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Acquisitions and Disposals

12 Months Ended

Dec. 31, 2015

3. ACQUISITIONS AND DISPOSALS

Acquisition of Anatolia Energy

On November 9, 2015, the Company completed its acquisition of 100% of the outstanding securities of Anatolia Energy for total consideration of $17.4 million. The consideration was comprised of $1.5 million in cash used to fund Anatolia Energy’s operating activities prior to completion of the Anatolia Transaction, $15.9 million in common stock of the Company and listed and unlisted options in the Company. Each ordinary share of Anatolia Energy was exchanged for 0.00548 common shares of URI and each outstanding Anatolia Energy performance share, listed option or unlisted option was converted into a performance share, listed option or unlisted option (as applicable) to acquire common shares of the Company, on the same terms and conditions as were applicable prior to the Anatolia Transaction, except that the number of shares to be received upon conversion and the exercise price were adjusted based on the fair value of the performance share, listed option or unlisted option prior to completion of the Anatolia Transaction, as to preserve the economic value of such performance share or option. As a result, the Company issued 1,709,724 new shares, 266,742 listed options, 310,921 options and 58,286 performance shares. The value of the Company’s stock issued as consideration was based upon the opening share price on November 10, 2015 of $9.00 for those shares issued on the NASDAQ and A$11.88 ($8.38) for those shares issued on the ASX. The Company did not include the fair value of the performance shares in its determination of the purchase price as in accordance with accounting rules, expense should not be recognized until it is reasonably certain that the performance condition will be satisfied. As the Company does not believe the performance condition will be satisfied prior to the date the performance shares expire, it did not include the fair value of the performance shares in the determination of the purchase price. The results of Anatolia Energy are included in the Consolidated Statement of Operations commencing November 10, 2015.

Acquisition related costs were $3.0 million, of which $0.7 million was settled by the issuance of 79,841 shares of URI’s common stock. Subsequent to December 31, 2015, URI issued an additional 117,097 shares of common stock as settlement of $0.7 million of required termination payments.

Anatolia Energy is an Australian entity that indirectly holds a 100% interest in the Temrezli project located in Central Turkey, which URI plans to advance to near-term production.

The acquisition of Anatolia Energy was accounted for as a business combination with URI deemed to be the acquirer, as, post-combination, URI continues to control the Board of Directors and senior management positions and has overall control over the day-to-day activities of the combined entity.

The following summarizes the preliminary allocation of purchase price to the fair value of assets acquired and liabilities assumed as of the acquisition date (in thousands):

Consideration:
Cash	$	1,497
Issuance of 1,709,724 common shares for replacement of Anatolia Energy shares		14,563
Issuance of 266,742 listed options for replacement of Anatolia Energy listed options		424
Issuance of 310,921 options for replacement of Anatolia Energy options		884
Issuance of 58,286 performance shares to replace Anatolia Energy performance shares		-
	$	17,368

Fair value of net assets acquired:
Assets:
Cash and cash equivalents	$	61
Short-term receivables		64
Prepaid and other current assets		217
Restricted cash		85
Property, plant, equipment and uranium interests		17,992
Total assets		18,419
Liabilities:
Accounts payable and other accrued liabilities		1,051
Total liabilities		1,051
Net assets	$	17,368

The carrying value of the current assets and liabilities assumed approximated the fair value due to the short-term nature of these items. The fair value of the uranium properties was estimated using a discounted cash flow approach. Key assumptions used in the discounted cash flow analysis include discount rates, mineral resources, future timing of production, recovery rates and future capital and operating costs.

The unaudited pro forma financial information below represents the combined results of the Company’s operations as if the acquisition had occurred at the beginning of the periods presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have occurred if the acquisition had taken place at the beginning of the periods presented, nor is it indicative of future operating results.

	For the year ended December 31,
	2015			2014
Net loss		(15,203	)	$	(15,601	)
Basic and diluted loss per share		(5.65	)		(4.08	)

Purchase and Exchange Agreement with Energy Fuels

On June 26, 2015, the Company and certain of its subsidiaries entered into a Purchase and Exchange Agreement (the “PEA”) with Energy Fuels Inc. and a subsidiary of Energy Fuels Inc. (collectively, “Energy Fuels”), pursuant to which at closing on July 31, 2015 subsidiaries of URI transferred ownership of URI’s Roca Honda project, including mineral fee lands and unpatented lode mining claims in Sections 8 and 17 of Township 13 North, Range 8 West, covering approximately 1,240 acres and 3,382 acres of leased claims to Energy Fuels. In exchange, Energy Fuels delivered to URI (i) $2.5 million in cash, (ii) 76,455 shares of Energy Fuels common stock with a fair value upon closing of $0.3 million, which were subsequently sold on February 22, 2016 for $0.2 million, (iii) Energy Fuels’ 4% gross royalty covering 5,640 acres on seven mineral leases in the state of Wyoming at the Kendrick and Barber areas of the Lance uranium in-situ recovery project, which is currently under construction by Peninsula Energy Limited, and (iv) unpatented lode mining claims covering 640 acres in Section 4 of Township 16 North, Range 18 West, located near Churchrock, New Mexico, which are contiguous with the Company’s Churchrock project, as well as claims in Section 34 and leases from the state of New Mexico in Sections 32 and 36, all situated in Township 17 North, Range 16 West.

URI also retained a 4% royalty on Section 17 of the Roca Honda project. The royalty can be repurchased by Energy Fuels upon payment to URI of $5.0 million cash at any time at Energy Fuel’s sole discretion prior to the date on which the first royalty payment becomes due.

The divestiture of the Roca Honda project was accounted for as an asset disposal and the non-cash considerations received from Energy Fuels was recorded at fair value. The fair value of the shares of Energy Fuels common stock received was determined using the closing share price of Energy Fuels stock on July 31, 2015. The fair value of the unpatented lode mining claims and mineral leases was determined based upon the per pound value of similar transactions involving unproved uranium assets within the last three years. The Company determined that the Lance Royalty had de minimus value and therefore determined the fair value to be nil. The following fair value amounts were recorded as the purchase consideration:

(thousands of dollars)	Fair Value
Cash	$	2,500
Energy Fuels Inc. common stock		293
Churchrock properties		2,123
Lance Royalty		-
Total Consideration Received	$	4,916

The fair value of the shares of Energy Fuel’s common stock received were valued using Level 1 inputs of the fair-value hierarchy and the fair value of the unpatented lode mining claims and mineral leases were valued using Level 3 inputs of the fair-value hierarchy (as defined in Note 1 above).

During the fourth quarter of 2015, the Company identified an adjustment of $0.6 million to its previously recorded gain on the sale of the Roca Honda assets. The Company previously did not include the carrying value of the West Endy project in its determination of the amount of the gain. The Company recorded this out-of-period adjustment in the quarter ended December 31, 2015. The Company assessed the materiality of this error on our current and prior period financial statements in accordance with Staff Accounting Bulletin (“SAB”) Topic 1.M and SAB Topic 1.N, and concluded the error was not material to the financial condition for the current and prior interim periods. As a result of this error, the Company reported net income of $0.3 million for the three month period and a net loss of $8.0 million for the nine-month period ended September 30, 2015, which should have been reported as a loss of $0.3 and $8.7 million, respectively. Additionally, the Company reported earnings per share of $0.01 for the three month period and loss per share of $0.28 per share for the nine-month period ended September 30, 2015, which should have been reported as a loss per share of $0.01 and $0.30, respectively. The Company evaluated the impact of this error on the loss for the full fiscal year and on the trends of its earnings and determined that it did not have a material impact on either.

The Company recorded the following gain on disposal of uranium properties within its Consolidated Statement of Operations:

(thousands of dollars)
Total Consideration Received	$	4,916
Carrying value of Roca Honda project		648
Gain on disposal of Roca Honda project	$	4,268

Asset Exchange Agreement with Rio Grande Resources Corporation

On September 5, 2014, the Company, its wholly owned subsidiary Uranco, Inc. and Rio Grande Resources Corporation (“RGR”) entered into an Asset Exchange Agreement whereby the Company agreed to acquire from RGR certain uranium properties located in South Texas near the Company’s processing facilities, including, among others, the Alta Mesa Este, Butler Ranch and Sejita Dome exploration projects. In exchange for these South Texas properties, the Company agreed to transfer to RGR two parcels of fee-owned mineral rights and a royalty interest in the Roca Honda area of west-central New Mexico. The Company retained certain leases, mining claims and fee-owned mineral interest on separate parcels in the Roca Honda area. On November 6, 2014, after completing customary due diligence and satisfying certain closing conditions, the Company and RGR closed the transaction and effectuated the exchange of properties.

The Asset Exchange Agreement was determined to be a non-monetary exchange of assets having commercial substance in accordance with ASC Topic 845 which requires the assets received in an asset exchange be recorded at the fair value of the assets relinquished. The Company determined the fair value of the Roca Honda assets relinquished to be $2.3 million. This fair value was determined based upon the per pound value of similar transactions involving unproved uranium assets within the last 3 years. The carrying value of the Roca Honda assets relinquished in the transaction had previously been written off to nil in prior years and, as a result, the entire $2.3 million was recognized as a gain on non-monetary exchange of assets and included in the Company’s Consolidated Statements of Operations.