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Note 3 - Acquisition of UEX Corporation

6 Months Ended

Jan. 31, 2023

NOTE 3: ACQUISITION OF UEX CORPORATION

During Fiscal 2022, on June 13, 2022, we entered into a definitive agreement with UEX Corporation (“UEX”, the “UEX Agreement”) pursuant to which we would acquire all of the issued and outstanding common shares of UEX in an all-share transaction (the “UEX Acquisition”). On June 21, 2022, in accordance with the UEX Agreement, we completed a private placement in UEX, whereby we acquired 11,627,907 UEX common shares at a price of CA$0.43 per UEX common share for total consideration of $3,867. Subsequently, we acquired an additional 6,844,000 UEX common shares for total consideration of $1,914 by making purchases of UEX common shares through the facilities of the Toronto Stock Exchange subject to and in accordance with applicable laws.

On August 19, 2022, we acquired all of the issued and outstanding common shares of UEX that we did not already own pursuant to the completion of the UEX Acquisition. Pursuant to the terms of the UEX Acquisition, UEX shareholders received 0.09 common shares of UEC for each UEX common share held. As a result, we issued 48,518,745 shares of our Company in exchange for the common shares of UEX that we did not already own. The UEX shares we owned before closing the UEX Acquisition were returned to treasury.

In connection with the UEX Acquisition, we also issued 2,301,750 stock options (the “Replacement Options”) and 4,660,580 warrants (the “Replacement Warrants”) to replace the outstanding stock options and warrants of UEX that were outstanding immediately prior to the completion of the UEX Acquisition.

The estimated fair value of the Replacement Options in the amount of $4,026 is classified as equity and presented in additional paid in capital in accordance with ASC 718 Compensation – Stock Compensation. The fair value of the Replacement Options as of August 19, 2022 was estimated using the Black-Scholes model with the following assumptions, which is level 3 of the fair value measurement hierarchy:

Exercise Price in USD	$1.07		to	$3.94
Exercise Price in CAD	CA$1.39		to	CA$5.12
Expected Risk Free Interest Rate		2.40%	to	3.23%
Expected Volatility		76.01%	to	97.53%
Expected Life in Years		0.12	to	1.0
Expected Dividend Yield			0.00%

The estimated fair value of the Replacement Warrants in the amount of $8,903 is classified as derivative liabilities in accordance with ASC 815 Derivatives and Hedging, as the exercise prices of the Replacement Warrants are denominated in Canadian dollars, which differs from the Company’s functional currency. The change in fair value on the derivative liabilities is recorded as a change in fair value of derivative liability in our condensed consolidated statements of operations. The fair value of the Replacement Warrants as of August 19, 2022 was estimated using the Black-Scholes model with the following assumptions, which is level 3 of the fair value measurement hierarchy:

Exercise Price in USD	$1.11		to	$3.42
Exercise Price in CAD	CA$1.44		to	CA$4.44
Expected Risk Free Interest Rate		3.18%	to	3.23%
Expected Volatility		90.98%	to	101.52%
Expected Life in Years		0.75	to	2.05
Expected Dividend Yield			0.00%

The UEX Acquisition is accounted for as an acquisition of assets rather than a business as UEX does not meet the definition of a business in accordance with ASC 805 Business Combinations.

The following table summarizes the fair value of the consideration paid, and the fair value of the assets acquired and liabilities assumed, on the closing date of the UEX Acquisition:

Consideration paid
UEC shares issued	$	171,271
Fair value of UEX shares acquired by UEC before acquisition		5,830
Replacement options issued		4,026
Replacement warrants issued		8,903
Acquisition related costs		2,643
Total consideration	$	192,673

Assets acquired and liabilities assumed
Cash and cash equivalents	$	4,627
Prepaid expenses and deposits		159
Accounts receivable		892
Mineral rights and properties		208,008
Equity accounted investment		24,502
Investment in equity securities		135
Other non-current assets		118
Total assets		238,441

Accounts payable and accrued liabilities		7,080
Other liabilities		111
Asset retirement obligations		211
Deferred tax liabilities		38,366
Total liabilities		45,768
Total net assets	$	192,673