What changed in this filing

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Item 1A. Risk Factors

2021-06-09 compared with 2021-03-16 · 42 added, 10 removed, 287 unchanged (15% of the section changed)

15 unchanged sentences

Since we completed the acquisition of our Alto Paraná Project located in the Republic of Paraguay in July 2017, we are also involved in mining and related activities, including exploration, pre-extraction, extraction and processing of titanium minerals.

As more fully described under “Liquidity and Capital Resources” of Item 2, Management’s Discussion and Analysis of Financial Condition and Result of Operations herein, we have a history of significant negative cash flow and net losses, with an accumulated deficit balance of $285.2 million at January 31, 2021.

Historically, we have been reliant primarily on equity financings from the sale of our common stock and on debt financing in order to fund our operations.

1 unchanged sentence

As a result of our limited financial and operating history, including our significant negative cash flow and net losses to date, it may be difficult to evaluate our future performance.

At January 31, 2021, we had cash and cash equivalents of $8.7 million and term deposits of $4.0 million.

Subsequent to January 31, 2021, we received net proceeds of $28.2 million under the ATM Offering.

Our existing cash resources are expected to provide sufficient funds to repay our long-term debt of $18.0 million under our Credit Facility when it comes due and carry out our planned operations for 12 months from the date of this Quarterly Report.

As of April 30, 2021, we had working capital of $64.2 million including cash and cash equivalents of $43.9 million, term deposits of $4.0 million and uranium inventory holdings of $26.2 million.

During the three months ended and subsequent to April 30, 2021, we entered into agreements to purchase 2.505 million pounds of uranium inventories with delivery dates from March 2021 to June 2023, of which $18.1 million will become due in the next 12 months from the date of this Quarterly Report.

In addition, as of April 30, 2021, we had $10 million term debt with a maturity date of January 31, 2022.

However, we believe our existing cash resources and, if necessary, cash generated from the sale of the Company’s current assets will provide sufficient funds to fulfill our uranium inventory purchase commitments, repay the $10 million principal amount when it becomes due and carry out our planned operations for 12 months from the date of this Quarterly Report.

Our continuation as a going concern beyond those 12 months will be dependent upon our ability to obtain adequate additional financing as our operations are capital intensive and future capital expenditures are expected to be substantial.

20 unchanged sentences

During Fiscal 2019, we entered into the Third Amended and Restated Credit Agreement under our Credit Facility with our Lenders under which we had previously drawn down the maximum $20 million in principal.

During the three months ended January 31, 2021, we made a voluntary payment of $2 million to one of our Lenders, reducing the principal outstanding to $18 million at January 31, 2021.

During the nine months ended April 30, 2021, we made voluntary payments totaling $10 million to certain Lenders, reducing the principal outstanding to $10 million as at April 30, 2021.

The Credit Facility requires monthly interest payments calculated at 8% per annum and other periodic fees.

7 unchanged sentences

We have a limited history of uranium extraction and generating revenue.

In November 2010 we commenced uranium extraction at our Palangana Mine, which has been our sole source of revenues from the sales of U 3 O 8 during Fiscal 2015, Fiscal 2013 and Fiscal 2012, with no revenues from sales of U 3 O 8 generated during the three months ended January 31, 2021, and any other fiscal years.

During the six months ended January 31, 2021, we continued to operate our Palangana Mine at a reduced pace since implementing our strategic plan in September 2013 to align our operations to a weak uranium commodity market in a challenging post-Fukushima environment.

In November 2010 we commenced uranium extraction at our Palangana Mine, which has been our sole source of revenues from the sales of U 3 O 8 during Fiscal 2015, Fiscal 2013 and Fiscal 2012, with no revenues from sales of U 3 O 8 generated during the nine months ended April 30, 2021, and any other fiscal years.

During the nine months ended April 30, 2021, we continued to operate our Palangana Mine at a reduced pace since implementing our strategic plan in September 2013 to align our operations to a weak uranium commodity market in a challenging post-Fukushima environment.

This strategy has included the deferral of major pre-extraction expenditures and remaining in a state of operational readiness in anticipation of a recovery in uranium prices.

61 unchanged sentences

Furthermore, only a portion of the financial assurance required for the future reclamation obligations has been funded.

We are responsible for certain remediation and decommissioning activities in the future primarily for our Hobson Processing Facility, our Palangana Mine, our Reno Creek Project and our Alto Paraná Project and have recorded a liability of $3.8 million on our balance sheet at January 31, 2021 to recognize the present value of the estimated costs of such reclamation obligations.

We are responsible for certain remediation and decommissioning activities in the future primarily for our Hobson Processing Facility, our Palangana Mine, our Reno Creek Project and our Alto Paraná Project and have recorded a liability of $3.9 million on our balance sheet as of April 30, 2021 to recognize the present value of the estimated costs of such reclamation obligations.

Should the actual costs to fulfill these future reclamation obligations materially exceed these estimated costs, it may have an adverse effect on our financial condition and operating results, including not having the financial resources required to fulfill such obligations when required to do so.

6 unchanged sentences

Should any one or more of these events occur in the future, we may not have the financial resources to fund the remaining amount or any portion thereof when required to do so.

We cannot provide any assurance that our Initiative Program involving the strategic acquisition of physical uranium will be successful, which may have an adverse effect on our results of operations.

We have used or allocated a large portion of our cash on hand in order to fund the acquisition of drummed uranium.

This strategy will be subject to a number of risks and there is no assurance that the strategy will be successful.

Future deliveries are subject to performance by other parties and there is a possibility of default by those parties, thus depriving us of potential benefits.

Due to the fluctuation of uranium prices, the price of uranium will fluctuate and we will be subject to losses should we ultimately determine to sell the uranium at prices lower than the acquisition cost.

The primary risks associated with physical uranium will be the normal risks associated with supply and demand fundamentals affecting price movements.

We may be required to sell a portion or all of the physical uranium accumulated to fund our operations should other forms of financing not be available to meet our capital requirements.

Since there is no public market for uranium, selling the uranium may take extended periods of time and suitable purchasers may be difficult to find, which could have a material adverse effect on our financial condition and may have a material adverse effect on our securities.

There is no public market for the sale of uranium, although there are several trading and brokerage houses that serve the industry with bid and ask data as well as locations and quantities.

The uranium futures market on the New York Mercantile Exchange does not provide for physical delivery of uranium, only cash on settlement, and that trading forum does not offer a formal market but rather facilitates the introduction of buyers to sellers.

The pool of potential purchasers and sellers is limited, and each transaction may require the negotiation of specific provisions.

Accordingly, a sale may take several weeks or months to complete.

If we determine to sell any physical uranium that we have acquired, we may likewise experience difficulties in finding purchasers that are able to accept a material quantity of physical uranium at a price and at a location that is compatible with our interests.

The inability to sell on a timely basis in sufficient quantities and at a desired price and location could have a material adverse effect on our securities.

As part of our Initiative Program, we have entered into commitments to purchase U 3 O 8 and may purchase additional quantities.

There is no certainty that any future purchases contemplated by us will be completed.

Storage arrangements, including the extension of storage arrangements, along with credit and operational risks of uranium storage facilities may result in the loss or damage of our physical uranium which may not be covered by insurance or indemnity provisions and could have a material adverse effect on our financial condition.

Currently, the uranium we purchased will be stored at the licensed uranium conversion facility of ConverDyn owned by Honeywell.

There can be no assurance that storage arrangements that have been negotiated will be extended indefinitely, forcing actions or costs not currently contemplated.

Failure to negotiate commercially reasonable storage terms for a subsequent storage period with ConverDyn may have a material adverse effect on our financial condition.

By holding our uranium investments at the ConverDyn conversion facility we are exposed to the credit and operational risks of the facility.

There is no guarantee that we can fully recover all of our investment in uranium held with the facility in the event of a disruptive event.

Failure to recover all uranium holdings could have a material adverse effect on our financial condition.

Any loss or damage of the uranium may not be fully covered or absolved by contractual arrangements with ConverDyn or our insurance arrangements, and we 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 our financial condition.

The uranium industry is subject to influential political and regulatory factors which could have a material adverse effect on our business and financial condition.

The international uranium industry, including the supply of uranium concentrates, is relatively small, competitive and heavily regulated.

Worldwide demand for uranium is directly tied to the demand for electricity produced by the nuclear power industry, which is also subject to extensive government regulation and policies.

In addition, the international marketing and trade of uranium is subject to political changes in governmental policies, regulatory requirements, and international trade restrictions (including trade agreements, customs, duties and/or taxes).

International agreements, governmental policies and trade restrictions are beyond our control.

Changes in regulatory requirements, customs, duties or taxes may affect the availability of uranium, which could have a material adverse effect on our business and financial condition.

We do not insure against all of the risks we face in our operations.

73 unchanged sentences

The titanium industry is concentrated and highly competitive, and we may not be able to compete effectively with our competitors that have greater financial resources or those that are vertically integrated, which could have a material adverse effect on our business, results of operations and financial condition.

The global titanium market is highly competitive, with the top six producers accounting for approximately 60% of the world’s production capacity.

The global titanium market is highly competitive, with the top nine producers accounting for approximately 60% of the world’s production capacity.

Competition is based on a number of factors, such as price, product quality and service.

76 unchanged sentences

Additional issuances of our common stock may result in significant dilution to our existing shareholders and reduce the market value of their investment.

We are authorized to issue 750,000,000 shares of common stock of which 200,142,556 shares were issued and outstanding as of January 31, 2021.

We are authorized to issue 750,000,000 shares of common stock of which 232,365,705 shares were issued and outstanding as of April 30, 2021.

Future issuances for financings, mergers and acquisitions, exercise of stock options and share purchase warrants and for other reasons may result in significant dilution to and be issued at prices substantially below the price paid for our shares held by our existing stockholders.

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors