MINERAL RIGHTS AND PROPERTIES

6 Months Ended

Jan. 31, 2012

MINERAL RIGHTS AND PROPERTIES [Text Block]

NOTE 5:              MINERAL RIGHTS AND PROPERTIES

Mineral Rights

At January 31, 2012, the Company had mineral rights covering 44,283 acres located in the States of Arizona, Colorado, New Mexico, Texas and Wyoming and an additional 247,000 acres located in Paraguay. These mineral rights were acquired for the purposes of uranium exploration, development and mining at a cost of $27,536,802, net of $1,713,504 in impairment charges. The acquisition costs of $27,536,802 include $23,747,973 representing the fair value of non-cash consideration and $3,788,829 representing the cash consideration provided. Included in the non-cash consideration is $1,798,387 representing the present value of the retirement obligation associated with the Palangana Mine. These mineral rights were acquired through staking and lease or option agreements and are subject to varying royalty interests, some of which are indexed to the sale price of uranium. At January 31, 2012, annual maintenance payments of $489,995 were required to maintain these mineral rights.

Mineral rights and property acquisition costs consist of the following:

		January 31, 2012			July 31, 2011
Mineral Rights and Properties, Unproven
Palangana Mine	$	5,710,187		$	5,710,187
Goliad Project		8,689,127			8,689,127
Salvo Project		363,645			303,645
Nichols Project		154,774			154,774
Los Cuatros (formerly New River) Project		257,250			257,250
Anderson Project		9,154,268			427,616
Todilto Project		182,320			182,320
Workman Creek Project		1,031,578			-
Coronel Oviedo Project		880,579			880,579
Other property acquisitions		1,113,074			837,215
		27,536,802			17,442,713
Accumulated depreciation and depletion		(635,047	)		(360,418	)
		26,901,755			17,082,295
Databases		2,345,038			1,433,890
Accumulated depreciation		(1,168,911	)		(968,782	)
		1,176,127			465,108
Land Use Agreements		375,155			375,155
Accumulated depreciation		(100,234	)		(81,475	)
		274,921			293,680
	$	28,352,803		$	17,841,083

During the three and six months ended January 31, 2012, the Company did not incur an impairment charge (three and six months ended January 31, 2011: $Nil).

Pursuant to a Data Purchase and Sale Agreement dated August 19, 2011, the Company purchased certain database covering the Goliad formation from Uranium One Inc. for total consideration of $911,148, comprised of a cash payment of $400,000 and the issuance of 159,326 restricted common shares of the Company with a fair value estimated to be $511,148.

Mineral property expenditures on a regional basis are as follows:

		Three Months Ended January 31,				Six Months Ended January 31,
		2012		2011		2012		2011
Mineral Property Expenditures
Arizona	$	46,026	$	4,106	$	186,702	$	15,951
Colorado		4,278		19,088		50,319		41,742
New Mexico		5,452		5,637		15,600		28,771
Texas		3,463,163		2,068,923		5,722,182		5,433,600
Utah		-		298		-		3,172
Wyoming		1,275		-		14,625		13,755
Paraguay		642,496		-		905,863		-
	$	4,162,690	$	2,098,052	$	6,895,291	$	5,536,991

Palangana Mine, Texas

On December 18, 2009, the Company acquired the Palangana Mine as part of the acquisition of STMV with an estimated fair value of $3,911,800 at acquisition. The Palangana Mine is an 8,178 acre property located approximately 100 miles south of the Hobson Processing Facility and is subject to 6% to 12% sliding scale production royalties.

Upon commencement of production in November 2010, the Company began depreciating and depleting the capitalized costs, which includes a reclamation liability of $1,798,387, of the Palangana Mine over forty-two months. At January 31, 2012, capitalized costs totaled $5,710,187, less accumulated depreciation and depletion of $635,047, for a net book value of $5,075,140.

Goliad Project, Texas

On October 11, 2005, the Company entered into a mineral asset option agreement granting the Company the right to acquire title to the leases totaling 2,342 acres, encompassing the Goliad Project. The Goliad Project is located in south Texas near the northeast end of the extensive South Texas Uranium trend. At January 31, 2012, capitalized costs totaled $8,689,127.

Salvo Project, Texas

On November 29, 2010, the Company entered into various lease agreements granting the Company the exclusive right to conduct mining exploration and related operations over an area covering 4,965 acres. The leases have a minimum term of five years with provisions for extensions. At January 31, 2012, capitalized costs totaled $363,645.

Nichols Project, Texas

On January 13, 2007, the Company entered into various lease agreements granting the Company the exclusive right to conduct mining exploration and related operations over an area covering 1,348 acres. The leases have a minimum term of five years with provisions for extensions. At January 31, 2012, capitalized costs totaled $154,774.

Los Cuatros Project, Arizona

On January 25, 2010, the Company executed an amendment to the underlying purchase agreement to acquire 640 acres of mineral exploration claims located in Maricopa County, Arizona, together with database records containing material information regarding the mineral claims. At January 31, 2012, capitalized costs totaled $257,250.

Anderson Project, Arizona

Pursuant to a Merger Agreement and Plan of Merger dated May 5, 2011 and effective September 9, 2011 (the “Merger Agreement”), the Company merged with Concentric Energy Corp. (“Concentric”) resulting in the acquisition of an undivided 100% interest in the 7,581-acre Anderson Property located in Yavapai County, Arizona. In accordance with the Merger Agreement, Concentric’s shareholders received 0.1075 of one share of the Company’s common stock for every one share of Concentric common stock, resulting in the issuance of 1,253,440 shares of the Company to the former Concentric shareholders. In addition, holders of Concentric share purchase warrants received 0.1075 of one share purchase warrant of the Company for every one Concentric share purchase warrant, resulting in the issuance of share purchase warrants representing 375,834 shares of the Company exercisable at prices ranging from $9.30 to $65.12 per share to the former holders of Concentric share purchase warrants.

Pursuant to an Acquisition Agreement dated April 11, 2011, as amended on June 24, 2011, and effective September 9, 2011 (the “Acquisition Agreement”) concurrently with the Merger Agreement, the Company was assigned all of Global Uranium Corp.’s (“Global”) rights and interests under the terms and conditions of an Option and Joint Venture Agreement dated April 13, 2010 between Concentric and Global with respect to the Anderson Project. In accordance with the Acquisition Agreement, the Company provided the following consideration to Global:

• an initial cash payment of $150,000;
• a further cash payment of $200,000 representing repayment in full of a secured loan between Global and Concentric thereby releasing and assigning to the Company the security previously granted by Concentric to Global; and
• a final cash payment of $150,000 and the issuance of 350,000 restricted shares of the Company.

The acquisition of the Anderson Project was accounted for in accordance with ASC 360, Property, Plant and Equipment, as an asset acquisition and the respective fair values of the material line items are summarized as follows:

• Cash payment of $500,000;
• Issuance of 1,603,440 shares of the Company and warrants to purchase 375,834 shares valued at $5,195,797;
• Transaction costs incurred valued at $509,273;
• Assumption of Concentric’s accounts payable liabilities and accrued liabilities valued at $1,241,260; and
• Assumption of Concentric’s convertible debenture liabilities valued at $1,707,938 (Note 14).

During the three months ended January 31, 2012, the Company paid a total of $152,045 to various vendors to settle a total of $280,258 in accounts payables assumed from the acquisition of the Anderson Project. As a result, a gain of $128,213 on settlement of accounts payables was recorded on the statements of operations and comprehensive loss.

At January 31, 2012, capitalized costs of Anderson Project totaled $9,154,268.

Workman Creek Project, Arizona

Pursuant to a Property Acquisition Agreement dated November 7, 2011, as amended on November 25, 2011, and effective November 30, 2011, the Company acquired from Cooper Minerals, Inc. (“Cooper”) an undivided 100% interest in the 3,520-acre Workman Creek Project located in Gila County, Arizona. The Workman Creek Project is subject to a 3.0% net smelter revenue royalty requiring an annual advance royalty payment of $100,000. The Company has the exclusive right and option to acquire one-half (1.5%) of the net smelter revenue royalty for $1,000,000 at any time until January 21, 2024. Additionally, certain individuals hold an option to acquire a 0.5% net smelter revenue royalty exercisable by paying the Company the sum of $333,340 at any time until January 21, 2024.

As consideration for this acquisition, the Company made cash payments totaling $84,640 and issued 300,000 restricted shares. The acquisition of the Workman Creek Project was accounted for in accordance with ASC 360, Property, Plant and Equipment, as an asset acquisition and the respective fair values of the material line items are summarized as follows:

• Cash payment of $84,640;
• Issuance of 300,000 shares valued at $915,000; and
• Transaction costs incurred valued at $31,938.

At January 31, 2012, capitalized costs totaled $1,031,578.

Todilto Project, New Mexico

Effective January, 14, 2009, the Company entered into an Option and Joint Venture Agreement with Uran Limited of Perth, Australia over a certain area of the Company’s Todilto Project located in New Mexico. Uran Limited may earn a 65% interest in the area by:

• making an initial cash payment of $75,000 to the Company (received);
• incurring project exploration expenditures of $100,000 in year one (completed), $200,000 in year two (completed), $300,000 in year three, $400,000 in year four and $500,000 in year five, for total aggregate exploration expenditures of $1,500,000;
• completion of a feasibility study; and
• issuing and delivering to the Company an initial 1,000,000 common shares of Uran Limited (received) and a further 750,000 shares each in year two (received), year three (received) and year four, for total aggregate issuance of 3,250,000 common shares of Uran Limited.

Uran Limited can withdraw from the project after expenditures of $250,000. At January 31, 2012, capitalized costs totaled $182,320.

Coronel Oviedo Project, Paraguay

Pursuant to a Share Exchange Agreement dated May 11, 2011 (the “Agreement”) and effective May 24, 2011, the Company acquired a 100% interest in Piedra Rica Mining S.A., a private Paraguayan company, which holds an undivided 100% interest in the Coronel Oviedo Project located in Paraguay. The Coronel Oviedo Project is comprised of two prospecting permits covering a total 247,000 acres and is subject to a 1.5% gross overriding royalty. The Company has the exclusive right and option at any time to acquire one-half percent (0.5%) of the gross overriding royalty for $500,000, including a right of first refusal to acquire all or any portion of the remaining one percent (1.0%) .

As consideration for this acquisition, the Company issued 225,000 restricted shares. The acquisition of the Coronel Oviedo Project was accounted for in accordance with ASC 360, Property, Plant and Equipment, as an asset acquisition and the respective fair values of the material line items are summarized as follows:

• Issuance of 225,000 shares valued at $722,250; and
• Transaction costs incurred valued at $158,329

At January 31, 2012, capitalized costs totaled $880,579.