MINERAL RIGHTS AND PROPERTIES

12 Months Ended

Jul. 31, 2015

MINERAL RIGHTS AND PROPERTIES [Text Block]

NOTE 4: MINERAL RIGHTS AND PROPERTIES

Mineral Rights

At July 31, 2015, the Company had mineral rights in the States of Arizona, Colorado, New Mexico, Texas and Wyoming and the Republic of Paraguay. These mineral rights were acquired through staking and purchase, lease or option agreements and are subject to varying royalty interests, some of which are indexed to the sale price of uranium. At July 31, 2015, annual maintenance payments of approximately $1,058,000 were required to maintain these mineral rights.

Mineral rights and property acquisition costs consisted of the following:

		July 31, 2015			July 31, 2014
Mineral Rights and Properties
Palangana Mine	$	6,587,135		$	6,664,260
Goliad Project		8,689,127			8,689,127
Burke Hollow Project		1,495,750			1,495,750
Longhorn Project		116,870			116,870
Salvo Project		14,905			364,710
Nichols Project		154,774			154,774
Anderson Project		9,154,268			9,154,268
Workman Creek Project		1,472,008			1,372,008
Los Cuatros Project		257,250			257,250
Slick Rock Project		661,271			661,271
Yuty Project		11,947,144			11,947,144
Coronel Oviedo Project		1,133,412			1,133,412
Other Property Acquisitions		285,741			262,115
		41,969,655			42,272,959
Accumulated Depletion		(3,929,884	)		(3,454,533	)
		38,039,771			38,818,426
Databases		2,410,038			2,405,038
Accumulated Amortization		(2,166,966	)		(1,928,901	)
		243,072			476,137
Land Use Agreements		390,155			390,155
Accumulated Amortization		(235,031	)		(196,019	)
		155,124			194,136
	$	38,437,967		$	39,488,699

During Fiscal 2015, the Company determined that certain mining leases and surface use agreements at the Salvo Project with a combined acquisition cost of $349,805 and outside of the previously established mineralize materials will not be extended or renegotiated. As a result, an impairment loss on mineral property of $349,805 was reported on the consolidated statement of operations.

During Fiscal 2014, the Company abandoned the Channen Project located in Texas with an acquisition cost of $428,164, the Todilto Project located in New Mexico with an acquisition cost of $166,720 and certain other interests located in Arizona, Colorado and Texas with a combined acquisition cost of $58,340. As a result, an impairment loss on mineral properties of $653,224 was reported on the consolidated statement of operations in Fiscal 2014. During Fiscal 2013, the Company did not incur any impairment loss relating to its mineral properties.

The Company has not established proven or probable reserves, as defined by the SEC under Industry Guide 7, for any of its mineral projects. The Company has established the existence of mineralized materials for certain uranium projects, including the Palangana Mine. Since the Company commenced uranium extraction at the Palangana Mine without having established proven or probable reserves, there may be greater inherent uncertainty as to whether or not any mineralized material can be economically extracted as originally planned and anticipated.

The Palangana Mine has been the Company’s sole source for the uranium concentrates sold to generate its sales revenues during Fiscal 2015, Fiscal 2013 and 2012, with no sales revenues generated during Fiscal 2014 and prior to Fiscal 2012. The economic viability of the Company’s mining activities, including the expected duration and profitability of the Palangana Mine and of any future satellite ISR mines, such as the Burke Hollow and Goliad Projects, located within the South Texas Uranium Belt, has many risks and uncertainties. These include, but are not limited to: (i) a significant, prolonged decrease in the market price of uranium; (ii) difficulty in marketing and/or selling uranium concentrates; (iii) significantly higher than expected capital costs to construct the mine and/or processing plant; (iv) significantly higher than expected extraction costs; (v) significantly lower than expected uranium extraction; (vi) significant delays, reductions or stoppages of uranium extraction activities; and (vii) the introduction of significantly more stringent regulatory laws and regulations. The Company’s mining activities may change as a result of any one or more of these risks and uncertainties and there is no assurance that any ore body that we extract mineralized materials from will result in profitable mining activities.

The estimated depletion and amortization of mineral rights and properties for the next five fiscal years are as follows:

Fiscal 2016	$	1,045,921
Fiscal 2017		1,411,157
Fiscal 2018		1,675,157
Fiscal 2019		1,759,347
Fiscal 2020		1,269,724
Total	$	7,161,306

Mineral property expenditures incurred by major projects were as follows:

		Year Ended July 31,
		2015		2014		2013
Mineral Property Expenditures
Palangana Mine	$	2,147,293	$	2,566,770	$	4,347,025
Goliad Project		105,282		1,747,619		540,853
Burke Hollow Project		1,316,321		2,094,089		2,225,132
Longhorn Project		66,135		71,497		16,335
Salvo Project		54,462		14,384		54,329
Anderson Project		240,519		254,840		117,008
Workman Creek Project		31,702		32,290		33,573
Slick Rock Project		53,313		66,525		147,043
Yuty Project		392,879		451,464		424,411
Coronel Oviedo Project		564,501		759,804		632,454
Other Mineral Property Expenditures		733,673		1,101,366		1,472,528
	$	5,706,080	$	9,160,648	$	10,010,691

Palangana Mine, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Palangana Mine, a 7,197-acre property located in Duval County, Texas approximately 100 miles south of the Hobson Processing Facility. These agreements are subject to certain royalty and overriding royalty interests indexed to the sale price of uranium and generally have an initial five-year term with extension provisions.

During Fiscal 2015, certain assumptions related to the asset retirement obligations (“ARO”) of the Palangana Mine were revised resulting in a reduction of the respective ARO assets and liabilities of $77,125 (Fiscal 2014: $381,197). Refer to Note 9.

Upon commencement of uranium extraction during the second quarter of Fiscal 2011, the Company began depleting the capitalized costs of the Palangana Mine over a 30 to 42-month period. At July 31, 2015, capitalized costs of the Palangana Mine were $6,587,135 (July 31, 2014: $6,664,260), less accumulated depletion of $3,929,884 (July 31, 2014: $3,454,533), for a net book value of $2,657,251 (July 31, 2014: $3,209,727).

Goliad Project, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Goliad Project, a 1,598-acre property located in Goliad County, Texas. These agreements are subject to certain royalty interests indexed to the sale price of uranium and have an initial five-year term with extension provisions. At July 31, 2015, capitalized costs totaled $8,689,127 (July 31, 2014: $8,689,127).

Burke Hollow Project, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Burke Hollow Project, a 19,335-acre property located in Bee County, Texas. These agreements are subject to certain royalty interests indexed to the sale price of uranium and have an initial five-year term with extension provisions. At July 31, 2015, capitalized costs totaled $1,495,750 (July 31, 2014: $1,495,750).

Longhorn Project, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Longhorn Project, a 651-acre property located in Live Oak County, Texas. These agreements are subject to certain royalty interests indexed to the sale price of uranium and have an initial five-year term with extension provisions. At July 31, 2015, capitalized costs totaled $116,870 (July 31, 2014: $116,870).

Salvo Project, Texas

The Company holds various mining lease and surface use agreements granting the Company the exclusive right to explore, develop and mine for uranium at the Salvo Project, a 1,514-acre property located in Bee County, Texas. These agreements are subject to certain royalty interests indexed to the sale price of uranium and have an initial five-year term with extension provisions.

During Fiscal 2015, the Company determined that certain mining leases and surface use agreements at the Salvo Project with a combined acquisition cost of $349,805 and outside of the boundaries of the previously reported mineralized materials will not be extended or renegotiated. At July 31, 2015, capitalized costs totaled $14,905 (July 31, 2014: $364,710).

Nichols Project, Texas

The Company holds a mining lease and surface use agreement granting the Company the exclusive right to explore, develop and mine for uranium at the Nichols Project, a 909-acre property located in Karnes County, Texas. The agreement is subject to certain royalty interests indexed to the sale price of uranium and has an initial five-year term with extension provisions. At July 31, 2015, capitalized costs totaled $154,774 (July 31, 2014: $154,774).

Anderson Project, Arizona

The Company holds an undivided 100% interest in contiguous mineral lode claims and state leases in the Anderson Project, a 9,214-acre property located in Yavapai County, Arizona.

At July 31, 2015, capitalized costs totaled $9,154,268 (July 31, 2014: $9,154,268).

Workman Creek Project, Arizona

The Company holds an undivided 100% interest in contiguous mineral lode claims in the Workman Creek Project, a 4,036-acre property located in Gila County, Arizona. The Workman Creek Project is subject to a 3.0% net smelter royalty requiring an annual advance royalty payment of $100,000. The Company has an exclusive right and option to acquire one-half (1.5%) of the net smelter 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 royalty exercisable by paying the Company the sum of $333,340 at any time until January 21, 2024. During Fiscal 2015, the Company paid an annual advance royalty totaling $100,000.

At July 31, 2015, capitalized costs totaled $1,472,008 (July 31, 2014: $1,372,008).

Los Cuatros Project, Arizona

The Company holds an undivided 100% interest in a state lease in the Los Cuatros Project, a 640-acre property located in Maricopa County, Arizona. At July 31, 2015, capitalized costs totaled $257,250 (July 31, 2014: $257,250).

Slick Rock Project, Colorado

The Company holds an undivided 100% interest in contiguous mineral lode claims in the Slick Rock Project, a 6,773-acre property located in San Miguel County, Colorado. Certain claims of the Slick Rock Project are subject to a 1.0% or 3.0% net smelter royalty, the latter requiring an annual advance royalty payment of $30,000 beginning in November 2017. As of July 31, 2015, capitalized acquisition and addition costs totaled $661,271 (July 31, 2014: $661,271).

Yuty Project, Paraguay

The Company holds an undivided 100% interest in one exploitation concession in the Yuty Project, a 289,680-acre property located in Paraguay, acquired originally from Cue Resources Ltd. (“Cue”) through an Arrangement Agreement dated January 20, 2012 and effective March 30, 2012.

Pursuant to a Settlement and Release Agreement dated and effective August 7, 2012 (the “Settlement Agreement”), the Company renegotiated certain acquisition and royalty agreement terms previously agreed to between Cue and the original property vendors of the Yuty Project. The Settlement Agreement confirms an overriding royalty payable to the property vendors of $0.21 for each pound of uranium produced from the Yuty Project, and supersedes all prior agreements entered into between Cue and the original property vendors.

At July 31, 2015, capitalized costs totaled $11,947,144 (July 31, 2014: $11,947,144).

Coronel Oviedo Project, Paraguay

The Company holds an undivided 100% interest in one exploration permit in the Coronel Oviedo Project, a 464,548-acre property located in Paraguay, acquired originally from three private Paraguayan companies through a Property Acquisition Agreement dated October 14, 2011, as amended on February 28, 2012 and March 31, 2012. The Coronel Oviedo Project is subject to a 1.5% gross overriding royalty over which the Company has an exclusive right and option at any time to acquire one-half percent (0.5%) for $166,667 and a right of first refusal to acquire all or any portion of the remaining one percent (1.0%) .

At July 31, 2015, capitalized costs totaled $1,133,412 (July 31, 2014: $1,133,412).