, the
Manager will receive the following fees from the Corporation: a) a base fee of $400,000 per annum, payable in
equal quarterly installments; b) a variable fee equal to (i) 0.3% per annum of the Corporation’s total assets in
excess of $100,000,000 and up to and including $500,000,000, and (ii) 0.2% per annum of the Corporation’s total
assets in excess of $500,000,000; c) a fee, at the discretion of the Board, for on-going monitoring or work
associated with a transaction or arrangement (other than a financing, or the acquisition of or sale of U R3ROR8 Ror UFR6R);
and d) a commission of 1.0% of the gross value of any purchases or sales of U R3ROR8 Ror UFR6R, or gross interest fees
payable to the Corporation in connection with any uranium loan arrangements.
The following outlines the fees paid to the Manager for the years ended:
(in thousands)
Fees incurred with the Manager:
Base and variable fees
Discretionary fees
Commission fees
Total fees incurred with the Manager
February 28,
2017
February 29,
2016
$ 1,538 $ 2,216
-
100
173 71
$ 2,287
$ 1,811
As at February 28, 2017, trade and other payables included $170,000 (February 29, 2016: $260,000) due to the
Manager with respect to the fees indicated above.
32
Annual Consolidated Financial Statements
Key Management Personnel
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the Corporation, directly or indirectly. The Corporation’s key management personnel
are the members of its Board of Directors.
The following compensation was awarded to key management personnel for the years ended:
(in thousands)
Directors’ fees & expenses
Total key management personnel compensation
10. CAPITAL MANAGEMENT AND FINANCIAL RISK
Capital Management
February 28,
2017
February 29,
2016
$ 293
$ 293
$ 235
$ 235
The Corporation’s capital structure consists of share capital and contributed surplus. The Corporation’s primary
objective is to achieve long-term appreciation in the value of its uranium holdings through a buy and hold
investment strategy and not to actively speculate with regard to short-term changes in uranium prices. Uranium
purchases are normally funded through common share offerings with at least 85% of the gross proceeds of share
offerings invested in, or set aside for future purchases of uranium. In strictly limited circumstances, the Corporation
can enter into borrowing arrangements for up to 15% of its net asset value to facilitate the purchases of uranium.
At February 28, 2017, the Corporation has invested more than 85% of its aggregate gross proceeds of share
offerings in uranium. The Corporation has no outstanding borrowing arrangements for the purchase of uranium.
Financial Risk
The Corporation examines the various financial risks to which it is exposed and assesses the impact and likelihood
of those risks. These risks may include commodity price risk, currency risk, credit risk and liquidity risk.
Commodity Price Risk
The Corporation’s net asset value is directly tied to the spot price of uranium published by UxC. At February 28,
2017, a 10% increase in the uranium spot price would have increased the Corporation’s total equity by
$44,400,000, while a 10% decrease would have the opposite effect.
Currency Risk
Changes in the value of the Canadian dollar compared to foreign currencies will affect the value, as reported, of
the Corporation’s foreign denominated investments in uranium, cash and cash equivalents, trade and other
receivables, and trade and other payables.
As the prices of uranium are quoted in U.S. currency, fluctuations in the Canadian dollar relative to the U.S. dollar
can significantly impact the valuation of uranium from a Canadian dollar perspective. At February 28, 2017, a 10%
increase in the U.S. dollar to Canadian dollar exchange rate would have increased the Corporation’s total equity
by $45,900,000, while a 10% decrease would have the opposite effect.
Credit Risk
Credit risk is the risk of loss due to a counterparty’s inability to meet its obligations under a financial instrument or
contractual agreement that will result in a financial loss to the Corporation. The Corporation’s credit risk exposure
includes the carrying amounts of cash and cash equivalents, trade and other receivables, and investments in
uranium.
To limit the credit risk exposure on its cash and cash equivalents, the Corporation holds all of its cash and cash
equivalents in credit worthy financial institutions, while investments in uranium are held with storage facilities owned
by organizations that are credible, financially stable, and/or essential to the global nuclear fuel cycle. Credit risk
exposure on its trade and other receivables related to uranium loans is limited since the Corporation lends uranium
33
Annual Consolidated Financial Statements
exclusively to large organizations and ensures that adequate security is provided for any loaned uranium. The
Corporation regularly assesses the credit profile of these organizations for any indications of financial difficulty.
Liquidity Risk
Financial liquidity represents the Corporation’s ability to fund future operating activities. The Corporation may
generate cash from the lending, relocation, or sale of uranium, or the sale of additional equity securities. The
Corporation funds its ongoing operations with its existing cash balance and has the ability to sell some of its
investments in uranium to generate additional cash if required. Although the Corporation enters into commitments
to purchase uranium periodically, the commitments are normally funded by the Corporation’s available cash or are
contingent on its ability to raise funds through the sale of additional equity securities.
Fair Value of Investments, Financial Assets and Financial Liabilities
IFRS requires disclosures about the inputs to fair value measurements, including their classification within a
hierarchy that prioritizes the inputs to fair value measurement. The three levels of the fair value hierarchy are:
•
•
•
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly;
and
Level 3 – Inputs that are not based on observable market data.
Investments in uranium are categorized in Level 2. Investments in uranium are measured at fair value at each
reporting period based on the most recent spot prices for uranium published by UxC and converted to Canadian
dollars using the month-end foreign exchange noon rate. The Corporation may also adjust the fair value of the
investments in uranium based on its assessment of the valuation impact of risks associated with the third party
storage facilities at which the Corporation’s uranium is held.
All financial instruments’ fair values approximate their carrying values due to the short-term nature of these
instruments. All purchases and sales of financial assets are accounted for at settlement date.
The Corporation has not offset financial assets with financial liabilities.
11. COMPARATIVE FINANCIAL STATEMENTS
Certain balances in the comparative consolidated financial statements have been reclassified from the
consolidated financial statements previously presented to conform to the presentation of the 2017 consolidated
financial statements in accordance with IFRS.
12. SUBSEQUENT EVENTS
On March 29, 2017, the counterparty to the relocation agreement (see note 6) filed for Chapter 11 bankruptcy
protection in the United States of America. Pursuant to this agreement, 300,000 KgU as UF6, which is contained
in enriched uranium product (“EUP”), owned by the Corporation is currently being held at this organization’s storage
facility. The Corporation continues to hold title to the UF6 that is stored at this facility and pursuant to the terms of
the relocation agreement, the counterparty is not permitted to transfer, sell, or assign the EUP containing the
Corporation’s UF6 to any person. As at February 28, 2017, trade and other receivables included $64,000 of unbilled
income related to the relocation of uranium. For the three months ended March 31, 2017, US$74,000 was billed
and is payable within 30 days.
34
BOARD OF DIRECTORS
OFFICE OF THE CORPORATION
Paul J. Bennett
President and Chief Executive Officer
Energus Resources Ltd.
Thomas Hayslett
Independent Consultant; formerly Senior Consultant
The Ux Consulting Company, LLC.
40 University Avenue, Suite 1100
Toronto, Ontario M5J 1T1
Telephone: 416-979-1991
Facsimile: 416-979-5893
Website: www.uraniumparticipation.com
Jeff Kennedy
Chief Financial Officer, Managing Director of Equity Capital Markets
Cormark Securities Inc.
AUDITORS
Garth A. C. MacRae
Independent Financial Consultant
PricewaterhouseCoopers LLP
Toronto
REGISTRAR AND TRANSFER AGENT
Computershare Investor Services Inc.
100 University Avenue, 8th Floor
Toronto, Ontario M5J 2Y1
Telephone:
Canada and U.S.: 1-800-564-6253
Overseas: 1-514-982-7555
STOCK EXCHANGE LISTING
The Toronto Stock Exchange
Trading Symbol: U
Website: www.tmx.com
Ganpat Mani
Independent Consultant; formerly Chief Executive Officer and
President, ConverDyn Corp.
Richard H. McCoy
Chairman of the Board
Corporate Director; formerly Vice Chairman
Investment Banking, TD Securities Inc.
Dorothy Sanford
President, MFDA Investor Protection Corporation
OFFICERS
David Cates
President and Chief Executive Officer
Mac McDonald
Chief Financial Officer
Scott Melbye
Vice President, Commercial
Amanda Willett
Corporate Secretary
MANAGER
Denison Mines Inc.
40 University Avenue, Suite 1100
Toronto, Ontario
M5J 1T1
www.denisonmines.com
Managed by:
40 University Avenue, Suite 1100, Toronto, Ontario M5J 1T1
www.denisonmines.com
Uranium Participation Corporation
#1100—40 University Avenue
Toronto ON M5J 1T1
T 416 979 1991 F 416 979 5893
www.uraniumparticipation.com
TSX: U