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ACQUISITION OF THE ALTA MESA ISR PROJECT
 6 Months Ended
Jun. 30, 2016
ACQUISITION OF THE ALTA MESA ISR PROJECT [Text Block]
3.

ACQUISITION OF THE ALTA MESA ISR PROJECT

On June 16, 2016, the Company acquired 100% of the membership interests of EFR Alta Mesa LLC (“Alta Mesa”) (formerly named “Mesteña Uranium, LLC”) and its related companies, together referred to as “Alta Mesa”. Under the terms of the acquisition agreement, the sellers of Alta Mesa received 4,551,824 common shares of the Company.

Alta Mesa’s primary asset is the Alta Mesa ISR Project (the “Alta Mesa Project”) located in Texas. The Alta Mesa Project is a fully-permitted and licensed production facility that is not currently operating. The acquisition was accounted for as a purchase of assets as Alta Mesa does not meet the definition of a business under ASC Topic 805, Business Combinations because the assets in Alta Mesa do not have developed wellfields which are a key process for extraction of uranium. The development can only commence once uranium prices improve and economic feasibility of the Alta Mesa Project is established. The measurement of the purchase consideration was based on the market price of the Company's common stock on June 16, 2016 of $2.50 per share. The total transaction costs incurred through June 30, 2016 by the Company were $1.29 million which were capitalized as part of the purchase consideration.

The aggregate fair values of assets acquired and liabilities assumed were as follows on the acquisition date:

 

      

Issuance of 4,551,824 common shares

 $ 11,378  

Transaction costs

   1,290  

Purchase consideration

 $ 12,668  

The purchase price was allocated as follows:

      

Property, plant and equipment (a)

 $ 13,680  

Inventories

   177  

Restricted cash

   4,478  

Accounts payable and accrued liabilities

   (213 )

Asset retirement obligation

   (5,454 )

Net identifiable assets

 $ 12,668  

  (a)

The Property, plant and equipment includes the value ascribed to the processing plant and equipment. The mineral properties acquired as part of the acquisition of Alta Mesa in 2016 do not have proven and probable reserves under SEC Industry Guide 7. Accordingly, all subsequent expenditures at the Alta Mesa Project and equipment, which do not have any alternative use, and expenditures on mineral properties are expensed as incurred.