operating and financial review quarter ended september 30 ...€¦ · operating and financial...

1

Operating and Financial Review Quarter Ended September 30, 2016 Set out below is a review of the activities, results of operations and financial condition of Uranium One Inc. (“Uranium One”) and its subsidiaries and joint ventures (collectively, the “Corporation”) for the three and nine months ended September 30, 2016. Information herein is presented as of November 10, 2016 and should be read in conjunction with the unaudited condensed consolidated interim financial statements of the Corporation for the three and nine months ended September 30, 2016 and the notes thereto (referred to herein as the “condensed consolidated interim financial statements”). The Corporation’s condensed consolidated interim financial statements and the financial data set out herein have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”) (“IFRS” or “GAAP”). All amounts are in US dollars and tabular amounts are in millions, except where otherwise indicated. Canadian dollars are referred to herein as C$, Russian Rubles are referred to herein as Rubles or RUB. The functional currency of Uranium One is the US dollar. All references herein to pounds are to pounds of U3O8. Uranium One’s unsecured Ruble-denominated bonds are listed on the Moscow Exchange and its senior secured notes are listed on the Luxembourg Stock Exchange. Additional information about the Corporation and its business and operations can be found on the Corporation’s website www.uranium1.com. This Operating and Financial Review includes certain forward-looking statements. Please refer to “Forward-Looking Statements and Other Information”.

http://www.uranium1.com/

2

Highlights

OPERATIONAL

Total attributable production during Q3 2016 was 3.2 million pounds, compared with the total attributable production of 3.1 million pounds during Q3 2015.

The average total cash cost per pound sold of produced material reduced to $7 per pound during Q3 2016, compared to $10 per pound during Q3 2015.

FINANCIAL

Attributable sales volumes of produced material for Q3 2016 were 3.7 million pounds sold from the Corporation’s operations and equity accounted investees compared to 2.9 million pounds sold during Q3 2015.

Headline revenue was $97.4 million in Q3 2016, compared to $84.1 million in Q3 2015.

Attributable revenues consistent with the Corporation’s segment reporting, which includes revenues from its interests in equity accounted investees, amounted to $115.8 million in Q3 2016, compared to $120.3 million in Q3 2015.

The average realized sales price of produced material during Q3 2016 was $30 per pound, compared to $36 per pound in Q3 2015. The average spot price in Q3 2016 was $25 per pound compared to $36 per pound in Q3 2015.

Gross profit was $33.0 million in Q3 2016, compared to gross profit of $2.7 million in Q3 2015.

Gross profit, including the Corporation’s share of gross profit from equity accounted investees, totaled $56.6 million in Q3 2016, a 11% increase compared to $51.2 million in Q3 2015, mainly due to increase of 28% in the sales volume, partly offset by a decrease of 17% in average realized sales price.

The net earnings for Q3 2016 were $29.5 million or $0.03 per share, compared to net earnings of $0.6 million or $0.00 per share for Q3 2015.

The adjusted net earnings for Q3 2016 were $28.5 million or $0.03 per share after exclusion of impairment of non-current assets of $5.0 million, loss on disposal of certain non-material US mineral claims and leases of $2.6 million, other expenses of $0.4 million, Ruble bond non-hedge derivative gains of $6.5 million and net foreign exchange gains of $2.5 million, compared to an adjusted net earnings of $13.2 million or $0.01 per share for Q3 2015.

In addition to the increase in sales volume during the quarter, improved profitability resulted from a reduction in operating expenses.

CORPORATE

Since March 2014, the United States and Canadian governments and the European Union have implemented a number of orders, directives and regulations in response to the situation in Ukraine. These measures generally impose visa restrictions and asset freezes on certain designated individuals and entities considered to have contributed to the situation in Ukraine, restrict access by certain designated Russian institutions and entities to Western capital markets and prohibit the supply of equipment for use in Russian offshore deepwater, Arctic or shale exploration or production projects. The Corporation’s operations have not been impacted by the foregoing orders, directives or regulations or any designations made thereunder and the Corporation continues to carry on business as usual.

On June 29, 2016, the Corporation closed the tender offer for, and accepted for purchase, $60.5 million of the principal amount of the Senior Secured Notes at a price of $1,000 per $1,000 of face value. The total amount of the transaction was $60.8 million including $0.3 million of accrued interest, as well as legal fees and transaction costs. The Senior Secured Notes so purchased have not been retired and remain outstanding. The settlement of the tender offer was completed on July 7, 2016.

On July 12, 2016, the Corporation entered into a loan facility agreement under which it may borrow up to $81.0 million from an affiliate, at an interest rate of up to 5.5% per annum with a maturity date of up to May 15, 2021, for the purpose of purchasing, redeeming or settling (respectively) the Senior Secured Notes, Series 1 Ruble Bonds, and/or any related currency exchange swap agreements. The Corporation has not yet drawn down any amounts under this loan facility. On October 28, 2016, the Corporation and the affiliate increased the facility to $95 million.

On September 14, 2016, the Corporation’s US subsidiary completed the sale of certain non-material mineral leases and claims in Wyoming. The aggregate consideration was $6.6 million: $0.5 million paid on execution of the transaction agreement on August 23, 2016, and the remaining $6.1 million is payable in instalments from 2017 to 2021. The fair value of the total consideration was $3.5 million; the loss on disposal was $2.6 million.

3

Key Statistics

TOTAL ATTRIBUTABLE PRODUCTION Q3 2016 Q2 2016 Q1 2016 Q4 2015 Q3 2015

Attributable commercial production (lbs)(1)

Akdala 454,500 473,200 449,200 474,800 453,700

South Inkai 930,800 922,800 853,300 907,200 937,500

Karatau 674,500 670,600 644,000 726,500 672,000

Akbastau 585,500 570,700 558,400 531,100 516,100

Zarechnoye 261,100 266,200 265,400 295,500 270,400

Kharasan 294,600 228,100 209,900 251,600 217,900

Willow Creek(3) 18,200 18,200 1,600 (22,600) (500)

Total attributable production 3,219,200 3,149,800 2,981,800 3,164,100 3,067,100

FINANCIAL Q3 2016 Q3 2015 YTD

Q3 2016 YTD

Q3 2015

Attributable production (lbs) (1) 3,219,200 3,067,100 9,350,800 9,285,900

Attributable sales (lbs) (1) – Produced material 3,719,800 2,890,100 8,950,000 7,784,600

Average realized sales price ($ per lb) (2) – Produced material 30 36 31 37

Average total cash cost per pound sold ($ per lb)(2) – Produced material 7 10 9 13

Revenues ($ millions) – as reported on consolidated income statement 97.4 84.1 238.6 252.9

Attributable revenues ($ millions)(2) 115.8 120.3 291.5 362.8

Gross profit ($ millions) – as reported on consolidated income statement 33.0 2.7 49.8 1.3

Attributable gross profit ($ millions)(2) 56.6 51.2 117.6 113.7

Net earnings ($ millions) 29.5 0.6 209.5 9.9

Net earnings per share – basic and diluted ($ per share) 0.03 0.00 0.22 0.01

Adjusted net earnings ($ millions)(2) 28.5 13.2 79.0 2.5

Adjusted net earnings per share – basic ($ per share)(2) 0.03 0.01 0.08 0.00

Notes: (1)

Attributable production pounds and attributable sales pounds are from assets owned and from joint ventures in commercial production during the period. All figures are rounded to reflect appropriate levels of confidence. Columns may not add up correctly due to rounding.

(2) The Corporation has included the following non-GAAP performance measures: average realized sales price per pound – produced material, average total

cash cost per pound sold – produced material, attributable revenues, attributable gross profit, adjusted net earnings (loss) and adjusted net earnings (loss) per share. See the section on “Non-GAAP Measures”.

(3) The negative production from Willow Creek in the third and fourth quarters of 2015 was due to converter adjustments.

4

Overview Uranium One is a Canadian corporation engaged through subsidiaries and joint ventures in the mining, production, purchase and sale of uranium, and in the acquisition, exploration and development of properties for the production of uranium in Kazakhstan, Tanzania, and the United States.

The common shares of Uranium One are currently 100% owned by subsidiaries of Russia’s State Atomic Energy Company “ROSATOM” (“ROSATOM”), the Russian state-owned nuclear industry operator. In Kazakhstan, the Corporation holds a 70% interest in the Southern Mining and Chemical Company (“SMCC”) joint venture, which owns the Akdala and South Inkai Uranium Mines, a 50% interest in the Karatau joint venture, which owns the Karatau Uranium Mine, a 50% interest in the Akbastau joint venture, which owns the Akbastau Uranium Mine, a 49.98% interest in the Zarechnoye joint venture, which owns the Zarechnoye Uranium Mine, a 30% interest in the Khorasan-U joint venture (“Khorasan”), which owns the Kharasan Uranium Mine, and a 19% interest in the SKZ-U joint venture, which owns a sulphuric acid plant near Kharasan as an additional source of sulphuric acid for its operations. In addition, the Corporation holds a 70% interest in the Betpak Dala joint venture which provided mine development, extraction and processing services for the Akdala and South Inkai Uranium Mines from June 4, 2014 to September 30, 2015, and a 30% interest in the Kyzylkum joint venture which provides mine development, extraction and processing services for the Kharasan Uranium Mine. In the United States, the Corporation owns the Willow Creek uranium mine and projects in the Powder River and Great Divide basins in Wyoming. The Corporation is the operator of the Mkuju River Project in Tanzania, and owns a 13.9% interest in Mantra Resources Pty Limited (“Mantra”), a subsidiary of which, Mantra Tanzania Ltd. (“Mantra Tanzania”), owns the Mkuju River Project. The Corporation also owns uranium exploration properties in the western United States. Uranium One also owned, through Uranium One Australia Pty Ltd., 100% of the Honeymoon uranium project in Australia. The project was placed on care and maintenance in November 2013, and on November 30, 2015, Uranium One sold all of the outstanding shares of Uranium One Australia Pty Ltd.

5

BUSINESS COMBINATION Prior to 2016 Betpak Dala and SMCC had significant contracts for production wells drilling with a subsidiary of Kazatomprom that expired in 2015. At the beginning of 2016 SMCC signed long-term (5 year) contracts on drilling services with a subsidiary of Uranium One Holding N.V. Due to changes to the relevant contracts, the Corporation has reassessed its interests in two joint ventures, SMCC and Betpak Dala, and determined that it has gained control over each of the joint ventures starting January 1, 2016. The consideration as a result of the acquisition of control of Betpak Dala was $33.4 million and of SMCC was $830.0 million, and included the fair value of the Corporation’s investments held before the respective business combinations of $23.4 million and $580.9 million, as well as the Corporation’s proportionate share of the non-controlling interest of $10.0 million and $249.1 million, respectively. No goodwill has been recognized as a result of either business combination. The fair values of mineral interests, property, plant and equipment have been measured on a provisional basis as the purchase price allocation is planned to be performed by an independent appraiser later during 2016. If new information obtained within one year of the date of acquisition about facts and circumstances that existed at the date of acquisition identifies adjustments to the above amounts, or any additional provisions that existed at the date of acquisition, then the accounting for the acquisition will be revised. The re-assessment of the fair value of the Corporation’s existing 70% interest in each of the SMCC and Betpak Dala joint ventures resulted in a gain of $180.5 million and a loss of $31.3 million, respectively, consisting of the following:

fair value less the carrying amounts of the equity-accounted investments at the date of acquisition of $339.8 million and negative $2.9 million respectively for SMCC and Betpak Dala;

negative goodwill of $70.9 million and $2.9 million respectively for SMCC and Betpak Dala;

less $230.2 million and $31.3 million respectively for SMCC and Betpak Dala consisting of translation reserve reclassified as profit and loss.

6

The following are the Corporation’s principal mineral properties and operations (discussed in more detail below):

OPERATING MINES

ENTITY MINE LOCATION STATUS OWNERSHIP

Southern Mining and Chemical Company LLP

Akdala Uranium Mine(1)

South Inkai Uranium Mine(1) Kazakhstan Kazakhstan

Producing Producing

70% J.V. interest 70% J.V. interest

Karatau LLP Karatau Uranium Mine Kazakhstan Producing 50% J.V. interest

JSC Akbastau Akbastau Uranium Mine Kazakhstan Producing 50% J.V. interest

JSC Zarechnoye Zarechnoye Uranium Mine Kazakhstan Producing 49.98% J.V. interest

Kyzylkum LLP Kharasan Uranium Mine(1) Kazakhstan Producing 30% J.V. interest

Khorasan-U LLP Kharasan Uranium Mine(1) Kazakhstan Producing 30% J.V. interest

Uranium One USA Inc. Willow Creek Uranium Mine USA Producing 100% interest

(1) Betpak Dala LLP and Kyzylkum LLP lost the subsoil rights to the Akdala, South Inkai and Kharasan mines effective June 4, 2014, but continued to operate the mines under contracts with Kazatomprom. Subsoil rights to these mines were transferred to Joint Venture Southern Mining and Chemical Company LLP and Joint Venture Khorasan-U LLP effective October 17, 2014, but Betpak Dala and Kyzylkum continued to operate the mines under contract. Betpak Dala sold all of the production assets at the Akdala and South Inkai mines to SMCC on September 30, 2015, at which time SMCC assumed all responsibility for operations at those mines.

DEVELOPMENT PROJECTS

ENTITY PROJECT LOCATION STATUS OWNERSHIP

Mantra Tanzania Ltd. Mkuju River Project Tanzania Feasibility study and permitting stage

13.9% interest

Revenue and operating expenses

Uranium revenues are recorded upon delivery of product to utilities and intermediaries and do not occur evenly throughout the year, as delivery times are at the contracted discretion of customers within a given quarter or other delivery period. Changes in revenues, net earnings/loss and cash flow are therefore affected primarily by fluctuations in contracted deliveries of product from quarter to quarter, as well as by changes in the price of uranium. Operating expenses are directly related to the quantity of U3O8 sold and total operating expenses are lower in periods when the quantity of U3O8 sold is lower. There is a corresponding build-up of inventory in periods when the quantity of U3O8 sold is lower than production.

7

Review of Operations

AKDALA URANIUM MINE - KAZAKHSTAN Akdala is an operating in situ recovery (“ISR”) uranium mine located in the Chu-Sarysu basin in the Suzak region, South Kazakhstan province, Kazakhstan, owned indirectly as to 70% by the Corporation through the SMCC joint venture, a Kazakh registered limited liability partnership. Akdala was operated under contract by the Betpak Dala LLP joint venture, a Kazakh registered limited liability partnership (“Betpak Dala”) in which the Corporation indirectly owns a 70% interest, from June 4, 2014 to September 30, 2015, when all the production assets at the mine were sold to SMCC, which thereupon assumed responsibility for operations. The other 30% interest for both SMCC and Betpak Dala is owned by JSC NAC Kazatomprom (“Kazatomprom”), a Kazakh state-owned company engaged in the mining and exporting of uranium in Kazakhstan.

Pursuant to the terms of its subsoil use contract, the current production capacity of the Akdala Mine is 2,599,800 pounds U3O8 (1,000 tonnes U) per year. The satellite plant to facilitate treatment of solutions from production blocks is located approximately 15 kilometres to the east of the current central processing facilities in an area known as Letniy. Production from new wellfields in the Letniy area commenced in the first quarter of 2014. The construction of the man camp at the Akdala mine was completed in the third quarter of 2015.

Production: Production from Akdala was 1,967,000 pounds U3O8 (757 tonnes U) during the first nine months of 2016, of which 1,376,900 pounds (530 tonnes U) was attributable to the Corporation. Operations: The following is a summary of the operational statistics (100%) for Akdala over the last four quarters:

TOTAL WELLS COMPLETED

(INCLUDING PRODUCTION

WELLS)

AVERAGE NUMBER OF

PRODUCTION WELLS IN

OPERATION

AVERAGE FLOW

RATE (m3/hour)

CONCENTRATION IN

SOLUTION

(mg U/l)

PRODUCTION

(lbs U3O8)

Q4 2015 15 298 2,322 52 678,300

Q1 2016 27 282 2,193 56 641,700

Q2 2016 115 319 2,352 51 676,000

Q3 2016 76 290 2,016 57 649,300

A total of 76 wells were installed during the third quarter of 2016, compared to a budget of 95. There were 290 production (extraction) wells in operation on average during the third quarter of 2016 with an average concentration of 57 mg U/l. One mining block started acidification and two new blocks were put into operation in the third quarter of 2016. Capital expenditure during the third quarter of 2016 was $0.6 million, compared to a budget of $1.04 million. Capital expenditure incurred in the nine months ended September 30, 2016 was $1.6 million, compared to a budget of $2.6 million, mainly due to differences between the actual and budgeted KZT/USD exchange rates. The capital expenditures were mostly spent on wellfield development during the third quarter of 2016.

8

AKDALA URANIUM MINE – KAZAKHSTAN (continued)

Financial information The following table shows the attributable production, sales and production cost trends for Akdala over the prior eight quarters:

(ALL FIGURES ARE THE CORPORATION’S ATTRIBUTABLE SHARE)

3 MONTHS ENDED

SEP 30, 2016

JUN 30, 2016

MAR 31, 2016

DEC 31, 2015

SEP 30, 2015

JUN 30, 2015

MAR 31, 2015

DEC 31, 2014

Production in lbs 454,500 473,200 449,200 474,800 453,700 486,100 438,900 336,600

Sales in lbs 476,600 751,600 - 615,100 621,300 477,300 226,100 261,600

Inventory in lbs 399,000 421,100 699,500 250,300 390,600 558,200 549,400 336,600

Revenues – Produced material ($ millions) (1) 16.9 26.3 - 22.7 22.6 17.5 8.5 9.0

Revenues – Services ($ millions) (1) - - - - - - - 5.0

Operating expense – Produced material ($ millions) (1) (2) (3)

3.3 8.9 - 5.9 6.4 6.6 3.5 3.3

Operating expenses ($’millions) - Impairment of inventory

- - 1.2 - - - - -

Operating expenses – Services ($ millions) (1)

- - - - 10 - - 1.0

Operating expense – Produced material ($/lb sold) (2) (3)

7 12 - 10 4 14 15 13

Depreciation ($ millions) (1) 7.4 10.9 - 3.0 6 3.6 1.5 1.5

Depreciation ($/lb sold) 16 15 - 5 8 7 6

Note: (1) Prior to January 1, 2016 the Corporation applied equity accounting for its investments in SMCC. Its share of the earnings and expenses of SMCC was

reflected in the “share of earnings from equity accounted investees” line in the consolidated income statement. Revenues included the gross profits from material sourced from this mine and sold by Uranium One. Starting from January 1, 2016 SMCC was consolidated as a subsidiary. Total revenue and expenses of SMCC are included in the Corporation’s consolidated revenues and expenses, and intra-group balances and transactions, and any unrealised income and expenses arising from intra-group balances, are eliminated.

(2) Operating expense – Produced material for the fourth quarter of 2014 includes the impact of production-related tax assessments of $0.5 million or $2 per pound recognized in the fourth quarter of 2014 in respect of prior periods.

(3) Operating expense for the second quarter of 2016 include inventory valuation adjustment reclassified to operating expense of $4.6 million ($6 per pound) to finished goods as a result of the business combination (see Note 3 in the financial statements).

9

SOUTH INKAI URANIUM MINE – KAZAKHSTAN South Inkai is an operating ISR uranium mine located in the Chu-Sarysu basin in the Suzak region, South Kazakhstan province, Kazakhstan, owned indirectly as to 70% by the Corporation through the SMCC joint venture. South Inkai was operated under contract by the Betpak Dala LLP joint venture, in which the Corporation indirectly owns a 70% interest, from June 4, 2014 to September 30, 2015, when all the production assets at the mine were sold to SMCC, which thereupon assumed responsibility for operations. The other 30% interest for both SMCC and Betpak Dala is held by Kazatomprom.

Pursuant to the terms of its subsoil use contract, the current production capacity of the South Inkai mine is 5,199,600 pounds U3O8 (2,000 tonnes U) per year.

Production: Commercial production from South Inkai was 3,866,900 pounds U3O8 (1,487 tonnes U) during the first nine months 2016, of which 2,706,900 pounds (1,041 tonnes U) was attributable to the Corporation. In addition to commercial mining, 113,400 lbs U3O8 (44 tonnes U) were produced in the nine months of 2016 during the pilot test from the Inkuduk horizon at the South Inkai mine. Operations: The following is a summary of the operational statistics (100%) for South Inkai over the last four quarters:



WELLS)

AVERAGE NUMBER

OF PRODUCTION

WELLS IN OPERATION

AVERAGE FLOW

RATE (m3/hour)

CONCENTRATION IN

SOLUTION

(mg U/l)

PRODUCTION

(lbs U3O8)

Q4 2015 258 468 3,783 61 1,296,000

Q1 2016 109 486 3,653 66 1,219,000

Q2 2016 209 516 3,937 59 1,318,200

Q3 2016 205 539 3,902 60 1,329,700

A total of 205 wells were installed during the third quarter of 2016, compared to the original budget of 195. There were 539 production (extraction) wells in operation on average during the third quarter of 2016 with an average concentration of 60 mg U/l. Three new production blocks were acidified and three new blocks commenced production in the third quarter of 2016. Capital expenditure during the third quarter of 2016 was $4.8 million, compared to a budget of $7.9 million. Capital expenditure incurred in the nine months ended September 30, 2016 was $11.7 million, compared to a budget of $25.9 million, mainly due to a delay in the competitive procedures for construction work at the site, due to the late approval of the budget for the year 2016, as well as due to differences between actual and budgeted USD/KZT exchange rates. The capital expenditures were mostly spent on exploration and wellfield development during the third quarter of 2016.

10

SOUTH INKAI URANIUM MINE – KAZAKHSTAN (continued)

Financial information The following table shows the attributable production, sales and production cost trends for South Inkai over the prior eight quarters:


3 MONTHS ENDED

SEP 30, 2016

JUN 30, 2016

MAR 31, 2016

DEC 31, 2015

SEP 30, 2015

JUN 30, 2015

MAR 31, 2015

DEC 31, 2014

Production in lbs 930,800 922,800 853,300 907,200 937,500 1,010,300 871,300 744,400

Sales in lbs 1,141,900 1,630,800 163,800 1,266,000 971,100 883,600 498,500 549,200

Inventory in lbs 650,100 861,200 1,569,200 879,700 1,238,500 1,272,100 1,145,500 772,700

Revenues – Produced material ($ millions) (1)

40.3 52.5 5.9 44.5 36.1 33.2 18.9 18.6

Revenues – Purchased material ($ millions) (2) - - 5.7 - - - - -

Revenues – Services ($ millions) (1) - - - - - - - 7.2

Operating expense – Produced material ($ millions) (1) (3) (4)

9.1 22.3 4.4 12.4 7.9 14.1 6.9 10.0

Operating expense – Purchased material ($ millions) (2)

- - 5.4 - - - - -

Operating expenses ($’millions) - Impairment of inventory

- - 3.4 - - - - -

Operating expenses – Services ($ millions) (1)

- - - - - - - 2.5

Operating expense – Produced material ($/lb sold) (3) (4)

8 14 27 10 8 16 14 18

Operating expense – Impairment of inventory ($/lb sold)

- - 4 - - - - -

Depreciation ($ millions) (1) 11.4 15.9 0.9 5.6 6.3 6.7 3.9 4.7

Depreciation ($/lb sold) 10 10 5 4 6 8 8 9

Note: (1) Prior to January 1, 2016 the Corporation applied equity accounting for its investments in SMCC. Its share of the earnings and expenses of SMCC was

reflected in the “share of earnings from equity accounted investees” line in the consolidated income statement. Revenues included the gross profits from material sourced from this mine and sold by Uranium One. Starting from January 1, 2016 SMCC was consolidated as a subsidiary. Total revenue and expenses of SMCC are included in the Corporation’s consolidated revenues and expenses, and intra-group balances and transactions, and any unrealised income and expenses arising from intra-group balances, are eliminated.

(2) Revenues from purchased material in the first quarter of 2016 include sale of SMCC material purchased by the Corporation in 2015. (3) Operating expense – Produced material for the fourth quarter of 2014 includes the impact of production-related tax assessments of $2.0 million or $4 per

pound recognized in the fourth quarter of 2014 in respect of prior periods. (4) Operating expense for the first and second quarter of 2016 includes inventory valuation adjustment reclassified to operating expense of $3.5 million

($21 per pound) and $12.0 million ($7 per pound) respectively as a result of the business combination (see Note 3 in the financial statements).

11

KARATAU URANIUM MINE - KAZAKHSTAN Karatau is an operating ISR uranium mine located in the Chu-Sarysu basin in the Suzak region, South Kazakhstan province, Kazakhstan, owned indirectly as to 50% by the Corporation through the Karatau joint venture. The other 50% interest is held by Kazatomprom. Pursuant to the terms of its subsoil use contract, the current production capacity of the Karatau Mine is 5,277,600 pounds U3O8 (2,030 tonnes U) per year. Production: Production from Karatau was 3,978,200 pounds U3O8 (1,530 tonnes U) during the first nine months 2016, of which 1,989,100 pounds (765 tonnes U) was attributable to the Corporation. Operations: The following is a summary of the operational statistics (100%) for Karatau over the last four quarters:



WELLS)

AVERAGE NUMBER

OF PRODUCTION

WELLS IN OPERATION

AVERAGE FLOW

RATE (m3/hour)

CONCENTRATION IN

SOLUTION

(mg U/l)

PRODUCTION

(lbs U3O8)

Q4 2015 21 201 1,779 136 1,453,100

Q1 2016 32 234 1,879 131 1,288,000

Q2 2016 176 260 1,688 140 1,341,200

Q3 2016 88 276 1,697 140 1,349,000

A total of 88 wells were installed during the third quarter of 2016, compared to a budget of 106. There were 276 production (extraction) wells in operation on average during the third quarter of 2016 with an average concentration of 140 mg U/l. Two production blocks were acidified and one new block commenced production in the third quarter of 2016. Capital expenditure during the third quarter of 2016 was $1.6 million, compared to a budget of $5.7 million. Capital expenditure incurred in the nine months ended September 30, 2016 was $5.6 million, compared to a budget of $13.2 million, mainly due to a delay in the wellfield exploration program, as well as due to differences between the actual and budgeted USD/KZT exchange rates. The capital expenditures were mostly spent on wellfield development. Financial information: The following table shows the attributable production, sales and production costs for Karatau over the prior eight quarters:


3 MONTHS ENDED

SEP 30, 2016

JUN 30, 2016

MAR 31, 2016

DEC 31, 2015

SEP 30, 2015

JUN 30, 2015

MAR 31, 2015

DEC 31, 2014


Sales in lbs 1,122,700 580,500 316,700 1,032,500 456,600 842,500 316,000 473,100

Inventory in lbs 533,500 981,700 891,600 564,300 870,300 654,900 842,900 533,100

Revenues ($ millions) (1) 26.8 15.0 10.2 34.7 15.9 30.0 11.4 15.7

Operating expense – Produced material ($ millions) (1) (2)

5.0 2.7 1.3 5.8 3.4 7.7 3.2 5.3

Operating expense – Produced material ($/lb sold) (2)

4 5 4 6 7 9 10 11



Note: (1) The Corporation applies equity accounting for its investment in the Karatau joint venture. Its share of the earnings and expenses of the Karatau joint

venture is reflected in the “share of earnings from equity accounted investees” line in the consolidated income statement. (2) Operating expense – Produced material includes the impact of production-related tax assessments of $1.0 million or $2 per pound recognized in the fourth

quarter of 2014 in respect of prior periods.

12

AKBASTAU URANIUM MINE - KAZAKHSTAN Akbastau is an operating ISR uranium mine located in the Chu-Sarysu basin in the Suzak region, South Kazakhstan province, Kazakhstan, owned indirectly as to 50% by the Corporation through the Akbastau joint venture. The other 50% interest is held by Kazatomprom. Pursuant to the terms of its subsoil use contract, the 2016 production capacity of the Akbastau Mine is 4,531,400 pounds U3O8 (1,743 tonnes U) per year from sections 1, 3, and 4 of the Budenovskoye deposit; the maximum approved production capacity of 5,020,200 pounds of U3O8 or 1,931 tonnes of U is to be reached in the year 2017. All mining sections are in commercial production. Akbastau is adjacent to the Karatau mine, which is licensed to mine section 2 of the Budenovskoye deposit. Akbastau entered into a toll processing agreement with Karatau, under which all of the solutions mined at Akbastau are currently processed at Karatau. Production: Production from Akbastau was 3,429,200 pounds U3O8 (1,319 tonnes U) in the first nine months of 2016, of which 1,714,600 pounds (660 tonnes U) was attributable to the Corporation. Operations: The following is a summary of the operational statistics (100%) for Akbastau over the last four quarters:



WELLS)

AVERAGE NUMBER OF

PRODUCTION WELLS

IN OPERATION

AVERAGE FLOW

RATE (m3/hour)

CONCENTRATION IN

SOLUTION

(mg U/l)

PRODUCTION

(lbs U3O8)

Q4 2015 12 230 1,201 147 1,062,300

Q1 2016 102 244 1,331 160 1,116,800

Q2 2016 64 234 1,297 155 1,141,400

Q3 2016 62 214 1,459 141 1,171,000

A total of 62 wells were installed during the third quarter of 2016, compared to a budget of 37. There were 214 production (extraction) wells in operation on average during the third quarter of 2016. One block was in acidification and two new blocks commenced production in the third quarter of 2016. Capital expenditure during the third quarter of 2016 was $1.2 million, compared to a budget of $3.1 million. Capital expenditure incurred in the nine months ended September 30, 2016 was $5.8 million, compared to a budget of $11.7 million, mainly due to a delay in the wellfield development program, as well as due to differences between the actual and budgeted USD/KZT exchange rates. The capital expenditures were mostly spent on wellfield development. Financial information: The following table shows the attributable production, sales and production costs for Akbastau over the prior eight quarters:


3 MONTHS ENDED

SEP 30, 2016

JUN 30, 2016

MAR 31, 2016

DEC 31, 2015

SEP 30, 2015

JUN 30, 2015

MAR 31, 2015

DEC 31, 2014


Sales in lbs – Produced material 579,000 562,600 316,600 790,700 316,100 380,300 333,400 403,600

Sales in lbs – Purchased material - - - 245,500 - - - -

Inventory in lbs 915,800 909,300 901,200 659,400 919,000 719,000 502,600 344,800

Revenues – Produced material ($ millions) (1)

13.8 17.3 10.2 26.2 11.2 13.9 12.0 14.1

Revenues – Purchased material ($ millions)

- - - 8.2 - - - -


3.0 3.3 1.6 5.2 2.8 3.6 3.1 4.2

Operating expense – Purchased material ($ millions)

- - - 8.2 - - - -


5 6 5 7 9 9 9 10



Note: (1) The Corporation applies equity accounting for its investment in the Akbastau joint venture. Its share of the earnings and expenses of the Akbastau joint

venture is reflected in the “share of earnings from equity accounted investees” line in the consolidated income statement. (2) Operating expense – Produced material includes the impact of production-related tax assessment of $0.6 million or $2 per pound recognized in the fourth


13

ZARECHNOYE URANIUM MINE - KAZAKHSTAN Zarechnoye is an operating ISR uranium mine located in the Syr Darya basin in the Otrar district, South Kazakhstan province, Kazakhstan. The Corporation has a 49.98% indirect interest in the Zarechnoye uranium mine through its 49.98% interest in the Zarechnoye joint venture. Kazatomprom owns a 49.98% share of the Zarechnoye joint venture and the remaining share is held by Kyrgyzstan JSC Karabalty Mining Combine. Pursuant to the terms of its subsoil use contract, the current production capacity of the Zarechnoye Mine is 2,521,800 pounds U3O8 (970 tonnes U) per year. Production: Production from Zarechnoye was 1,586,000 pounds U3O8 (610 tonnes U) in the first nine months of 2016, of which 792,700 pounds (305 tonnes U) was attributable to the Corporation. Operations: The following is a summary of the operational statistics (100%) for Zarechnoye over the past four quarters:



WELLS)

AVERAGE NUMBER OF

PRODUCTION WELLS

IN OPERATION

AVERAGE FLOW

RATE (m3/hour)

CONCENTRATION IN

SOLUTION

(mg U/l)

PRODUCTION

(lbs U3O8)

Q4 2015 120 234 2,982 35 588,000

Q1 2016 100 235 2,974 36 531,000

Q2 2016 180 235 3,004 33 532,600

Q3 2016 135 236 3,001 32 522,400

A total of 135 wells were installed during the third quarter of 2016, compared to the adjusted budget of 136. There were 236 production (extraction) wells in operation on average during the third quarter of 2016. Eight mining blocks were put in acidification and five new blocks started production in the third quarter of 2016. Capital expenditure during the third quarter of 2016 was $4.2 million, compared to a budget of $5.6 million. Capital expenditure incurred in the nine months ended September 30, 2016 was $9.6 million, compared to a budget of $16.2 million mainly due to a delay in capital repairs and tender procedures, as well as due to differences between the actual and budgeted USD/KZT exchange rates. The capital expenditure was mostly spent on wellfield development and exploration during the third quarter of 2016. Financial information: The following table shows the attributable production, sales and production costs for Zarechnoye over the prior eight quarters:


3 MONTHS ENDED

SEP 30, 2016

JUN 30, 2016

MAR 31, 2016

DEC 31, 2015

SEP 30, 2015

JUN 30, 2015

MAR 31, 2015

DEC 31, 2014


Sales in lbs 196,100 374,200 177,500 358,900 177,700 355,500 212,300 175,600

Inventory in lbs 276,800 215,500 328,100 243,500 311,300 223,400 319,000 287,200

Revenues ($ millions) (1) 4.9 10.1 5.2 12.4 6.0 12.9 8.0 6.6


2.4 4.4 2.0 5.7 3.4 7.6 4.6 4.6


12 12 11 16 19 21 22 26



Note: (1) The Corporation applies equity accounting for its investment in the Zarechnoye joint venture. Its share of the earnings and expenses of the Zarechnoye

joint venture is reflected in the “share of earnings from equity accounted investees” line in the consolidated income statement. (2) Operating expense – Produced material includes the impact of production-related tax assessment of $0.9 million or $5 per pound recognized in the fourth


14

KHARASAN URANIUM MINE - KAZAKHSTAN Kharasan is an operating ISR uranium mine located in the Syr Darya basin in the Zhanakorgan region, Kyzylorda province, Kazakhstan. The Corporation has a 30% indirect interest in the Kharasan uranium mine through its 30% interest in the Khorasan joint venture, a Kazakh registered limited liability partnership. The Corporation has an indirect 30% interest in the Kyzylkum joint venture (“Kyzylkum”), a Kazakh registered limited liability partnership which operates the Kharasan uranium mine under contract. Kazatomprom has a 33.98% interest in Khorasan and Energy Asia Holdings Ltd., which is owned by a consortium of Japanese utilities and a trading company, has the remaining 36.02% interest in Khorasan. Kazatomprom has a 30% interest in Kyzylkum and Energy Asia (BVI) Ltd., which is owned by a consortium of Japanese utilities and a trading company, has the remaining 40% interest in Kyzylkum.

Pursuant to the terms of its subsoil use contract, the planned production capacity of the Kharasan Mine is 7,799,300 pounds U3O8 (3,000 tonnes U) per year to be achieved in 2021, with a 2016 production capacity of 3,639,700 pounds U3O8 (1,400 tonnes U) per year.

Production: Production from Kharasan was 2,442,100 pounds U3O8 (939 tonnes U) in the first nine months of 2016, of which 732,600 pounds (282 tonnes U) was attributable to the Corporation. Operations: The following is a summary of the operational statistics for Kharasan (on a 100% basis) over the last four quarters:



WELLS)

AVERAGE NUMBER OF

PRODUCTION WELLS

IN OPERATION

AVERAGE FLOW

RATE (m3/hour)

CONCENTRATION IN

SOLUTION

(mg U/l)

PRODUCTION

(lbs U3O8)

Q4 2015 69 255 1,533 91 838,700

Q1 2016 103 248 1,527 87 699,500

Q2 2016 130 256 1,561 86 760,600

Q3 2016 125 290 1,841 94 982,000

A total of 125 wells were installed during the third quarter of 2016, compared to a budget of 111. There were 290 production (extraction) wells in operation on average during the third quarter of 2016. Acidification of six new blocks commenced during the third quarter of 2016 and four new blocks were placed into production during the third quarter of 2016. Capital expenditure during the third quarter of 2016 was $4.6 million, compared to a budget of $5.5 million. Capital expenditure incurred in the nine months ended September 30, 2016 was $13.2 million, compared to a budget of $21.4 million, mainly due to a delay in the wellfield exploration program, as well as due to differences between the actual and budgeted USD/KZT exchange rates. The capital expenditure was mostly spent on wellfield development and exploration during the third quarter of 2016.

15

KHARASAN URANIUM MINE – KAZAKHSTAN (continued)

Financial information

The following table shows the attributable production, sales and production costs for Kharasan over the prior eight quarters:

(ALL FIGURES ARE THE CORPORATION’S ATTRIBUTABLE SHARE) 3 MONTHS ENDED

SEP 30, 2016

JUN 30, 2016

MAR 31, 2016

DEC 31, 2015

SEP 30, 2015

JUN 30, 2015

MAR 31, 2015

DEC 31, 2014


Sales in lbs – Produced material 177,400 332,300 23,600 408,100 188,000 269,000 - 212,400

Sales in lbs – Purchased material - - - 49,300 - - - -

Inventory in lbs 296,300 182,300 288,500 103,600 245,900 234,600 306,300 107,200

Revenues – Produced material ($ millions) (1) 7.3 10.7 1.0 13.4 6.9 10.2 - 8.0

Revenues – Purchased material ($ millions) - - - 1.7 - - - -

Revenues – Services ($ millions) - - - - - - - 2.4


1.4 2.6 0.2 3.6 2.5 4.9 - 5.0

Operating expense – Purchased material ($ millions) - - - 1.7 - - - -

Operating expenses – Services ($ millions) (1) - - - - - - 0.5 0.1

Operating expense – Produced material ($/lb sold) (2) 8 8 8 9 13 18 - 24

Depreciation ($ millions) (1) 0.6 1.3 0.1 1.3 1.0 1.7 - 2.0

Depreciation ($/lb sold) 3 4 4 3 4 6 - 9

Note: (1)

The Corporation applies equity accounting for its investments in the Kyzylkum and Khorasan joint ventures. Its share of the earnings and expenses of these joint ventures is reflected in the “share of earnings from equity accounted investees” line in the consolidated income statement. Revenues include the gross profits from material sourced from this mine and sold by Uranium One.

(2) Operating expense – Produced material includes the impact of production-related tax assessments of $1.1 million or $5 per pound recognized in the fourth


16

WILLOW CREEK URANIUM MINE – UNITED STATES Willow Creek is an operating ISR uranium mine located in Johnson and Campbell Counties in the Powder River Basin of Wyoming, U.S.A. The mine includes the licensed and permitted Irigaray ISR central processing plant, the Christensen Ranch satellite ISR facility and associated uranium ore bodies, collectively referred to as the Willow Creek Mine. The current design capacity of the Willow Creek Mine is 1,300,000 pounds U3O8 (500 tonnes U) per year. The Willow Creek Mine was successfully commissioned and commercial operations commenced on May 1, 2012. Production: Production from Willow Creek was 18,200 pounds U3O8 (7 tonnes U) in the third quarter of 2016. All production was attributable to the Corporation. Operations: The following is a summary of the operational statistics for Willow Creek over the last four quarters:



WELLS)

AVERAGE NUMBER OF

PRODUCTION WELLS

IN OPERATION

AVERAGE FLOW

RATE (m3/hour)

CONCENTRATION IN

SOLUTION

(mg U/l)

PRODUCTION

(lbs U3O8)

Q4 2015(1) - 15 14 14 (22,600)

Q1 2016(2) - 48 48 16 1,600

Q2 2016(3) - 146 264 12 18,200

Q3 2016(4) - 175 320 12 18,200

Note:

(1) A negative production number of 22,600 pounds U3O8 (0.9 tonnes U) in Q4 of 2015 resulted from negative adjustments that totaled (-23,200 lbs U3O8), while

production from existing wellfields at Willow Creek in Q4 amounted to 600 lbs U3O8. Negative amendments were made to account for minor converter

adjustments (-600 lbs) and for Honeymoon material that was already accounted for in previous calculations (-22,600 lbs). (2) The total amount of uranium recovered from wellfields during Q1 2016 was 3,900 lbs. The remaining 2,300 lbs was still in process at the end of the first

quarter and was eluted in April 2016.

(3) No yellowcake drying activities took place in the first half of this year. All yellowcake (19,800 lbs U3O8) reported as produced during the six months ended

June 30, 2016 is contained within the in-circuit solutions and concentrates.

(4) Yellowcake drying activities commenced in September with a total of 19,400 lbs U3O8 being packaged in drums. These activities will continue into October

2016.

There were no new wellfield installations or construction activities in 2016 due to low uranium prices. Production from existing wellfields at Willow Creek continues and, as of September 30, 2016, there were 213 production wells in operation. The number of production wells in operation increased during the third quarter due to a continued restart of wells from existing wellfields. As of September 30, 2016, there were 19,400 lbs U3O8 (7.5 tonnes U) in drums on site along with 20,000 lbs U3O8 (7.7 tonnes U) of in-circuit solutions and concentrates. Capital expenditure during the third quarter of 2016 was $0.1 million, compared to a budget of $0.7 million. Capital expenditure incurred in the nine months ended September 30, 2016 was $0.1 million, compared to the budget of $0.8 million mainly due to a delay in completing the project. Financial information: The following table shows the attributable production, sales and production costs for Willow Creek over the prior eight quarters:


3 MONTHS ENDED

SEP 30, 2016

JUN 30, 2016

MAR 31, 2016

DEC 31, 2015

SEP 30, 2015

JUN 30, 2015

MAR 31, 2015

DEC 31, 2014

Production in lbs 18,200 18,200 1,600 (22,600)(4) (500)(4) 35,500 104,800 122,300

Sales in lbs 26,100 - - 500 159,300 - 100,000 125,000

Inventory in lbs 78,800 86,700 68,500 66,900 90,000 249,800 214,300 209,500

Revenues ($ millions) (1) 0.7 - - - 5.8 - 3.8 5.1

Operating expense – Produced material ($ millions) (2)

1.7 1.2 1.5 1.6 3.7 1.1 2.6 4.1


65 - - - 23 - 26 32


Depreciation ($/lb sold) (3) 73 - - - 24 - 32 38

Note: (1)

Revenues include gross profits earned by the Corporation in respect of Willow Creek production delivered into sales contracts held by Uranium One. (2)

Operating expense – Produced material of Willow Creek includes net realizable value adjustments on the carrying value of inventory of $0.8 million ($31 per pound) expense in Q3 2016, $1.2 million expense in Q2 2016, $1.5 million expense in Q1 2016, $1.6 million expense in Q4 2015, $1.5 million ($9 per pound) recovery in Q3 2015, $1.1 million expense in Q2 2015.

(3) Depreciation of Willow Creek includes net realizable value adjustments on the carrying value of inventory of $0.9 million ($34 per pound) expense in

Q3 2016, $0.4 million expense in Q4 2015, $3.1 million ($19 per pound)recovery in Q3 2015, $1.8 million expense in Q2 2015. (4)

Converter adjustments resulted in a negative production figures for Q3 and Q4 2015 as the total net production 1,415 pounds for these quarters did not exceed the total adjustments (-24,455 pounds) during the same period.

17

CORPORATE

MANTRA RESOURCES

As at September 30, 2016, Uranium One owns 13.9% of Mantra. Mantra Tanzania, a wholly-owned subsidiary of Mantra, is the owner of the Mkuju River Project. As operator of the Mkuju River Project, Uranium One continues to provide funding for the project. In connection therewith, Uranium One entered into a loan agreement with Mantra Tanzania on June 6, 2011. Drawdowns of $9.0 million have been made against the facility during the nine months ended September 30, 2016, bringing the total amount owed by Mantra Tanzania to the Corporation, including interest of $27.1 million, to $137.9 million. The loan bears interest at 7.74% per annum. The loan is guaranteed by JSC Atomredmetzoloto (“ARMZ”), a subsidiary of ROSATOM. As at September 30, 2016, an impairment of $9.9 million was recognized on the Mantra investment mainly due to decreased uranium pricing assumptions.

MKUJU RIVER PROJECT The Mkuju River Project (“MRP”) is a large scale uranium development project located in southern Tanzania. The Definitive Feasibility Study with value engineering was completed in December 2013. Pre-FEED and FEED (Front-End Engineering & Design) initiatives with external consultants continued until June 2014. Thereafter, activities at the Project were focused on licensing and permitting matters, with on-going value engineering opportunities to optimize the capital and operating costs for open-pit operation. In addition, an ISL test program started in Q2 2015 and is still ongoing. ISL could prove to be an alternative extraction method for the MRP and similar ore bodies in the region in addition to or instead of the open-pit method. In October 2012, the Tanzanian Ministry of the Environment issued an environmental impact assessment certificate to Mantra in respect of the Mkuju River Project, and in April 2013, the Tanzanian Government issued a Special Mining License (SML) to Mantra for the Project. In September 2014, Uranium One submitted an updated works program aligned to the current anticipated timeline for the development of the Project to the Ministry of Energy and Minerals, and the approval of the revised works program was received in February 2015. The Corporation is further evaluating various development options and alternative schedules of the works program, subject to the necessary regulatory approval, to optimize the overall cost and adjust the project schedule to better align MRP to current and forecasted market conditions. Negotiations with the Tanzanian Government on the terms of a Mine Development Agreement ("MDA") which includes fiscal stabilization for the Project were successfully concluded in August 2015 and the Corporation had been awaiting confirmation from the Ministry of Energy and Minerals ("MEM") of the date for signing of the MDA. However, during August 2016 the MEM proposed several revisions to the MDA. Mantra is not in agreement with the proposed revisions. Mantra has initiated discussions with MEM with a view to reasserting the terms agreed previously. The National Investment Steering Committee (“NISC”) approved a fiscal benefits package for the MRP subject to the conclusion of a Performance Contract with the Tanzania Investment Centre (“TIC”). The Performance Contract with the TIC was concluded on November 26, 2015.

SITUATION IN UKRAINE Since March 2014, the U.S. and Canadian governments and the European Union have implemented a number of measures in response to the situation in Ukraine. In the case of the U.S., these include Executive Orders and regulations imposing visa restrictions and freezing the property and interests in property in the United States of persons designated under those Orders as contributing to the situation in Ukraine. The directives also prohibit U.S. persons from transacting in, providing financing for, or otherwise dealing in new equity or debt of longer than either 30 or 90 days maturity (depending on the directive) issued by designated Russian financial institutions and entities and from supplying to designated Russian companies goods, services and technology relating to exploration or production in Russian deepwater, Arctic offshore or shale projects. In addition, U.S. law prohibits exports of certain U.S.-origin items, technology and services that may be supplied to the Russian oil and gas sector and suppliers of that sector. In December 2014, U.S. legislation was enacted authorizing the expansion of existing U.S. sanctions targeting companies in and activities involving Russia’s defense and energy sectors and the imposition of sanctions on non-U.S. financial companies which facilitate and support related transactions. Also in December 2014, an Executive Order was issued that implemented a near total trade embargo on the Crimea region of Ukraine. In Canada, the federal government has enacted regulations creating classes of designated persons, and freezing the assets of certain designated persons. The regulations also prohibit, subject to specified exceptions, any person in Canada or any Canadian citizen outside Canada from, among other things, (i) dealing in any property of any designated person, (ii) facilitating financial transactions relating to such dealings, (iii) providing goods or financial or related services to or for the benefit of designated persons, (iv) transacting in, providing financing for or otherwise dealing in new equity or debt of longer than 30 or 90 days maturity (depending on the designation) of designated Russian financial institutions and entities, and (v) supplying designated goods (or to provide services related to such goods) to Russia or to any person in Russia for use in offshore deepwater, Arctic or shale oil exploration or production. The sanctions imposed by the European Union (EU) include export bans on the supply of dual-use items to any person in Russia if they are intended for military purposes, and an arms embargo. In addition, there are measures to block the main state-owned financial institutions in Russia and some other enterprises active in the energy sector and in the military sector from access to EU capital markets and from the EU banking system, and there are export restrictions in relation to deepwater oil exploration and production, Arctic oil exploration and extraction and shale oil projects. In addition, asset freezing measures and travel restrictions were imposed on various individuals (mainly, state officials and military personnel connected with the Ukraine crises).

18

The Corporation’s operations have not been impacted by the foregoing orders, directives or regulations and the Corporation continues to carry on business as usual. While the Corporation has banking relationships with Gazprombank and Sberbank, both of which are among the Russian banks whose access to certain Western debt and equity capital markets has been restricted as noted above, the restrictions have not affected the Corporation’s relationships with those entities. The Corporation will continue to monitor sanctions-related developments closely to ensure it remains fully compliant with all applicable legislative and regulatory requirements.

URANIUM MARKET The spot U3O8 price as reported by Ux Consulting ("UxC") at the beginning of the third quarter (Q3) of 2016 was $26.50. The price declined throughout July by $1.50 before finally finishing the month at $25.00. Spot activity during July was characterized by a series of larger-quantity deals, as spot volume totaled 4.7 million pounds U3O8 under 22 transactions. Furthermore, there were five long-term contract awards booked during the month, three of which were for U3O8. Early August witnessed prices or temporary prices pushing slightly higher to $26.25. However, the increase in prices at the beginning of August was short-lived as the spot price sank to $25.25 by the end of the month. While volume remained moderate during the month of August at 4.3 million pounds U3O8 from 21 deals, prices in August began to reflect the notable lack of real needs-based demand in the market. The spot price started September up slightly at $25.50, but this would prove to be the high water mark for the month as prices sagged through the middle of the month and dropped sharply by month-end. UxC’s spot price indicator ultimately finished September at $23.75, down $1.75 for the month and down $10.75 since beginning the 2016 year at $34.50. Spot activity was also noticeably lower for September at 3.4 million pounds U3O8 from 24 transactions. A general shift in market perceptions during and following the World Nuclear Association Symposium held in mid-September was cited as one of the main factors contributing to the recent drop in spot prices. Furthermore, the market has been aggressively offered downward lately, as producers look to move abundant supplies in the face of lower volume and low-price bids. Of the spot activity confirmed in Q3 2016, 93% has been categorized as discretionary, or not for immediate need. Q3 2016 brought with it some positive developments in the U.S., as the New York Public Service Commission approved the state’s Clean Energy Standard ("CES"). This legislation requires that 50% of New York’s power stem from clean and renewable sources of energy by 2030, including nuclear energy. Following the passage of the CES, Exelon said it will reinvest $200 million in its Ginna and Nine Mile Point nuclear power plants in upstate New York in the spring of 2017 and purchase the FitzPatrick nuclear power plant from Entergy. FitzPatrick, which was previously scheduled to close in January 2017, will continue to operate following Exelon’s purchase. Also during Q3, the Tennessee Valley Authority ("TVA") reported that Watts Bar Unit 2 successfully completed final ascension testing, and the reactor will be the first new nuclear reactor to be brought online in the U.S. in this century. In Western Europe, the UK government announced that after completing an evaluation of an agreement with EDF, it has decided to proceed with the Hinkley C project for the construction of two European Pressurized Reactors ("EPRs") at the proposed Hinkley Point nuclear power plant. With the approval by the government, EDF will be able to proceed with construction at Hinkley Point C, as the company’s board of directors has already made a final decision to invest in the project. For Eastern Europe, Russia’s Novovoronezh II project recently celebrated Unit 1’s first connection to the grid in August, with commercial operation expected in early 2017. Also the Leningrad II nuclear power plant project realized multiple construction milestones during the quarter, with Units 1 & 2 expected to enter service in 2017 and 2019, respectively. Finally, Unit 4 of the Rostov nuclear power plant is nearing completion and plans remain on track to commission the Akademic Lomonosov floating nuclear power plant by 2019. In Japan, there were mixed signals during the quarter. On the positive front, Shikoku Electric Power Co.’s Ikata 3 reactor in Ehime Prefecture returned to full commercial operation in September and the Japanese government announced plans to create legislation for nuclear plants to sell baseload power into the country’s electricity exchange, thereby allowing nuclear plant operators to distribute operating and decommissioning costs to make nuclear power more competitive with other power generation sources. On the negative front, a Japanese court upheld a standing order to keep the Takahama 3 & 4 reactors offline due to objections raised by local residents, and the discovery that the steel used in 13 Japanese reactors had structural anomalies similar to those found in the steel used in some French reactors. Perhaps the biggest announcement in the uranium supply sector for Q3 2016 came from Paladin Energy, which has elected to halt mining operations at Langer Heinrich in Namibia to conserve cash. Over the next two years, the company will process lower grade stockpiled ore from Langer Heinrich, which will reduce finished U3O8 production by up to 1.0-1.5 million pounds U3O8 per year. Meanwhile, Swakop Uranium’s CEO Zheng Keping stated in early October that its Husab mine in Namibia will commence production in late October 2016 despite a shortage of water supply in the area. In Western Australia, the Environmental Protection Authority recommended in August that Cameco’s proposed Yeelirrie uranium mine not be implemented. A final decision on the proposed mine rests with the state’s Environment Minister. On September 28, BHP Billiton’s Olympic Dam project in South Australia suffered a massive outage that forced its shutdown after strong winds destroyed major power lines and lightning struck a power plant. Electricity to the full mine site is expected to be restored by the end of the second week of October, with minimal impact to annual uranium production anticipated. In Q2 2016, Cameco announced the suspension of operations at its Rabbit Lake operations in Canada, and the curtailment of its US operations in Wyoming and Nebraska. For 2016, total supply (including production and inventories) of 207 million pounds U3O8 is expected to exceed UxC’s Base Case Demand of 186 million pounds U3O8 (this includes inventory build-up) for a net surplus of 21 million pounds U3O8. This surplus is down slightly from 23 million pounds U3O8 last quarter. Primary production is expected to account for 162 million pounds U3O8, while secondary supplies are expected to total 45 million pounds U3O8.

19

Review of Financial Results

SUMMARY OF QUARTERLY RESULTS

(US DOLLARS IN MILLIONS EXCEPT PER SHARE AND PER LB AMOUNTS)

3 MONTHS ENDED

SEP 30, 2016

JUN 30, 2016

MAR 31, 2016

DEC 31, 2015

SEP 30, 2015

JUN 30, 2015

MAR 31, 2015

DEC 31, 2014

$ $ $ $ $ $ $ $

Revenues 97.4 127.3 13.9 71.8 84.1 111.0 57.8 106.7

Attributable revenues (1) 115.8 137.5 38.2 178.4 120.3 165.0 77.5 153.8

Net earnings (loss) 29.5 24.5 155.5 60.8 0.6 21.6 (12.3) (61.9)

Basic and diluted earnings (loss) per share(2)

0.03 0.03 0.16 0.06 0.00 0.02 (0.01) (0.06)

Total assets 2,147.2 2,194.8 2,166.8 1,323.9 1,526.1 1,861.8 1,868.7 1,989.4

Notes: (1)

See the section on “Non-GAAP Measures”. (2)

The basic and diluted earnings/loss per share are computed separately for each quarter presented and therefore may not add up to the basic and diluted earnings (loss) per share calculated for a full year.

The relationship between volumes sold and inventory and the average realized uranium price per pound sold relative to the average spot price per pound over the last eight quarters are as follows:

The Corporation, in line with its past marketing strategy, entered into sales contracts with pricing mechanisms that ensured that average realized sales prices per pound were highly correlated to the spot price at the time of delivery. Under this strategy, pricing in the Corporation’s sales contracts normally would reference spot market prices at the time of delivery, although some contracts reference average spot market prices for a defined period preceding the delivery date, which can be up to 3 months prior to delivery for certain contracts. This, and the fact that spot prices and deliveries are not uniform across the period, produces average realized sales prices which could be above or below the average spot price for the period, but that would largely track that benchmark. The Corporation’s current strategy is to balance market-related pricing with more fixed, base-escalated or mixed pricing in a hedged approach.

The Corporation’s sales volumes are largely determined by the terms of long term sales contracts with customers and the delivery schedules which customers are allowed to select each given year. These sales are supplemented by spot sales whose timing is at the discretion of the Corporation.

Earnings fluctuate in line with sales volume, but are also affected by a mixture of fixed and variable costs, including general and administration cost, foreign exchange, impairment charges and taxation.

20

25

30

35

40

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

$/lb of U3O8

Realized Price ($lb) Average Price ($lb)

-

1.0

2.0

3.0

4.0

5.0

6.0

Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016

Lbs of U3O8

('Millions)

Sales Inventory

20

NON-GAAP MEASURES

ADJUSTED NET EARNINGS (LOSS)

The Corporation has included the following non-GAAP performance measures throughout this document: adjusted net earnings (loss) and adjusted net earnings (loss) per share. Adjusted net earnings (loss) and adjusted net earnings (loss) per share do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures reported by other companies. The Corporation believes that, in addition to conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the Corporation’s performance and ability to generate cash flow. This is provided as additional information and should not be considered in isolation, or as a substitute for, measures of performance prepared in accordance with IFRS.

Adjusted net earnings (loss) is calculated by adding back restructuring costs, impairments, cost of suspension of operations, gains/losses from the sale of assets, foreign exchange gains/losses, non-hedge derivative gains and losses, one-off or unusual items, items in respect of prior periods and when applicable, the effect of tax rate adjustments on deferred tax liabilities to net earnings. Corporate development expenditure relates to project costs. These items are added back due to their inherent volatility and/or infrequent occurrence.

The following table provides a reconciliation of adjusted net earnings (loss) to net loss as reported for the periods presented:

(US DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)

3 MONTHS ENDED 9 MONTHS ENDED

SEP 30, 2016 $ MILLIONS




Net earnings – as reported 29.5 0.6 209.5 9.9

Impairment of non-current assets 5.0 - 9.9 -

Loss on disposal of US claims and leases 2.6 - 2.6 -

Corporate development expenditure 0.4 0.9 0.5 1.6

Foreign exchange (gain) loss (2.5) (28.6) 15.0 (13.7)

Ruble bond non-hedge derivative gains, net of tax (6.5) 29.1 (37.3) 0.9

Inventory valuation adjustment reclassified to operating expense (see Note 3 in the financial statements)

- - 28.0 -

Business combination - - (149.2) -

Non-recurring income tax adjustment - 11.2 - 11.2

Adjusted net earnings (loss) 28.5 13.2 79.0 2.5

Adjusted net earnings (loss) per share – basic ($) and diluted 0.03 0.01 0.08 0.00

Weighted average number of shares (millions) – basic and diluted 957.2 957.2 957.2 957.2

ATTRIBUTABLE REVENUES AND ATTRIBUTABLE GROSS PROFIT

The Corporation monitors and evaluates performance of its business by using these additional non GAAP measures, which are consistent with the results that would be reported under proportionate consolidation accounting. The Corporation believes that, in addition to conventional measures prepared in accordance with IFRS, the Corporation and certain investors use this information to evaluate the Corporation’s performance and ability to generate cash flow. This is provided as additional information and should not be considered in isolation, or as a substitute for measures of performance prepared in accordance with IFRS. ATTRIBUTABLE REVENUES

Attributable revenues are determined as shown in Note 17 of the condensed consolidated interim financial statements for the period ended September 30, 2016. This note discloses segmented information which incorporates the revenues of the Corporation under proportionate consolidation. The following table provides a reconciliation of attributable revenues to revenues as reported for the periods presented:

(US DOLLARS IN MILLIONS)






Revenues - as reported 97.4 84.1 238.6 252.9

Attributable revenues from equity accounted investees 49.8 95.2 127.5 267.5

Intercompany purchases from equity accounted investees (14.3) (59.0) (28.0) (157.6)

Attributable to non-controlling interest (1) (17.1) - (46.6) -

Attributable revenues 115.8 120.3 291.5 362.8

(1) Represents share of income and expense attributable to non-controlling interest in SMCC (Akdala and South Inkai mines), which has been consolidated as a subsidiary starting from January 1, 2016

21

ATTRIBUTABLE GROSS PROFIT

Attributable gross profit is disclosed in the tables of uranium sales, inventory and operating costs on pages 23 and 24. The following table provides a reconciliation of attributable gross profit to gross profit as reported for the periods presented:

(US DOLLARS IN MILLIONS)






Gross profit - as reported 33.0 2.7 49.8 1.3

Attributable revenues from equity accounted investees 49.8 95.2 127.5 267.5

Attributable operating expenses from equity accounted investees (11.8) (26.4) (30.1) (92.7)

Attributable depreciation from equity accounted investees (10.7) (20.3) (26.4) (62.4)

Attributable gross profit to non-controlling interest(1) (3.7) - (3.2) -

Attributable gross profit 56.6 51.2 117.6 113.7

(1) Represents share of income and expense attributable to non-controlling interest in SMCC (Akdala and South Inkai mines), which has been consolidated as a subsidiary starting from January 1, 2016

AVERAGE REALIZED SALES PRICE PER POUND OF PRODUCED MATERIAL AND AVERAGE TOTAL CASH COST PER POUND SOLD OF PRODUCED MATERIAL The Corporation has included the following non-GAAP performance measures throughout this document: average realized sales price per pound of produced material and average total cash cost per pound sold of produced material. The Corporation reports total cash costs on a sales basis. In the uranium mining industry, these are common performance measures but do not have any standardized meaning, and are non-GAAP measures. The Corporation believes that, in addition to conventional measures prepared in accordance with IFRS, the Corporation and certain investors use this information to evaluate the Corporation’s performance and ability to generate cash flow. This is provided as additional information and should not be considered in isolation, or as a substitute for, measures of performance prepared in accordance with IFRS. As in previous periods, average realized sales price per pound of produced material and cash cost per pound sold of produced material are calculated as follows:

(i) Average realized sales price per pound of produced material: Attributable revenues minus revenue in the “Corporate and other” segment, divided by attributable sales pounds of produced material (See tables on pages 23 and 24).

(ii) Average total cash cost per pound sold of produced material: Operating expenses of produced material divided by attributable sales pounds of produced material (See tables on pages 23 and 24).

22

RESULTS OF OPERATIONS AND DISCUSSION OF FINANCIAL POSITION

SELECTED FINANCIAL INFORMATION Information reported to the Corporation’s chief operating decision maker for the purposes of resource allocation and assessment of segment performance is primarily by operating mine or mineral property and its location and it reflects the Corporation’s proportionate share. The information on the attributable revenues, gross profit, the Corporation’s uranium sales, cost of uranium sales and gross profit by mine is provided below based on the Corporation’s proportionate share and is reconciled to the unaudited condensed consolidated financial statements in accordance with IFRS. The Corporation’s consolidated financial statements and the financial data set out below have been prepared in accordance with IFRS. Uranium One and its operating subsidiaries use the United States dollar, the Kazakhstan tenge, the Australian dollar and the Canadian dollar as measurement currencies.

(US DOLLARS IN MILLIONS EXCEPT PER SHARE AND PER POUND AMOUNTS)






Revenues 97.4 84.1 238.6 252.9

Attributable revenues from segment reporting (4) 115.8 120.3 291.5 362.8

Net earnings 29.5 0.6 209.5 9.9

Adjusted net earnings (2) 28.5 13.2 79.0 2.5

Cash flows from (used in) operating activities 83.6 (16.6) 93.3 (112.4)

Cash dividends received 16.3 38.8 60.2 53.6

Net earnings per share 0.03 0.00 0.22 0.01

Adjusted net earnings per share (2) 0.03 0.01 0.08 0.00

Product inventory carrying value(1) 30.8 3.2 30.8 3.2

Product inventory carrying value for equity accounted investees 23.6 39.1 23.6 39.1

Total assets 2,147.2 1,526.1 2,147.2 1,526.1

Long term financial liabilities (5) 519.4 836.2 519.4 836.2

Average realized uranium sales price per pound – produced material(3) 30 36 31 37

Average spot price per pound 25 36 28 37

Attributable sales volume – produced material 3,719,800 2,890,100 8,950,000 7,784,600

Attributable production volume 3,219,200 3,067,100 9,350,800 9,285,900

Attributable inventory 3,150,300 4,065,500 3,150,300 4,065,500

Notes: (1) Inventory is attributable to mines that are in commercial production. Revenue from production during commissioning of the Corporation’s development

projects is credited against capital expenditures. (2) Adjusted net earnings (loss) and adjusted net earnings (loss) per share are non-GAAP measures. The definition and reconciliation of these non-GAAP

measures is included in the section called “Non-GAAP Measures”. (3) For calculation of this metric see footnote 3 in Uranium Sales, inventory and operating costs tables on pages 23 and 24. (4) See tables on page 23 and 24. (5) Includes long term portion of interest bearing liabilities, convertible debentures, provisions and financial derivatives.

23

RESULTS OF OPERATIONS

QUARTER ENDED SEPTEMBER 30, 2016 URANIUM SALES, INVENTORY AND OPERATING COSTS TABLE The Corporation’s uranium sales, costs of uranium sales and gross profit were as follows in the third quarter of 2016 and the third quarter of 2015:

Q3 2016

AKDALA SOUTH INKAI

KARATAU AKBASTAU ZARECHNOYE KHARASAN WILLOW

CREEK

CORPORATE AND OTHER

(2)

TOTAL / AVERAGE

Attributable Revenues

($ millions) (1)(6) 16.9 40.3 26.8 13.8 4.9 7.3 0.7 - 110.7

Revenues – Purchased material ($ millions) - - - - - - - 5.1 5.1

Attributable sales volumes (lb ‘000) – Produced material

476.6 1,141.9 1,122.7 579.0 196.1 177.4 26.1 - 3,719.8

Attributable sales volumes (lb ‘000) – Purchased material

- - - - - - - 190.6 190.6

Operating expenses ($ millions) – Produced material (7) 3.3 9.1 5.0 3.0 2.4 1.4 1.7 - 25.9

Operating expenses ($ millions) – Purchased material

- - - - - - - 1.9 1.9

Average realized sales price ($/lb sold) – Produced material(3)(6)

35 35 24 24 25 41 27 - 30

Operating expenses ($/lb sold) – Produced material(4)(6)(7)

7 8 4 5 12 8 65 - 7

Depreciation ($ millions) 7.4 11.4 4.9 3.5 1.7 0.6 1.9 - 31.4

Depreciation ($/lb sold)(5)(6) 16 10 4 6 9 3 73 - 8

Attributable gross profit (loss) ($ millions) (6) 6.2 19.8 16.9 7.3 0.8 5.3 (2.9) 3.2 56.6

Less share of gross profit from equity accounted investees ($ millions)

- - (16.9) (7.3) (0.8) (2.3) - - (27.3)

Attributable to non-controlling interest ($ millions)

0.9 2.8 - - - - - - 3.7

Gross profit (loss) per consolidated income statement 7.1 22.6 - - - 3.0 (2.9) 3.2 33.0

Notes: (1) Excluding the "Corporate and Other" segment, revenues represent the Corporation’s proportionate share of sales from its operations. In addition, the

gross profit of material sold by the Corporation is allocated back to the operations from which the material was sourced. (2) The revenue and associated cost of sales of material that has not been sourced from one of the Corporation’s operations is shown as part of the corporate

and other segment. (3) Represents the average realized sales price per lb of sales by the Corporation from material produced from its operations and is calculated as follows:

"Revenues ($ millions)” minus revenue in "Corporate and other" divided by "Attributable sales volumes (lb ‘000) - Produced material". (4) Represents the Corporation's average total cash cost per lb sold of material produced from its operations calculated as follows: "Operating expenses

($ millions) - Produced material" divided by "Attributable sales volume (lb '000) - Produced material”. (5) Represents the Corporation’s proportionate share of depreciation from equity accounted investees operations, calculated as follows: “Depreciation

($ millions)” divided by “Attributable sales volume (lb ‘000) – Produced material”. (6) Represents a non-GAAP measure. The definitions of non-GAAP measures are included in the section called “Non-GAAP Measures”. (7) Operating expense of Akdala and South Inkai for the second quarter of 2016 include inventory valuation adjustment reclassified to operating expense of

$4.6 million ($6 per pound) and $12.0 million ($7 per pound) to finished goods respectively as a result of business combination (see Note 3 in the financial statements).

24

Q3 2015

AKDALA SOUTH INKAI

KARATAU AKBASTAU ZARECHNOYE KHARASAN WILLOW

CREEK

CORPORATE AND OTHER(2)

TOTAL / AVERAGE

Attributable Revenues

($ millions) (1)(6) 22.6 36.1 15.9 11.2 6.0 6.9 5.8 15.8 120.3

Attributable sales volumes (lb ‘000) – Produced material 621.3 971.1 456.6 316.1 177.7 188.0 159.3 - 2,890.1

Attributable sales volumes (lb ‘000) – Purchased material - - - - - - - 410.0 410.0

Operating expenses ($ millions) – Produced material 6.4 7.9 3.4 2.8 3.4 2.5 3.7 - 30.1 Operating expenses ($ millions) – Purchased material - - - - - - - 14.8 14.8

Average realized sales price ($/lb sold) – Produced material(3)(6)

36 37 35 35 34 37 36 - 36

Operating expenses ($/lb sold) – Produced material(4)(6) 10 8 7 9 19 13 23 - 10

Depreciation ($ millions) 4.0 6.3 3.1 3.4 2.5 1.0 3.9 - 24.2

Depreciation ($/lb sold)(5)(6) 6 6 7 11 15 4 24 - 8

Attributable gross profit (loss) ($ millions) (6) 12.2 21.9 9.4 5.0 0.1 3.4 (1.8) 1.0 51.2

Less share of gross profit from joint ventures ($ millions)

(10.9) (20.9) (9.4) (5.0) (0.1) (2.2) - - (48.5)

Gross profit (loss) per consolidated income statement 1.3 1.0 - - - 1.2 (1.8) 1.0 2.7

Notes:

(1) Excluding the "Corporate and Other" segment, revenues represent the Corporation’s proportionate share of sales from its operations. In addition, the gross profit of material sold by the Corporation is allocated back to the operations from which the material was sourced.

(2) The revenue and associated cost of sales of material that has not been sourced from one of the Corporation’s operations is shown as part of the corporate and other segment.

(3) Represents the average realized sales price per lb of sales by the Corporation from material produced from its operations and is calculated as follows: "Revenues ($ millions)” minus revenue in "Corporate and other" divided by "Attributable sales volumes (lb ‘000) - Produced material".

(4) Represents the Corporation's average total cash cost per lb sold of material produced from its operations calculated as follows: "Operating expenses ($ millions) - Produced material" divided by "Attributable sales volume (lb '000) - Produced material”.

(5) Represents the Corporation’s proportionate share of depreciation from joint ventures operations, calculated as follows: “Depreciation ($ millions)” divided by “Attributable sales volume (lb ‘000) – Produced material”.

(6) Represents a non-GAAP measure. The definitions of non-GAAP measures are included in the section called “Non-GAAP Measures”.

25

SALES AND OPERATING EXPENSES The average realized sales price of produced material during the third quarter of 2016 was $30 per pound compared to $36 per pound in the third quarter of 2015. The closing and average spot prices in the third quarter of 2016 were $22 and $25 per pound, respectively.

Revenue, including the revenue of equity accounted investees, of $115.8 million in the third quarter of 2016 decreased by 4% compared to $120.3 million in the third quarter of 2015, mainly due to lower average realized sales price.

The sales mix for the third quarter of 2016 was 16% for Akbastau, 13% for Akdala, 30% for South Inkai, 30% for Karatau, 5% for Kharasan, 5% for Zarechnoye and 1% for Willow Creek compared to the third quarter of 2015 in which Akbastau contributed 11% of the sales, Akdala 21%, South Inkai 33%, Karatau 16%, Zarechnoye 6%, Kharasan 7% and 6% for Willow Creek. The sales mix is expected to align with the production ratio of each mine over the year.

Operating expenses per pound sold for produced material were $7 per pound in the third quarter 2016 compared to $10 per pound in the third quarter 2015. The main factors of operating expense decrease were high sales volumes from Karatau, which is one of the lowest cost producers ($4/lb), and devaluation of the tenge.

There is possible volatility in operating expenses due to the timing of the acidification of new wellfields. Sulphuric acid use is higher during the initial acidification process, and the sulphuric acid cost per pound is higher during these periods. The Corporation carries inventory at the weighted average cost of production, calculated at various stages of the production process. As a result, the weighted average cost increases during periods with higher levels of acidification. GENERAL AND ADMINISTRATIVE EXPENSE The main drivers of the cash component of general and administrative expenses are compensation and consulting and advisor fees.

General and administrative expense was $5.4 million in the third quarter of 2016, compared to $3.8 million in the third quarter of 2015.

The general and administrative expense for the third quarter of 2016 includes consulting and advisor fees of $3.2 million, compensation expense of $1.7 million and other expense of $0.6 million, compared to compensation expense of $1.7 million, consulting and advisor fees of $0.7 million and other expense of $1.4 million for the third quarter of 2015. IMPAIRMENT OF NON-CURRENT ASSETS During Q3 2016 an impairment of $5.0 million was recognized on the Mantra investment mainly due to decreased pricing assumptions. EXPLORATION The Corporation has a significant resource base and does not rely on exploration success for current and future production activities. Exploration expenditure is therefore purely discretionary. The Corporation determines its discretionary exploration expenditure each year during its planning cycle. Exploration expenditure relates to exploration programs undertaken on the Corporation’s tenures in the United States and was $0.1 million during the third quarter of 2016 and $0.5 million during the third quarter of 2015. SHARE OF EARNINGS FROM EQUITY ACCOUNTED INVESTEES Due to changes to the relevant contracts, the Corporation has reassessed its interests in its SMCC and Betpak Dala joint ventures. As a result, the Corporation determined that it has gained control over each of the joint ventures starting January 1, 2016. As such, the results and financial positions of the two joint ventures have been consolidated as subsidiaries with full consolidation effective since January 1, 2016. The Corporation has reclassified its investments in Kyzylkum LLP and Khorasan-U LLP from joint ventures to associates starting January 1, 2016. Comparative amounts have been reclassified to conform with the current year presentation. The change in accounting estimates has not affected the consolidated assets, liabilities and net results. The Corporation’s share in both Kyzylkum and Khorasan is 30%. Earnings from equity accounted investees mainly consist of revenue, operating expenses, depreciation, finance income and expenses and taxation of the equity accounted investees and represent the Corporation’s share thereof.

Uranium sales, operating costs and depreciation Revenue of $49.8 million in the third quarter of 2016 decreased by 48% compared to $95.2 million in the third quarter of 2015 due to the combined effect of lower sales prices and the accounting treatment of the consolidation of SMCC and Betpak Dala as subsidiaries.

Operating expenses and depreciation of $22.5 million in the third quarter of 2016 decreased by 52% compared to $46.7 million in the third quarter of 2015 mainly due to the devaluation of the tenge and the consolidation of SMCC and Betpak Dala as subsidiaries.

Finance income and expense Interest accrued on the Corporation’s proportionate share of equity accounted investees debt facilities was $0.5 million in the third quarter of 2016, compared to $0.9 million in the third quarter of 2015.

Income taxes The current income tax expense for the third quarter of 2016 and 2015 of $6.5 million and $11.6 million respectively mainly consists of income tax paid and payable in Kazakhstan on profits from the Corporation’s mines.

The deferred income tax recovery was $0.8 million in the third quarter of 2016 and $4.4 million in the third quarter of 2015 consists of the recognition / recovery of deferred income tax liabilities of the Kazakh mines.

FINANCE INCOME AND EXPENSE

Finance income was $2.8 million in the third quarter of 2016 and $2.6 million in the third quarter of 2015. In addition to the interest earned on loans to equity accounted investees, interest is earned on funds held on deposit by the Corporation. Total interest accrued on the Ruble Bonds was $6.4 million in the third quarter 2016, net of gain of $0.5 million accrued on the cross currency interest rate swap. Interest accrued on the Ruble Bonds was $6.1 million in the third quarter of 2015, net of income of $3.0 million accrued on the cross currency interest rate swap.

26

For the three months ended September 30, 2016, the Corporation accrued interest on the Senior Secured Notes of $4.7 million (third quarter of 2015: $4.4 million). FOREIGN EXCHANGE Foreign exchange gains of $2.5 million during the third quarter of 2016 relates to $3.8 million loss on the Ruble Bonds offset by $1.3 million foreign exchange gain on the swaps and foreign exchange gain of $5.0 million on cash balances, deposits and other items. Foreign exchange gains of $28.6 million during the third quarter of 2015 primarily relates to $42.1 million gain on the Ruble Bonds offset by $15.3 million foreign exchange loss on the swaps, and foreign exchange gain of $1.8 million on cash balances, deposits and other items. OTHER INCOME (EXPENSE) Other income of $3.8 million in the third quarter of 2016 primarily relates to the mark-to-market gain on non-hedge derivatives of $8.5 million and hedge ineffectiveness gain of $0.2 million, offset by interest accrued on non-hedge derivatives of $2.0 million, loss on sale of US claims and leases of $2.6 million and other expenses of $0.3 million. INCOME TAXES The current income tax expense for the third quarter of 2016 of $7.7 million mainly consists of current tax payable by the Corporation’s subsidiaries in Kazakhstan, and withholding tax paid and payable on dividends from the Corporation’s equity accounted investees in Kazakhstan. The current income tax expense for the third quarter of 2015 of $6.6 million consists of current tax paid on interest received by a Kazakhstan subsidiary and withholding tax paid and payable on dividends from the Corporation’s joint ventures in Kazakhstan. The deferred income tax expense of $3.8 million mainly consists of the reversal of deferred tax liabilities related to Kazakhstan subsidiaries and deferred income tax liabilities in respect of unrealized foreign exchange on intercompany loans. For the third quarter of 2015, $8.9 million deferred tax expense was recorded. NET EARNINGS (LOSS) The net earnings for the third quarter of 2016 were $29.5 million or $0.03 per share, compared to net earnings of $0.6 million or $0.00 per share for the third quarter of 2015.

NINE MONTHS ENDED SEPTEMBER 30, 2016 SALES AND OPERATING EXPENSES Revenue, including the revenue of equity accounted investees, of $291.5 million for the nine months ended September 30, 2016 decreased by 20% compared to the $362.8 million in the nine months ended September 30, 2015, mainly due to lower average realized sales price. Operating expenses per pound sold for produced material were $9 per pound for the nine months ended September 30, 2016 and $13 per pound for the nine months ended September 30, 2015. The Corporation’s average sales price per pound sold and average spot prices per pound were $31 and $28 respectively during the nine months ended September 30, 2016. GENERAL AND ADMINISTRATIVE EXPENSE General and administrative expense was $14.3 million in the nine months ended September 30, 2016, compared to $17.0 million in the nine months ended September 30, 2015. The general and administrative expense for the nine months ended September 30, 2016 includes audit and professional fees of $7.8 million, compensation of $5.0 million, office rent of $0.6 million and other expense of $0.9 million. IMPAIRMENT OF NON-CURRENT ASSETS For the nine months ended September 30, 2016 an impairment of $9.9 million was recognized on the Mantra investment mainly due to decreased pricing assumptions. EXPLORATION Exploration expenditure related to exploration programs undertaken on the Corporation’s tenures was $0.7 million during the nine months ended September 30, 2016, compared to $1.2 million during the nine months ended September 30, 2015. SHARE OF EARNINGS FROM EQUITY ACCOUNTED INVESTEES Earnings from equity accounted investees mainly consist of revenue, cost of sales, finance income and expenses and taxation of the joint ventures and represent the Corporations share thereof.

Uranium sales and operating costs Revenue of $127.5 million for the nine months ended September 30, 2016 decreased by 52% compared to the $267.5 million in the nine months ended September 30, 2015, due to lower sales prices and the consolidation of SMCC and Betpak Dala as subsidiaries. Operating expenses and depreciation of $56.5 million for the nine months ended September 30, 2016 decreased by 64% compared to $155.1 million for the nine months ended September 30, 2015 mainly due to the devaluation of the tenge and the consolidation of SMCC and Betpak Dala as subsidiaries. Finance income and expense Interest accrued on the Corporation’s proportionate share of joint venture debt facilities was $1.8 million for the nine months ended September 30, 2016, compared to $3.1 million in the nine months ended September 30, 2015.

27

Income taxes The current income tax expense for the nine months ended September 30, 2016 of $16.3 million mainly consists of income tax paid and payable in Kazakhstan on profits from the Corporation’s mines. For the nine months ended September 30, 2015 $29.7 million of current income tax expense was recorded. The deferred income tax recovery in the nine months ended September 30, 2016 of $0.9 million consists of the recognition of deferred income tax liabilities of the Kazakh mines. For the nine months ended September 30, 2015 $3.4 million deferred income tax expense was recorded.

FINANCE INCOME AND EXPENSE Finance income was $8.7 million in the nine months ended September 30, 2016 and $7.7 million in the nine months ended September 30, 2015. In addition to the interest earned on loans to equity accounted investees, interest is earned on funds held on deposit by the Corporation. Interest accrued on the Ruble Bonds was $19.4 million in the nine months ended September 30, 2016, net of loss of $1.4 million accrued on the cross currency interest rate swap. Interest accrued on the Senior Secured Notes was $14.3 million in the nine months ended September 30, 2016. FOREIGN EXCHANGE Foreign exchange loss of $15.0 million during the nine months ended September 30, 2016 consists of $32.4 million losses on the Ruble Bonds offset by foreign exchange gains of $11.6 million on the swaps and foreign exchange gain of $5.8 million on cash balances, deposits and other items. Foreign exchange gain of $13.7 million during the nine months ended September 2015 consists of $17.6 million gains on the Ruble Bonds, gains of $1.6 million on the 2010 Debentures and foreign exchange gains of $0.8 million on cash balances, deposits and other items offset by foreign exchange losses of $6.4 million on the swaps. GAIN FROM BUSINESS COMBINATION Due to changes to the relevant contracts, the Corporation has reassessed its interests in the SMCC and Betpak Dala joint ventures. As a result, the Corporation determined that it has gained control over each of the joint ventures starting January 1, 2016. The re-assessement of the fair value of the Corporation’s existing 70% interest in each of the SMCC and Betpak Dala joint ventures resulted in a gain of $180.5 million and a loss of $31.3 million, respectively, consisting of the following:

fair value less the carrying amounts of the equity-accounted investments at the date of acquisition of $339.8 million and negative $2.9 million respectively for SMCC and Betpak Dala;

negative goodwill of $70.9 million and $2.9 million respectively for SMCC and Betpak Dala;

less $230.2 million and $31.3 million respectively for SMCC and Betpak Dala consisting of translation reserve reclassified as profit and loss. OTHER INCOME (EXPENSE) Other income of $36.0 million during the nine months ended September 30, 2016 primarily relates to the positive mark-to-market movement on non-hedge derivatives of $43.4 million and gain from hedge ineffectiveness of $1.8 million, offset by interest accrued on non-hedge derivatives of $6.1 million, loss on sale of US claims and leases of $2.6 million and other expenses of $0.5 million. INCOME TAXES The current income tax expense for the nine months ended September 30, 2016 of $22.9 million mainly consists of current tax of a Kazakhstan subsidiary and withholding tax paid and payable on dividends from the Corporation’s equity accounted investees in Kazakhstan. The current income tax expense for the nine months ended September 30, 2015 of $14.5 million mainly consists of withholding tax payable on dividends from the Corporation’s equity accounted investees in Kazakhstan and of current tax paid on interest received by a Kazakhstan subsidiary. The deferred income tax benefit of $13.0 million mainly consists of the reversal of deferred tax liabilities related to Kazakhstan subsidiaries and deferred income tax liabilities in respect of unrealized foreign exchange on intercompany loans. NET EARNINGS Net earnings for the nine months ended September 30, 2016 was $209.5 million or $0.22 per share, compared to net earnings of $9.9 million or $0.01 per share for the nine months ended September 30, 2015.

28

FINANCIAL CONDITION CASH AND CASH EQUIVALENTS On September 30, 2016, the Corporation had cash and cash equivalents, including restricted cash, of $235.2 million, compared to $156.5 million at December 31, 2015. The increase in cash and cash equivalents is mainly due to dividends received of $60.2 million, cash received through consolidation of SMCC and Betpak Dala of $24.6 million and $3.6million, respectively, change in working capital of $63.9 million offset by interest payments of $39.3 million made by the Corporation under the Senior Secured Notes and the Ruble Bonds during the nine months of 2016, purchase of Senior Secured Notes of $60.8 million and dividends paid (by the Corporation’s consolidated joint ventures) to non-controlling shareholder of $24.9 million. INVENTORIES The value of inventories as at September 30, 2016 increased to $37.0 million from $10.3 million held at December 31, 2015 mainly as a result of consolidation of inventory of SMCC in the amount of $33.8 million at September 30, 2016. As at September 30, 2016, the Corporation had attributable inventory of 0.1 million pounds held at conversion facilities. Sales of product are normally completed at conversion facilities when material is transferred to customers by way of a book transfer. The product on hand at conversion facilities as at September 30, 2016 is committed for delivery under existing sales contracts or spot sales subsequent to quarter end. Shipping times for finished product can be up to four months, depending on the distance between the mine site and conversion facility, where sales are completed through transfer of legal title and ownership. MINERAL INTERESTS, PROPERTY, PLANT AND EQUIPMENT The carrying values of mineral interests, property, plant and equipment were $1,079.8 million and $154.3 million at September 30, 2016 and December 31, 2015, respectively. The increase of $925.5 million during the nine months ended September 30, 2016 consists of:

Consolidation of SMCC and Betpak Dala of $981.5 million and $1.3 million, respectively;

Additions of $17.2 million;

Disposals of $7.9 million;

Depreciation of $80.0 million; and

Currency translation reserve gain of $13.4 million.

INVESTMENT IN EQUITY ACCOUNTING INVESTEES The balances and movement in underlying assets and liabilities of the investment in equity accounted investees, on an attributable basis, include the following:

Cash On September 30, 2016, the equity accounted investees had cash and cash equivalents attributable to the Corporation’s share of $26.7 million, compared to $55.7 million at December 31, 2015. Inventory The value of inventories as at September 30, 2016 decreased to $29.2 million from $38.6 million held at December 31, 2015. Finished uranium concentrates and solutions and concentrates in process decreased by $13.9 million. As at September 30, 2016, the equity accounted investees had attributable inventory of 3.1 million pounds.

A summary of the Corporation’s attributable inventory held through equity accounted investees interest and carried at September 30, 2016 is as follows:

CATEGORY LOCATION lbs

U3O8,millions

In process Mine sites 0.3

In process External processing facilities 0.4

Finished product ready to be shipped Mine sites 0.9

Finished product ready to be shipped External processing facilities 1.5

Total inventory 3.1

Mineral interests, property, plant and equipment The carrying values of mineral interests, property, plant and equipment were $526.6 million and $731.2 million at September 30, 2016 and December 31, 2015, respectively. The decrease of $204.6 million during the nine months ended September 30, 2016 consists of:

Reclassification to mineral interests, property, plant and equipment due to consolidation of SMCC and Betpak Dala of $195.1 million and $0.9 million, respectively;

Additions of $10.6 million;

Disposals of $0.8 million;

Depreciation of $29.7 million; and

Currency translation reserve gain of $11.3 million;

29

Current and long term portion of equity accounted investees debt At September 30, 2016, Kyzylkum had loans outstanding of $20.7 million, $26.7 million and $55.5 million from the Japan Bank for International Cooperation (“JBIC”), Citibank and Kazatomprom, respectively. The Corporation’s share of such loans is $30.9 million, of which $24.6 million is classified as long term debt. Amendments to the Citibank loan agreement and the JBIC loan agreement, which each include Khorasan-U as a co-borrower, were signed at the end of March 2015. These loans are guaranteed by Kazatomprom. As at December 31, 2015, there was a breach of a financial covenant (Total Debt to Equity ratio) by Kyzylkum under each of the JBIC and Citibank loans. On December 30, 2015, Kyzylkum received a waiver from each of JBIC and Citibank. The conditions of the waivers were fulfilled by September 30, 2016.

In addition to the $3.7 million loan from the Corporation (which was made as part of the Corporation’s obligation to provide project financing for the construction and commissioning of the sulphuric acid plant in Kazakhstan), SKZ-U has loans outstanding of $3.3 million, $3.3 million and $79.9 million from Sumitomo Mitsui Banking Corporation, Mizuho Corporate Bank and JBIC, respectively, at September 30, 2016. The Corporation’s share of such loans is $16.4 million, of which $13.9 million is classified as long term debt. At September 30, 2016, Zarechnoye had loan outstanding of $4.0 million from ATF. The Corporation’s share of these loans is $2.0 million, which is classified as short term debt. At September 30, 2016, Karatau had loan outstanding of $19.9 million from Bank VTB Kazakhstan. The Corporation’s share of the loan is $9.9 million, which is classified as short term debt.

LOANS RECEIVABLE The Corporation received $7.4 million of principal from SKZ-U during the nine months ended September 30, 2016, bringing the total outstanding loan to $3.6 million. The Corporation received interest of $0.6 million during the nine months ended September 30, 2016. The Corporation made loans available to Mantra to provide funds for the Mkuju River Project. The Corporation advanced an additional $9.0 million and accrued interest of $6.3 million during the nine months ended September 30, 2016, bringing the total outstanding loan to $137.9 million. RUBLE BONDS AND DERIVATIVES The Corporation originally issued Series 1 Ruble Bonds having an aggregate principal amount of RUB 14.3 billion ($463.5 million) on December 7, 2011. At the same time, the Corporation entered into a cross currency interest rate swap, which economically converted the Series 1 Ruble Bonds into a synthetic US dollar borrowing by fixing the Corporation’s principal and interest payments in US dollar terms and, while the hedging relationship was in force, the Corporation was not economically exposed to any ruble currency risks. The swap has a US$ fixed exchange rate of $1.00 = RUB 30.855 and resulted in a US$ fixed interest rate of 6.74% on the principal amount of $463.5 million. For accounting purposes, the original swap was designated as a cash flow hedge and the Corporation applied a hedge ratio of 80% to the debt, resulting in the Swap covering 80% of the foreign currency risk inherent in the interest and principal payments on the RUB 14.3 billion borrowing. On August 23, 2013, the Corporation repurchased and cancelled RUB 11.8 billion of the Series 1 Ruble Bonds, resulting in the original swap being de-designated from the hedging relationship. On October 1, 2013, 17% or RUB 2.5 billion of the original swap was designated as a cash flow hedge against 80% of the remaining RUB 2.5 billion Series 1 Ruble Bonds. The remaining 83% of the original swap is no longer designated in a hedging relationship. On August 23, 2013, the Corporation completed a public offering in Russia of seven-year ruble-denominated Series 2 Ruble Bonds for gross proceeds of $380.7 million (RUB 12.5 billion). On September 18 and 23, 2013, the Corporation entered into a number of cross currency interest rate swaps and forward strip contracts with the economic objective of managing the foreign exchange and interest rate risks of the Corporation. On October 1, 2013, these instruments and combinations of instruments were designated as hedging instruments against portions of the Series 2 Ruble Bonds. The cross currency interest rate swaps and the associated hedging relationships are as follows:

(a) A cross currency interest rate swap with a notional amount of RUB 245 million / $7.7 million (fixed at an exchange rate of $1.00 = RUB 31.8) to convert a portion Series 2 Ruble Bonds into a synthetic US dollar borrowing. This swap was designated as a cash flow hedge to hedge a portion (RUB 196 million or an 80% hedge relationship) of the foreign exchange risk arising from the Series 2 semi-annual ruble interest payments and ruble principal amount due at maturity starting from October 1, 2013 to August 11, 2020.

(b) A cross currency interest rate swap with a notional value of RUB 4.1 billion / $129.8 million (fixed at an exchange rate of $1.00 = RUB 31.8)

and effective date of November 30, 2016, to convert a portion of the Series 2 Ruble Bonds into a synthetic US dollar borrowing, at a fixed rate of 7.5%. This swap was designated as a cash flow hedge to hedge a portion (RUB 3.3 billion or an 80% hedge relationship) of the foreign exchange risk arising from the Series 2 Semi-annual ruble interest payments and ruble principal amount due at maturity starting November 30, 2016 to August 11, 2020.

On September 18, 2013, the Corporation entered into a cross currency interest rate swap with a notional amount of RUB 7.7 billion / $238.2 million (fixed at an exchange rate of $1.00 = RUB 32.2) with the initial exchange date of November 30, 2016 and effective date of February 17, 2017, to convert a portion (RUB 7.7 billion) of the Series 2 Ruble Bonds into a synthetic US dollar floating borrowing (3 month US LIBOR interest rate plus a spread of 4.85%). The maturity date of this cross currency interest rate swap is August 14, 2020.

On August 23, 2013, the Corporation redeemed RUB 11.8 billion of the Series 1 Ruble Bonds, resulting in the original swap being de-designated from the hedging relationship. Management decided not to designate 29% or RUB 4.1 billion of the original swap in any hedging relationship. On October 1, 2013, 54% or RUB 7.7 billion of the original swap together with two forward strips were designated as a cash flow hedge against a portion of the foreign exchange risk arising from the Series 2 semi-annual ruble interest payments from October 1, 2013 to February 14, 2017 and the principal payment. On January 1, 2014, management de-designated this hedging relationship so that 54% of the original swap and the two forward strip contracts are no longer in a hedging relationship. As a result, a loss of $0.7 million was reclassified from other comprehensive income to finance expense.

30

On September 18, 2013, the Corporation entered into a cross currency interest rate swap with a notional amount of RUB 455 million / $14.1 million (fixed at an exchange rate of $1.00 = RUB 32.2) to convert a portion of the Series 2 Ruble Bonds into a synthetic US dollar floating borrowing (3 month US LIBOR plus a spread of 5%). On October 1, 2013, this cross currency interest rate swap was designated as a fair value hedge to hedge a portion (RUB 455 million or a 100% hedge relationship) of the foreign exchange risk arising from the Series 2 semi-annual ruble interest payments and ruble principal amount due at maturity starting from October 1, 2013 to August 14, 2020. On January 1, 2014, management de-designated this hedging relationship so that this swap is no longer in a hedging relationship. As a result, a loss of $0.2 million was reclassified from the Ruble Bonds to finance expense. Interest expense of $19.4 million was recognized in the nine months ended September 30, 2016, which consists of an interest expense of $18.0 million related to the Ruble Bonds Series 1 and Series 2 and $1.4 million interest expense on the Swap. Net foreign exchange losses on Ruble Bonds of $20.7 million were recognized in the nine months ended September 30, 2016, consisting of foreign exchange losses of $32.4 million on translation of the Ruble Bonds to the closing US dollar rate on the reporting date, offset by $11.6 million of exchange gains reclassified to the consolidated income statement from the fair value hedge reserve. The mark-to-market movement on non-hedge derivatives of $37.5 million was recognized in other (expense) income in the consolidated income statement. DIVIDENDS PAYABLE As of December 31, 2015 the amount of dividend payable by Betpak Dala LLP to its non-controlling shareholder, Kazatomprom, was $18.4 million. For the nine months ended September 30, 2016 SMCC and Betpak Dala LLP accrued dividends to the shareholders in the amount of $100.7 million and $6.7 million respectively, which included $32.2 million dividends payable to their non-controlling shareholder. During the same period, Betpak Dala LLP and SMCC paid dividends to the non-controlling shareholder in the amount of $24.9 million. As of September 30, 2016 the amount of dividends payable to the non-controlling shareholder consists of $26.5 million dividends payable by SMCC. NON-CURRENT LIABILITIES The amount outstanding on the Corporation’s Ruble Bonds increased mainly because of appreciation of the Ruble. The amount outstanding on the Corporation’s Senior Secured Notes decreased because of the purchase by the Corporation of $60.8 million of the principal amount, interest accrued of $14.3 million partially offset by coupon interest payment of $10.1 million and accrued amortization of transaction costs of $2.5 million. EQUITY The increase in shareholders’ equity during the nine months ended September 30, 2016 of $709.9 million mainly consists of:

Net earnings of $209.5 million;

Consolidation of SMCC and Betpak Dala of $479.3 million and $41.3 million, respectively;

Share of dividends declared by SMCC and Betpak Dala in favor of non-controlling shareholder of $30.2 million and $2.0 million, respectively;

Unrealised exchange gain on translation of foreign operations of $17.8 million; and

Revaluation net loss of the cash flow hedging reserve of $5.8 million.

31

WORKING CAPITAL AND CASH GENERATED FROM OPERATIONS On September 30, 2016, the Corporation’s current assets exceed current liabilities by $47.6 million. Included in this amount are cash, cash equivalents and restricted cash of $235.2 million. Cash held by the Corporation’s equity accounted investees operations is applied to the business of the equity accounted investees and cash flows between the Corporation and the equity accounted investees normally only occur through loans or capital contributions to the equity accounted investees and dividends paid by the equity accounted investees. Cash in excess of the working capital requirements from the Corporation’s equity accounted investees is distributed to the Corporation through the payment of principal, interest and/or dividends.

The Corporation currently earns revenue from the sale of uranium and services from its mines in Kazakhstan and the United States.

Refer to Results of Operations and Discussion of Financial Position - Uranium sales, inventory and operating costs for a discussion on inventory levels and the relationship between contracted sales and inventory.

Uranium is sold into the spot market as well as under forward long-term delivery contracts. Contracted deliveries are planned to be filled from the Corporation’s mining operations. The ability to deliver contracted product is therefore dependent upon the continued operation of the mining operations as planned. The Corporation has entered into market-related sales contracts with price mechanisms that reference the market price in effect at or near the time of delivery. In addition, the Corporation has negotiated floor price protection in many of its sales contracts. CURRENT AND FUTURE SOURCES OF FUNDING The Corporation has Ruble Bonds and Senior Secured Notes outstanding as at September 30, 2016. In addition, the Corporation’s equity accounted investees in Kazakhstan has amounts outstanding on several debt facilities. The Corporation considers and evaluates its capital requirements, capital structure and liquidity position, as well as its alternative sources of capital, on a continuous basis, taking into account current circumstances and expectations. On December 13, 2013, the Corporation issued $300 million of 6.25% Senior Secured Notes due December 13, 2018 to qualified institutional buyers in the U.S.A. and Europe. On September 24, 2015, the Corporation purchased $29.6 million of the principal amount of the Senior Secured Notes at a price of $920 per $1,000 of face value pursuant to a tender offer. The total amount of the transaction was $27.9 million, including $0.5 million of accrued interest and legal fees of $0.2 million. The Corporation financed the purchase with a loan of $50 million provided by an affiliate, bearing interest at a rate of 6.15% per annum (subsequently reduced to 4.95% as of July 14, 2016) and due on June 30, 2020. The Senior Secured Notes so purchased have not been retired and remain outstanding. On June 29, 2016, the Corporation closed the tender offer for, and accepted for purchase, $60.5 million of the principal amount of the Senior Secured Notes at a price of $1,000 per $1,000 of face value. The total amount of the transaction was $60.8 million including $0.3 million of accrued interest, as well as legal fees. The Senior Secured Notes so purchased have not been retired and remain outstanding. The settlement of the tender offer was completed on July 7, 2016. On July 12, 2016, the Corporation entered into a loan facility agreement under which it may borrow up to $81.0 million from an affiliate, at an interest rate of up to 5.5% per annum with a maturity date of up to May 15, 2021, for the purpose of purchasing, redeeming or settling (respectively) the Senior Secured Notes, Series 1 Ruble Bonds and/or any related currency exchange swap agreements. The Corporation has not yet drawn down any amounts under this loan facility. On August 11, 2016, the Corporation and the affiliate agreed to increase the facility to $95 million. On January 2, 2014, the Corporation repurchased C$227.5 million of the C$260.0 million 2010 Debentures outstanding. The remaining 2010 Debentures had a face value of C$32.5 million and were terminated and repaid on February 5, 2015, with interest payable at a rate of 5.0% per annum. On August 23, 2013, the Corporation partially repurchased the Series 1 Ruble Bonds which resulted in a reduced Series 1 Ruble Bond amount outstanding of RUB2.5 billion that will mature on November 30, 2016, with interest payable in Rubles at a rate of 9.75% per annum, payable semi-annually in arrears and being funded from internal resources. The Swap fixed the US dollar principal amount of the Series 1 Ruble Bonds at $81.0 million, and the interest at a US dollar rate of 6.74%. The Corporation also issued RUB12.5 billion aggregate principal amount of Series 2 Ruble Bonds on August 23, 2013 that will mature on August 20, 2020 with interest payable in Rubles at a rate of 10.25% per annum, payable semi-annually in arrears and being funded from internal sources. The Derivatives fixed the US dollar principal amount of the Series 2 Ruble Bonds at $389.9 million and the interest at a US dollar rate of 7.5% on a principal of $137.6 million, LIBOR plus 5% on a principal of $14.1 million and LIBOR plus 4.85% on a principal of $238.2 million after November 2016. As at September 30, 2016, the amount of the outstanding credit facilities held by Karatau, Kyzylkum and Zarechnoye were $19.9 million, $102.9 million and $4.0 million, respectively. The Corporation’s share of these facilities was $42.8 million. As at September 30, 2016, SKZ-U had loans outstanding of $86.5 million, in addition to the loan outstanding from Uranium One in the amount of $3.7 million to finance the construction of a sulphuric acid plant in Kazakhstan. In addition to the factors described under “Risks and Uncertainties” below, the Corporation’s ability to raise capital is highly dependent on the commercial viability of its projects and the underlying price of uranium. Other risk factors, including the Corporation’s ability to develop its projects into commercially viable mines, international uranium industry competition, public acceptance of nuclear power and governmental regulation can also adversely affect the Corporation’s ability to raise additional funding. There is no assurance that additional sources of funding, if required, will be forthcoming. Please refer to “Risks and Uncertainties”.

32

CONTRACTUAL OBLIGATIONS

There were no material changes in contractual obligations since December 31, 2015.

COMMITMENTS AND CONTINGENCIES

Due to the size, complexity and nature of the Corporation’s operations, various legal and tax matters arise in the ordinary course of business. The Corporation accrues for such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management, these matters will not have a material effect on the consolidated financial statements of the Corporation.

The Corporation incurs expenditures to maintain and increase its production capacity, which mostly consist of its capital expenditure budget.

Uranium One is providing a credit facility to fund the Mkuju River Project and other Mantra Tanzania exploration activities. The credit facility is guaranteed by ARMZ.

Since March 2014, the U.S. and Canadian governments and the European Union have implemented a number of measures in response to the situation in Ukraine, as discussed under “Situation in Ukraine”, above.

RELATED PARTIES

The following significant related party transactions and balances are included in the Corporation’s results as at September 30, 2016:

The Corporation and its equity accounted investees had sales of $212.5 million to Uranium One Holding during 2016, on market related terms;

SMCC had sales of $19.3 million to Kazatomprom during 2016, on market related terms. As at September 30, 2016 trade receivables from Kazatomprom amounted to $2.2 million;

For the nine months ended September 30, 2016 SMCC had purchases from affiliates of Uranium One Holding N.V. and Kazatomprom in the amount of $14.8 million. As at September 30, 2016 trade payables to those affiliates amounted to $1.9 million;

As of September 30, 2016 the amount of dividends payable to Kazatomprom was $26.5 million. For the nine months ended September 30, 2016 Betpak Dala and SMCC paid dividends to Kazatomprom in the amount of $20.5 million and $4.4 million, respectively;

The Corporation’s equity accounted investees had purchases of $5.5 million from RBM-Kazakhstan during 2016;

On September 30, 2016, the Corporation and its equity accounted investees had outstanding trade receivables of $64.6 million due from Uranium One Holding;

The associate Kyzylkum performed processing services for the associate Khorasan during 2016 and recognized revenue of $30.3 million and operating expenses of $14.7 million. The Corporation’s share of these revenue and operating expenses was $9.1 million and $4.4 million, respectively;

The Corporation purchased U3O8 from Uranium One Holding valued at $5.1 million for the nine months ended September 30, 2016;

On July 7, 2016, pursuant to the Corporation’s tender offer to purchase Senior Secured Notes, the Corporation purchased Senior Secured Notes held by Uranium One Holding. Before the date of the transaction Uranium One Holding received $0.7 million of interest during 2016;

ROSATOM holds $39.6 million of the Corporation’s Ruble Bonds and received $1.8 million of interest during 2016;

On September 24, 2015, the Corporation received a loan of $50 million from an affiliate bearing interest at the rate of 6.15% per annum (subsequently reduced to 4.95% as of July 14, 2016) and due on June 30, 2020, for the purpose of purchasing Senior Secured Notes of U1 Investments;

In April 2016 the Corporation signed the uranium concentrates loan agreement with Uranium One Holding for 200,000 pounds U3O8 with the maturity date on or prior to September 30, 2016. The loan was repaid in September, 2016;

On July 12, 2016, the Corporation entered into a loan facility agreement under which it may borrow up to $81.0 million from an affiliate, at an interest rate of up to 5.5% per annum with a maturity date of up to May 15, 2021, for the purpose of purchasing, redeeming or settling (respectively) the Senior Secured Notes, Series 1 Ruble Bonds and/or any related currency exchange swap agreements. The Corporation has not yet drawn down any amounts under this loan facility. On October 28, 2016, the Corporation and the affiliate increased the facility to $95 million;

The Corporation advanced $9.0 million to Mantra during 2016. Mantra owed $137.9 million, including accrued interest of $27.1 million, to the Corporation at September 30, 2016;

On February 29, 2016, the Corporation entered into a service agreement with Uranium One Group for tax, accounting, budgeting, treasury, legal, strategic development and other operational services. For the nine months ended September 30, 2016 the Corporation paid $2.9 million for the services performed in 2016 under the contract; and

The Corporation is the operator of Mantra’s Mkuju River Project in Tanzania. The Corporation does not receive a fee for being the operator of the Mkuju River Project but is a party to an operating agreement whereby the Corporation will receive a termination fee of $42.8 million, in cash or in shares of Mantra Tanzania Ltd. (or any combination thereof), upon the expiration or termination of the operating agreement by either party upon 30 days’ notice, without impact to the value of the termination fee. The operating agreement expires on December 31, 2016. If Mantra Tanzania Ltd. were to pay the termination fee wholly or partly in shares, the operating agreement does not include a mechanism to determine the number of shares which may be issued by Mantra Tanzania Ltd. to make such payment. Therefore, there is no basis to determine the fair value of any shares to be received as payment. The Corporation has not recorded any amounts recoverable for the termination fee related to the operating agreement.

OFF-BALANCE SHEET ARRANGEMENTS

The Corporation has no off-balance sheet arrangements.

OUTSTANDING SHARE DATA

As of September 30, 2016, there were issued and outstanding 957,189,036 Common Shares.

The Corporation had contingent obligations for the issuance to third parties of 57,500 common shares under certain property options and joint venture agreements. These obligations can be satisfied at the Corporation’s discretion by either the issuance of shares or by the payment in cash of $400,000. Consequently, the Corporation intends to settle these contingent arrangements in cash and not issue shares.

33

DIVIDENDS

Holders of common shares are entitled to receive dividends if and when declared by the Board of Directors. There are no restrictions on the Corporation’s ability to pay dividends except as set out under its governing statute, the Canada Business Corporations Act, and under the indenture governing the Senior Secured Notes (subject to certain exceptions).

CRITICAL JUDGEMENTS AND ESTIMATES The preparation of consolidated financial statements in conformity with IFRS requires the Corporation’s management to make estimates and assumptions about future events that affect the amounts reported in the consolidated financial statements and related notes to the consolidated financial statements. Actual results may differ from those estimates. Information about areas of judgment and key sources of uncertainty and estimation is contained in the accounting policies and / or the notes to the consolidated financial statements.

The following are the key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Recoverability of trade receivables and investments A provision is made against accounts that in the estimation of management may be impaired. The recoverability assessment of trade receivable is based on a range of factors including the age of the receivable and the creditworthiness of the customer. The provision is assessed monthly with a detailed formal review of balances and security being conducted quarterly. Determining the recoverability of an account involves estimation as to the likely financial condition of the customer and their ability to subsequently make payment. To the extent that future events impact the financial condition of the customers, these provisions could vary significantly.

Investments in securities are reviewed for impairment at the end of each reporting period. When the fair value of the investment falls below the Corporation's carrying value, and it is considered to be significant or prolonged, an impairment charge is recorded to the consolidated income statement for the difference between the investment's carrying value and its estimated fair value at the time. In making the determination as to whether a decline is considered prolonged, the Corporation considers such factors as the duration and extent of the decline, the investee's financial performance, and the Corporation's ability and intention to retain its investment for a period that will be sufficient to allow for any anticipated recovery in the investment's market value. Differing assumptions could affect whether an investment is impaired in any period or the amount of the impairment.

Net realizable value of inventories In determining the net realizable value of inventories, the Corporation estimates the selling prices, based on published market rates, cost of completion and cost to sell. To the extent that future events impact the saleability of inventory these provisions could vary significantly.

Estimated reserves, resources and exploration potential Reserves are estimates of the amount of product that can be extracted from the Corporation’s properties, considering both economic and legal factors. Calculating reserves and estimates requires decisions on assumptions about geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, prices and exchange rates.

Estimating the quantity and / or grade of reserves requires the analysis of drilling samples and other geological data.

Estimates of reserves may change from period to period as the economic assumptions used to estimate reserves change from period to period, and because additional geological data is generated during the course of operations. Changes in reported reserves may affect the Corporation’s financial position in a number of ways, including the following:

Asset carrying values may be affected due to changes in estimated future cash flows;

Depreciation and amortization charged in the consolidated income statement may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change; and

The carrying value of deferred tax assets may change due to changes in estimates of the likely recovery of the tax benefits.

Impairment of mineral interests, property, plant and equipment For the purpose of determining the recoverable amount of assets or cash generating units, estimates are made of the discount rate. Future cash flow estimates are based on expected production and sales volumes, commodity prices (considering current and historical prices, price trends and related factors), reserves, operating costs, restoration and rehabilitation costs and future capital expenditures. The Corporation’s management is required to make these estimates and assumptions which are subject to risk and uncertainty; hence there is a possibility that changes in circumstances will alter these projections, which may impact the recoverable amount of the assets. In such circumstances, some or all of the carrying value of the asset may be impaired and the impairment would be recognized in the consolidated income statement. Impairment testing is done at the cash generating unit level. Some of the Corporation’s equity accounted investees have multiple mining areas and management must exercise judgment in determining what constitutes a cash generating unit and the degree of aggregation of various assets. This impacts the impairment analysis performed, as the results of the impairment analysis might differ based on the composition of the various cash generating units. Due to the decline in uranium prices, the Corporation carried out impairment analyses in Q2 and Q3 which resulted in a write-down of $4.9 million and $5.0 million respectively for the MRP. No impairment was found necessary for the U.S. and Kazakhstan operations.

Expected economic lives of, estimated future operating results and net cash flows from mineral interests In applying the units of production method, depreciation is normally calculated using the quantity of material extracted from the mine in the period as a percentage of the total quantity of material to be extracted in current and future periods based on proven and probable reserves. In assessing the life of a mine for accounting purposes, mineral resources are only taken into account where there is a high degree of confidence of economic extraction.

34

The Corporation’s operating result and net cash flow forecasts are based on the best estimates of expected future revenues and costs, including the future cash costs of production, capital expenditure, close down and restoration. These may include net cash flows expected to be realized from extraction, processing and sale of mineral resources that do not currently qualify for inclusion in proven and probable ore reserves. Such non reserve material is included where there is a high degree of confidence in its economic extraction. This expectation is usually based on preliminary drilling and sampling of areas of mineralization that are contiguous with existing reserves.

The mine plan takes account of all relevant characteristics of the ore body, ore grades, chemical and metallurgical properties of the ore impacting on process recoveries and capacities of processing equipment that can be used. The mine plan is therefore the basis for forecasting production output in each future year and for forecasting production costs.

The Corporation’s cash flow forecasts are based on estimates of future commodity prices. These long term commodity prices, for most commodities, are derived from an analysis of the marginal costs of the producers of these commodities. These assessments often differ from current price levels and are updated periodically. In some cases, prices applying to some part of the future sales volumes of a cash generating unit are predetermined by existing sales contracts. The effects of such contracts are taken into account in forecasting future cash flows.

There are numerous uncertainties inherent in estimating ore reserves, and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being re-estimated.

Fair value of financial instruments For financial instruments that have fair values that cannot be reasonably approximated by their carrying values, the fair values of those financial instruments must be estimated. As much as possible, the fair values of those financial instruments have been estimated by reference to quoted market prices for actual or similar instruments where available and disclosed accordingly. The fair values of other financial instruments are measured using valuation models. These models require a variety of observable market inputs, market prices, forward price curves, yield curves and discount rates. Valuation methodologies and assumptions are reviewed on an ongoing basis. A significant change in this assessment may result in unrealized losses being recognized in net income. The fair values of cross-currency interest rate swaps are based on credit risk adjusted discounted cash flows. These require the Corporation’s management to make assumptions and estimates regarding US dollar exchange rates, interest rates and credit spreads. Some of the inputs to the valuation model are based on unobservable market data. The model is sensitive to assumptions and estimates made by the Corporation’s management and changes in these inputs could result in different values being recognized (i) on the consolidated balance sheet as financial derivatives and reserves (ii) through the consolidated income statements for fair value changes associated with derivatives not in a hedging relationship and ineffectiveness for cash flow hedging relationships, and (iii) through other comprehensive income (loss) for the effective fair value changes of cash flow hedging relationships. Fair value of stock-based compensation The Corporation determines the fair value of its LTIP PSUs from two pricing scenarios: (i) the income approach that is based on the net asset value derived from the discounted cash flow model using the life of mine models and (ii) the market approach based on trading multiples of comparable public companies that compare the relative prices of public companies to their net asset values and operating cash flows. The income approach requires the use of estimates and assumptions inherent in life of mine models such as uranium prices, foreign exchange, discount rate and production volumes. The market approach also uses assumptions including trading multiples that reflect market sentiment towards uranium producers. The Corporation determined the fair value of options granted using the Black-Scholes option pricing model. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate and, therefore, the existing models do not necessarily provide a reliable measure of the fair value of the Corporation’s stock options.

Fair value of assets and liabilities acquired in business combinations Business combinations are accounted for by applying the acquisition method of accounting, whereby the purchase consideration of the combination is allocated to the identifiable net assets on the basis of fair value on acquisition. The amount of goodwill initially recognized is dependent on the allocation of the purchase price to the fair value of the identifiable assets acquired and the liabilities assumed. The determination of the fair value of the assets and liabilities is based, to a considerable extent, on management’s judgment.

Allocation of the purchase price affects the results of the Corporation as finite lived intangible assets are amortized, whereas indefinite lived intangible assets, including goodwill, are not amortized and could result in differing amortization charges based on the allocation to indefinite lived and finite lived intangible assets.

Reclamation and closure cost obligations Reclamation and closure cost obligation provisions represent management’s best estimate of the present value of the future costs. Significant estimates and assumptions are made in determining the amount of reclamation and closure cost obligation provisions. Those estimates and assumptions deal with uncertainties such as: requirements of the relevant legal and regulatory framework; the magnitude of possible contamination; determination of the appropriate discount rate; and the timing, extent and costs of required restoration and rehabilitation activity. These uncertainties may result in future actual expenditures differing from the amounts currently provided.

The following are the critical judgments that have a significant effect on the consolidated financial statements:

Commencement of commercial operations Determining when a project has commenced commercial operations involves judgment. Management performs this assessment on an ongoing basis for each development project. Amongst the criteria that are evaluated are: the level of production relative to design capacity and the sustainability of this level; the period of time since the start of uranium production; and an assessment of the sustainability of profitable operations. These factors can be subjective and no one factor by itself is necessarily indicative. Management exercises judgment in evaluating these factors based on its knowledge of the project’s operations.

35

This assessment impacts the balance sheet and income statement, as upon commencement of commercial operations, development expenditures cease to be capitalized, revenue is recognized from any sales when the appropriate criteria have been met, and the assets included in assets under construction are reclassified to property, plant and equipment.

Determination of joint control The Corporation conducts the majority of its operations through joint ownership interests. Judgment is needed to assess whether these interests meet the definition of joint control, as opposed to an investment interest. Management makes this determination based on an analysis of the contracts with the other venturers, including assessing whether unanimous consent is required on financial and operating decisions.

Taxation The provision for income taxes and composition of income tax assets and liabilities require management’s judgment as to the types of arrangements considered to be a tax on income in contrast to an operating cost. The application of income tax legislation also requires judgment in order to interpret legislation and apply those findings to the Corporation’s transactions.

Management judgment and estimates are required in assessing whether deferred tax assets and certain deferred tax liabilities are recognized in the consolidated balance sheet. Judgments are made as to whether future taxable profits will be available in order to recognize certain deferred tax assets. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volumes, commodity prices, reserves, operating costs, and other capital management transactions. These judgments and assumptions are subject to risk and uncertainty, therefore there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognized on the consolidated balance sheet and the benefit of other tax losses and temporary differences not yet recognized.

Functional currency Judgment is required to determine the functional currency of each entity. These judgments are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances.

NEW STANDARDS NOT YET ADOPTED At the date of authorization of the unaudited condensed consolidated interim financial statements for the period ended June 30, 2016, the following standards, which are applicable to the Corporation, were issued but not yet effective.

IFRS 9, Financial instruments IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Corporation is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 9.

IFRS 15, Revenue from Contracts with Customers IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. The core principle of the new standard is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard results in enhanced disclosures about revenue, provides guidance for transactions that were not previously addressed comprehensively and improves guidance for multiple-element arrangements. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Corporation is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 15. IFRS 16, Leases IFRS 16 specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16’s approach to lessor accounting substantially unchanged from its predecessor, IAS 17. IFRS 16 was issued in January 2016 and applies to annual reporting periods beginning on or after 1 January 2019. The Corporation is assessing the potential impact on its consolidated financial statements resulting from the application of IFRS 16.

LONG-TERM INCENTIVE PLAN The total number of PSUs awarded under the LTIP on May 27, 2015 was 159,425 PSUs at a price of $1.94 per PSU. The number of PSUs outstanding as at December 31, 2015 was 334,586. There were no exercised or expired PSUs during the period and 224,545 PSUs were forfeited or cancelled in the period to December 31, 2015. On March 30, 2016 140,047 PSUs were awarded under the LTIP at a price of $2.44 per PSU. The number of PSUs outstanding as at September 30, 2016 is 421,301. There were no exercised or expired PSUs during the period and 101,911 PSUs were forfeited or cancelled in the period to September 30, 2016. The fair market value of the PSUs is calculated using various inputs including the weighted average cost of capital in the range of 10% to 12% and uranium prices in the range of $40/lb. to $62/lb. The management of the Corporation is assisted by external valuators in determining the fair market value. The amount charged to the income statement for LTIP was $0.3 million for the quarter ended September 30, 2016 ($0.1 million for the period ended December 31, 2015).

36

RISKS AND UNCERTAINTIES

The Corporation’s operations and results are subject to various risks and uncertainties. These include, but are not limited to, the following: macroeconomic conditions and global financial markets may have a substantial material adverse effect on the Corporation’s business; as a wholly-owned subsidiary of a Russian state-owned company, the Corporation may be adversely affected by economic sanctions that may be imposed on its shareholders, affiliates or third parties with which the Corporation deals; exploration and mining involves operational risks and hazards; mineral resources and mineral reserves are estimates only; there is no certainty that further exploration will result in new economically viable mining operations or yield new reserves to replace and expand current reserves; Uranium One cannot give any assurance that any of its development projects will become operating mines, or that any of its operations on care and maintenance will become operational, or that currently producing mines will remain commercially viable if uranium prices keep falling; no assurances can be given that future mineral production estimates will be achieved; mineral rights and tenures may not be granted or renewed on satisfactory terms and may be revoked, altered or challenged by third parties (and have been in the case of certain mines); the Government of Kazakhstan has pre-emptive and other rights to acquire the Corporation’s properties in Kazakhstan or their production; limited supply of desirable mineral lands for acquisition; risks and problems associated with completing and integrating acquisitions; competition in marketing uranium, or for mineral properties or operating requirements like drilling equipment; competition from other sources of energy and public acceptance of nuclear energy; sensitivity of revenues to uranium prices and the volatility of the same; labour relations; extreme weather events; the capital requirements to complete the Corporation’s current projects and expand its operations are substantial; the integration of acquisitions; currency fluctuations; Ruble currency exchange risk; restrictions of the Russian banking system; swap counterparty risk; related party transactions and potential conflicts of interest; the Corporation’s operations and activities are subject to environmental risks; government regulation may adversely affect the Corporation; the risks of obtaining and maintaining necessary licences and permits; risks associated with foreign operations including, in relation to Kazakhstan; the risk of future sulphuric acid constraints; a change in ownership that breaches covenants in the Ruble Bonds and Senior Secured Notes; the Corporation is dependent on third party service providers; the Corporation is significantly leveraged; the Corporation is subject to covenants which limit its operating and financial flexibility and create the risk of substantial liability in the event of default; and the Corporation has some outstanding debt that bears interest at floating rates. The Corporation’s risk factors are discussed in detail in its Operating and Financial Review for the year ended December 31, 2015, which is available on the Corporation’s website www.uranium1.com, and should be reviewed in conjunction with these documents.

http://www.uranium1.com/

37

FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION This Operating and Financial Review of Financial Condition and Results of Operations contains certain forward-looking statements. Forward-looking statements include but are not limited to those with respect to, the price of uranium, the estimation of mineral resources and reserves, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency fluctuations, market conditions, corporate plans, objectives and goals, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, the timing and potential effects of proposed transactions, title disputes or claims, limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of words such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes” or variations of such words and phrases, or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the possibility of sanctions that may be imposed on the Corporation, its shareholders, affiliates or third parties with which the Corporation deals, that may have a material adverse effect on the Corporation’s ability to carry on its business or perform its contractual obligations, the future steady state production and cash costs of Uranium One, the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, possible variations in grade and ore densities or recovery rates, failure of plant, equipment or processes to operate as anticipated, possible changes to the tax code in Kazakhstan, accidents, labour disputes or other risks of the mining industry, delays in obtaining government approvals or financing or in completion of development or construction activities, risks relating to the completion of transactions, integration of acquisitions and the realization of synergies relating thereto, to international operations, to prices of uranium as well as those factors referred to in the section entitled “Risk Factors” in the Corporation’s Operating and Financial Review for the year ended December 31, 2015. Although Uranium One has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Uranium One expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required under applicable securities laws. Readers are advised to refer to independent technical reports for detailed information on the Corporation's material properties. Those technical reports, which are available at www.sedar.com under Uranium One’s profile and www.uranium1.com, provide the date of each resource or reserve estimate, details of the key assumptions, methods and parameters used in the estimates, details of quality and grade or quality of each resource or reserve and a general discussion of the extent to which the estimate may be materially affected by any known environmental, permitting, legal, taxation, socio-political, marketing, or other relevant issues. The technical reports also provide information with respect to data verification in the estimation. This document and the Corporation’s other publicly filed documents use the terms “measured”, "indicated" and "inferred" resources as defined in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects. United States investors are advised that the SEC does not recognize these terms. Investors are cautioned not to assume that all or any part of the mineral deposits in these categories will ever be converted into reserves. In addition, "inferred resources" have a great amount of uncertainty as to their existence and economic and legal feasibility and it cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Investors are cautioned not to assume that all or any part of an inferred resource exists or is economically or legally mineable. Mineral resources are not mineral reserves and do not have demonstrated economic viability.

operating and financial review quarter ended september 30 ...€¦ · operating and financial...

Documents