uranerz ar 2011 and proxy document

8/3/2019 Uranerz AR 2011 and Proxy Document

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ANNUAL REPORT 2010

Invest in Nuclear.Clean Air Energy.

Developin ISR uraniu ines in Aeria

NYSEAmEx

ExchANgE

URZ

TORONTOSTOcK

ExchANgE

URZ

FRANKFURTSTOcK

ExchANgE

U9E


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Powder river Basin Projects

Uranerz Project UnitsU egy cpcm ru

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A Proven Team,Focused On Production

Uranerz Energy Corporation is a US-based company

ocused on near-term uranium production. Uranerz

is listed on the NYSE Amex Exchange and the

Toronto Stock Exchange under the symbol URZ.

Uranerz is also listed on the Frankurt Stock

Exchange under the symbol U9E.

The Uranerz management team has specialized

expertise in the in-situ recovery (ISR) uranium

mining method. The Company controls large

strategic land positions in the Powder River Basin

(PRB), a well-known uranium mining district o

Wyoming, U.S.A.

The Companys most advanced 100%owned

Nichols Ranch and Hank projects are both

awaiting the nal license necessary to commence

construction o an ISR uranium mining operation.Uranerz has received the State permits and now

only requires the nal Materials License rom the

Nuclear Regulatory Commission (NRC) to build

the Nichols Ranch ISR Uranium Project, which is

planned to consist o a central processing acility at

the Nichols Ranch property and a satellite acility at

the Hank property. Commencement o production

at the Nichols Ranch ISR Project is dependent on

receipt o the required NRC license and production

start-up is projected or 2012.

GilletteBuffalo

Newcastle

Casper

Kaycee

Fort

Washakie

Rawlins

Laramie

W Y O M I N G

Powder River Basin Projects

4

2

3

1

IRIGARAY SR PLANT(WILLOW CREEK)

CHRISTENSEN RANCH ISR

MINE (WILLOW CREEK)

CAMECO

NORTH-BUTTE

MOORE RANCH

RUTH ISR TEST MINE

5

6

Letter to te Sareolders 1

In-Situ Reovery (ISR) minin Proess 4

For 10K 5

Proy Stateent 83

corporate Inforation Inside bak over

C O N T E N T S

6 miles / 10 Kiloetres


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expl llg h Pumpk BuUum d

Letterto Shareholders

It is exciting to refect on the corporate events that have unoldedover the past year and the rst quarter o 2011. Uranerz Energy

Corporation had a very successul 2010, during which several keymilestones were achieved, and we are looking orward to continuingthat success through 2011 to allow us to initiate construction on ourrst in-situ recovery (ISR) uranium mine.

The highlights or 2010 and early 2011 included:

Acquiringextensivedrilldataincludingdrilllogs,drillholemapsandgeologiccross

sections and commencing a detailed assessment o these data on over 15,000

uranium exploration holes in the Powder River Basin area o Wyoming;

SignicantlyincreasingourPowderRiverBasinuraniumresourcebasebyover45%

to 19.1 million pounds (in all categories), as U3O8;

Initiatingthepermitapplicationprocessonourthirdin-siturecovery

(ISR) mining unit;

TheadoptionofaShareholderRightsPlandesignedtoensurethatallofthe

Companys shareholders receive air and equal treatment in situations where an

unsolicited oer to acquire the Company is made;

StrengtheningtheCompanystreasurytoover$47millionthroughthecompletionof

an ATM nancing and the exercise o warrants; and

AchievingmajoradvancementsfortheNicholsRanchISRUraniumProjectwith:- Receipt o the Permit to Mine rom the Wyoming Department o Environmental

Quality (WDEQ);

- Contracting or long lead time well-eld installation equipment, processing

plant equipment and project power;

- Issuing requests-or-quotation or well-eld development, plant construction,

and equipment;

- Receipt o the nal Supplemental Environmental Impact Statement (SEIS) by

the Nuclear Regulatory Commission (NRC); and

- Receipt o the drat Materials License rom the NRC.

Uranerz Energy Corporation 1


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LETTER TO ShAREhOLDERS

Last summer we acquired and commenced a detailed assessment

o a large data library which includes over 15,000 drill logs, drill

hole maps and geologic cross sections or nearly all o the Pumpkin

Buttes Mining District in the Powder River Basin o Wyoming. These

drillholescoverover340squaremilesandareexpectedtobevery

helpul in identiying prospective uranium targets while saving the

Company a substantial amount o time and exploration expense.

The library may also be used to target potential acquisitions within

the Powder River Basin and to generate data or permitting and

eventual production operations in avorably identied areas.

During 2010 Uranerz ocused eorts on expanding its resource

base and completed technical reports on three new project areas.

With the addition o Reno Creek, Uranerz has reported uranium

resourcesonsevenofitsprojectsundertheguidelinesofNI43-

101,andincreaseditsuraniumresourcebasebyover45%(inall

categories). The Company currently has over 30 uranium projects atvarious stages o exploration and development in the Powder River

Basin area o Wyoming.

The Company also commenced preparation o the environmental

permit and license applications or its planned third ISR uranium

mining unit in the central Powder River Basin o Wyoming. This unit,

named Jane Dough, includes the Doughstick, South Doughstick

and North Jane uranium properties. The Jane Dough permit area

is adjacent to and immediately south o the Nichols Ranch permit

area, and the Company intends to add the Jane Dough Unit as an

amendment to the Nichols Ranch ISR Uranium Project license.

During 2010 the Company implemented a Shareholder Rights Plan to

saeguard our shareholders interests by discouraging undervalued

or unair takeovers o the Company. The Company wants to ensure

that the uture benets o its ongoing initiatives are not denied to

its shareholders by an opportunistic, undervalued acquisition o the

Company. This Plan is designed to protect against such acquisitions

so that shareholders can share in the ull benet o Uranerz long-

term potential.

Late inDecember, 2010 the Company completed a $20million

nancing, and caused the accelerated exercise o an outstanding

series o warrants in February o 2011. These unds signicantly

bolsteredtheCompanystreasurywhichstoodatover$47million

by the end o Q1, 2011. The unds will be used primarily or the

development o commercial mining acilities at the Nichols Ranch

ISR Uranium Project, urther exploration on Powder River Basinproperties, and working capital to hire new sta or construction,

production and ongoing overhead.

Several imperative permitting milestones have been achieved during

the past several months. In late December the State o Wyoming,

Department o Environmental Quality (WDEQ), issued the

commercialPermittoMine(PermitNumber778)fortheCompanys

Nichols Ranch ISR Uranium Project located in Johnson and

Campbell counties in the Central Powder River Basin o Wyoming,

U.S.A. In January o 2011, the nal Supplemental Environmental

Annual Report 20102

Recently constructed electrical substation will provide power to the Nichols Ranch ProjectMechanical Integrity Testing Truck (Tests wells or possible leaks)


5/138Uranerz Energy Corporation 3

LETTER TO ShAREhOLDERS

Impact Statement (SEIS) or the Nichols Ranch ISR Uranium

Project was posted on the Nuclear Regulatory Commission (NRC)

website and published in the Federal Register. In the SEIS, the NRC

reported its conclusion that there were no major environmental

impacts that would preclude licensing o the Nichols Ranch ISR

Uranium Project.

The last authorization needed beore on-site construction can

commence is the nal Materials License rom the NRC. The NRC

issued to the Company in drat orm the Materials License Number

SUA-1597inlateNovember,2010.OncethenalMaterialsLicense

is issued, the Company plans to commence development o its

rst ISR uranium mine in Wyoming. The Nichols Ranch project will

serve as a platorm to develop the Companys other Powder River

Basin projects through the permit amendment provisions o the

regulatory process.

The Company believes that, notwithstanding the eects o the March

2011 tsunami in Japan, the long term undamentals or nuclear

energy remain strong. The demand or uranium ar exceeds mined

supply, as climate change and environmental concerns continue

garnering increased world attention, and nuclear is regarded as a

sae, clean and sustainable energy source.

In closing, I would like to thank all our shareholders, nanciers, and

employees or their continued support and contribution towards

building a successul uranium company. I particularly want to

thank our eld employees or perorming their jobs in a sae and

environmentally riendly manner. With this continued support I

am condent that Uranerz will meet its objective o becoming an

economic producer o uranium to be used or uel utilized in nuclear

power plants.

Sincerely,

Glenn Catchpole, M.S., P.Eng.

President and Chie Executive Ocer

Back (Let to right): Gerhard Kirchner, Richard Holmes, Peter Bell, KurtisBrown, Arnold Dyck, Paul Saxton, Doug Hirschman.Front (Let to right): Ben Leboe, Sandra MacKay, Glenn Catchpole,

Dennis Higgs, George Hartman


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In-situ recovery (ISR) mining is a low-cost process that uses a

leaching solution to extract uranium rom underground ore bodies.

The leaching agent, which contains an oxidant such as oxygen with

CO2 and sodium bicarbonate (commonly known as baking soda),is injected through wells into the ore body in a conned aquier to

dissolve the uranium. This solution is then pumped via other wells

to the surace or processing resulting in a cost-ecient and

environmentally riendly mining process.

ISR operations are basically water treatment plants; oxygenated water

is pumped through the sandstone to dissolve the trapped uranium.

The uranium is recovered and then processed in a nearby acility.

LowCapitalCostsforMineDevelopment

EnvironmentallyFriendly

NoWasteRock,NoTailingsPond

ProtableonLowerGradeUranium

Deposits

SmallWorkForce(lowlaborcosts)

In-Situ Recovery(ISR) Mining Process

Annual Report 20104


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Form 10K

Uranerz Energy Corporation 5


8/138Annual Report 20106



UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the scal year ended December 31, 2010 OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period rom_______________ to _________________

Commission le number: 001-32974

URANERZ ENERGY CORPORATION(Exact Name o Registrant as Specied in its Charter)

Nevada

98-0365605(State o other jurisdiction o incorporation or organization) (I.R.S. Employer Identication No.)

1701 East E Street

PO Box 50850, Casper, Wyoming

82605-0850

(Address o Principal Executive Oces) (Zip Code)

(307) 265-8900(Registrants Telephone Number, including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title o Each Class Name o Each Exchange on Which RegisteredCommon Stock: $0.001 par value NYSE Amex EquitiesPreerred Stock: $0.001 par value Toronto Stock Exchange



SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None

Indicate by check mark i the registrant is not required to le reports pursuant to Section 13 or Section 15(d) o the Act.Yes [ ] No[X]

Indicate by checkmark whether the registrant (1) led all reports required to be led by Section 13 or 15(d) o the Securities ExchangeAct o 1934 during the preceding 12 months (or or such shorter period that the registrant was required to le such reports), and (2)has been subject to such ling requirements or the past 90 days.Yes [X] No [ ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, i any, every Inter-active Data File required to be submitted and posted pursuant to Rule 405 o Regulation S-T ( 229.405 o this chapter) during thepreceding 12 months (or or such shorter period that the registrant was required to submit and post such les).Yes [X] No [ ]

Indicate by checkmark i disclosure o delinquent lers pursuant to Item 405 o Regulation S-K is not contained herein, and will notbe contained, to the best o the registrants knowledge, in denitive proxy or inormation statements incorporated by reerence in PartIII o this Form 10-K or any amendment to the Form 10-K.

[ ]

Indicate by check mark whether the registrant is a large accelerated ler, an accelerated ler, or a non-accelerated ler. See thedenitions o large accelerated ler, accelerated ler, and smaller reporting company in Rule 12b-2 o the Exchange Act(Check one):Large Accelerated Filer [ ] Accelerated Filer [X]Non-Accelerated Filer [ ] Smaller Reporting Company [ ]

Indicate by check mark whether the registrant is a shell company (as dened in Rule 12b-2 o the Act).Yes [ ] No [X]

State the aggregate market value o the voting and non-voting common equity held by non-aliates computed by reerence to the

price at which the common equity was last sold, or the average bid and asked price o such common equity, as o the last businessday o the registrants most recently completed second scal quarter: $60,000,000

The number o shares o the Registrants Common Stock outstanding as o March 1, 2011 was 75,699,074.

Documents Incorporated by Reerence: To the extent herein specically reerenced in Part III, portions o the Registrants DenitiveProxy Statement on Schedule 14A or the 2011 Annual General Meeting o Shareholders.



PART IITEM 1. DESCRIPTION OF BUSINESS .....................................................................................11

ITEM 1A. RISK FACTORS AND UNCERTAINTIES ....................................................................... 14

ITEM 1B. UNRESOLVED STAFF COMMENTS ............................................................................19

ITEM 2. DESCRIPTION OF PROPERTIES .................................................................................19

ITEM 3. LEGAL PROCEEDINGS ..............................................................................................38

ITEM 3A. EXECUTIVE OFFICERS OF THE COMPANY ................................................................ 38

ITEM 4. (Removed and Reserved) ......................................................................................... 40

PART IIITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED

STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES............41

ITEM 6. SELECTED FINANCIAL DATA .................................................................................... 45

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL ................................. 46

CONDITION AND RESULTS OF OPERATIONS

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES .................................................... 50

ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA .......................................... 51

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ...................................... 74

ON ACCOUNTING AND FINANCIAL DISCLOSURE

ITEM 9A. CONTROLS AND PROCEDURES ................................................................................ 74

ITEM 9B. OTHER INFORMATION ............................................................................................. 77

PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE ...................... 77

ITEM 11. EXECUTIVE COMPENSATION ...................................................................................77

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND ............................. 78

MANAGEMENT AND RELATED STOCKHOLDER MATTERS

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND ............................... 78

DIRECTOR INDEPENDENCE

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES ....................................................... 78

PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES ............................................... 78

GLOSSARY OF TECHNICAL TERMS ............................................................................................81

SIGNATURES ............................................................................................................................. 82

TABLE OF CONTENTS



CAUTIONARY STATEMENT REGARDINGFORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K and the exhibits attached hereto contain orward-looking statements within the meaning o thePrivate Securities Litigation Reorm Act o 1995. Such orward-looking statements concern the Companys anticipated results anddevelopments in the Companys operations in uture periods, planned exploration and, i warranted, development o its properties,plans related to its business and other matters that may occur in the uture. These statements relate to analyses and other inormationthat are based on orecasts o uture results, estimates o amounts not yet determinable and assumptions o management.

Any statements that express or involve discussions with respect to predictions, expectations, belies, plans, projections, objectives,assumptions, uture events or perormance (oten, but not always, using words or phrases such as expects or does not expect,is expected, anticipates or does not anticipate, plans, estimates or intends, or stating that certain actions, events orresults may, could, would, might or will be taken, occur or be achieved) are not statements o historical act and maybe orward-looking statements. Forward-looking statements are subject to a variety o known and unknown risks, uncertainties andother actors which could cause actual events or results to dier rom those expressed or implied by the orward-looking statements,including, without limitation:

risks related to our limited operating history;risks related to the probability that our properties contain reserves;risks related to our past losses and expected losses in the near uture;

risks related to our need or qualied personnel or exploring or, starting and operating a mine;

risks related to our lack o known reserves;risks related to the fuctuation o uranium prices;risks related to environmental laws and regulations and environmental risks;risks related to using our in-situ recovery mining process;risks related to exploration and, i warranted, development o our properties;risks related to our ability to acquire necessary mining licenses or permits;risks related to our ability to make property payment obligations;risks related to the competitive nature o the mining industry;risks related to our dependence on key personnel;risks related to requirements or new personnel;risks related to securities regulations;risks related to stock price and volume volatility;

risks related to dilution;risks related to our lack o dividends;risks related to our ability to access capital;risks related to market events;risks related to our issuance o additional shares o common stock;risks related to acquisition and integration issues; andrisks related to deects in title to our mineral properties.

This list is not exhaustive o the actors that may aect our orward-looking statements. Some o the important risks and uncertaintiesthat could aect orward-looking statements are described urther under the section headings Item 1. Description o Business,Item 1A. Risk Factors and Uncertainties and Item 7. Managements Discussion and Analysis o Financial Condition and Resultso Operations o this Annual Report. Although we have attempted to identiy important actors that could cause actual resultsto dier materially rom those described in orward-looking statements, there may be other actors that cause results not to be asanticipated, estimated or intended. Should one or more o these risks or uncertainties materialize, or should underlying assumptionsprove incorrect, actual results may vary materially rom those anticipated, believed, estimated or expected. We caution readers notto place undue reliance on any such orward-looking statements, which speak only as o the date made. Except as required by law,we disclaim any obligation subsequently to revise any orward-looking statements to refect events or circumstances ater the dateo such statements or to refect the occurrence o anticipated or unanticipated events. We qualiy all the orward-lookingstatements contained in this Annual Report by the oregoing cautionary statements.



PART 1

ITEM 1. DESCRIPTION OF BUSINESS

Corporate Background

Uranerz Energy Corporation (Uranerz or the Company) was incorporated under the laws o the State o Nevada on May 26,1999. On July 5, 2005, we changed our name rom Carleton Ventures Corp. to Uranerz Energy Corporation. Our executive andoperations oce is located at 1701 East E Street, P.O. Box 50850, Casper, Wyoming USA 82605-0850. Our administrative oce

is located at Suite 1410 - 800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6. The telephone number or ourexecutive oce is (307) 265-8900. The telephone number or our administrative oce is (604) 689-1659.

Our common stock is traded on the NYSE Amex Equities and the Toronto Stock Exchange under the symbol URZ and on theFrankurt Exchange under the symbol U9E.

History

Uranerz was relatively inactive rom 1999 until 2005 when it acquired mineral prospecting permits in Saskatchewan, mineral li-censes in Mongolia and mining claims and leases in Wyoming. Exploration commenced in 2005 and has continued through 2010.In 2007 we led uranium mining applications or a project in Wyoming. In 2008 we sold our Mongolian properties and have ter-minated exploration in Saskatchewan. We continue to acquire additional mineral properties and conduct exploration drilling whilepursuing mining permits in Wyoming. We have increased our personnel and operational consultants to move some o our Wyomingproperties into the mine planning and permitting stage. The development o our rst mine, Nichols Ranch ISR Uranium Project, isexpected to begin in 2011.

Our Business

We are an exploration stage company engaged in the acquisition, exploration and, when warranted, development o uraniumproperties. We have an interest in the properties described below.

We are principally ocused on the exploration o our properties in the Powder River Basin area o Wyoming. We are exploring theseproperties with the objective o assessing their viability or commercial in-situ recovery (which we may also reer to herein as ISR)uranium mining projects. ISR is a mining process that uses a leaching solution to extract uranium rom underground ore bodies.We also own interests in properties in the Great Divide Basin area o Wyoming, and in Texas.

We have applied or mine operating permits on two o our properties in the Powder River Basin area o Wyoming. We have receivedthe Wyoming DEQ permits and are currently awaiting the NRC Source Materials License or developing our commercial in-siturecovery uranium mines. We are also assembling baseline data to permit additional properties in the Powder River Basin area oWyoming which appear to have potential or development.

Recent Corporate Developments

The ollowing signicant corporate developments occurred during our scal year ended December 31, 2010:

1. We issued 454,100 common shares upon the exercise o stock options or gross cash proceeds o $431,915;

2. We completed a public oering o 6,147,446 common shares, or gross cash proceeds o $20,000,000;

3. We continued our exploration program in Wyoming and signicantly increased resources reported under NI 43-101 guide-lines see details under the section heading Item 2 Description o Properties;

4. We continued to advance the licensing and permitting process to construct and operate in-situ recovery uranium acilities onour Nichols Ranch and Hank projects;

5. We started the licensing and permitting process to construct and operate in-situ recovery uranium acilities on our JaneDough project;

6. We acquired extensive Geological Data on our North Reno Creek uranium prospect located in Campbell County, Wyoming;

7. We acquired the Excalibur/Mountain West log library o some 15,902 drill logs, drill hole maps and geologic cross sectionsor the Pumpkin Buttes area and commenced a detailed assessment o the data;

8. We completed the design o our proposed Nichols Ranch and Hank mining and processing acilities; and

9. We adopted a Shareholder Rights Plan designed to ensure that all o the Companys shareholders receive air and equaltreatment in situations where an unsolicited oer to acquire the Company is made.



Competition

Our industry is highly competitive. We compete with other mining and exploration companies in connection with the acquisition ouranium mineral properties and the equipment, materials and personnel necessary to explore and develop such properties. There iscompetition or the limited number o uranium acquisition opportunities, some o which is with other companies having substantiallygreater nancial resources, sta and acilities than we do. As a result, we may have diculty acquiring attractive exploration properties,staking claims related to our properties, and exploring and developing our properties.

ISR Mining Process

We plan to use the process o in-situ recovery mining, a process that uses a leaching solution to extract uranium rom undergroundore bodies. The leaching agent, which contains an oxidant such as oxygen with sodium bicarbonate (commonly known as bakingsoda) or carbon dioxide, is added to the native groundwater and injected through wells into the ore body in a sandstone aquier todissolve the uranium. This solution is then pumped via other wells to the surace or processing -- resulting in a cost-ecient andenvironmentally riendly mining process.

The ISR mining process diers dramatically rom conventional mining techniques in that ISR mining leaves the rock matrix in place.The ISR technique avoids the movement and milling o rock and ore as well as mill tailing waste associated with more traditionalmining methods.

Minerals Exploration Regulation

Our uranium mineral exploration and development activities are, and our production activities (i and when they occur) will be, subjectto extensive laws and regulations governing exploration, development, production, exports, taxes, labor standards, occupationalhealth, waste disposal, protection and remediation o the environment, protection o endangered and protected species, mine saety,toxic substances and other matters. Uranium minerals exploration is also subject to risks and liabilities associated with pollution othe environment and disposal o waste products occurring as a result o mineral exploration and production.

Compliance with these laws and regulations may impose substantial costs on us and will subject us to signicant potential liabilities.Changes in these regulations could require us to expend signicant resources to comply with new laws or regulations or changesto current requirements and could have a material adverse eect on our business operations.

Minerals exploration operations are subject to comprehensive regulation which may cause substantial delays or require capital outlaysin excess o those anticipated, causing an adverse eect on our business operations. Minerals exploration operations are subject toederal and state laws relating to the protection o the environment, including laws regulating removal o natural resources romthe ground and the discharge o materials into the environment. Minerals exploration operations are also subject to ederal and

state laws and regulations which seek to maintain health and saety standards by regulating the design and use o drilling methodsand equipment. Various permits rom government bodies are required or drilling operations to be conducted; no assurance can begiven that such permits will be received. Environmental standards imposed by ederal and state authorities may be changed andany such changes may have material adverse eects on our activities. As o the date o this annual report, other than with respectto the posting o a perormance bond, we have not been required to spend material amounts on compliance with environmentalregulations. However, we may be required to do so in uture and this may aect our ability to expand or maintain our operations.Environmental regulation is discussed in urther detail in the ollowing section.

Environmental Regulation

Exploration, development and production activities are subject to certain environmental regulations which may prevent or delaythe commencement or continuance o our operations. In general, our exploration and production activities are subject to certainederal and state laws and regulations relating to environmental quality and pollution control. Such laws and regulations increase

the costs o these activities and may prevent or delay the commencement or continuance o a given operation. Compliance withthese laws and regulations has not had a material eect on our operations or nancial condition to date. Specically, we are subjectto legislation regarding emissions into the environment, water discharges, and storage and disposition o hazardous wastes. Inaddition, legislation has been enacted which requires well and acility sites to be abandoned and reclaimed to the satisaction ostate and ederal authorities.

Waste Disposal

The Resource Conservation and Recovery Act (RCRA), and comparable state statutes, aect minerals exploration and productionactivities by imposing regulations on the generation, transportation, treatment, storage, disposal and cleanup o hazardous wastesand on the disposal o non-hazardous wastes. Under the auspices o the United States Environmental Protection Agency (the EPA),the individual states administer some or all o the provisions o RCRA, sometimes in conjunction with their own, more stringentrequirements.



CERCLA

The ederal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) imposes joint and several liabilityor costs o investigation and remediation and or natural resource damages, without regard to ault or the legality o the originalconduct, on certain classes o persons with respect to the release into the environment o substances designated under CERCLA ashazardous substances (Hazardous Substances). These classes o persons or potentially responsible parties include the current andcertain past owners and operators o a acility or property where there is or has been a release or threat o release o a HazardousSubstance and persons who disposed o or arranged or the disposal o the Hazardous Substances ound at such a acility. CERCLAalso authorizes the EPA and, in some cases, third parties to take actions in response to threats to the public health or the environmentand to seek to recover the costs o such action. We may also in the uture become an owner o acilities on which HazardousSubstances have been released by previous owners or operators. We may in the uture be responsible under CERCLA or all or parto the costs to clean up acilities or property at which such substances have been released, and or natural resource damages.

Air Emissions

Our operations are subject to state and ederal regulations or the control o emissions o air pollution. Major sources o airpollutants are subject to more stringent, ederally imposed permitting requirements. Administrative enorcement actions or ailureto comply strictly with air pollution regulations or permits are generally resolved by payment o monetary nes and correction oany identied deciencies. Alternatively, regulatory agencies could require us to orego construction, modication or operation ocertain air emission sources.

Clean Water Act

The Clean Water Act (CWA) imposes restrictions and strict controls regarding the discharge o wastes, including mineral processingwastes, into waters o the United States, a term broadly dened. Permits must be obtained to discharge pollutants into ederalwaters. The CWA provides or civil, criminal and administrative penalties or unauthorized discharges o hazardous substances andother pollutants. It imposes substantial potential liability or the costs o removal or remediation associated with discharges o oilor hazardous substances. State laws governing discharges to water also provide varying civil, criminal and administrative penalties,and impose liabilities in the case o a discharge o petroleum or its derivatives, or other hazardous substances, into state waters. Inaddition, the EPA has promulgated regulations that require us to obtain permits to discharge storm water runo. In the event o anunauthorized discharge o wastes, we may be liable or penalties and costs.

Underground Injection Control (UIC) Permits

The ederal Sae Drinking Water Act creates a nationwide regulatory program protecting groundwater. This act is administered by theEPA. However, to avoid the burden o dual ederal and state (or Indian tribal) regulation, the Sae Drinking Water Act allows or theUIC permits issued by states (and Indian tribes determined eligible or treatment as states) to satisy the UIC permit required underthe Sae Drinking Water Act under two conditions. First, the states program must have been granted primacy. Second, the EPA musthave granted, upon request by the state, an aquier exemption. The EPA may delay or decline to process the states application ithe EPA questions the states jurisdiction over the mine site.

Segment Inormation

Segment inormation relating to the Company is provided in Note 16 to our nancial statements under the section heading Item8. Financial Statements and Supplementary Data below.

Employees

Currently we have sixteen ull-time employees, ve ull time operational consultants and one part-time operational consultant. Weoperate in established mining areas, which we believe have sucient available personnel or our business plans.

Available Inormation

Detailed inormation about us is contained in our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reportson Form 8-K, proxy statements and other reports, and amendments to those reports, that we le with or urnish to the SEC. Thesereports are available ree o charge on our website, www.uranerz.com, as soon as reasonably practicable ater we electronically lesuch reports with or urnish such reports to the SEC. However, our website and any contents thereo should not be considered tobe incorporated by reerence into this document. We will urnish copies o such reports ree o charge upon written request to ourInvestor Relations department. You can contact our Investor Relations department at:

Uranerz Energy CorporationInvestor RelationsSuite 1410 800 West Pender Street Telephone: 1 800 689 1659Vancouver, BC, Canada V6C 2V6 Email: [email protected]



Additionally, our corporate governance guidelines, Code o Ethics and the charters o each o the standing committees o our Boardo Directors are available on our website. We will urnish copies o such inormation ree o charge upon written request to ourInvestor Relations department.

ITEM 1A. RISK FACTORS AND CERTAINITIES

Stockholders should careully consider the risks and uncertainties described below.

Our ailure to successully address the risks and uncertainties described below would have a material adverse eect on our business,

nancial condition and/or results o operations, and the trading price o our common stock may decline and investors may lose allor part o their investment. We cannot assure you that we will successully address these risks or other unknown risks that mayaect our business.

Risks Related to Our Business

Our uture perormance is difcult to evaluate because we have a limited operating history.

We were incorporated in 1999 and we began to implement our current business strategy in the uranium industry in the beginning o2005. Our operating cash fow needs have been nanced primarily through issuances o our common stock. As a result, we have littlehistorical nancial and operating inormation available to help you evaluate our perormance or an investment in our securities.

Because the probability o an individual prospect ever having reserves is remote, our properties may not containany reserves, and any unds spent on exploration may be lost.

We have no uranium producing properties and have never generated any revenue rom our operations. Because the probability o anindividual prospect ever having reserves is remote, our properties may not contain any reserves, and any unds spent on explorationmay be lost. Notwithstanding our disclosures to Canadian authorities under National Instrument 43-101, we do not know withcertainty that economically recoverable uranium exists on any o our properties. We may never discover uranium in commerciallyexploitable quantities and any identied deposit may never qualiy as a commercially mineable (or viable) reserve. We will continueto attempt to acquire the surace and mineral rights on lands that we think are geologically avorable or where we have historicalinormation in our possession that indicates uranium mineralization might be present.

The exploration and development o mineral deposits involves signicant nancial and other risks over an extended period o time,which even a combination o careul evaluation, experience and knowledge may not eliminate. While discovery o a uranium, preciousor base metal deposit may result in substantial rewards, ew properties which are explored are ultimately developed into producingmines. Major expenditures are required to establish reserves by drilling and to construct mining and processing acilities at a site.Our uranium properties are all at the exploration stage and do not contain any reserves at this time. It is impossible to ensure thatthe current or proposed exploration programs on properties in which the Company has an interest will result in the delineationo mineral deposits or in protable commercial operations. Our operations are subject to the hazards and risks normally incidentto exploration, development and production o uranium, precious and base metals, any o which could result in damage to lie orproperty, environmental damage and possible legal liability or such damage. While we may obtain insurance against certain risks,the nature o these risks is such that liabilities could exceed policy limits or could be excluded rom coverage. There are also risksagainst which we cannot insure or against which we may elect not to insure. The potential costs which could be associated withany liabilities not covered by insurance, or in excess o insurance coverage, or compliance with applicable laws and regulations maycause substantial delays and require signicant capital outlays, adversely aecting our uture earnings and competitive positionand, potentially our nancial viability.

We have a limited operating history and have losses which we expect to continue into the uture. As a result, wemay have to suspend or cease exploration activities.

We were incorporated in 1999 and are engaged in the business o mineral exploration. We have not realized any revenue rom ouroperations. We have a relatively limited exploration history upon which an evaluation o our uture success or ailure can be made. Wehave incurred losses since inception. Our ability to achieve and maintain protability and positive cash fow is dependent upon:

our ability to locate a protable mineral property;our ability to generate revenues;our ability to control costs.

Based upon current plans, we expect to incur operating losses in uture periods. This will happen because there are expensesassociated with the research and exploration o our mineral properties plus development costs to produce saleable product. Wecannot guarantee we will be successul in generating revenues in the uture. Failure to generate revenues may cause us to go outo business.



Because some o our ofcers and directors do not have technical training or experience in exploring or, starting,and operating a mine, we may have to hire qualifed personnel. I we cant locate qualifed personnel, we mayhave to suspend or cease exploration activity.

Some, but not all, o our ocers and directors do have experience with exploring or, starting, and operating a mine. Because someo our ocers and directors are inexperienced with exploring or, starting, and operating a mine, we may have to hire qualiedpersons to perorm surveying, exploration, and water management o our properties. Some o our ocers and directors have nodirect training or experience in these areas and as a result may not be ully aware o many o the specic requirements relatedto working within the industry. Their decisions and choices would typically take into account standard engineering or managerialapproaches mineral exploration companies commonly use. However, our exploration activities, earnings and ultimate nancial successcould suer irreparable harm due to certain o managements decisions. As a result we may have to suspend or cease explorationactivities, or any uture warranted development activities, which would likely result in the loss o your investment.

Our uture proftability will be dependent on uranium prices.

Because a signicant portion o our anticipated revenues are expected to be derived rom the sale o uranium, our net earnings,i any, can be aected by the long and short-term market price o U

3O

8. Uranium prices are subject to fuctuation. The price o

uranium has been and will continue to be aected by numerous actors beyond our control. With respect to uranium, such actorsinclude the demand or nuclear power, political and economic conditions in uranium producing and consuming countries, uraniumsupply rom secondary sources, uranium production levels and costs o production. Spot prices or U

3O

8were at $20.00 per pound

U3O

8in December 2004, and then, to $35.25 per pound in December 2005 and $72.00 per pound in December 2006. During 2007

the spot price reached a high o $138.00 per pound. The spot price o U3O

8was approximately $90.00 per pound in December

2007. The spot price declined during 2008, reaching a low o $44.00 per pound in October. In 2009, the spot price o U3O8 had ahigh o $51.50 and a low o $42.00. In 2010 the spot price had a high o $62.50 and a low o $40.75. The spot price o U

3O

8was

approximately $62.25 per pound and the long term price was approximately $65.00 per pound in December 2010.

Our operations are subject to environmental regulation and environmental risks.

We are required to comply with applicable environmental protection laws and regulations and permitting requirements, and weanticipate that we will be required to continue to do so in the uture. The material laws and regulations within the U.S. that theCompany must comply with are the National Environmental Protection Act (NEPA), Atomic Energy Act, Uranium Mill Tailings RadiationControl Act o 1978 (UMTRCA), Clean Air Act, Clean Water Act, Sae Drinking Water Act, Federal Land Policy Management Act,National Park System Mining Regulations Act, and the State Mined Land Reclamation Acts or State Department o EnvironmentalQuality regulations, as applicable. We also are required to comply with environmental protection laws in Canada. We are requiredto comply with the Atomic Energy Act, as amended by UMTRCA, by applying or and maintaining a Source Material license romthe US Nuclear Regulatory Commission. Uranium operations must conorm to the terms o such license, which include provisionsor protection o human health and the environment rom endangerment due to radioactive materials. The license encompassesprotective measures consistent with the Clean Air Act and the Clean Water Act. We intend to utilize specic employees and consultantsin order to comply with and maintain our compliance with the above laws and regulations.

The uranium industry is subject not only to the worker health and saety and environmental risks associated with all mining businesses,but also to additional risks uniquely associated with uranium mining and processing. The possibility o more stringent regulationsexists in the areas o worker health and saety, the disposition o wastes, the decommissioning and reclamation o exploration andin-situ recovery mining sites, and other environmental matters, each o which could have a material adverse eect on the costsor the viability o a particular project. We cannot predict what environmental legislation, regulation or policy will be enacted oradopted in the uture or how uture laws and regulations will be administered or interpreted. The recent trend in environmentallegislation and regulation, generally, is toward stricter standards and this trend is likely to continue in the uture. This recent trendincludes, without limitation, laws and regulations relating to air and water quality, mine reclamation, waste handling and disposal,the protection o certain species and the preservation o certain lands. These regulations may require the acquisition o permits or

other authorizations or certain activities. These laws and regulations may also limit or prohibit activities on certain lands. Compliancewith more stringent laws and regulations, as well as potentially more vigorous enorcement policies or stricter interpretation oexisting laws, may necessitate signicant capital outlays, may materially aect our results o operations and business, or may causematerial changes or delays in our intended activities.

Our operations may require additional analysis in the uture including environmental and social impact and other related studies.Certain activities require the submission and approval o environmental impact assessments. Environmental assessments o proposedprojects carry a heightened degree o responsibility or companies and directors, ocers, and employees. There can be no assurancethat we will be able to obtain or maintain all necessary permits that may be required to continue operations or exploration oproperties or, i easible, to commence development, construction or operation o mining acilities at such properties at economicallyjustiable costs.



We intend to extract uranium rom our properties using the in-situ recovery mining process which may not besuccessul.

We intend to extract uranium rom our properties using in-situ recovery mining, which is suitable or extraction o certain typeso uranium deposits. This process requires in-situ recovery mining equipment and trained personnel. Competition and unoreseenlimited sources o supplies in the industry could result in occasional spot shortages o supplies, and certain equipment such as drillingrigs and other equipment that we might need to conduct exploration and, i warranted, development. We will attempt to locateadditional products, equipment and materials as needed. I we cannot nd the products and equipment we need, we will have tosuspend our exploration and, i warranted, development plans until we do nd the products and equipment we need.

We ace risks related to exploration and development, i warranted, on our properties.

Our level o protability, i any, in uture years will depend to a great degree on uranium prices and whether any o our explorationstage properties can be brought into production. The exploration or and development o mineral deposits involves signicant risks.It is impossible to ensure that the current and uture exploration programs and/or easibility studies on our existing propertieswill establish reserves. Whether a uranium ore body will be commercially viable depends on a number o actors, including, butnot limited to: the particular attributes o the deposit, such as size, grade and proximity to inrastructure; uranium prices, whichcannot be predicted and which have been highly volatile in the past; mining, processing and transportation costs; perceived levelso political risk and the willingness o lenders and investors to provide project nancing; labor costs and possible labor strikes;and governmental regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use,importing and exporting materials, oreign exchange, environmental protection, employment, worker saety, transportation, andreclamation and closure obligations.

We are subject to the risks normally encountered in the mining industry, such as:

the discovery o unusual or unexpected geological ormations;accidental res, foods, earthquakes, volcanic eruptions, and other natural disasters;unplanned power outages and water shortages;controlling water and other similar mining hazards;operating labor disruptions and labor disputes;the ability to obtain suitable or adequate machinery, equipment, or labor;our liability or pollution or other hazards; andother known and unknown risks involved in the conduct o exploration, the operation o mines and the market or uranium.

The development o mineral properties is aected by many actors, including, but not limited to: the cost o operations, variationsin the grade o ore, fuctuations in metal markets, costs o extraction and processing equipment, availability o equipment and

labor, labor costs and possible labor strikes, and government regulations, including without limitation, regulations relating to taxes,royalties, allowable production, importing and exporting o minerals, oreign exchange, employment, worker saety, transportation,and environmental protection. Depending on the price o uranium, we may determine that it is impractical to commence, or, icommenced, continue, commercial production. Such a decision would negatively aect our prots and may aect the value o yourinvestment.

Because we may be unable to meet property payment obligations or be able to acquire or maintain necessarymining licenses, we may lose interests in our exploration properties.

The agreements pursuant to which we acquired our interests in some o our properties provide that we must make a series o cashpayments over certain time periods, expend certain minimum amounts on the exploration o the properties or contribute our shareo ongoing expenditures. I we ail to make such payments or expenditures in a timely ashion, we may lose our interest in thoseproperties. Further, even i we do complete exploration activities, we may not be able to obtain the necessary licenses to conductmining operations on the properties, and thus would realize no benet rom our exploration activities on the properties.

Our mineral properties may be subject to deects in title.

We own, lease, or have under option, unpatented and patented mining claims, mineral claims or concessions and ee mineral leaseswhich constitute our property holdings. The ownership and validity or title o unpatented mining claims and concessions are otenuncertain and may be contested. We also may not have, or may not be able to obtain, all necessary surace rights to develop aproperty. We have not conducted title research in relation to many o our mining claims and concessions to ensure clean title. Wecannot guarantee that title to our properties will not be challenged. Title insurance is generally not available or mineral propertiesand our ability to ensure that we have obtained secure claim to individual mineral properties or mining concessions may be severelyconstrained. Our mineral properties may be subject to prior unregistered agreements, transers or claims, and title may be aected by,among other things, undetected deects. We may incur signicant costs related to deending the title to our properties. A successul



claim contesting our title to a property may cause us to compensate other persons or perhaps reduce our interest in the aectedproperty or lose our rights to explore and, i warranted, develop that property. This could result in us not being compensated or ourprior expenditures relating to the property. Also, in any such case, the investigation and resolution o title issues would divert ourmanagements time rom ongoing exploration and development programs.

Because we may be unable to secure access rights, we may be unable to explore and/or develop our properties.

Our mineral rights do not always include rights o access or use o the surace o lands. We require agreements with land ownersor these rights which may be dicult to obtain and which may require cash payments.

Because mineral exploration and development activities are inherently risky, we may be exposed to environmen-tal liabilities.

The business o mineral exploration and extraction involves a high degree o risk. Few properties that are explored are ultimatelydeveloped into production. At present, none o our properties has a known body o commercial ore. Unusual or unexpected ormations,ormation pressures, res, power outages, labor disruptions, fooding, explosions and the inability to obtain suitable or adequatemachinery, equipment or labor are other risks involved in extraction operations and the conduct o exploration programs. Althoughwe intend to carry liability insurance with respect to our mineral exploration operations, we may become subject to liability ordamage to lie and property, environmental damage or hazards against which we cannot insure or against which we may elect notto insure. Previous mining operations may have caused environmental damage at certain o our properties. It may be dicult orimpossible to assess the extent to which such damage was caused by us or by the activities o previous operators, in which case,any indemnities and exemptions rom liability may be ineective. I any o our properties is ound to have commercial quantities oore, we would be subject to additional risks respecting any development and production activities. Most exploration projects do not

result in the discovery o commercially mineable deposits o ore.

Because we have not put a mineral deposit into production beore, we may have to acquire outside expertise. Iwe are unable to acquire such expertise we may be unable to put our properties into production.

Our Board o Directors includes six individuals, two o whom are in operational management, that have technical or nancialexperience in placing mining projects into production. However, we may also be dependent upon using the services o appropriatelyexperienced personnel or entering into agreements with other companies that can provide such expertise.

Acquisitions and integration issues may expose us to additional risks which could have a material adverse eecton our business.

Our business strategy includes making targeted acquisitions. Any acquisition that we make may be o a signicant size, may changethe scale o our business and operations, and may expose us to new geographic, political, operating, nancial and geological risks.

The success o our acquisition activities depends on our ability to identiy suitable acquisition candidates, negotiate acceptable termsor any such acquisition and integrate the acquired operations successully with our own. Any acquisitions would be accompaniedby risks which could have a material adverse eect on our business. For example, there may be signicant decreases in commodityprices ater we have committed to complete the transaction and have established the purchase price or exchange ratio; a material orebody may prove to be below expectations; we may have diculty integrating and assimilating the operations and personnel o anyacquired companies, realizing anticipated synergies and maximizing the nancial and strategic position o the combined enterpriseand maintaining uniorm standards, policies and controls across the organization; the integration o the acquired business or assetsmay disrupt our ongoing business and our relationships with employees, customers, suppliers and contractors; and the acquiredbusiness or assets may have unknown liabilities which may be signicant. I we choose to use equity securities as considerationor such an acquisition, existing stockholders may suer dilution. Alternatively, we may choose to nance any such acquisition withour existing resources. There can be no assurance that we would be successul in overcoming these risks or any other problemsencountered in connection with such acquisitions.

The mining industry is highly competitive.The business o the acquisition, exploration, and development o uranium properties is intensely competitive. We will be required tocompete, in the uture, directly with other corporations that may have better access to potential uranium resources, more developedinrastructure, more available capital, and better access to necessary nancing, and more knowledgeable and available employeesthan us. We may encounter competition in acquiring uranium properties, hiring mining proessionals, obtaining mining resources, suchas manpower, drill rigs, and other mining equipment. Such competitors could outbid us or potential projects or produce mineralsat lower costs. Increased competition could also aect our ability to attract necessary capital unding or acquire suitable producingproperties or prospects or uranium exploration in the uture.



Risks Related to Corporate and Financial Structure

We are dependent upon key management employees.

The success o our operations will depend upon numerous actors, many o which are beyond our control, including (i) our abilityto enter into strategic alliances through a combination o one or more joint ventures, mergers or acquisition transactions; and (ii)our ability to attract and retain additional key personnel in sales, marketing, technical support and nance. We currently dependupon our management employees to seek out and orm strategic alliances and nd and retain additional employees. There can beno assurance o success with any or all o these actors on which our operations will depend. We have relied and may continue to

rely, upon consultants and others or operating expertise.Our growth will require new personnel, which we will be required to recruit, hire, train and retain.

We expect signicant growth in the number o our employees i we determine that a mine at any o our properties is commerciallyeasible, we are able to raise sucient unding and we elect to develop the property. This growth will place substantial demands onus and our management. Our ability to assimilate new personnel will be critical to our perormance. We will be required to recruitadditional personnel and to train, motivate and manage employees. We will also have to adopt and implement new systems in allaspects o our operations. This will be particularly critical in the event we decide not to use contract miners at any o our properties.We have no assurance that we will be able to recruit the personnel required to execute our programs or to manage these changessuccessully.

Legislation, including the Sarbanes-Oxley Act o 2002, may make it difcult or us to retain or attract ofcers anddirectors.

We may be unable to attract and retain qualied ocers, directors and members o board committees required to provide or oureective management as a result o the recent and currently proposed changes in the rules and regulations which govern publicly-heldcompanies. Sarbanes-Oxley Act o 2002 has resulted in a series o rules and regulations by the Securities and Exchange Commissionthat increased responsibilities and liabilities o directors and executive ocers. The increased personal risk associated with thesechanges may deter qualied individuals rom accepting these roles.

Stock market price and volume volatility.

The market or our common stock may be highly volatile or reasons both related to the perormance o the Company or eventspertaining to the industry (i.e. mineral price fuctuation/high production costs/accidents) as well as actors unrelated to the Companyor its industry. In particular, market demand or uranium fuctuates rom one business cycle to the next, resulting in change o demandor the mineral and an attendant change in the price or the mineral. Our common stock can be expected to be subject to volatility inboth price and volume arising rom market expectations, announcements and press releases regarding our business, and changes in

estimates and evaluations by securities analysts or other events or actors. In recent years, the securities markets in the United Stateshave experienced a high level o price and volume volatility, and the market price o securities o many companies, particularly small-capitalization companies, have experienced wide fuctuations that have not necessarily been related to the operations, perormances,underlying asset values, or prospects o such companies. For these reasons, the price o our common stock can also be expected tobe subject to volatility resulting rom purely market orces over which we will have no control.

Granting o options may negatively impact the value o our common shares.

Because the success o the Company is highly dependent upon its respective employees, we may in the uture grant to some or all oour key employees, directors and consultants, options to purchase shares o our common stock as non-cash incentives. Those optionsmay be granted at exercise prices equal to market prices at times when the public market is depressed. To the extent that signicantnumbers o such options may be granted and exercised, the interests o the other stockholders o the Company may be diluted.

The issuance o additional shares o common stock may negatively impact the trading price o our shares o

common stock.We have issued equity securities in the past and may continue to issue equity securities to nance our activities in the uture, includingto nance uture acquisitions, or as consideration or acquisitions o businesses or assets. In addition, outstanding options andwarrants to purchase shares o common stock may be exercised, resulting in the issuance o additional shares o common stock.The issuance by us o additional shares o common stock would result in dilution to our stockholders, and even the perception thatsuch an issuance may occur could have a negative impact on the trading price o our shares o common stock.

The value o an investment in our shares o common stock could decline substantially.

The market price or shares o our common stock has been and can be expected to remain highly volatile. As a result, shareholdersmight experience an extreme variation in the value o their holdings. Trading prices o many exploration stage companies, includingus, have experienced price and volume fuctuations which have, at times, been seemingly unrelated to the perormance o thecompanies whose securities were aected.



We do not intend to pay dividends in the oreseeable uture.

We have never paid a dividend to our shareholders, and we intend to retain our cash or the continued development o our business.We do not intend to pay cash dividends on our common stock in the oreseeable uture. As a result, your return on investment willbe solely determined by your ability to sell your shares in a secondary market.

We depend on our ability to successully access the capital and nancial markets. Any inability to access the capital or nancialmarkets may limit our ability to execute our business plan or pursue investments that we may rely on or uture growth.

We rely on access to long-term capital markets as a source o liquidity or capital and operating requirements. I we are not ableto access nancial markets at competitive rates, our ability to implement our business plan and strategy may be aected. Certainmarket disruptions may increase our cost o borrowing or aect our ability to access one or more nancial markets. Such marketdisruptions could result rom:

adverse economic conditions;adverse general capital market conditions;poor perormance and health o the uranium industry in general;bankruptcy or nancial distress o unrelated uranium companies or marketers;signicant decrease in the demand or uranium;adverse regulatory actions that aect our exploration and development plans; andterrorist attacks on our potential customers.

Recent market events and conditions, including disruptions in the U.S. and international credit markets and otherfnancial systems and the deterioration o the U.S. and global economic conditions, could, among other things,impede access to capital or increase the cost o capital, which would have an adverse eect on our ability to undour working capital and other capital requirements.

Beginning in late 2007, the U.S. credit markets began to experience serious disruption due to a deterioration in residential propertyvalues, deaults and delinquencies in the residential mortgage market (particularly, subprime and non-prime mortgages) and a declinein the credit quality o mortgage backed securities. These problems led to a slow-down in residential housing market transactions,declining housing prices, delinquencies in non-mortgage consumer credit and a general decline in consumer condence. Thesenegative conditions peaked in 2008, causing a loss o condence in the broader U.S. and global credit and nancial markets andresulting in the collapse o, and government intervention in, major banks, nancial institutions and insurers and creating a climateo greater volatility, less liquidity, widening o credit spreads, a lack o price transparency, increased credit losses and tighter creditconditions. Various actions by the U.S. and oreign governments are targeting general conditions o the capital markets, nancial

instruments, banks, investment banks, insurers and other nancial institutions to stabilize and improve the broader credit andstock markets. The general economic indicators, including low consumer sentiment, high unemployment and low economic growthindicate continued economic uncertainty.

These unprecedented disruptions in the current credit and nancial markets have had a signicant material adverse impact on anumber o nancial institutions and have limited access to capital and credit or many companies. These disruptions could, amongother things, make it more dicult or us to obtain, or increase our cost o obtaining, capital and nancing or our operations. Ouraccess to additional capital may not be available on terms acceptable to us or at all.

ITEM 1B. UNRESOLVED STAFF COMMENTS

We do not have any unresolved comments rom the SEC sta regarding our periodic or current reports under the Securities ExchangeAct o 1934, as amended.

ITEM 2. DESCRIPTION OF PROPERTIES

Overview

We are an exploration stage company engaged in the acquisition, exploration and, i warranted, development o uranium properties.Uranium used in this context reers to U

3O

8. U

3O

8, also called yellowcake, is triuranium octoxide produced rom uranium ore and

is the most actively traded uranium-related commodity.

We are ocused on both the exploration and development o our properties in the Powder River Basin area o Wyoming. We areexploring these properties with the objective o assessing their viability or commercial ISR uranium mining. ISR is a mining processthat uses a leaching solution to extract uranium rom underground ore bodies.



Concurrent with our exploration activities, we are also preparing the Nichols Ranch Unit or construction o the central processingplant and well eld which is expected to begin in 2011. We applied or and expect to receive our mine construction and operatingpermits on two o our properties in the Powder River Basin area o Wyoming, known as the Nichols Ranch and Hank Units in 2011.We believe that these properties have the potential, based on data in our possession, o being developed into commercial ISRuranium mines. These permits will allow us to produce uranium yellowcake concentrate, which can be sold directly to utilities oruel used in nuclear electrical generating acilities. Because o the long lead times or environmental permitting o mining operationsin North America, we led applications to the State o Wyoming (WDEQ) and the US Nuclear Regulatory Commission (NRC) orpermits or the Nichols Ranch ISR Uranium Project in December 2007. The status o our permitting activities is described more ully

below under the heading Nichols Ranch ISR Uranium Project.Our Wyoming properties totaling 100,337 acres include:

Powder River Basin

100% owned properties, which totaled 26,544 acres as o December 31, 2010;properties o Arkose Mining Venture, in which we hold an 81% interest, which totaled 67,273 acres as o December 31,2010.

Great Divide Basin100% owned properties, which totaled 6,520 acres as o December 31, 2010.

We completed a substantial exploration program on our Powder River Basin properties in 2010. A total o 312 drill holes and 24

wells were completed in 2010, representing approximately 241,600 eet o drilling at an average depth o 719 eet per hole. Uraniumtrend holes, delineation holes and wells were drilled utilizing two drill rigs and two electric log probing units.

The objective o the 2010 drilling program was to nd previously unknown or little-known uranium mineralization trends and todelineate known trends, which would provide data or permitting and eventual production operations in avorably identied areas.During the 2010 drilling program, approximately ten miles o uranium roll ront trends were investigated. The water wells wereinstalled to acilitate environmental data collection or uture project permitting purposes.

Our 2010 drilling program led to the preparation and ling o two National Instrument 43-101 Technical Reports, which are describedin more detail below under 2010 Drilling Program.

In anticipation o receiving all the approvals necessary to mine, we have commenced a marketing program or conditional sales ouranium rom our Nichols Ranch ISR Uranium Project. In July o 2009, we entered into a sales agreement with Exelon GenerationCompany, LLC or the sale o uranium over a ve-year period. In August o 2009, we entered into a second contract or the sale o

uranium to another U.S. utility, also over a ve-year period.Our plan o operations during 2011 is to:

continue with our exploration o our Powder River Basin Properties as detailed below under 2011 Exploration Program;commence construction o our Nichols Ranch ISR Uranium Project; andcontinue the permitting process or our Jane Dough property.

We have sucient nancing to continue our exploration and permitting activities and design and early stage construction activitiesover the next twelve months. However, we may require additional nancing in order to complete construction o our Nichols RanchISR Uranium Project. There is no assurance that we will be able to obtain the necessary nancing to complete construction or carryout mining activities, i mining is warranted.

All o our projects are at the exploration stage and there can be no assurance that a commercially viable mineral deposit, or reserve,exists on any o our properties until appropriate exploratory work is done and a comprehensive evaluation based on such work

concludes legal and economic easibility. Further exploration may be required beore a nal evaluation as to the economic, technicaland legal easibility o mining o any o our properties is determined. There is no assurance that urther exploration will result in anal evaluation that a commercially viable mineral deposit exists on any o our mineral properties.

Operations

Our exploration program in the Wyoming Powder River Basin is directed by Mr. Kurtis Brown, Senior Vice-President Exploration andis supervised by Mr. George Hartman, our Executive Vice-President and Chie Operating Ocer. We engage contractors to carry outour exploration programs under Mr. Browns supervision. Contractors that we plan to engage include project geologists, drillingcompanies and geophysical logging companies, each according to the specic exploration program on each property.



Our management will make determinations as to whether to proceed with the additional exploration o our Wyoming Powder RiverBasin mineral properties based on the results o the preliminary exploration that we undertake. In completing these determinations,we will make an assessment as to whether the results o the exploration are suciently positive or us to proceed with moreadvanced analysis.

Wyoming Powder River Basin

Our Powder River Basin properties in Wyoming as shown in the map below:

Uranerz Energy Corporation Wyoming Property Location December 2010

Source: Uranerz Energy Corporation 2010

GREAT DIVIDE BASIN

POWDER RIVER BASIN

W Y O M I N G



We plan to maintain, explore and, when warranted, develop our properties in the Powder River Basin area o Wyoming.

Powder River Basin Properties

As o December 31, 2010, our Powder River Basin properties include both our 100% owned properties and those propertiesincluded within the Arkose Mining Venture. These principal properties comprise in total approximately 93,816 acres and consisto a combination o ederal mining claims, state mineral leases and private ee mineral leases. A map showing the location o our100% owned Powder River Basin and Arkose Mining Venture properties is provided below:

Uranerz Energy Corporation Powder River Basin December 2010


Uranerz Claims Arkose Claims



An additional map showing the location o our properties within the general Powder Basin property area and our key property unitsis presented below:

Uranerz Energy Corporation Powder River Basin Property Units December 2010




Ownership Interests

Our ownership interests in the properties within the Powder River Basin are summarized as ollows:

100% Owned Properties

Our 100% owned properties are comprised o unpatented lode mining claims, state leases and ee (private) mineral leases, assummarized as ollows:

Property Composition

Ownership Interest

(i)

Number o Claims/

Leases

Acreage

(Approximate)

Unpatented Lode Mining Claims 100% 877 17,540 acres

State Leases 100% 7 6,480 acres

Fee (private) Mineral Leases 100% 23 2,524 acres

Total 26,544 acres(i) Subject to royalties, as discussed urther below.

These 100% owned properties in the Powder River Basin include the ollowing core property units:

Property No. Claims Approximate Acreage

Doughstick 22 440

Collins Draw 32 640North Rolling Pin 54 1,080

Hank 66 1320

Nichols Ranch 36 720

Willow Creek 11 220

West North-Butte 125 2,500

East Nichols 44 880

North Nichols 107 2,140

Reno Creek 13 260

TOTAL 510 10,200

We continue to look or more prospective lands in the Powder River Basin and as a result may locate, purchase or lease additionalunpatented lode mining claims; and/or purchase or lease additional ee mineral (private) lands during the next twelve months,however there is no assurance any additional properties will be acquired.

Arkose Mining Venture

The Arkose Mining Venture properties are comprised o unpatented mineral lode claims, state leases and ee (private) mineral leases,as summarized as ollows:

PropertyComposition

Ownership Interest(i)

Number o Claims/Leases

Acreage(Approximate)

Unpatented Mineral Lode Claims 81% 2,857 46,763 acresState Leases 81% 3 2,080 acres

Fee (private) Mineral Leases 81% 70 18,430 acres

Total 67,273 acres(i) Subject to royalties, as discussed urther below.

We completed the acquisition o an undivided 81% interest in the Arkose Mining Venture (the Venture) mineral properties onJanuary 15, 2008. This acquisition was completed pursuant to a purchase and sale agreement with the Venture previously announcedon September 19, 2007 between Uranerz, and NAMMCO, Steven C. Kirkwood, Robert W. Kirkwood and Stephen L. Payne (collectively,the NAMMCO Sellers). The total purchase price that we paid to acquire this 81% interest in the Arkose Mining Venture includedcash o $5,757,000 and 5,750,000 shares o our common stock issued to the NAMMCO Sellers. The NAMMCO Sellers entered intoa voting agreement with us eective January 15, 2008 pursuant to which each o the NAMMCO sellers granted to our management



or our appointed agent the right to vote ty percent (50%) o the outstanding and currently held shares issued as considerationor the acquisition, whether held directly or indirectly by each o the NAMMCO sellers, or a period o three (3) years ollowing thedate o the issuance.

In connection with our acquisition o an 81% interest in the Arkose Mining Venture, we entered into a venture agreement datedas o January 15, 2008 (the Venture Agreement) with United Nuclear, LLC (United Nuclear), a limited liability company whollyowned by the NAMMCO Sellers and their designee under the purchase and sale agreement. Under the Venture Agreement, weagreed that United Nuclear will hold (and contribute to) its nineteen percent (19%) working interest in the Arkose Mining Venture,and we will operate and be the manager o the Arkose Mining Venture under the name Arkose Mining Venture. We and UnitedNuclear agreed to contribute unds to programs and budgets approved under the Arkose Mining Venture in accordance with ourrespective interests in the Venture.

The Venture Agreement provides that we, as manager, will have management and control over operations carried out by the Venture.We are obligated to present proposed programs and budgets to the management committee o the Venture on an annual basis. Theproposed programs and budgets may include exploration programs, pre-easibility studies, easibility studies, development, mining,and expansion or modication o operation plans. Proposed programs and budgets are reviewed by the management committeeappointed under the Venture which includes at least two members rom each company appointed by Uranerz and United Nuclearrespectively. Unless otherwise provided in the Venture Agreement, the vote o the participant with a participating interest greaterthan 50% will determine decisions o the management committee. A participant may elect to participate in an approved program andbudget either (i) in proportion to the participants respective interest in the Venture, or (ii) not at all. In the event that a participantelects not to participate in a program and budget, then its participating interest in the Venture Agreement is subject to recalculationin accordance with the Venture Agreement to refect the decision not to participate.

This overview o the Venture Agreement does not provide a ull discussion o all terms and conditions o the Venture Agreement.Investors are encouraged to read the entire copy o the Venture Agreement that was led with the SEC as an exhibit to our CurrentReport on Form 8-K led on January 22, 2008.

The Arkose Mining Venture includes the ollowing property units on which we have conducted exploration:

South DoughstickCedar CanyonEast BuckSouth Collins DrawSand RockLittle ButteHouse Creek

Beecher DrawLone Bull

Other Powder River Basin Projects

Through a combination o claim staking, purchasing, and leasing, we also have acquired interests in several projects that lie withinthe Powder River Basin but outside o the project areas discussed above. These properties include the Verna Ann, Niles Ranch, andReno Creek projects which cover approximately 1,673 acres. In general, these projects are located in sandstone basins o Tertiaryage with known uranium mineralization. However, due to our ocused approach we have not yet initiated exploration work on theseprojects. Additional leasing in the Reno Creek Project has prompted us to acquire past exploration and development data or thisarea to support a National Instrument 43-101 report which was published on October 13, 2010. I warranted, environmental baseline work may begin thereater with the goal o submitting an environmental permit application or ISR acilities.

Foreiture o certain Powder River Basin and Great Divide Basin interests

During August 2010, we decided to oreit our interests in certain mining claims in the Powder River Basin and the Great Divide Basinwhich we determined, based on the review, analysis and recommendations o our geological sta, did not merit urther explorationand accordingly were no longer o strategic interest or value to the Company. The claims, which were oreited eective September 1,2010 when the annual renewal ee would have become due, were comprised o: 295 claims in which we had held a 100% interestin the Collins Draw, Eagle, Cyclone Rim, WM, Bison Basin, JS, Divide, C-Line, and West North Butte project areas and 1269 claimsin the Little Butte, South Collins, East Buck, Kermit, Sand Rock, Cedar Canyon, Lone Bull, Stage, and Beecher Draw project areas,in which we held an 81% interest through the Arkose Mining Venture. We will continue to review our property portolio and maydecide to oreit other properties in the uture i we determine that they are no longer o strategic interest.



NI 43-101 Technical Reports

We have obtained technical reports on the ollowing material properties:

Name o Report Authors o Technical Report Date o Report

Technical Report, Reno CreekProperty, Campbell County,Wyoming, U.S.A.

TREC, Inc., 951 Werner CourtSuite 395, CasperWyoming 82601

October 13, 2010

Technical Report, North Rolling PinProject, Campbell County,Wyoming, U.S.A.


June 4, 2010

Technical Report, DoughstickProject, Campbell County,Wyoming, U.S.A.


January 26, 2010

Technical Report, SouthDoughstick Property, Campbelland Johnson Counties, Wyoming, U.S.A.


February 25, 2010(Amended)October 12, 2009

Technical Report, Nichols RanchProperty, Johnson and CampbellCounties, Wyoming, U.S.A.

Kurtis J. Brown, P.G., SeniorVice President, Uranerz EnergyCorporation, 1701 East EStreet, Casper Wyoming 82605

June 5, 2009

Technical Report - West North-Butte Satellite Properties,Campbell County, Wyoming,U.S.A.

TREC, Inc., 341 East EStreet, Suite 200, CasperWyoming 82601

Don R. Woody, P.G., WoodyEnterprises, 9005 SypesCanyon Road, Bozeman,Montana 58715

December 9, 2008

Preliminary Assessment NicholsRanch Uranium In-Situ RecoveryProject, Powder River Basin,Wyoming, U.S.A


July 25, 2008

Technical Report The Hank UnitProperty, Campbell Country,Wyoming, U.S.A.



May 1, 2008



Technical Report on the ArkoseMining Venture Project, Campbelland Johnson Counties, Wyoming,U.S.A.



February 27, 2008

Nichols Ranch Uranium Project,Campbell and Johnson Counties,Wyoming, U.S.A.

Douglas Beahm, PE, P.G.Andrew Anderson, PE, P.G.BRS Inc.

October 26, 2007

Cautionary Note to United States Investors

As a company listed on the TSX, we are required by Canadian law to provide disclosure in accordance with Canadian SecuritiesAdministrators National Instrument 43-101 Standards o Disclosure or Mineral Projects (NI 43-101). This required disclosureincludes the preparation and ling o technical reports on our material mineral properties with Canadian securities commissionsunder NI 43-101. These technical reports are urnished by us to the U.S. Securities and Exchange Commission (the SEC) on Form8-K in order to satisy our public disclosure obligations under SEC Regulation FD and are not led with the SEC. U.S. reportingrequirements or disclosure o mineral properties, including disclosure required in this Annual Report on Form 10-K, are governedby the Industry Guide 7 (SEC Guide 7) o the SEC. The standards o disclosure o mineral properties under NI 43- 101 and SECGuide 7 are substantially dierent. All mineral resources disclosed in our NI 43-101 technical reports reerenced herein have beenestimated in accordance with the denition standards on mineral resources and mineral reserves o the Canadian Institute o Mining,Metallurgy and Petroleum reerred to in National Instrument 43-101, commonly reerred to as NI 43-101. The terms mineralreserve, proven mineral reserve and probable mineral reserve are Canadian mining terms as dened in accordance with NI43-101. These denitions dier rom the denitions in SEC Guide 7. Under SEC Guide 7 standards, a nal or bankable easibilitystudy is required to report reserves, the three-year historical average price is used in any reserve or cash fow analysis to designatereserves and the primary environmental analysis or report must be led with the appropriate governmental authority.

The NI 43-101 technical reports reerenced herein use the terms mineral resource, measured mineral resource, indicated mineralresource and inerred mineral resource. We advise shareholders that these terms are dened in and required to be disclosed byNI 43-101; however, these