Business Description

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation These consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) and are presented in thousands of United States dollars. All inter-company transactions and balances have been eliminated upon consolidation. Mineral Rights and Properties The Company has established the existence of mineralized materials for certain uranium projects, including the Company’s Christensen Ranch Mine, Burke Hollow Mine and Palangana Mine (collectively, the “ISR Mines”), and the Red Desert, Green Mountain, Roughrider and Christie Lake Projects. The Company has not established proven or probable reserves, as defined by the United States Securities and Exchange Commission (“SEC”) under subpart 1300 of Regulation S-K (“S-K 1300” ), through the completion of a “final” or “bankable” feasibility study for any of the uranium projects the Company operates, including the ISR Mines. Furthermore, the Company has no present plans to establish proven or probable reserves for any of the uranium projects for which the Company plans on utilizing in-situ recovery (“ISR”) mining, such as the ISR Mines. As a result, and despite the fact that the Company commenced extraction of mineralized materials at some of the ISR Mines, the Company remains an exploration stage issuer, as defined by the SEC, and will continue to remain as an exploration stage issuer until such time proven or probable reserves have been established. Since the Company commenced extraction of mineralized materials at the ISR Mines without having established proven or probable reserves, any mineralized materials established or extracted from the ISR Mines should not in any way be associated with having established or produced from proven or probable reserves. In accordance with U.S. GAAP, expenditures relating to the acquisition of mineral rights are initially capitalized as incurred while exploration and pre-extraction expenditures are expensed as incurred until such time as the Company exits the exploration stage by establishing proven or probable reserves. Expenditures relating to exploration activities, such as drill programs to establish mineralized materials, are expensed as incurred. Expenditures relating to pre-extraction activities, such as the construction of mine wellfields and disposal wells, are expensed as incurred until such time that proven or probable reserves are established for that project, after which expenditures relating to mine development activities for that particular project are capitalized as incurred. Companies in the production stage, as defined by the SEC, having established proven and probable reserves and exited the exploration stage, typically capitalize ongoing development expenditures, with corresponding depletion calculated over reserves using the units-of-production method and allocated to inventory and, as that inventory is sold, to cost of goods sold. Because the Company is in the exploration stage and expenses the ongoing development expenditures as incurred, the Company reports larger losses than if the Company would have been in the production stage. Additionally, there would be no corresponding depletion allocated to future reporting periods since those costs had been expensed previously, resulting in lower inventory costs and cost of goods sold and higher gross profits and lower losses than if the Company would have been in the production stage. Any capitalized costs, such as acquisition costs of mineral rights, are depleted over the estimated extraction life using the straight-line method. As a result, the consolidated financial statements of the Company may not be directly comparable to the financial statements of companies in the production stage. Business Combination and Asset Acquisition The Company performs a screen test as required under U.S. GAAP to determine whether a transaction is an asset acquisition. If substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset (or a group of similar identifiable assets), the assets acquired would not represent a business and the Company accounts for the acquisition as an asset acquisition.…