Edgar Filing: INTERNATIONAL URANIUM CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

AMENDMENT NO. 3 TO FORM 20-F

[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934.
OR
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended September 30, 1999

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

For the transition period from to
------- -------
Commission File Number: 0-24443

INTERNATIONAL URANIUM CORPORATION
(Exact name of Registrant as specified in its charter)

ONTARIO, CANADA
(Jurisdiction of incorporation or organization)

INDEPENDENCE PLAZA, SUITE 950, 1050 SEVENTEENTH STREET, DENVER, CO 80265
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act:

COMMON STOCK WITHOUT PAR VALUE
(Title of Class)

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act:
NONE

Indicate the number of outstanding shares of each of the Registrant's classes of
capital or common stock as of the close of the period covered by the annual
report:

ISSUED AND OUTSTANDING
TITLE OF CLASS AS OF SEPTEMBER 30, 1999
-------------- ------------------------

Common Stock, Without Par Value 65,525,066 common shares

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed during the preceding 12 months (or shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

YES X NO
--- ---

Indicate by check mark which financial statement item the registrant has elected
to follow:

ITEM 17 X ITEM 18
--- ---

The Registrant has filed a notification of Late Filing on Form 12b-25 regarding
the financial statement footnote entitled "Differences Between Canadian and
United States Accounting Principles and Practices" which is not currently
included in this filing.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Except for the statements of historical fact contained therein, the information
under the headings "Item 1 - Description of Business", "Item 2 - Description of
Property", "Item 9 -- Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Item 9A - Quantitative and Qualitative
Disclosure About Market Risk," and elsewhere in this Registration Statement
constitutes forward looking statements ("Forward Looking Statements") within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such Forward Looking
Statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the
Registrant to differ materially from any future results, performance or
achievements projected or implied by such Forward Looking Statements. Such
factors include, among others, the factual results of current exploration
activities, conclusions of feasibility studies now underway, changes in project
parameters and the factors set forth in the section entitled "Risk Factors".

GLOSSARY OF TERMS

ALTERNATE FEED Ore or residues from other processing
facilities that contain uranium in
quantities or forms that are either
uneconomic to recover or cannot be
recovered at these other facilities,
but can be recovered either alone or in
conjunction with other co-products at
the Registrant's facilities;

BLM Means the United States Bureau of Land
Management;

CCD CIRCUIT The counter-current decantation circuit
at the White Mesa Mill, in which
uranium-bearing solution is separated
from the crushed waste solids;

CONVERSION A process whereby the purified uranium
obtained in the refining process is
converted into forms suitable for
making nuclear fuel (UO(2)) or for
enrichment (UF(6));

$ Means United States dollars and "CDN $"
means Canadian dollars;

ENRICHMENT A process whereby the U-235 isotope
content is increased from the natural
level of 0.711% to a concentration of
3% to 5% as required in fuel for light
water reactors;

EPA The United States Environmental
Protection Agency;

FEE LAND Means private land;

HECTARE Measurement of an area of land
equivalent to 10,000 square meters or
2.47 acres;

ISL OR IN SITU LEACH In situ leach mining means solution
mining that is performed in the
mineralized horizons and does not
involve excavation and removal of
mineralized rock or the subsequent
processing of such rock through a
mill to recover uranium. Rather, the
mineralized material is mined by using
groupings of wells completed in the
mineralized horizons to inject leach
solution, which is recovered in
production wells. The leaching solution

selectively dissolves the uranium
mineralization, and the solution is
then processed to recover the contained
uranium.

MINERALIZATION Means a natural aggregate of one or
more metallic minerals;

MINERAL DEPOSIT OR
MINERALIZED MATERIAL Is a mineralized body which has been
delineated by appropriately spaced
drilling and/or underground sampling to
support a sufficient tonnage and
average grade of metal(s). Such a
deposit does not qualify as a reserve
until a comprehensive evaluation based
upon unit cost, grade,recoveries, and
other material factors conclude legal
and economic feasibility.

NRC The United States Nuclear Regulatory
Commission;

PARTIALLY DEVELOPED With respect to properties, means
properties that contain workings from
previously operating mines that were
shut down due to a lack of economic
feasibility of the mineralized material
left in the stopes.

REFINING A process whereby yellowcake is
chemically refined to separate the
uranium from impurities to produce
purified uranium;

RESERVE That part of a mineral deposit which
could be economically and legally
extracted or produced at the time of
the reserve determination.

SAG MILL The semi-autogenous grinding mill at
the White Mesa Mill in which the
uranium ore is ground prior to the
leaching process;

TAILINGS Waste material from a mineral
processing mill after the metals and
minerals of a commercial nature have
been extracted;

TON A short ton (2,000 pounds);

TONNE A metric tonne (2,204.6 pounds);

URANIUM OR U Means natural uranium; 1% U=1.18%
U(3)O(8);

UF(6) Means natural uranium hexafluoride,
produced by conversion from U(3)O(8),
which is not yet enriched or depleted;

U(3)O(8) Triuranium octoxide;

V(2)O(5) Vanadium pentoxide;

WHITE MESA MILL Means the 2,000 ton per day uranium
mill, with a vanadium or other
co-product recovery circuit, located
near Blanding, Utah that is owned by
IUC White Mesa, LLC. Also referred to
as the "Mill".

YELLOWCAKE Means the concentrate powder produced
from uranium milling, or an in situ
leach, facility. Yellowcake typically
contains approximately 90% U(3)O(8)
from conventional mined ores.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

International Uranium Corporation (the "Registrant") is in the business of
recycling uranium-bearing waste products as an alternative to the direct
disposal of these waste products. In addition, IUC is engaged in the selling and
trading of uranium recovered from these operations and other commercial
activities in the international nuclear fuel market. IUC also sells vanadium and
other metals that can be produced as a co-product with uranium. IUC continues to
own several uranium and uranium/vanadium mines and exploration properties that
have been shut down pending any significant improvements in commodity prices.
See "Current Operations."

The Registrant is the product of an amalgamation under the Business Corporations
Act (Ontario) (the "Act") of two companies; namely, International Uranium
Corporation, incorporated on October 3, 1996 under the laws of the Province of
Ontario pursuant to the Act, and Thornbury Capital Corporation, incorporated
under the laws of the Province of Ontario by Letters Patent ("Thornbury") on
September 29, 1950. The amalgamation was made effective on May 9, 1997, pursuant
to a Certificate of Amalgamation dated that date. The amalgamated companies were
continued under the name "International Uranium Corporation." See
"Amalgamation."

The head office of the Registrant is located at Independence Plaza, Suite 950,
1050 Seventeenth Street, Denver, CO 80265. The registered office of the
Corporation is located at Suite 2100, Scotia Plaza, 40 King Street West,
Toronto, Ontario, M5H 3C2.

The Registrant entered the uranium industry in May 1997 by acquiring
substantially all of the uranium producing assets of Energy Fuels Ltd., Energy
Fuels Exploration Company, and Energy Fuels Nuclear, Inc. (collectively "Energy
Fuels"). The Registrant raised Cdn$47.25 million through a special warrant
private placement and used cash of approximately Cdn$29.3 million to purchase
the Energy Fuels' assets (see "Acquisition" for further details). Energy Fuels
was a uranium producer with properties in the United States and Mongolia.

The Energy Fuels' assets acquired included several developed mines that were
shut down, several partially developed properties and exploration properties
within the states of Colorado, Utah, Arizona, Wyoming and South Dakota, as well
as the 2,000 ton per day White Mesa Mill near Blanding, Utah. The White Mesa
Mill is a fully permitted dual circuit uranium/vanadium mill in the United
States. In addition to the U.S. properties, the Registrant also acquired a 70%
interest in a joint venture with the government of Mongolia and a Russian
geological concern to explore for economic uranium mineralization in Mongolia.

Due to deteriorating commodity prices and other factors, the Registrant has
ceased its mining and exploration activities, and has shut down all of its mines
and its Mongolian joint venture. The Registrant intends to keep those properties
on a shutdown status indefinitely, pending any significant improvements in
commodity prices, or possibly sell or joint venture all or a portion of such
properties and interest to or with other parties. The Registrant is in the
process of closing its Colorado Plateau and Arizona mining offices and is
actively seeking potential purchasers for its mining properties and mining
equipment and taking other steps to minimize its holding costs for mining
properties. See "Current Operations."

AMALGAMATION

The predecessor, International Uranium Corporation ("Old IUC"), and Thornbury
were amalgamated effective May 9, 1997 under the provisions of the Business
Corporations Act (Ontario) to form the Registrant in accordance with the terms
of an agreement entered into between Old IUC and Thornbury dated February 13,
1997 (the

"Amalgamation Agreement"). The primary purpose of the Amalgamation was to effect
an acquisition of Thornbury by Old IUC in that upon completion of the
Amalgamation the shareholders of Old IUC immediately prior to the Amalgamation
would hold the controlling interest in the Registrant, a public company.

BACKGROUND ON THORNBURY

Thornbury was incorporated under the laws of Ontario on September 29, 1950.
Thornbury's common shares were quoted for trading on the Canadian Dealing
Network Inc. Thornbury's principal assets consisted of marketable securities
with a market value as at December 31, 1996 of Cdn$495,480 and eight mining
claims situated in the Mayo Mining District, Yukon Territory, which expire
between 1999 and 2009.

SHARE EXCHANGE RATIOS

The Amalgamation received the approval of the shareholders of both Old IUC and
Thornbury. On amalgamation, each shareholder of Old IUC received one (1) share
of the Registrant, a newly formed amalgamated company, for each one (1) common
share held in Old IUC, and each shareholder of Thornbury received one (1) share
of the Registrant for each five (5) common shares held in Thornbury. Fractional
shares resulting from the foregoing were rounded down to the next whole number.

After giving effect to the amalgamation, there were a total of 65,743,066 common
shares of the Registrant issued and outstanding. This figure was based on
26,500,000 previously issued common shares of Old IUC, 37,800,000 common shares
of Old IUC issued upon conversion of the special warrants and 7,215,334 common
shares of Thornbury which were outstanding prior to the amalgamation being
effective (1,443,066 post-amalgamation common shares).

AMALGAMATION AGREEMENT

Old IUC and Thornbury entered into an amalgamation agreement, which contained
such representations and warranties, covenants, indemnification and other
provisions as are customarily found in an amalgamation agreement entered into by
parties dealing at arm's length.

ACQUISITION

The Registrant entered the uranium industry by acquiring substantially all of
the uranium producing assets of Energy Fuels. On December 19, 1996, Old IUC,
through its subsidiary, International Uranium Holdings Corporation, entered into
an agreement (the "Acquisition Agreement") to acquire the Energy Fuels' Assets
for cash of $20.5 million, subject to adjustment. The terms of the acquisition
were approved by the United States Bankruptcy Court following a lengthy bidding
procedure as required under United States bankruptcy laws. See "Bankruptcy of
Oren Benton and Nuexco." The acquisition was completed on May 9, 1997.

ENERGY FUELS

HISTORICAL BACKGROUND

The Energy Fuels group of companies was founded in August 1976 to capitalize on
uranium mining, purchasing and processing opportunities in the Colorado Plateau
area of western Colorado and eastern Utah.

In order to process the ores mined and purchased from the Colorado Plateau,
Energy Fuels commenced construction of a 2,000 ton per day mill near Blanding,
Utah in June 1979 at a total cost of approximately $40 million. Known as the
White Mesa Mill, the facility is a dual-circuit uranium mill.

The cost of construction of the White Mesa Mill was funded in large part by
Kernkraftwerk Goesgen-Daeniken AG, and Nordostschweizerische Kraftwerke AG, the
former limited partners in certain of the Energy Fuels Assets (the "Swiss
Utilities"), who owned a 40% limited partnership interest in almost all of
Energy Fuels' United States assets.

In 1995, this 40% limited partnership interest was converted into a 9% royalty
on all uranium produced and a 5% royalty on vanadium and all other minerals
produced from the United States properties. The Swiss utilities have agreed to a
reduction in this royalty on these properties until December 31, 2000. See
"Swiss Royalty Interest".

In the early 1980s Energy Fuels expanded its operations to include breccia pipe
uranium mining in the Arizona Strip district of northern Arizona. The land
position of Energy Fuels in the Arizona Strip district acquired by the
Registrant included four developed or partially developed properties as well as
several potential prospects and numerous other exploration targets.

In 1984, Energy Fuels formed a limited partnership with Union Carbide
Corporation ("Union Carbide") pursuant to which Union Carbide acquired a 70%
undivided interest in and became the operator of the White Mesa Mill. As a
result of subsequent negotiations in 1987, Union Carbide's mines and properties
in the Colorado Plateau were added to this limited partnership and, as a result,
Energy Fuels acquired a 25% undivided interest in those mines. In 1994 this
partnership was dissolved and Energy Fuels re-acquired 100% of the White Mesa
Mill as well as certain of Union Carbide's mines on the Colorado Plateau. In the
Colorado Plateau district, Energy Fuels then owned several uranium and vanadium
mines that were shut down, several partially developed properties as well as
additional acreage with exploration potential.

In 1994, in an effort to expand into the global uranium marketplace, Energy
Fuels acquired a 70% interest in a joint venture with the government of Mongolia
and a Russian geological concern to explore for economic uranium mineralization
in Mongolia.

In the early 1990s, Energy Fuels also acquired two uranium properties intended
to be mined by in situ type mining technology: the Reno Creek property in
Wyoming, and the Dewey Burdock property in South Dakota.

In early 1995, Energy Fuels filed for protection under Chapter 11 of the United
States Bankruptcy Code as a result of providing guarantees to an affiliated
company and its majority shareholder. See "Bankruptcy of Oren Benton and
Nuexco".

BANKRUPTCY OF OREN BENTON AND NUEXCO

On February 23, 1995, Oren L. Benton ("Benton") and two entities which Benton
controlled -- Nuexco Trading Corporation ("Nuexco") and CSI Enterprises, Inc.
("CSI") -- filed for protection under Chapter 11 of the United States Bankruptcy
Code.

Energy Fuels, Ltd. ("EFL") and Energy Fuels Exploration Company ("EFEX") also
filed for protection under Chapter 11 of the United States Bankruptcy Code on
February 23, 1995. EFL and EFEX were both controlled by Benton through the
Energy Fuels Mining Joint Venture ("EFMJV"). EFL and EFEX were forced into
bankruptcy because Benton, as controlling shareholder, caused them to guarantee
certain of Benton's and Nuexco's investment and trading activities. EFMJV filed
for protection under Chapter 11 on August 12, 1996.

The bankruptcy of Benton, Nuexco, CSI, EFL, EFEX and EFMJV involved numerous
other affiliated and subsidiary entities, of which Energy Fuels was a relatively
small part.

Under the provisions of Chapter 11 of the United States Bankruptcy Code, Benton
maintained control of the assets of his estate, including the Energy Fuels
Assets, but was under a fiduciary duty to reorganize his estate either under a
plan of reorganization or through the sale of portions of the assets from time
to time ("Section 363 Sales"). In order to protect the rights of creditors in
this process, a committee of selected creditors was formed (the "Creditors
Committee") as required under the provisions of Chapter 11 of the United States
Bankruptcy Code.

Benton and the Creditors Committee filed a joint Section 363 Sale motion on
October 21, 1996 with the Registrant as the lead bidder for the sale of the
Energy Fuels Assets to the Registrant for cash of $20.5 million, subject to
adjustments.

On December 4, 1996, the Bankruptcy Court approved the Acquisition Agreement and
the sale of the Energy Fuels Assets to the Registrant. The effect of the court
order was to eliminate substantially all known and existing claims

and liabilities of all creditors against the Energy Fuels Assets, so that the
Registrant would acquire the Energy Fuels Assets free and clear of all such
liabilities.

SUMMARY OF ENERGY FUELS ASSETS ACQUIRED BY THE REGISTRANT

UNITED STATES ASSETS

The Energy Fuels Assets acquired by the Registrant pursuant to the Acquisition
Agreement located in the United States included the following:

o the White Mesa Mill, a 2,000 ton per day uranium and vanadium
processing plant in Blanding, Utah. See "White Mesa Mill."

o the Arizona Strip uranium properties, in north central
Arizona. See "Arizona Strip."

o the Colorado Plateau uranium properties, straddling the
south/central Colorado and Utah border. See "Colorado Plateau
District."

o the Reno Creek in situ leach project, a uranium deposit in the
Powder River Basin area of Wyoming. See "Other U.S. Mineral
Properties.""

o the Dewey Burdock in situ leach project, a uranium deposit in
South Dakota. See "Other U.S. Mineral Properties."

o the Bullfrog project, a uranium deposit in south central Utah.
See "Other U.S. Mineral Properties."

o mining equipment. See "Other Assets of Registrant."

o various uranium supply, waste processing contracts, and joint
venture contracts. See "Other Assets of Registrant."

o various field and administrative offices. See "Other Assets of
Registrant."

THE MONGOLIA PROPERTY

Energy Fuels owned a 70% interest in the Gurvan-Saihan Joint Venture in
Mongolia. The Registrant, as a result of the Acquisition, acquired this
interest. The other parties are the Mongolian Government as to 15% and
Geologorazvedka, a Russian geological concern, as to the remaining 15%. As of
March 31, 2000, the Gurvan-Saihan Joint Venture holds some 3.19 million acres of
uranium exploration properties in Mongolia. See "Mongolia Property."

CLAIMS ARISING OUT OF THE ACQUISITION

Under the Acquisition Agreement, the Registrant asserted claims during May 1998,
against funds held in escrow for alleged breaches by Energy Fuels of certain
representations and warranties relating to title on certain mineral claims in
the Colorado Plateau District, and to the ability of the Mongolian joint venture
to conduct exploration activities on a nature reserve area covering
approximately 6% of the properties of the Mongolian joint venture. The
liquidating trustee for Energy Fuels disputed these claims; however, during
March 1999, the Registrant settled both of these claims with the trustee and
received $200,000 from escrow.

THE URANIUM INDUSTRY

The following is a brief summary of the uranium industry as of March 31, 2000.

OVERVIEW

Considerable growth in world demand for electricity has created a strong market
for the development of nuclear power over the past 30 years, and it now
contributes 17% of world electricity supply. Today, world demand continues to
see rapid growth in developing countries, particularly in Asia, while relatively
low growth is expected in countries where nuclear power is well established.

According to the Uranium Institute ("UI"), there are 105 nuclear reactors in the
United States and a total of 347, worldwide, representing a total world nuclear
capacity of 346 GWe. Despite lower growth in developed countries, the UI reports
in one case that world nuclear generating capacity is expected to be 355 GWe by
2000, and then grow to 422 GWe by 2010 and 483 GWe by 2020. With the only
significant commercial use for uranium being nuclear fuel for nuclear reactors,
it follows that reactor requirements will be a key indicator in the nuclear fuel
market.

Generally, uranium is mined and milled, converted, enriched and fabricated prior
to use in a nuclear reactor. Once a uranium deposit is discovered and reserves
delineated, uranium ore is mined either by underground, open pit or in situ
methods then partially refined at a nearby mill to produce uranium concentrates.
Typically, the uranium concentrate or U(3)O(8), or yellowcake as it is referred
to in the industry, is sold by the mining companies to electricity utilities in
the form of U(3)O(8). Market participants, such as utilities, then contract with
the converters, enrichers, and fuel fabricators for services to further refine
the yellowcake for use in a nuclear reactor.

URANIUM SUPPLY AND DEMAND

According to the UI, annual Western World uranium consumption has increased from
approximately 56 million pounds U(3)O(8) in 1980 to about 149 million pounds
U(3)O(8) in 1998. Demand could increase by increased plant operating capacities
or reduced by premature closing of nuclear power plants.

Demand for uranium can be supplied through either primary production (newly
mined uranium) or secondary sources (inventories and alternate production).
Inventories are of particular importance to the uranium industry when compared
to other commodity markets, as further described below.

According to the UI, primary western world uranium production had been in
decline for a decade until the first rise in production in 1995, which was
reported to be 85 million pounds. Of this, Canada and Australia accounted for
more than 50% of total production. Increases continued in 1996 and 1997 to 72
and 73 million pounds, respectively. The increase in western world production
was short lived with a drop in production to 68 million beginning in 1998. Major
production cut backs and delays had been announced at the end of 1998 in Canada,
Australia, United States and South Africa, which has resulted in a significant
drop in production to 61 million for 1999.

Secondary sources of supply cover all uranium, other than primary production,
sourced to satisfy reactor requirements. These sources include inventories,
stockpiles (primarily, government and military related) and recycled uranium.
These supply sources can be held at any point of the nuclear fuel cycle and by
utilities and other fuel cycle companies or by governments, alike. Each source
must meet appropriate specifications to be utilized in nuclear reactors.

Inventories represent the largest portion of secondary sources of supply and can
be quite difficult to quantify. Inventories include production inventories held
by producers and utilities, and government and military stockpiles. Inventories
are held for a variety of reasons, such as: government policy, avoiding supply
disruptions and taking advantage of favorable market prices.

In total, current inventories are estimated at over seven (7) years supply of
the total world consumption, according to the UI. However, utilities have been
steadily consuming inventories to reduce fuel carrying costs. It is estimated
that utilities will consume 60 million pounds of Western world uranium inventory
between 1998 and 2005. In addition, roughly 22% of the utilities carry, as
strategic inventories, three (3) or more years of reactor requirements as a
matter of policy. Over the three-year period from 1995 through 1997, Western
world inventories fell by 26 million pounds of uranium.

The recycling of Highly Enriched Uranium ("HEU") is a unique subset of secondary
sources of supply and is accounted for separately from inventories. Surplus
fissile military materials are converted from HEU into low enriched uranium
("LEU") suitable for use in nuclear reactors. In February 1993, the United
States and Russia entered into an agreement (the "Russian HEU Agreement") which
provided for the United States to purchase 500 metric tons of Russian HEU over a
20-year period. In April 1996, the United States Enrichment Corporation ("USEC")
Privatization Act gave Russia the authority to sell Russian natural uranium
derived from the LEU in the United States over the 20-year period under certain
limits.

The USEC Privatization Act provides a framework for the introduction of Russian
uranium into the U.S. commercial uranium market. The agreement was signed during
July 1998 between the Russian government and three Western companies granting an
option to the Western companies to purchase a portion of the Russian natural
uranium derived from the LEU.

URANIUM PRICES

Most of the countries that use nuclear-generated electricity do not have a
sufficient domestic uranium supply to fuel their nuclear power reactors, and
their electric utilities secure a substantial part of their required uranium
supply by entering into medium-term and long-term contracts with foreign uranium
producers. These contracts usually provide for deliveries to begin one to three
years after they are signed and to continue for several years thereafter. In
awarding medium-term and long-term contracts, electric utilities consider, in
addition to the commercial terms offered, the producer's uranium reserves,
record of performance and cost competitiveness, all of which are important to
the producer's ability to fulfill long-term supply commitments. Under
medium-term and long-term contracts, prices are established by a number of
methods, including base prices adjusted by inflation indices, reference prices
(generally spot price indicators but also long-term reference prices) and annual
price negotiations. Many contracts also contain floor prices, ceiling prices,
and other negotiated provisions which affect the amount paid by the buyer to the
seller. Prices under these contracts are usually confidential.

Electric utilities procure their remaining requirements through spot and
near-term purchases from uranium producers and traders. Traders source their
uranium from organizations holding excess inventory, including utilities,
producers and governments.

The spot market is the market for uranium which may be purchased for delivery
within one year. Over the last ten years, annual spot market demand averaged
roughly 26 million pounds U(3)O(8) with a record high of 42 million pounds
U(3)O(8) in 1995 followed by a low, over the period, to 11 million pounds
U(3)O(8) in 1998. Historically, spot prices have been more volatile than
long-term contract prices, increasing from $6.00 per pound in 1973 to $43.00 in
1977, then declining from $40.00 in 1980 to a low of $7.25 in October of 1991.
More recently, the record spot demand aided to push prices to $16.50 in June
1996. Trade restrictions limiting the free flow of uranium from the former CIS
republics into the Western world markets, the Nuexco bankruptcy under Chapter 11
of the United States Bankruptcy Code and related defaults on deliveries (see
"Bankruptcy of Oren Benton and Nuexco"), and the reluctance of uranium producers
and inventory holders to sell at low spot price levels, contributed to increases
in demand and spot prices between 1995 and 1997. These factors had a diminishing
impact on the uranium market causing prices to decline. The drop in spot demand
in the following three years largely contributed to a relatively steady drop in
prices to $9.60 in December 1999. Prices remain depressed as a result of weak
demand and as of March 31, 2000, are around $9.50.

Future uranium prices will depend largely on the amount of incremental supply
made available to the spot market from the remaining excess inventories, primary
production in Russia and other former CIS republics, as well as supplies from
Russian HEU and other Russian stockpiles, from excess United States HEU and
increased production from unutilized capacity of other uranium producers. Some
analysts believe, however, that prices should stabilize and begin to rebound in
the next several years.

COMPETITION

The Registrant markets uranium to utilities in direct competition with supplies
available from various sources worldwide. The Registrant competes primarily on
the basis of price. Uranium production is international in scope and is
characterized by a relatively small number of companies operating in only a few
countries. In 1999, five (5) companies, Cameco, Compagnie Generales des Matieres
Nucleaires ("Cogema"), Energy Resources of Australia

Ltd. ("ERA"), The RTZ Corporation PLC ("RTZ"), and WMC Limited, produced over
67% of total world output. Most of Western World production was from only eight
countries: Canada, Niger, Australia, Namibia, South Africa, United States,
France, and Gabon. In 1988, the former CIS, and mainland China began to supply
significant quantities of uranium annually into Western World markets. The
Canadian uranium industry has in recent years been the leading world supplier,
producing 25 million pounds U(3)O(8) on average over the past few years, or
about 35% of total world production. The Registrant's total production is a
small percentage of total Western World production.

THE VANADIUM MARKET

The following is a brief summary of the vanadium market as of March 31, 2000.

As a co-product of the production of uranium from the Colorado Plateau District
ores, the Registrant has produced and sells vanadium.

Vanadium is an essential alloying element for steels and titanium, and its
chemical compounds are indispensable for many industrial and domestic products
and processes. The principal uses for vanadium are: (i) carbon steels used for
reinforcing bars; (ii) high strength, low alloy steels used in construction and
pipelines; (iii) full alloy steels used in castings; (iv) tool steels used for
high speed tools and wear resistant parts; (v) titanium alloys used for jet
engine parts and air frames; and (vi) various chemicals used as catalysts.

Principal sources of vanadium are (i) titaniferous magnetites found in Russia,
China, Australia and South Africa; (ii) sludges and fly ash from the refining
and burning of U.S., Caribbean and Middle Eastern oils; and (iii) uranium
co-product production from the Colorado Plateau. While produced and sold in a
variety of ways, vanadium production figures and prices are typically reported
in pounds of an intermediate product, vanadium pentoxide, or V(2)O(5). The White
Mesa Mill is capable of producing three products, ammonium metavanadate ("AMV")
and vanadium product liquor ("VPL"), both intermediate products, and vanadium
pentoxide ("flake", "black flake", "tech flake" or "V(2)O(5)"). The majority of
sales are as V(2)O(5), with AMV and VPL historically produced and sold on a
request basis only.

Vanadium is generally produced as a by- or co-product of other metal production.
In the United States, the most significant source of production has been as a
byproduct of uranium production from ores in the Colorado Plateau District,
accounting for over half of historic U.S. production. Vanadium in these deposits
occurs at an average ratio of six pounds of vanadium for every pound of uranium,
and the financial benefit derived from the byproduct sales have helped to make
the mines in this area profitable in the past. However, low prices for both
uranium and vanadium in recent years have forced producers in the Colorado
Plateau District to place their facilities on standby.

The market for vanadium has fluctuated greatly over the last 15 years. Over
capacity in the mid-1970s was caused by reduced demand for vanadium during the
recession that plagued the steel industry. By the end of the decade, steel
production had climbed to record levels and prices for V(2)O(5) firmed at around
$2.75 per pound. During the early 1980s, quoted prices were in the range of
$3.00 per pound, but increased exports from China and Australia, coupled with
the continued economic recession of the 1980s drove prices to as low as $1.30
per pound. Prices stabilized in the $2.00 - $2.45 per pound range until
perceived supply problems in 1988 caused by cancellation of contracts by China
and rumors of South African production problems resulted in a price run-up of
unprecedented magnitude, culminating in an all time high of nearly $12.00 per
pound in February of 1989. This enticed new producers to construct additional
capacity and oversupply problems again depressed the price in the early 1990s to
$2.00 per pound and below. Late in 1994, a reduction in supplies from Russia and
China, coupled with concerns about the political climate in South Africa and a
stronger steel market caused the price to climb to $4.50 per pound early in
1995. In the beginning of 1998, prices had climbed to a nine-year high of $7.00
caused by a supply deficit unable to keep pace with record demand from steel and
aerospace industries. However, during the second half of 1998, prices then
declined to $2.80 per pound due to sudden decreases in Far East steel
production, along with suppliers from Russia and China selling available
inventories at low prices in order to receive cash. Since that time, prices have
fallen dramatically due in part to the difficult economic conditions being
experienced throughout the Pacific Rim. At the end of 1999 prices fell to $1.50
per pound V(2)O(5) with many experts predicting that prices would remain in this
depressed state for an extended period of time.

Vanadium supply and demand estimates for the near future show yearly consumption
to increase at a rate of 2 to 3% from its current level of 130 million pounds
V(2)O(5). Worldwide production capacity is expected to increase from its current
level of 120 million pounds beginning in the year 2000. Recent comments in trade
journals have indicated that the major South African producers have augmented
their production by the integration of their ferro-vanadium production. Many
experts believe that there will continue to be some oscillation in the market
price over the next 12 to 18 months before a sustained recovery is expected to
be experienced at what such experts believe may be near the $2.50 to $3.00 per
pound range.

Vanadium has been largely producer-priced historically, but during the 1980s,
this came under pressure due to the emergence of new sources. As a result,
merchant or trader activity gained more and more importance. Prices for the
products that will be produced by the Registrant will be based on weekly
quotations of the London Metal Exchange ("LME"). Historically, vanadium
production from the White Mesa Mill has been sold into the world-wide market
both through traders, who take a 2% to 3% commission for their efforts and, to a
lesser extent, through direct contacts with domestic converters and consumers.
While priced in U.S. dollars per pound of V(2)O(5), the product is typically
sold by the container, which contains nominally 40,000 pounds of product packed
in 55 gallon drums, each containing approximately 550 pounds of product. Typical
contracts will call for the delivery of one to two containers per month over a
year or two to a customer with several contracts in place at the same time.
Pricing is usually based on the LME price and may include floor and ceiling
price protection for both the producer and seller. Spot sales are also made
based on the current LME quote.

ALTERNATE FEED PROCESSING

Commissioned in 1980, the White Mesa Mill has processed conventionally mined
mineralized material for the recovery of uranium and vanadium for many years. In
addition, the Registrant's NRC license gives the Registrant the right to process
other uranium-bearing materials known as "alternate feeds," pursuant to an
Alternate Feed Guidance adopted by the NRC in 1995. Alternate feeds are
uranium-bearing materials from other processing facilities, which usually are
classified as waste products to the generators of the materials. Requiring a
routine amendment to its license for each different alternate feed, the
Registrant can process these uranium-bearing materials and recover uranium, in
some cases, at a fraction of the cost of processing conventional ore, alone or
together with other valuable metals such as niobium, tantalum and zirconium. In
other cases, the generators of the alternate feed materials are willing to pay a
recycling fee to the Registrant to process these materials to recover uranium
and then dispose of the remaining byproduct in the Mill's licensed tailings
cells, rather than directly disposing of the materials at a disposal site. This
gives the Registrant the ability to process alternate feeds and generate
earnings that are largely independent of uranium market prices. By working with
the Registrant and taking the recycling approach, the suppliers of alternate
feed materials can significantly reduce their remediation costs, as there are
only a limited number of disposal sites for uranium-bearing materials in the
United States.

As of March 31, 2000, the Mill has received nine license amendments, authorizing
the Mill to process nine different alternate feed materials. As of March 31,
2000, the Mill has recovered approximately 1,125,000 pounds of U(3)O(8) from the
processing of alternate feed materials. Of these amendments, five have involved
the processing of feeds provided by nuclear fuel cycle facilities and private
industry and one has involved the processing of Department of Energy material.
These five feed materials were generally relatively high in uranium content and
relatively low in volume. The remaining three amendments have been to allow the
Mill to process uranium-bearing soils from former defense sites, known as
Formerly Utilized Sites Remedial Action Program ("FUSRAP") sites, which are
being remediated by the U.S. Army Corps of Engineers (the "Corps"). These
materials are typically relatively low in uranium content but relatively high in
volume. The Registrant has received and processed approximately 44,000 tons of
FUSRAP materials from the Ashland 2 site near Buffalo, New York, and, as of
March 31, 2000, is receiving approximately 100,000 tons of such material from
the Ashland 1 site, also near Buffalo. Previously, material excavated from
FUSRAP sites was only directly disposed of at one of the few direct disposal
sites in the country, and at considerable cost. The Corps , charged with the
task of reducing the cost of this remediation program, awarded the Ashland 2
contract to the Registrant to recycle the materials and recover uranium before
disposing of the resulting tailings in the Mill's tailings cells. By processing
these soils through the Mill for the recovery of uranium, the Registrant was
able to allow the Corps to clean up this site at a fraction of the cost that
would have been incurred had the disposal-only option been used.

As of March 31, 2000, the Registrant estimates that there are potentially
several million tons of uranium-bearing soils and materials located at these
FUSRAP and similar sites. While the Corps is responsible for the clean up of
several million tons of alternate feed material under FUSRAP, it is only one
agency of several that is being operated by the federal government for the clean
up of former defense and nuclear weapons sites. The Department of Energy, NRC
and Department of Defense combine for an additional 15 million tons of low-level
radioactive waste to be cleaned up over the next 15 years. It is anticipated
that these uranium-bearing soils will be excavated and then transported to
either a disposal only facility or in some cases to a recycling facility, like
the White Mesa Mill.

Even though there are significant volumes of materials estimated under the
government programs, nuclear fuel cycle facilities and private industry will
remain an important part of the Registrant's alternate feed program over the
foreseeable future. For example, the second alternate feed campaign completed in
fiscal 1999 involved an alternate feed material that the Registrant acquired
under a contract with a nuclear fuel cycle facility. The high-grade uranium
content of this material provided the Registrant with 160,000 pounds of uranium.
The Registrant continues to receive alternate feeds under this contract, and is
working toward concluding a similar contract in 2000 with another nuclear fuel
cycle facility. As well, the Registrant will continue to be an outlet for
smaller private companies seeking recycling as a cheaper alternative to direct
disposal.

Government remediation projects, such as those involving the clean-up of FUSRAP
sites, are generally well known in the industry. Each such project typically
takes several years to characterize and to obtain all agency approvals required
in order to proceed to remediation. Once the project reaches the remediation
stage, and government funding has been allocated to the project, it typically is
put out to tender for sealed bids, and site remediation, transportation and
disposal/recycling facility contracts are then awarded. This process typically
takes several months to complete. Once contracts are awarded, the actual
remediation could last for months to years, depending on the size of the project
and government funding priorities. Depending on the project, there are typically
two to five qualified disposal/recycling facilities that will bid on each
contract. There are also other government sources of alternate feed materials
that are not on any particular schedule or program for remediation. These are
not as well known in the industry, and it is incumbent upon the Registrant to
identify these. These types of contracts may be sole-source or may be subject to
public tender, depending on the circumstances. While some private industry
contracts relate to private sites that must be remediated under regulatory order
or directive within set time frames and in many respects resemble government
remediation contracts in scope and timing, most private industry contracts are
not well publicized and typically need not be remediated within any set time
period. It is incumbent upon the Registrant to identify these types of
contracts. Most of these types of contracts are sole-source. As of March 31,
2000, the Registrant has been successful in obtaining approximately 50% of the
contracts for which it submitted a competitive bid and approximately 75% of all
contracts sought.

While the progress made to date is considerable, there are regulatory
uncertainties associated with this uranium recycling business. As noted, the
Registrant's license gives the Registrant the right, with appropriate
amendments, to process alternate feeds. These amendments are granted under the
rules and regulations of the NRC. Some of the Registrant's alternate feed
projects have been challenged by the State of Utah, which believes that the
State of Utah should have regulatory authority over these projects instead of
the NRC. Activities have also been challenged by a commercial disposal company.
As of March 31, 2000, the Registrant's White Mesa Mill has been granted nine
license amendments for processing alternate feeds out of nine requests, and the
Registrant has successfully defended all challenges before the NRC, to date. In
fact, in February, 2000 the NRC rendered a decision, upholding the amendment to
the Registrant's NRC license amendment that allowed the Registrant to process
the Ashland 2 FUSRAP materials. This decision by the five NRC Commissioners
affirmed an earlier ruling by the Atomic Safety and Licensing Board just over
one year ago, and resolved in the Registrant's favor the long-standing dispute
with the State of Utah over the types of materials that can be processed at the
Mill. As a result of this ruling, it is clear that the potential several million
tons of uranium bearing soils and materials located at former defense sites that
are being pursued by the Registrant can be processed at the Mill in accordance
with NRC health and safety regulations. See "Legal Proceedings."

The Registrant has been working with the Utah Department of Environmental
Quality ("UDEQ") to resolve any concerns that UDEQ has regarding the operations
at the Mill. The Registrant and UDEQ have made considerable progress in this
regard to date, and the Registrant intends to continue working with UDEQ to
cooperatively resolve any outstanding issues in a manner that will provide UDEQ
with the regulatory comfort that it desires while still

allowing the Registrant to pursue the development of its alternate feed
business. The Registrant remains optimistic that this objective will be
achieved. See "Legal Proceedings."

The Registrant continues to expect that the development of the business of
recycling uranium-bearing materials can result in a profitable business for the
Registrant. As noted above, there are potentially millions of tons of this type
of material in the U.S., enough to keep the White Mesa Mill operating at
capacity for the foreseeable future. In order for the Registrant to become
profitable in this business the Registrant must be able to: A) identify a
sufficient number of contracts that would be profitable for the Registrant; B)
be successful in winning a sufficient number of these contracts in the face of
competition from other facilities; and C) receive these contracts in a time
frame and have sufficient backlog of such contracts to allow the Mill to operate
at a sufficient capacity to more than cover its costs of production, any standby
costs that are incurred between Mill runs, and other corporate overheads.
Despite its successes in developing this new business opportunity and the
receipt of alternate feed materials from various sources, the Registrant has not
to date developed this required backlog of alternate feed business to result in
sustained profitable operations for the Registrant. Given the timeframes
inherent in bidding for and being awarded government contracts and identifying
and securing commercial contracts for alternate feed materials, this could take
a matter of years to achieve. Developing this backlog will be a prerequisite if
the Registrant is to continue with its pursuit of this business in the future.
While the Registrant's shutdown of its exploration and mining activities is
underway (see "Current Operations"), the Registrant intends to marshal its
resources and concentrate its United States operations on the continuing
development of the alternate feed, uranium-bearing waste recycling business,
including the possibility of joint venturing or selling all or a portion of this
business with or to other parties. However, if the Registrant cannot develop the
required backlog of alternate feed business in the near future, it may consider
pursuing other business opportunities that have not yet been identified.

CURRENT OPERATIONS

The Registrant is currently in the process of redefining its business operations
to focus on the development of the alternate feed business. The Registrant has
focused on the following four areas in the past:

1) Mining

2) Alternate Feed Processing

3) Exploration and Development

4) Marketing

These will be discussed below.

While this reduction in exploration and mining activities is underway, the
Registrant intends to marshal its resources and concentrate its United States
operations on the continuing development of the alternate feed, uranium-bearing
waste recycling business, including the possibility of joint venturing or
selling all or a portion of this business with or to other parties. Although the
Registrant has pursued the alternate feed business in the past, and, as of March
31, 2000, has received nine license amendments for the processing of alternate
feed materials at the Mill, the alternate feed business has historically been
considered by the Registrant to be supplemental to its business of mining and
milling conventional uranium and uranium/vanadium mineralization. With the
recent decline in commodity prices, the Registrant is now dedicating its full
attention to the development of the alternate feed business as the primary focus
of its business operations. See "Alternate Feed Processing." The Registrant will
also continue to evaluate other opportunities unrelated to its mining and
alternate feed activities, as they may arise.

MINING OPERATIONS

The Registrant commenced conventional mining operations at its Sunday Mine
Complex in November 1997 and at its Rim Mine in January 1998 after completion of
minor development activities. These properties are located in the Colorado
Plateau District of western Colorado and eastern Utah, and contain high grades
of vanadium along with uranium.

To supplement its own production, the Registrant implemented a mill-feed
purchase program under which it intended to purchase feed for the Mill from many
small independent mines in the Uravan district of the Colorado Plateau mining
region. Unfortunately, this program did not materialize to the degree hoped, as
the independent miners found that their operations were not economic at current
commodity prices, due to new regulatory and environmental licensing requirements
that had come into effect since they last operated.

The Registrant continued the mining of uranium and vanadium-bearing material
from its Sunday and Rim Mine complexes in the Colorado Plateau district until
mid-1999. At that time, the Registrant elected to suspend mining operations as a
result of continued weak uranium and vanadium prices and the expectation that
these conditions would not improve for the next several years. The shut down of
the mines took several months to complete, and was completed in November, 1999.
The mines continue to remain on shutdown status at this time.

Due principally to the lack of success of the Registrant's mill-feed purchase
program, the tonnage ultimately delivered to the Mill was less than originally
expected. Approximately 87,250 tons of material, with a U(3)O(8) grade of 0.28%
and a V(2)O(5) grade of 1.9% were mined from the Registrant's mines and
independent mines. All of the material was shipped to the White Mesa Mill, and
the Registrant commenced the milling of this material during June 1999. The
conventional mill run was much shorter than originally anticipated, which
impacted operating efficiencies

and, ultimately, unit production costs. In addition, certain operational
problems were encountered with the vanadium circuit which had not operated since
1990, resulting in lower realized recoveries during this production run.
Nevertheless, as of September 30, 1999, approximately 72,750 tons of material
had been fed to the Mill, leaving approximately 14,500 tons in stockpile, which
was milled during October and early November of 1999. During the Mill run, the
Registrant did successfully recover approximately 487,000 pounds of U(3)O(8) in
concentrate and approximately 2.0 million pounds of vanadium.

Due to deteriorating commodity prices and other factors, the Registrant has
shutdown all of its mines. The mines continue to remain on shutdown status at
this time. The Registrant has also written-off the carrying value of its U.S.
mineral properties for the same reason. The Registrant intends to keep those
properties on shutdown status indefinitely, pending any significant improvements
in commodity prices, or possibly the sale or joint venture of all or a portion
of such properties to or with other parties. As of March 31, 2000, the
Registrant is in the process of closing its Colorado Plateau and Arizona mining
offices and is actively seeking potential purchasers for its mining properties
and mining equipment and taking other steps to minimize its holding costs for
mining properties.

ALTERNATE FEED PROCESSING

While declining commodity prices seriously affected the Registrant's
conventional mining, milling and exploration programs, the Registrant did have
some notable success in the development of its alternate feed, uranium-bearing
waste recycling business. During fiscal 1999, the Registrant was awarded its
second contract under the U.S. government's Formerly Utilized Sites Remedial
Action Program ("FUSRAP") for the Ashland 1 site, near Buffalo, New York. This
contract is a multi-year contract that involves over 100,000 tons of
uranium-bearing soils that will be processed through the Mill. The Registrant
also received NRC approval to receive alternate feed materials from a third
FUSRAP project with sites located in and around St. Louis, Missouri, which paves
the way for the Registrant to pursue a commercial contract for this material. As
of March 31, 2000, the Registrant has not yet been successful in being awarded
such a contract. In addition, the Registrant concluded contracts with other
private sector facilities for the recycling of uranium-bearing waste materials
during the year. Also noteworthy is the fact that the NRC decided the State of
Utah's appeal of the Ashland 2 license amendment in favor of the Registrant,
thereby resolving in the Registrant's favor the long-standing dispute with the
State of Utah over the types of materials that can be processed at the Mill. See
"Alternate Feed Processing" and "Legal Proceedings."

The Registrant intends to marshal its resources and concentrate its United
States operations on the continuing development of the alternate feed,
uranium-bearing waste recycling business, including the possibility of joint
venturing or selling all or a portion of this business with or to other parties.
The Registrant continues to expect that the development of its alternate feed
business can result in a profitable business for the Registrant, if the
Registrant is able to develop a sufficient backlog of alternate feed materials
to allow the Mill to operate efficiently on a continuous basis. Despite the
Registrant's successes, however, the Registrant has not to date developed the
required backlog of alternate feed business. Given the timeframes inherent in
bidding for and being awarded government contracts and identifying and securing
commercial contracts for alternate feed materials, this could take a matter of
years to achieve. Developing this backlog will be a prerequisite if the
Registrant is to continue with its pursuit of this business in the future. See
"Alternate Feed Processing."

Process milling of alternate feeds generated $4,288,515 of the Registrant's
fiscal 1999 revenues which were approximately 31% of total revenues for the
year.

EXPLORATION AND DEVELOPMENT

In the area of exploration and property development, the Registrant did not
undertake any exploration activities in 1999. The Registrant's 70% owned
Gurvan-Saihan Joint Venture, which discovered a new uranium mineral deposit in
the Hairhan region of Mongolia and delineated a deposit containing approximately
21.67 million tons of mineralized material at an average grade of approximately
0.052% U(3)O(8) during the field seasons of 1997 and 1998, was placed on standby
in early fiscal 2000. As of March 31, 2000, the two field camps in the Hairhan
and Haraat regions are being dismantled and other cost savings measures are
being instituted in order to minimize the holding cost of this asset. Due to the
favorable and unique Mineral Agreement between the Joint Venture and the
Mongolian Government, the Joint Venture is able to hold its land position at
minimal cost. The Registrant considers

the Mongolian Joint Venture to be a valuable asset and, as of March 31, 2000, is
discussing with other investors and interested parties the potential for their
participation in the Joint Venture. See "Mongolia Property."

In addition, due to the weak uranium market, the Registrant also suspended all
licensing work on its Reno Creek in situ leach property during fiscal 1999. In
order to minimize the holding cost of its U.S. mining properties, the Registrant
has dropped some portions of this property and, as of March 31, 2000, is seeking
potential purchasers for the remaining portion. If no purchasers are identified,
the Registrant will continue to drop its holdings of this property in order to
minimize costs. See "Other U.S. Mineral Properties."

MARKETING

Despite the weak uranium market, the Registrant was an active seller of U(3)O(8)
in fiscal 1999. The Registrant delivered over 1.1 million pounds of uranium to
six customers generating $9,758,317 of revenues; sixteen (16) percent of the
material sold was produced by the Registrant from its alternate feed processing.
The remaining 84% was purchased; therefore, the Registrant was able to take
advantage of the low market prices to fill existing contracts at a profit.

RISK FACTORS

ABILITY TO DEVELOP ALTERNATE FEED BUSINESS

The Registrant intends to marshal its resources and concentrate its United
States operations on the continuing development of the alternate feed,
uranium-bearing waste recycling business. In order for the Registrant to become
profitable in this business the Registrant must be able to: A) identify a
sufficient number of contracts that would be profitable for the Registrant; B)
be successful in winning a sufficient number of these contracts in the face of
competition from other facilities; and C) receive these contracts in a time
frame and have sufficient backlog of such contracts to allow the Mill to operate
at a sufficient capacity to more than cover its costs of production, any standby
costs that are incurred between Mill runs, and other corporate overheads. While
the Registrant has had considerable success to date in this initiative, the
Registrant has not to date developed a sufficient backlog of alternate feed
business to result in sustained profitable operations for the Registrant.
Developing this backlog will be a prerequisite if the Registrant is to continue
with its pursuit of this business in the future. There can be no guarantee or
assurance that the Registrant will be successful in developing the necessary
backlog or that it will otherwise be successful at this business initiative. If
the Registrant cannot develop this backlog in the near future, it may pursue
other business opportunities as they may arise.

ABILITY TO SUCCESSFULLY PURSUE OTHER BUSINESS INITIATIVES

If the Registrant is unsuccessful in developing the alternate feed,
uranium-bearing waste recycling business, it may pursue other business
opportunities, as they may arise, in lieu thereof. In addition, the Registrant
will continue to evaluate other opportunities unrelated to its mining and
alternate feed activities. There can be no guarantee or assurance that the
Registrant has or will be able to develop the required expertise or experience
for any such other business opportunities or that any such other business
opportunities will be successful.

VOLATILITY AND SENSITIVITY TO PRICES, COSTS AND EXCHANGE RATES

Because a significant portion of the Registrant's revenues are expected to be
derived from the sale of uranium and vanadium, the Registrant's net earnings are
affected by the long- and short-term market price of U(3)O(8) and V(2)O(5).
Historically, uranium prices have been subject to fluctuation, and the price of
uranium has been and will continue to be affected by numerous factors beyond the
Registrant's control, such as demand for nuclear power, political and economic
conditions in uranium producing and consuming countries, such as the United
States, Canada and Russia and other republics of the CIS, and production levels
and costs of production in countries such as Russia, Canada and other republics
of the former CIS and Australia.

During fiscal year 1999, U(3)O(8) prices started at $9.75 per pound U308 in
September 1998, rose to $10.85 in March, then declined to $9.75 per pound in
September 1999. The spot market value of vanadium, however, suffered a
tremendous decline. V(2)O(5) prices were $5.37 per pound V205 in September 1998,
and then declined during the remainder of the fiscal year to $1.84 per pound in
September 1999. Uranium prices have continued to drift

downward to $9.30 per pound in March 2000, while vanadium prices have recovered
slightly to approximately $2.25 per pound in March 2000.

COMPETITION FROM OTHER ENERGY SOURCES AND PUBLIC ACCEPTANCE OF NUCLEAR ENERGY

Nuclear energy competes with other sources of energy, including oil and gas,
coal and hydro-electricity. These other energy sources are to some extent
interchangeable with nuclear energy, particularly over the longer term. Lower
prices of oil, gas, coal and hydro-electricity for an extended period of time
may make nuclear power a less attractive fuel source for the generation of
electricity, thus resulting in lower demand for uranium. It is anticipated that
production costs will become more of a factor for nuclear and other sources of
energy as utilities continue to be less regulated, receive fewer government
subsidies, and as electrical power becomes more freely traded. Furthermore, the
growth of the uranium and nuclear power industry beyond its current level will
depend upon continued and increased acceptance of nuclear technology as a means
of generating electricity. Because of unique political, technological and
environmental factors that affect the nuclear industry, the industry is subject
to public opinion risks which could have an adverse impact on the demand for
nuclear power and increase the regulation of the nuclear power industry.

URANIUM INDUSTRY COMPETITION AND INTERNATIONAL TRADE RESTRICTIONS

The international uranium industry is highly competitive in many respects,
including the supply of uranium. The Registrant markets uranium to utilities in
direct competition with supplies available from a relatively small number of
Western World uranium mining companies, from certain republics of the former CIS
and mainland China and from excess inventories, including inventories made
available from decommissioning of military weapons. To some extent, the effects
of the supply of uranium from the former CIS republics are mitigated by a number
of international trade agreements and policies, including suspension agreements
entered into by the United States with certain republics of the former CIS,
including Russia, that restrict imports into the United States market. In
addition, in January 1994, the United States and Russia signed a 20-year
agreement to convert HEU from former Russian nuclear weapons to a grade suitable
for use in nuclear power plants. During 1995, the United States also amended its
suspension agreements with the Republics of Kazakhstan and Uzbekistan, which
increased the limit on the supply of uranium from those republics into the
United States for a 10-year period. The European Community also has an informal
policy limiting annual consumption of uranium sourced from the former CIS
republics. These agreements and any similar future agreements, governmental
policies or trade restrictions are beyond the control of the Registrant and may
affect the supply of uranium available in the United States, which is the
largest market for uranium in the world.

IMPRECISION OF MINERAL DEPOSIT ESTIMATES

Mineral deposit estimates included in this document for uranium and vanadium are
estimates, and no assurances can be given that the indicated levels of recovery
will be realized. Such estimates are expressions of judgment based on knowledge,
mining experience, and analysis of drilling results and industry practices.
Valid estimates made at a given time may significantly change when new
information becomes available. While the Registrant believes that the mineral
deposit estimates included in this document are well established and reflect
management's best estimates, by their nature, mineral deposit estimates are
imprecise and depend, to a certain extent, upon statistical inferences which may
ultimately prove unreliable. Furthermore, based on current commodity prices,
none of the Registrant's mineral deposits are considered reserves, and there can
be no assurances that any of such deposits will ever be reclassified as
reserves. Mineral deposit figures included here have not been adjusted in
consideration of these risks and, therefore, no assurances can be given that any
mineral deposit estimate will ultimately be reclassified as reserves.

REPLACEMENT OF MINERAL DEPOSITS

The Registrant's total uranium mineral deposits will decrease over time as its
current uranium producing properties are depleted, sold or closed. There can be
no assurance that uranium properties will remain, be developed and placed into
production or that the Registrant's future exploration, development and
acquisition efforts will be successful.

MINING AND MILLING RISKS AND INSURANCE

The mining and milling of uranium and uranium-bearing materials is a capital
intensive commodity business, and is subject to a number of risks and hazards.
These risks are environmental pollution, accidents or spills, industrial
accidents, labor disputes, changes in the regulatory environment, natural
phenomena (such as inclement weather conditions, underground flooding and
earthquakes), and encountering unusual or unexpected geological conditions.
Depending on the size and extent of the event, the foregoing risks and hazards
could result in damage to, or destruction of, the Registrant's mineral
properties, personal injury or death, environmental damage, delays in or
cessation of production from the Registrant's mines or in its exploration or
development activities, monetary losses, cost increases which could make the
Registrant uncompetitive, and potential legal liability. In addition, due to the
radioactive nature of the materials handled in uranium mining and milling,
additional costs are incurred by the Registrant on a regular and ongoing basis.

The Registrant maintains insurance against certain risks that are typical in the
uranium industry. As of March 31, 2000, this includes approximately $47,000,000
of fire and casualty insurance for damage to the White Mesa Mill and mining
properties, $3,000,000 of business interruption insurance for the White Mesa
Mill and mine activities caused by fire or other insured casualty, and
$12,000,000 of general liability insurance. Although the Registrant maintains
insurance in amounts it believes to be reasonable, such insurance may not
provide adequate coverage in the event of certain unforeseen circumstances.
Insurance against certain risks (including certain liabilities for environmental
pollution or other hazards as a result of production, development or
exploration), is generally not available to the Registrant or to other companies
within the uranium mining and milling business.

GOVERNMENTAL REGULATION AND POLICY RISKS

Mining and milling operations and exploration activities, particularly uranium
mining and milling in the United States, are subject to extensive regulation by
state and federal governments. Such regulation relates to production,
development, exploration, exports, taxes and royalties, labor standards,
occupational health, waste disposal, protection and remediation of the
environment, mine reclamation, mine safety, toxic substances and other matters.
Compliance with such laws and regulations has increased the costs of exploring,
drilling, developing, constructing, operating and closing the Registrant's mines
and other facilities. It is possible that, in the future, the costs, delays and
other effects associated with such laws and regulations may have an impact on
the Registrant's decisions as to whether to operate existing mines or refining
and other facilities or, with respect to exploration and development properties,
whether to proceed with exploration or development. Furthermore, future changes
in governments, regulations and policies, could materially adversely affect the
Registrant's results of operations in a particular period or its long-term
business prospects. In addition, should certain recent proposals being
considered by the U.S. Congress become law, a royalty on production of minerals
from unpatented mining claims located on federal lands could be imposed, which
could adversely impact the Registrant's proposed business and uranium prospects.

Worldwide demand for uranium is directly tied to the demand for energy produced
by the nuclear electric industry, which is also subject to extensive government
regulation and policies in the United States and elsewhere. The development of
mines and related facilities is contingent upon governmental approvals which are
complex and time consuming to obtain and which, depending upon the location of
the project, involve various governmental agencies. The duration and success of
such approvals are subject to many variables outside the Registrant's control.
In addition, the international marketing of uranium is subject to certain trade
restrictions, such as those imposed by the suspension agreements entered into by
the United States with certain republics of the former CIS and the agreement
between the United States and Russia related to the supply of Russian HEU into
the United States.

ENVIRONMENTAL RISKS

The Registrant is required to comply with environmental protection laws and
regulations and permitting requirements, and the Registrant anticipates that it
will be required to continue to do so in the future. The material laws and
regulations that the Registrant must comply with are the Atomic Energy Act,
Uranium Mill Tailings Radiation Control Act of 1978 ("UMTRCA"), Clean Air Act,
Clean Water Act, Safe Drinking Water Act, National Environmental Policy Act
("NEPA"), Federal Land Policy Management Act, National Park System Mining
Regulations Act, and the State Mined Land Reclamation Acts or Department of
Environmental Quality regulations, as applicable. The Registrant complies with
the Atomic Energy Act as amended by UMTRCA by applying for and maintaining
operating licenses from the NRC. Uranium milling operations must conform to the
terms of such

licenses, which include provisions for protection of human health and the
environment from endangerment due to radioactive materials. The licenses
encompass protective measures consistent with the Clean Air Act and the Clean
Water Act, and as federally-issued licenses, are subject to the provisions of
NEPA. This means that any significant action relative to issuance, renewal, or
amendment of the license must meet the NEPA provisions. At the present time, the
NRC also regulates in situ uranium mining operations. Therefore, for these types
of facilities, the Registrant must comply with the NRC licensing requirements,
as well as with the Federal Land Policy Management Act, the National Park System
Mining Regulations Act, and State Mined Land Reclamation Acts or Department of
Environmental Quality regulations, as applicable. The Registrant utilizes
specific employees and consultants in order to comply with and maintain the
Registrant's compliance with the above laws and regulations.

Although the Registrant believes that its operations are in compliance, in all
material respects, with all relevant permits, licenses and regulations involving
worker health and safety as well as the environment, the historical trend toward
stricter environmental regulation may continue. The uranium industry is subject
to not only the worker health and safety and environmental risks associated with
all mining businesses, but also to additional risks uniquely associated with
uranium mining and milling. The possibility of more stringent regulations exists
in the areas of worker health and safety, the disposition of wastes, the
decommissioning and reclamation of mining and milling sites, and other
environmental matters, each of which could have a material adverse effect on the
costs or the viability of a particular project.

The Registrant has detected some chloroform contamination at the Mill site, that
appears to have resulted from the operation of a temporary laboratory facility
that was located at the site prior to and during construction of the Mill
facility. See "Legal Proceedings." The source and extent of this contamination
are currently under investigation, and a corrective action plan, if necessary,
is yet to be devised. Although investigations to date indicate that this
contamination appears to be contained in a manageable area, the scope and costs
of remediation have not yet been determined and could be significant.

RECLAMATION OBLIGATIONS

As owner and operator of the White Mesa Mill and numerous uranium and
uranium/vanadium mines, the Registrant is obligated to eventually reclaim such
properties. Most but not all of these reclamation obligations are bonded, and
cash and other assets of the Registrant have been reserved to secure a portion
of this bonded amount. Although the Registrant's financial statements contain as
a liability the Registrant's current estimate of the cost of performing these
reclamation obligations, and the bonding requirements are generally periodically
reviewed by applicable regulatory authorities, there can be no assurance or
guarantee that the ultimate cost of such reclamation obligations will not exceed
the estimated liability contained on the Registrant's financial statements. See
"Reclamation."

DEPENDENCE ON LIMITED NUMBER OF CUSTOMERS

Long term demand for uranium is relatively fixed due to the fact that there are
a limited number of nuclear reactors in the world and the lead time for
construction of new reactors is many years. As a result, in any given year the
Registrant likely will rely on a relatively small number of customers to
purchase a significant portion of its production of uranium. The loss of any of
the Registrant's largest customers or curtailment of purchases by such customers
along with the inability to replace such customers with new customers could have
a material adverse effect on the Registrant's financial condition and results
from operations. Factors which may adversely affect purchases by customers from
the Registrant include decisions by customers to forego purchases and use
existing inventories of uranium, as well as competition from other uranium
suppliers.

MONGOLIA PROPERTY

The Mongolia Property continues to be a significant asset of the Registrant. As
with any foreign operation, the Mongolia Property may be subject to certain
risks, such as adverse political and economic developments in Mongolia, foreign
currency controls and fluctuations, as well as risks of war and civil
disturbances. Other events may limit or disrupt the project, restrict the
movement of funds, result in a deprivation of contract rights or the taking of
property by nationalization or expropriation without fair compensation,
increases in taxation or the placing of limits on repatriation of earnings. No
assurance can be given that current policies of Mongolia or the political
situation within that country will not change so as to affect adversely the
value or continued viability of the

Registrant's interests in the Mongolia Property. The Registrant intends to
monitor this investment with a view to anticipating political, economic or other
events that may affect the Registrant's interests in the Mongolia Property. See
"Mongolia Property."

RELIANCE ON ALTERNATE FEED INCOME; DEPENDENCE ON ISSUANCE OF LICENSE AMENDMENTS

A significant portion of the Registrant's expected revenues and income over the
next several years is expected to result from the processing of alternate feed
materials through the White Mesa Mill. The Registrant's ability to process
alternate feeds is dependent upon obtaining amendments to its Mill license from
the NRC. There can be no assurance that the NRC will continue to issue such
license amendments. See "Alternate Feed Processing" and "Legal Proceedings."

Although the Registrant believes that alternate feed sources will continue to
generate income for the Registrant in the foreseeable future, there can be no
guarantees or assurance that this will be the case.

DEPENDENCE ON KEY PERSONNEL

The Registrant's success will largely depend on the efforts and abilities of
certain senior officers and key employees. Certain of these individuals have
significant experience in the uranium and radioactive waste recycle/disposal
industry. The number of individuals with significant experience in this industry
is small. While the Registrant does not foresee any reason why such officers and
key employees will not remain with the Registrant, if for any reason they do
not, the Registrant could be adversely affected. The Registrant has not
purchased key man life insurance for any of these individuals.

CONFLICTS OF INTEREST

Certain of the directors of the Registrant also serve as directors of other
companies involved in natural resource exploration and development, and
consequently there exists the possibility for such directors to be in a position
of conflict. Any decision made by such directors involving the Registrant will
be made in accordance with the duties and obligations of directors to deal
fairly and in good faith with the Registrant and such other companies. In
addition, such directors must declare, and refrain from voting on, any matter in
which such directors may have a conflict of interest. The Registrant believes
that no material conflicts of interest currently exist. See "Interest of
Management in Certain Transactions."

LIMITED OPERATING HISTORY

The Registrant began its business in May 1997, following the acquisition of
assets from Energy Fuels. As a result, the Registrant has had a limited history
of operations. There can be no assurance that the Registrant's operations will
be profitable.

ITEM 2. DESCRIPTION OF PROPERTIES

The following is an overview of the properties held by the Registrant as of
March 31, 2000:

WHITE MESA MILL

OVERVIEW

The White Mesa Mill, a fully permitted uranium mill with a vanadium and other
co-product recovery circuit, is strategically located in southeastern Utah near
the Colorado Plateau District and the Arizona Strip. The Mill is approximately
six (6) miles south of the city of Blanding, Utah. Access is by state highway.

Construction of the White Mesa Mill started in 1979, and conventionally mined
uranium mineralized material was first processed in May 1980. The Mill cost $40
million to construct; with inflation, more stringent permitting requirements,
and the lack of suitable sites, the cost of constructing a facility such as the
White Mesa Mill, if possible, would be considerably more than that amount. The
Mill is in compliance with NRC and EPA standards, and is a standard design with
both uranium and vanadium circuits.

During mining, uranium mineralized material is received at the Mill and
stockpiled. Amenability tests are run on lots from individual mines to determine
if blending of the mined material will increase overall recovery. The ore is
initially fed to an 18-foot diameter SAG Mill, then stored in slurry form in one
of the two pulp storage tanks. The White Mesa Mill utilizes a two-stage leach
process where overflow solution from the No. 1 CCD Thickener is combined, in an
"acid kill" step, with feed from the pulp storage tanks. The slurry from this
first stage leach is then separated in the pre-leach thickener, with the solids
going to the second stage leach and the clarified solution going to the solvent
extraction circuits. Concentrated sulfuric acid, steam, and an oxidizer are
added in the second stage leach. This slurry is subsequently fed to the 8-stage
CCD Circuit where the underflow is discharged to tailings. In full operation,
the Mill employs approximately 100 people.

CURRENT CONDITION AND OPERATING STATUS

The Mill has been on standby since the completion of the conventional Mill run
in November 1999. During this period of standby the Mill has been receiving and
stockpiling alternate feed materials from the Ashland 1 FUSRAP site, as well as
other alternate feed materials. The Registrant intends to maintain the Mill on
standby status until a sufficient stockpile of alternate feed material has been
accumulated at the Mill to justify an efficient Mill run, at which time the Mill
will re-commence operations. The Mill is maintained in good operating condition
and is capable of commencing a Mill run at any time without the need for
regulatory approvals or any significant capital expenditures. In addition to
receiving and stockpiling alternate feed materials for future processing, the
primary focus of the personnel at the Mill is to ensure that the operating
status of the Mill is maintained, so that the Mill remains ready for operation
at any time.

INVENTORIES

Uranium inventories were 888,666 lbs U(3)O(8) and vanadium inventories were
1,073,965 lbs V(2)O(5), as at September 30, 1999. All of the vanadium and
approximately 151,300 lbs of the U(3)O(8) were located at the Mill site, and the
remainder of the U(3)O(8) was located at conversion facilities.

TAILINGS

Synthetic lined cells are used to contain tailings and, in one case, solutions
for evaporation. There is sufficient volume available, as of March 31, 2000, for
approximately another 200,000 tons of tailings solids. Thereafter, Cell No. 4A
can be utilized after it is relined. Difficulties have been encountered with
leaking seams in the liner for Cell No. 4A. This cell contains no tailings at
present, and leaking is due to working of the liner by thermal stress, since it
has not been placed in use and has been exposed to full sunlight for several
years. The cell must be relined with a better quality material before using it
to deposit tailings. The Registrant estimates an expenditure of $1.5 to $3.0
million for this purpose. After Cell No. 4A is relined, approximately 2,000,000
tons of tailings solids can be disposed of in Cell No. 4A before an additional
cell will be needed.

The environmental assessment for the Mill permits that a total of another three
forty-acre tailings cells may be added. Each additional tailings cell can
accommodate approximately two million tons of tailings, for a total of 12 years
of operation at 2,000 tons per day, 260 operating days a year.

REQUIRED CAPITAL EXPENDITURES

Other than routine maintenance, the only significant capital project anticipated
over the next three years with respect to operations of the White Mesa Mill is
the relining of tailings Cell No. 4A, assuming that the Mill continues to
process materials at a rate similar to the rate of production over the past
three years, at an estimated cost of $1,500,000 - $3,000,000. In addition, if
Cell No. 4A is put into use the reclamation obligation for the Mill would
increase by approximately $1,000,000, which would require an increase in the
Mill's reclamation bond by that amount. It is not expected that this capital
expenditure will be required during fiscal 2000.

RECENT OPERATIONS

Since January of 1995, the Mill has completed several campaigns: the processing
in 1995 and 1996 of approximately 200,000 tons of stockpiled mineralized
material, mainly from the Arizona Strip Mines; the processing in 1996 of an
alternate feed source; the processing in 1997 of three alternate feed sources;
in 1998, the Registrant completed a processing run of uranium-bearing tantalum
residues for a major tantalum producer; and, in 1999 the Registrant completed
the processing of two alternate feed sources and the majority of its 87,250 ton
conventional mill run.

OPERATION AT REDUCED CAPACITY

Nameplate capacity of the Mill is 2,000 tons per day of mined material, which
would yield 6 million pounds U(3)O(8) per year from Arizona Strip materials or
3.5 million pounds per year of U(3)O(8) and up to 18 million pounds per year

of V(2)O(5) from Colorado Plateau materials. The Mill, at its 2,000 tons per day
design capacity, is oversized for the foreseeable tonnages expected over the
next few years. The larger the capacity, the larger the interval between Mill
runs, as mill-feed must be stockpiled to provide adequate mill feed.

The Registrant has modified the Mill to a reduced effective capacity of
approximately 1,050 tons of material per day. This will allow the Mill to be run
more frequently and will reduce the amount of time that material is stockpiled.
However, the unit cost of milling materials increases as the capacity of the
Mill is reduced. Certain alternate feeds can be run at a lower daily capacity,
without requiring any significant capital improvements to the Mill.

The Registrant's capital expenditures required to reduce the capacity of the
Mill were approximately $100,000, and that amount is approximately the same
amount that would be required to increase capacity at a later date, should that
alternative become economically attractive.

CLOSURE

THE FOLLOWING DISCUSSION OF THE REGISTRANT'S CURRENT PLANS FOR THE FUTURE
OPERATION OF THE MILL CONSTITUTES FORWARD LOOKING STATEMENTS WITHIN THE MEANING
OF FEDERAL SECURITIES LAWS. SEE "SPECIAL NOTE REGARDING FORWARD LOOKING
STATEMENTS."

In the future, should the Registrant choose to shut down and close the Mill, it
would be subject to certain closure costs. The estimate of closure costs for the
Mill was revised by the Registrant after discussion with the NRC and reviewing
costs for demolition. These estimated closure costs, as of March 31, 2000, are
summarized as follows:

WHITE MESA MILL CLOSURE COSTS

CATEGORY
--------

Mill dismantling and decommissioning $1,505,166
Cover tailings cell #2 1,082,869
Cover tailings cell #3 1,565,444
Cover tailings cell #4A 120,128
Tailings cell #1 933,169
Miscellaneous - management, hygiene, radiation, etc. 1,939,480
----------
Direct Costs 7,146,256
Contractors' Profit 714,626
Contingency 1,071,939
Licensing and bonding 142,925
Long term care fund 606,721
----------

TOTAL ESTIMATED COSTS $9,682,467
==========

On February 10, 2000 the NRC issued amendment No.13 to the Mill license which
reduced the current surety from $11,469,859 to the amount shown above of
$9,682,467.

SEQUENTIAL RECLAMATION

Under the Mill's NRC permit, the Mill is only allowed to have two tailings cells
open at any one time. Prior to depositing tailings into Cell No. 4A, the
Registrant is required to close tailings Cell No. 2 The Registrant also intends
to commence reclamation of Cell No.2 for approximately $1,675,000. The result is
that the total cost of reclamation at any one time, and hence the amount of the
bond required, is not expected to increase as Cell No.4A is brought into use.

As each pond, or cell, is filled with tailings, the water is drawn off and
pumped to the evaporation pond and the sands allowed to dry. As each cell
reaches final capacity, reclamation will begin with the placement of 6 to 8 feet
of

clay and rock over the tailings. Additional cells are excavated into the ground,
and the overburden is used to reclaim previous cells. In this way there is an
ongoing reclamation process.

GROUND WATER DISCHARGE PERMIT

Although the Mill is designed as a facility that does not discharge to
groundwater, the Registrant is negotiating a State of Utah Groundwater Discharge
Permit with the State of Utah Department of Environmental Quality, which will
give the State of Utah dual jurisdiction over the protection of groundwater at
the Mill site. The State of Utah requires that every operating uranium mill in
the State of Utah must have a State Groundwater Discharge Permit, regardless of
whether or not the facility discharges to groundwater.

SUMMARY OF MINERALIZED MATERIAL

The following is a summary of the Registrant's estimates of the uranium and
vanadium contained in mineral deposits on the Registrant's various properties,
as of March 31, 2000:

Conventional Mines

Project Mineralized Tons %U(3)O(8) %V(2)O(5)
------- ---------------- --------- ---------

Arizona Strip Mines(1,4)
Arizona 1 80,000 0.652
Canyon 108,000 0.903
Pinenut 110,000 0.427
---------- ------
Total Arizona Strip 298,000 0.660

Colorado Plateau(2,4) 1,506,750 0.206 1.208

Bullfrog Project(3,4) 1,937,000 0.334
---------- ------

1) The reported mineralized tons for the Arizona Strip mines include
extraction dilution losses (which includes mining dilution and mining
recovery losses).

2) The reported mineralized tons for the Colorado Plateau mines include
extraction dilution losses (which includes mining dilution and mining
recovery losses).

3) The reported mineralized tons for the Bullfrog Project do not include
extraction dilution losses.

4) Processing of uranium bearing material in a uranium/vanadium recovery
mill normally results in recovery of approximately 94% to 98% of the
contained uranium and 70% to 80% of the contained vanadium. Milling
Recovery losses are not included in the foregoing table.

In-Situ Leach Projects(5)

Mineralized Tons % U(3)O(8)

Reno Creek 4,286,000 0.075
Dewey Burdock 1,476,000 0.210
Mongolia JV 21,672,000 0.052

Total ISL Projects 27,434,000 0.063

5. Total uranium recovery from ISL projects is normally in the
range of 70% to 75% of the in place mineralization. These
recovery losses are not incorporated in the foregoing figures
for the Registrant's ISL projects.

The Registrant mined uranium and vanadium-bearing materials from its Sunday and
Rim Mine complexes in the Colorado Plateau District from November 1997 until
mid-1999. In mid-June, 1999, the Registrant elected to suspend mining operations
as a result of continuing weak uranium and vanadium prices and the expectation
that these conditions would not improve for the next few years. The Registrant
has also written-off the carrying value of its U.S. mineral properties for the
same reason. Accordingly, none of the Registrant's U.S. mining properties should

be considered economically viable at this time; hence none of the properties
should be considered to contain "reserves" but should be classified as "mineral
deposits."

In addition, in order to reduce property holding costs, the Registrant is in the
process of attempting to sell its U.S. mineral properties, and to selectively
drop many of those mineral properties that cannot be sold.

COLORADO PLATEAU DISTRICT

OVERVIEW

The Uravan mineral belt in the Colorado Plateau (the "Colorado Plateau
District") has a lengthy mining history, with the first shipment of mined
materials made to France in 1898. World War II brought increased attention to
the uranium mineralization in the Uravan area, and by the 1950s this district
was one of the world's foremost producers of both uranium and vanadium.
Production continued more or less uninterrupted until 1984 when low uranium
prices forced the closure of all operations. Production resumed in 1987, but
once again ceased in 1990. Total historical production from the Union Carbide
mines (many of which were later purchased by Energy Fuels, and hence the
Registrant) in the Uravan area is reported at 47 million pounds of U(3)O(8) and
273 million pounds of vanadium, yielding an overall ratio of V(2)O(5)/U(3)O(8)
of 5.79.

EXPLORATION POTENTIAL

The uranium mineralization found in the Colorado Plateau was deposited in
sediments in alluvial fans formed by braided streams. The shape and size of the
mineralized lenses are extremely variable. As a result, exploration and mining
have historically involved conducting exploration to find a lense and then
merely following its erratic path, with little additional surface exploration
drilling other than development drilling in the course of following the seam.
This is unlike other types of mining where mineralization is almost completely
delineated by surface explorative drilling prior to mining.

The unusual nature of these deposits has therefore traditionally resulted in a
limited amount of resources being dedicated to delineate reserves prior to
mining. Traditionally, there will be some reserves that have been delineated at
the beginning of each year, uranium will be mined during the year and
approximately the same amount of reserves will remain delineated at the end of
the year. This pattern has persisted since the 1940s.

Based on this history of production from the Colorado Plateau, the Registrant
believes that if commodity prices improve the potential to continue this pattern
of production exists and that additional mineral deposits will be delineated
each year that mining continues.

Presently mineral deposits estimated to contain approximately 1,506,750 tons
with an average grade of 0.206% U(3)O(8) and 1.208% V(2)O(5) have been
identified by the Registrant in its Colorado Plateau properties. These estimates
take into account extraction dilution losses, but do not include milling
recovery losses, which are estimated to be 2% to 6% for uranium and 20% to 30%
for vanadium.

GEOLOGY

The Registrant's properties in this geographic area are typical uranium-vanadium
deposits of the Colorado Plateau type located in the southern end of the Uravan
mineral belt. The rocks of the Colorado Plateau are predominately sedimentary
ranging in age from Precambrian to Tertiary and, although uranium mineralization
occurs in sediments of different ages, the most important deposits of the Uravan
belt occur in the Salt Wash Member of the Jurassic Morrison Formation.

The Salt Wash Member consists of light gray to light brown sandstones
interbedded with red-green siltstones and mudstones. The sandstones, which are
generally fine-grained and well to moderately sorted, are considered to have
been deposited as alluvial fans by braided streams. The mineralization occurs in
the lenticular sandstone deposits as tabular, elongate bodies generally parallel
to the bedding following the palaeo-channels. All of the large deposits

within the Morrison Formation are in the upper sandstone lens of the Salt Wash
Member, commonly known as the third rim. Fine-grained uraninite is the dominant
uranium mineral accompanied by lesser amounts of coffinite. The chief vanadium
mineral is montrosite. In the oxidized parts of the deposits the distinctive
yellow colored uranyl-vanadate mineral, carnotite, is common.

Individual deposits are small, varying in length from a few hundred to several
thousand feet and in width from a hundred to a thousand feet. Thickness varies
from a few inches to several tens of feet, but generally average between two to
five feet. Mines often contain several such mineralized deposits. The host
sediments are generally flat lying to low dipping with little structural
deformation.

OPERATIONS

The Registrant's principal mining complexes on the Colorado Plateau District
consist of the Deer Creek, Monogram, Thunderbolt, Sunday, and East Canyon (Rim)
zones. The bulk of the mineral deposits in the Colorado Plateau District are
contained in three areas: the Sunday Mine Complex; the Deer Creek complex, which
includes the La Sal and Pandora mines; and, the East Canyon Area, which includes
the Rim Mine. All of these areas have developed, permitted mines that have been
shut down, pending any significant improvements in commodity prices. The
location of these mines is indicated on the following figure:

[MAP]

The Registrant commenced conventional mining operations at its Sunday Mine
Complex in November 1997 and at its Rim Mine in January 1998 after completion of
mine development activities. The Registrant continued the mining of uranium and
vanadium bearing materials from these mines until mid-1999. At that time, the
Registrant elected to suspend operations at these mines as a result of continued
weak uranium and vanadium prices. The shutdown of the mines took several months
to complete, and the process of shutting the mines down was completed in
November 1999. The mines continue to remain in a shutdown status pending any
significant improvements in commodity prices. During this mining campaign a
total of approximately 81,500 tons of mineralized material with a U(3)O(8) grade
of 0.28% and a V(2)O(5) grade of 1.9% was mined from these mines. This
mineralized material together with approximately 5,750 tons of mineralized
material from independent mines was milled at the White Mesa Mill during the
period June 1999 to November 1999, to recover approximately 487,000 pounds of
U(3)O(8) and 2.0 million pounds of V(2)O(5).

Due to the shutdown of mining operations on the Colorado Plateau, the Registrant
closed its field office in Dove Creek Colorado during the period July to
November, 1999.

ARIZONA STRIP

OVERVIEW

The Arizona Strip is an area bounded on the north by the Arizona/Utah state
line; on the east by the Colorado River and Marble Canyon; on the West by the
Grand Wash cliffs; and on the south by a mid-point between the city of Flagstaff
and the Grand Canyon. The area encompasses approximately 13,000 square miles.
The Arizona Strip is separate and distinct from the Colorado Plateau District.
The two mining districts are located approximately 200 air miles (310 road
miles) apart and have been historically administered as two separate mining
camps.

The Registrant owns a number of permitted mines, partially developed properties,
known deposits and well developed prospects in the Arizona Strip, all of which
have been shut down pending any significant improvements in commodity prices.

Since 1980, when mine development first began at Hack Canyon II, the Arizona
Strip has produced in excess of 19 million pounds of uranium from seven mines,
each of which was owned and operated by Energy Fuels. Of these mines, Hack
Canyon I, II, and III, Pigeon and Hermit are mined out and have been reclaimed;
Pinenut, Kanab North, Canyon and Arizona 1 have remaining mineral deposits but
have been placed on shutdown status pending any significant improvements in
commodity prices. Mineral from the Arizona Strip mines can be hauled by truck
from the mine sites to the White Mesa Mill. The Arizona 1 Mine is 307 road
miles, and the Canyon Mine is 316 road miles from the Mill.

Due to the shutdown of mining activities and the Registrant's initiatives to
reduce the holding costs of its U.S. mineral properties, the Registrant has
closed its field office in Fredonia Arizona effective March 31, 2000.

MINE DEVELOPMENT

The mineral deposits occur in collapsed breccia pipes and range from 1,000 to
1,800 feet below surface with a vertical extent of up to 600 feet thick. Each of
the mines in the Arizona Strip consists of one breccia pipe. The pipes typically
are 200 to 400 feet in diameter. Within this envelope the mineral deposits can
be at times massive but often are irregular and discontinuous.

A 1,000 to 1,600 foot deep shaft is generally required to access the deposits.
In the case of the Hack Canyon I, II, and III mines, access was obtained through
declines driven from nearby canyons.

Typically, the life cycle of an Arizona Strip mine is approximately eight years.
The permitting process takes approximately one to two years. The average mine
development and mining phase takes approximately five years, and the average
decommissioning reclamation period is less than one year.

BACKGROUND GEOLOGY

Breccia pipes are collapse features created by cavern dissolution in the Redwall
Limestone, some 3,000 feet below present day surface. Overlying sediments
fracture as the cavern size increases and ultimately collapse forming a
pipe-like structure, which is filled with the rubble of the sediments. Uranium
mineralization occurs in this brecciated rock, forming deposits 200 to 400 feet
in diameter, some 600 feet thick at depths up to 1,800 feet.

Uranium mineralization is hosted by the breccia in a sand, silt, and clay
matrix. The principal uranium mineral, pitchblende, occurs primarily in the
matrix, filling voids between sand grains and replacing rock fragments. Pyrite
is the principal gangue mineral. Calcite and gypsum are common cementing
minerals. Copper, lead and zinc minerals may also be present.

Nearly always, the pipe is haloed by alteration or a zone of bleaching resulting
from the partial removal of red iron minerals from formations surrounding the
pipe. "Ring fractures" are often seen at the pipe margins. These fractures may
also be an important host for associated mineralization and reserves.

OPERATIONS

The Arizona Strip properties consist of several developed and partially
developed mines and exploration properties, including the Arizona 1, Canyon,
Pinenut and Kanab North mines, all of which have been shut down pending any
significant improvements in commodity prices. The Arizona Strip properties are
estimated to contain in total approximately 298,000 tons with an estimated
average grade of approximately 0.66% U(3)O(8). These estimates take into account
extraction dilution losses, but do not include milling recovery losses which are
estimated to be 2% to 6% for uranium. The location of these mines is indicated
on the following figure:

[MAP]

EXPLORATION POTENTIAL

Since 1980, Energy Fuels developed nine mine projects, from which seven mines
produced a total of 19 million pounds of uranium, or approximately 2.7 million
pounds of uranium per mine.

Energy Fuels conducted an extensive exploration program in the Arizona Strip.
Since 1980, Energy Fuels identified in excess of 1,300 breccia pipe targets. Of
these, Energy Fuels drilled at least one hole on 140 breccia pipe targets, of
which 62 were verified to be breccia pipes, and identified mineralization in 42
of these. Subsequently all of these 42 breccia pipes were acquired by the
Registrant. The Registrant has since dropped one of these breccia pipes.

OTHER U.S. MINERAL PROPERTIES

In addition to the mineral properties on the Colorado Plateau and the Arizona
Strip, the Registrant also acquired from Energy Fuels the Bullfrog, Reno Creek
and Dewey Burdock properties located in the United States.

BULLFROG PROPERTY

The Bullfrog property is located in eastern Garfield County, Utah, 20 miles
north of Bullfrog Basin Marina on Lake Powell, about 40 air miles south of
Hanksville, Utah, and 150 miles from the White Mesa Mill.

More than 2,200 rotary drill holes have been completed on the Bullfrog property.
There are no surface or underground workings or infrastructure on the property.
The location of the Bullfrog property is indicated on the figure under the
heading "Colorado Plateau District - Operations"

In 1993, Energy Fuels personnel calculated an in-place mineral deposit of
1,937,000 tons at a grade of 0.334% U(3)O(8). A higher grade portion of the
deposit was estimated by Energy Fuels to contain 1,300,000 tons at a grade of
0.417% U(3)O(8). These estimates do not take into account extraction dilution
losses or milling recovery losses.

RENO CREEK PROPERTY

The Reno Creek Property is a potential uranium in situ leach ("ISL") mine
project located in the Powder River Basin of northeastern Wyoming, 47 miles
south of Gillette. Access to the property is by state highway, which cuts
through the property. The location of the Reno Creek property is indicated on
the following figure:

[MAP]

Uranium at Reno Creek occurs in mineral sands at depths from 300 to 420 feet
below surface. The roll fronts in the area are typically low grade (average less
than 0.15% U(3)O(8)) and thick (average up to 17 feet). About 4,000 drill holes
are completed and logged on the property. These holes are generally on lines
normal to the roll front, spaced approximately 200 feet apart with hole spacing
thereon 100 feet or greater.

In the 1980s, a field pilot plant was operated on the property. The pilot plant
demonstrated that an ISL process could mine uranium and that the ground water
can be restored after mining.

Due to the weak uranium market, the Registrant has suspended all licensing work
on its Reno Creek property, and portions of the Reno Creek property were dropped
in fiscal 1999. As of March 31, 2000, the Registrant estimates remaining mineral
deposits to contain approximately 4.286 million tons of mineralized material at
an average grade of 0.075% U(3)O(8). Total uranium recovery would normally be
expected to be in the range of 70% to 75% of this in place uranium
mineralization. These recovery losses are not incorporated into these figures.
As of March 31, 2000, the Registrant is seeking potential purchasers for the
remaining portion of this property. If no purchasers are identified, the
Registrant will continue to drop its holdings of this property in order to
minimize costs.

DEWEY BURDOCK PROPERTY

The Dewey Burdock property area is located near the Edgemont Mining District in
southwest South Dakota near the Wyoming-South Dakota border. The nearest larger
centers with air connections are Rapid City, South Dakota about 100 miles by
road and Casper, Wyoming, about 175 miles by road. The location of the Dewey
Burdock property is indicated in the previous figure.

The Dewey/Burdock deposit has been considered as a candidate for ISL mining.
Although the mineral deposit computation has been confined to sands below the
water table, little is known concerning the permeability and flow rates of the
host sandstones. Comprehensive tests will have to be conducted before the
mineral deposit can be conclusively determined to be amenable to ISL.

Portions of the Dewey Burdock property were dropped in 1999. The remaining
mineral deposits are estimated by the Registrant as of March 31, 2000, to
contain approximately 1.476 million tons of mineralized material at an average
grade of 0.210% U(3)O(8). Total uranium recovery would normally be expected to
be in the range of 70% to 75% of this in place uranium mineralization. These
recovery losses are not incorporated into these figures. As of March 31, 2000,
the Registrant is seeking potential purchasers for the remaining portion of this
property. If no purchasers are identified, the Registrant will continue to drop
its holdings of this property in order to minimize costs.

MONGOLIA PROPERTY

The following is a summary of information relating to Mongolia and the Mongolia
Project, as of March 31, 2000.

OVERVIEW AND PROJECT STATUS

The Registrant owns a 70% interest and is the managing partner in the
Gurvan-Saihan Joint Venture, which holds significant uranium exploration and
mineral deposit properties in Mongolia.

Due to depressed commodity prices, the Joint Venture, which discovered a new
uranium mineral deposit in the Hairhan region of Mongolia and delineated a
deposit of over 22 million pounds of uranium during the field seasons of 1997
and 1998, was shut down in early fiscal 2000. The two field camps, in the
Hairhan and Haraat regions, are being dismantled and other cost savings measures
are being instituted in order to minimize the holding cost of this asset.
Reclamation and remediation costs for these activities are the responsibility of
the Joint Venture itself, are not expected to be significant and will be funded
through the sale of surplus Joint Venture equipment and assets. Due to the
favorable and unique Mineral Agreement between the Joint Venture and the
Mongolian Government, the Joint Venture is able to hold its land position at
minimal cost. Although the registrant has currently shut this project down, the
Registrant considers the Mongolian Joint Venture to be a valuable longer term
asset, due to the vast potential for the Mongolian property and the successes to
date. The Registrant is discussing with other investors and interested parties
the potential for their participation in the Joint Venture in order to further
exploration on this project in the nearer term.

THE REPUBLIC OF MONGOLIA

The Republic of Mongolia, known from 1924 to 1991 as the Mongolian People's
Republic, is a nation in Central Asia, bounded on the north by Russia and on the
east, south, and west by China. The country has a total area of 1,565,000 square
kilometers (604,250 square miles). The capital and largest city of Mongolia is
Ulaanbaatar.

TOPOGRAPHY, CLIMATE AND RESOURCES

The topography of Mongolia consists mainly of a plateau between about 914 and
1,524 meters (about 3,000 and 5,000 feet) in elevation broken by mountain ranges
in the north and west. The Altai Mountains in the southwest rise to heights
above 4,267 meters (14,000 feet). The Gobi Desert covers a wide arid tract in
the central and southeastern areas. The most important rivers are the Selenge
Moron and its tributary, the Orhon Gol, in the north.

Mongolia's climate is harsh, with temperatures ranging between -15(degree) and
-45(degree) C (-5(degree) and -50(degree) F) in winter and 10(degree) and
45(degree) C (50(degree) and 115(degree) F) in summer. Winters are dry, and
summer rainfall seldom exceeds 380 millimeters in the mountains and 125
millimeters in the desert.

Mongolia contains forests of larch, pine, and cedar in the mountains, but these
are of little economic importance. Fur bearing animals, especially marmot and
squirrel, are abundant, and the country has a well-developed fur industry. Rich
prairie land in the northeast and northwest supports large herds of cattle,
sheep, and goats. Mineral resources such as coal, iron, copper, fluorspar, gold,
uranium, and silver have not been fully exploited.

POPULATION

The population of the Republic of Mongolia (1997 estimate) was 2.4 million,
yielding an overall population density of about 1.4 people per square kilometer.

The ethnic composition of Mongolia is fairly homogeneous. Khalkha Mongols
constitute more than 75 percent of the population. Other groups are Buryat
Mongols and Kazakhs. The society is about 58 percent urban.

POLITICAL DIVISIONS AND PRINCIPAL CITIES

Mongolia is divided into 18 provinces and 3 independent cities. The independent
cities are Ulaanbaatar, the capital (population, 1992 estimate, 600,900); Darhan
(1991 estimate, 90,000); and Erdenet (1991 estimate, 58,200), a mining center
that developed rapidly in the 1970s.

RELIGION AND LANGUAGE

The traditional faith in Mongolia was Buddhist Lamaism, which was suppressed
beginning in 1929. Only one small monastery remains, at Ulaanbaatar. Buddhism is
enjoying a revival since the end of communism in the late 1980s. The Mongolian
language is one of the Altaic languages.

EDUCATION

Education in Mongolia is compulsory between the ages of 6 and 16. In the late
1980s some 443,000 pupils annually attended about 710 elementary and secondary
schools staffed by approximately 18,400 teachers. Some 22,200 students were
enrolled in vocational and teacher-training schools. About 22,600 students
attended institutions of higher education; some 4,000 of these were enrolled in
the Mongolian State University (1942), in Ulaanbaatar. Other institutions of
higher learning included schools of medicine, agriculture, and military affairs.
While Soviet influence predominated in Mongolia, Russian was taught in all
schools, and several thousand students each year were sent to study in the Union
of Soviet Socialist Republics ("USSR") and eastern European countries.

ECONOMY

The basis of the economy of Mongolia is crop farming and livestock breeding.
Manufacturing is devoted largely to the processing of agricultural and livestock
products. After the collapse of the socialist system and disintegration of the
former Soviet Union, Mongolia endured a severe decline in GDP from 1989 to 1993.
The economy has rebounded since 1994 with GDP growth of 6.3% in 1995, 2.6% in
1996, and 3.3% in 1997. The slower economic growth reflects a decline of world
market prices for copper and cashmere, Mongolia's two largest exports.

The freeing of fuel and energy prices pushed inflation in 1996 to 59% and
dampened overall consumption. In 1997, a relatively stable exchange rate was
realized, and inflation was held below 18%. Economic trends point toward a
sustainable economic growth rate of 5-6% per annum, with inflation falling into
single digits by 1999.

Total foreign trade turnover in 1997 was $861.4 million; exports equaled $418
million, and imports totaled $443.4 million. Copper and molybdenum concentrates,
fluorspar, goat wool, and cashmere accounted for 66% of exports.

MINERAL DEPOSITS

Mongolia has substantial deposits of copper, molybdenum, gold, uranium, lead,
zinc, zeolites, rare earths, ferrous metals, fluorspar, phosphate, and precious
and semi-precious stones. Several mining operations were developed before 1989
with assistance of the Soviet Union and Eastern European countries, and in
recent years a number of private mining operations have begun. Due to isolation
from international trading systems and lack of infrastructure, many mining
prospects remain undeveloped. In recent years, gold production has emerged as
one of the most dynamic sectors of the Mongolian economy. Gold production has
grown seven-fold since 1990 and reached 8 metric tons (257,000 oz.) in 1997.

The Mongolian and Russian joint venture Erdenet has been operating since 1981
with an annual capacity of 20 million tons of copper ore; this capacity is being
expanded to 24 million tons of ore per year. Recoverable metal is estimated to
be 7,556,000 tons of copper and 43,600 tons of molybdenum in ore averaging 0.53%
copper and 0.018% molybdenum.

Mongolia has substantial proven reserves of coal. Coal is the major source of
energy production and is likely to remain so. Mongolia's coal reserves are
estimated at about 100 billion tons, 20% in hard coal deposits, and 80% in
lignite deposits. In 1997, domestic coal production totaled about 5 million
metric tons, the majority of which was consumed for domestic needs.

Mongolia has one operable oil field in the Gobi region, and initial results of
petroleum exploration in eastern and western Mongolia, carried out by companies
from the U.S., Europe, China, and Russia, appear to be promising.

ENERGY

The Central Energy System of Mongolia has four coal-fired power plants (two in
Ulaanbaatar, one in Darkhan, one in Erdenet) with a total capacity of 690MW. At
peak demand times, additional power is imported from Russia. Power for small
towns in outlying areas is provided primarily by diesel generators or small
coal-fired plants.

CURRENCY AND FOREIGN TRADE

The currency of Mongolia is the tughrik (togrog), which consists of 100 mongo
(1,000 tughriks equal US$1.00; 1999).

Most of Mongolia's trade is with the countries that made up the former USSR and
other former Soviet-bloc countries. Since the early 1990s, Mongolia has made
efforts to expand trade with other countries. Principal exports in the late
1980s were minerals, cattle, meat products, wool, and consumer items. Imports
consisted mainly of machinery and transport equipment, consumer goods, and
industrial raw materials.

TRANSPORTATION AND COMMUNICATIONS

Mongolia is served by the Trans-Mongolian Railway, which connects Ulaanbaatar
with Russia and China. Truck services operate throughout the country. Steamer
services operate on the Selenge River and a tug and barge service on Lake
Hovsgol. Air service connects Ulaanbaatar with Moscow, Beijing, Seoul, and
cities in Central Asia. Domestic services are provided by Mongolian Civil Air
Transport.

Following dissolution of communist control in Mongolia in the early 1990s,
independent newspapers and journals proliferated. Mongolia is served by a number
of major daily papers. Mongolia has also moved rather quickly to keep up with
modern communications, but improvements are generally limited to Ulaanbaatar.
The central phone system is modern and reliable. Ulaanbaatar has cellular phone
service and access to the Internet became available in 1997. In 1998, an e-mail
daily news service, published in English, became available.

Although electronic and printed communication is advancing in Mongolia, the
remoteness of the country limits communication with the country side.

GOVERNMENT AND JUDICIARY

Under Mongolia's 1960 constitution, the supreme organ of state power was the
People's Great Hural ("Khural"), a 430-member assembly that usually met twice a
year. The Mongolian People's Revolutionary (Communist) party ("MPRP") was the
sole legal party until 1990, when the constitution was amended to allow
opposition parties, to institute a presidential system of government, and to add
a 53-member standing legislature, the Small Hural. In January 1992, a new
constitution was adopted. By this constitution, the legislative power of the
republic resides in the 76-member Great Hural; the delegates of the Great Hural
are chosen for 4-year terms through free elections. The president is head of
state, and is also elected to a four-year term.

Mongolia is divided into 18 provinces, or aimags, which are subdivided into
districts, or somons. Local centers of power are hurals, or assemblies, of
working people's deputies. Ulaanbaatar, Darhan, and Erdenet are separate
administrative units, governed by city hurals.

In Mongolia, the Supreme Court, the city court of Ulaanbaatar, 18 provincial
courts, and local district courts administer justice. The assemblies at each
political level elect members of the courts.

HISTORY

Modern history of Mongolia began with the rise of the great Mongol Empire at the
beginning of the 13th Century under Genghis (Chinggis) Khan. By 1280 the
Mongol's ruled from Peking to the Adriatic and from Siberia to Persia and the
northern border of India. Kublai Khan, grandson of Genghis, founded the Yuan
dynasty in China in 1271. The Manchu Empire subjugated Mongolia in 1691. The
period of Manchu colonialism, which lasted for 220 years, was a grim time in
Mongolian history.

After the Chinese revolution of 1911, Mongolia declared its independence from
China, but the Living Buddha continued to rule. In 1920 a military force
supplied and financed by Japan and led by a Russian anti-Bolshevik general,
Baron Roman Nikolaus von Ungern-Sternberg, took the capital, Urga, and set up a
puppet government. In 1921 the Mongolian People's Revolutionary Party, formed by
Soviet-trained Mongols, established an independent Provisional People's
Government and, with aid from the USSR, defeated Ungern-Sternberg and his
supporters. The theocratic monarchy, its powers limited, was retained by the
provisional government until 1924, when the last Living Buddha died. At that
time, the Mongolian People's Republic, modeled on Soviet lines, was founded, but
China did not recognize its independence until 1946. After the Communists won
power in China in 1949, trade and cultural relations were established between
the two nations, but the Sino-Soviet split in the late 1950s curtailed these
relations. A Sino-Mongolian border treaty was signed in 1962, but Mongolia
maintained its closest ties with the USSR, which in 1961 sponsored its
membership in the United Nations. The two countries signed a treaty of
friendship, trade, and mutual assistance in 1966, renewed in 1986. In the 1980s,
the USSR was Mongolia's leading trade partner and aid donor; about 65,000 Soviet
troops were stationed in Mongolia.

In March 1990, Punsalmaagiyn Ochirbat, former foreign trade minister, became
president, inaugurating a period of political and economic liberalization. After
the new constitution was adopted in January 1992, the reconstituted Mongolian
People's Revolutionary Party swept the parliamentary elections in June of that
year. In January 1993, President Ochirbat and the Russian President Boris
Yeltsin signed another treaty of friendship and cooperation, to replace the
treaty of 1986. In June 1993, President Ochirbat was re-elected. In 1996, the
Social Democratic Party won a majority of seats in the Mongolian Parliament. In
1997, N. Bagabondi defeated President Ochirbat.

FOREIGN INVESTMENT POLICY

Mongolia has publicly, via various international symposia, presented the
official position of the government to invite and encourage "foreign direct
investment" in Mongolia. Since the collapse of the Soviet Union, Mongolia has
been in a situation where it must develop foreign investment and trade to attain
economic independence and sustainability.

Mongolia enacted a Foreign Investment Law in July 1993. This law has undergone
revision with the purpose to further enhance foreign direct investment. Mongolia
has passed the following laws to create a stable investment environment:

Companies and Partnership Law 1995
Bankruptcy Law 1991
Consumer Protection Law 1991
Accounting Law 1993
Business Income Tax Law 1993
Copyright Law 1993
Patent Law 1993
Foreign Investment Law 1993
Securities Law 1995
Mineral Law 1997

In 1991, the governments of the United States and Mongolia entered into an
agreement on trade relations to clarify some of the conditions for international
business between the two nations.

Energy Fuels was one of the first firms to establish an international joint
venture in the minerals sector in Mongolia. A Joint Venture Founding Agreement
was created between the parties in the venture, and a Mineral Agreement was
entered into between the Joint Venture and the government of Mongolia. This
Mineral Agreement serves as the definitive grant and authorization for the Joint
Venture to conduct uranium exploration development and mining in Mongolia.

No restrictions are known to exist on foreign investment of the nature being
conducted by the Registrant. The Mineral Agreement with the government of
Mongolia specifically addresses and allows the export and marketing of uranium
and the import and export of all necessary equipment and materials needed to
explore, mine, process, store, and transport uranium.

The Mineral Agreement also specifically addresses taxation stability for the
Joint Venture, including the tax holiday provided to the Joint Venture. Foreign
exchange controls and restrictions on repatriation of profits are not addressed
in the Mineral Agreement, but no limitations currently exist on repatriation of
profits.

Mongolia previously maintained an import duty of 15%, plus fees of 1.5%, on all
imports. This duty has been entirely removed; a 10% sales tax was in place, but
this has now been replaced by a 13% Value Added Tax on goods and equipment
brought into Mongolia.

Because of the limited history of the current Mongolian government, the existing
laws governing foreign investment may change in the future and such changes may
adversely affect the Registrant's investment in Mongolia.

ENVIRONMENTAL REGULATIONS

In July 1997, Mongolia enacted the Mineral Law of Mongolia. This Law has
specific language regarding environmental protection for mining operations.
While the Joint Venture is exempt from certain provisions of the Minerals Law
due to the pre-existing Mineral Agreement, the Registrant, as the operator of
the Joint Venture, is in compliance and intends to continue to comply with
appropriate rules and laws of Mongolia regarding environmental protection.

The environmental protection provisions of the Mineral Law require notification
and consultation with local administrative bodies and the filing and approval of
environmental plans. Prior to receiving a mining license, an environmental
impact assessment and an environmental protection plan must be filed and
approved. The assessment and the plan are intended to identify possible adverse
environmental impacts and to provide measures to ensure that mining operations
are conducted in the least damaging way to the environment. Environmental
protection measures must be specified for handling of toxic materials,
utilization and protection of surface and ground water, tailings management (if
appropriate), and other protective measures associated with mining operations.

Compliance with the environmental plan is through inspections, reporting and
determination of reclamation/closure surety. If a license holder fails to comply
with the provisions of the approved environmental plan, local administrative
authorities can use the deposited funds to bring the project into compliance.

Nothing in the Mineral Law specifically allows revocation of a License for
failure to comply with environmental plans or regulations. The Registrant is in
compliance with all notification, reporting, and inspection provisions and has
received no adverse comments or reports.

To demonstrate its commitment to responsible environmental management, the Joint
Venture voluntarily had an independent environmental review conducted of its
field work in 1996. The report of this review was voluntarily provided to the
government of Mongolia.

MONGOLIA PROPERTY

OWNERSHIP AND SUMMARY OF JOINT VENTURE TERMS

The joint venture company, Gurvan-Saihan BBHK, was formed in Mongolia in January
1994 by Energy Fuels, Geologorazvedka ("GRZ"), a unit of the Russian Ministry of
Geology, and URAN, a state enterprise under the Ministry of Energy, Geology and
Mining of Mongolia. The purpose of the joint venture is to explore, develop and
mine uranium deposits, if commercially viable.

The contributions of each member to the Joint Venture are described as follows.
GRZ contributed the historical data and records from past uranium exploration
work in Mongolia. URAN contributed the grant of mineral rights and the necessary
licenses and permits. Energy Fuels contributed $4 million in cash which was used
for exploration operations. GRZ and URAN were each granted a 15% interest in the
joint venture and Energy Fuels was granted a 70% interest.

The Joint Venture participants and the government of Mongolia entered into a
Mineral Agreement which serves as the grant by the government of Mongolia of the
right to explore, develop and mine uranium deposits on the properties described
below. The Mineral Agreement also serves as the grant by the government of
Mongolia to issue licenses and permits to conduct exploration and mining and to
store, transport, market, process and export uranium and import and export all
necessary equipment and materials without the need for additional licenses or
permits, and free of any duties, taxes, or levies. The term of the Mineral
Agreement is until January 14, 2009, or as long thereafter that exploration,
development, mining or reclamation is being conducted.

The Joint Venture is exempt from taxes on profits from production for five years
following start of commercial production. For the next five years, the tax rate
is 50% of the rate that would normally apply, and after ten years of production,
the Joint Venture will pay the then applicable taxes, subject to a maximum rate
of 40% of net profits. The government of Mongolia was also granted a 4% royalty
on production.

The Registrant acquired Energy Fuels' interest in the Joint Venture via its
asset purchase and has assumed all of Energy Fuels' rights and obligations as
per the agreements. Even though the Registrant has a 70% ownership interest in
the Joint Venture, it is currently funding 100% of the JV's activities. The JV
Agreement provides that the Registrant will receive preferential distributions
on future production and profits until the Registrant has recovered, from net
profits of the venture, 150% of its contributions on behalf of the non-funding
members.

LOCATION AND PHYSICAL FEATURES

The Mongolian joint venture is comprised of five separate concession blocks, in
the original grant by the Mongolian government, that cover a total area of
12,100 square kilometers in central eastern Mongolia. Based on encouraging
exploration results in the 1996 and 1997 field seasons, the joint venture added
4365 square kilometers in eight additional parcels in early 1998. Following
reconnaissance exploration in 1998, four of the eight new areas were dropped;
the total land position of the joint venture as of early 2000 is 12,911 square
kilometers.

The East Gobi region of Mongolia is a plateau at 3,000 to 3,500 feet above sea
level characterized by low hills and gently rolling topography. The climate is
harsh with typical extremes of an intercontinental climate similar to the
southern prairies of Canada and northern plains of the United States. The region
is semi-arid with numerous dry lake beds and salt marshes and no permanent
rivers.

The Choir concession, where most of the work has been undertaken prior to 1997,
is on the Trans-Mongolian Railway about 250 kilometers southeast of Ulaanbaatar
and about 1,100 kilometers from Beijing. A network of

numerous unpaved trails connects most centers, and truck or 4x4 vehicles
following tracks or driving cross-country can reach the various concession
areas.

EXPLORATION HISTORY

Uranium prospecting was started by the Russians in 1955 and resulted in the
discovery of several showings in the Choir Depression and the location of
uranium anomalies in several other sites on the properties now held by the joint
venture. Detailed work, which began in 1970 with an airborne gamma-ray
spectrometer survey and ground follow up, resulted in the identification of the
Haraat deposit in the Choir Depression.

In 1988 and 1989, a major drilling program was undertaken in the Choir
Depression with a series of drill hole fences across the full 10 to 20
kilometers width of the depression. Fence spacings ranged from 8 to 12
kilometers with hole spacings at 100 to 800 meters. A total of 47,000 meters of
drilling was completed in over 1,000 holes ranging in depth from 20 to 400
meters. The vast majority of the drilling was shallow down to 40 meters, testing
the shallow mineralization in the Upper Cretaceous with efforts concentrated on
defining the mineralization at Haraat. A few deeper holes were drilled to test
the potential of the basin at depth.

Extensive drilling resumed in 1994 with the formation of the Gurvan-Saihan Joint
Venture, and delineation drilling was undertaken at Haraat on a 200 meters x 100
meters grid with some closer spacing at 100 meters x 50 meters. Preliminary
field ISL studies were also conducted at Haraat in 1994.

In 1995, modern probing equipment using digital recording was sent to Mongolia
from the United States and has been used on probing of all holes since then.
This allows for a more efficient use of data, and also allows for discrimination
of individual lithologic units.

In 1996, the Joint Venture focused its efforts on the Choir Depression and in
the Haraat area in particular. An ISL Pilot test using acid solution was run on
ore horizons both above and below the water table (leaching above the water
table is a promising technology that requires further refinement). The 1996
pilot testing demonstrated that the deposits at Haraat, both above and below the
water table, are suitable for ISL. Additional testing and research is needed to
refine the leach chemistry.

The total exploration-drilling program in 1996 was in excess of 30,000 meters,
with the majority of the work in the Choir Depression. Based on detailed
radiometric surveys, initial reconnaissance drilling was conducted in 1996 in
both the Hairhan and the Gurvan Saihan Depressions. High grade discoveries were
made in both basins, and the discovery hole at Hairhan was the thickest,
highest-grade hole drilled to date in the Mongolia venture. Following the 1996
exploration results, drilling was increased substantially in 1997 and 1998.
Emphasis shifted from the Choir Depression to the Hairhan Depression and the
Ulziit Depression. A summary of joint venture drilling is presented on the
following table:

DRILLING ACTIVITIES IN METERS

DEPRESSION
AREA 1994 1996 1997 1998 TOTAL
---------- ----- ------ ------ ------ -------

Choir 8,439 25,699 18,816 -- 52,954
Hairhan -- 1,014 32,426 33,058 66,498
Gurvan Saihan -- 3,495 -- -- 3,495
Ulziit -- -- 4,179 16,900 21,079
Undurshil -- -- -- 2,360 2,360
New Properties -- -- -- 672 672
Total: 8,439 30,208 55,421 52,990 147,058

GEOLOGY

Uranium exploration is focused on large depression areas filled with Cretaceous
sediments and flanked by Proterozoic schists, gneisses and limestones as well as
Permian acid volcanics, Palaeozoic granites and Mesozoic leucogranites and
volcanics. The Lower Cretaceous, which is up to 1,500 meters thick, is comprised
of two facies: (1) low-sorted gravels, conglomerates and sandstones, and (2)
lake sediments (clays, argillaceous sandstones) and brown coals. The Upper
Cretaceous is five to 40 meters thick, consists largely of sand and gravel
formations cemented by limonite-goethite, and is confined to small areas near
the centers and margins of the major depressions. The dips are flat, but may
steepen to 5(degree) to 10(degree) near margins. There is some block faulting,
and dips may increase to 70(degree) to 80(degree) against faults.

The uranium mineralization is found in paleo channels and alluvial/fluvial
systems and is thought to have been deposited from solutions percolating through
the porous sandstones and precipitating uranium at reducing interfaces with
organic detritus. The granites are the most likely uranium source, and
consequently, the areas of the depressions flanked by granitic rocks are the
most prospective. The main uranium minerals in the reducing environment below
the water table are uraninite and coffinite. Above the water table, a number of
different secondary minerals have been identified and include autunite,
torbernite, bergenite and phosphuranylite. Geochemical studies show that small
amounts of RE, rhenium and selenium accompany the uranium mineralization.

THE HARAAT DEPOSIT

Two areas of mineralization have been identified and drilled on close spacing at
Haraat; these are referred to as the N1 and N2 uranium deposits. In addition, a
number of outlying mineralized areas have been delineated, but they are not as
extensively drilled.

Mineral deposit estimates were prepared in 1997 for the Haraat area. The
estimation methodology, utilizing a 0.01% U cutoff, is basically a block or
polygonal technique wherein ore-bearing coefficient and average thickness and
grade values are determined for each mineralized area. The mineral deposits in
the most heavily investigated areas, the N-1 and N-2 deposits, were calculated
by a joint American-Russian team in early 1997; the combined current mineral
deposits total for the Haraat area deposits is presented in the following table:

AREA MINERALIZED TONS GRADE (%U(3)O(8)) THICKNESS(ft)
--------------------------------------------------------------------------------

BELOW WATER TABLE

Haraat N-1 & N-2 3,023,000 0.046 26.7
Shar Oortsog 5,897,000 0.018 9.9
Haraat West 2,153,000 0.025 9.2
Haraat East 627,000 0.030 4.7
---------- ------
Total 11,700.000 0.027

The Registrant estimates the mineral deposits contain approximately 11.7
million tons of mineralized material at an average grade of 0.027% U(3)O(8).
This total does not include any U(3)O(8) estimated to be above the water table.
Total uranium recovery would normally be expected to be in the range of 70% to
75% of this in place mineralization. These recovery losses are not incorporated
into these figures. While drilling to date supports the tonnage and average
grade of mineralized material as shown above, it does not support a reserve
classification at this time.

THE HAIRHAN DEPOSIT

By the end of the 1996 exploration season, a 23 km anomalous trend, based on
radiometric surveys, was delineated in the Hairhan depression. A major
exploration and delineation program in 1997 followed the initial reconnaissance
drilling, and this program in 1997 led to the identification of the Hairhan
uranium deposit.

Extensive exploratory and delineation drilling was conducted at the Hairhan
deposit and on other targets in the Hairhan Depression in 1997 and 1998. Through
the end of 1998, a total of 780 exploration holes, hydrology wells, and ISL test
wells have been drilled in the Hairhan Depression. The total volume of drilling
through the end of 1998

is 66,500 meters. The majority of the holes are in the main block (1500 meters
by 2000 meters); much of which has been drilled on 100 meter x 50 meter spacing
to support calculation of probable mineral deposits.

The Hairhan deposit is hosted in sandy sediments deposited in a fault graben,
which focused the deposition of a sequence of alternating sands, siltstones,
clays, and carbonaceous layers. The graben aligns with a structural valley in
the nearby granitic highlands. Erosion, weathering, and leaching of the granites
and the derived sediments formed uranium deposits in multiple layers. The ore
deposition is related to reduction-oxidation interfaces. The ore ranges from 10
meters to at least 100 meters deep, with as many as six stacked horizons in some
locations.

Core holes have been drilled to obtain rock samples for testing, and
hydrogeological test wells were installed to evaluate aquifer properties. The
water table is shallow at Hairhan, and all mineralization of interest is below
the water table. The Hairhan deposit exhibits favorable characteristics for ISL.

Mineral deposits have been calculated as of the end of 1998 at 0.024% U(3)O(8)
cutoff for the area of detail drilling at Hairhan:

ZONE MINERALIZED TONS GRADE % U(3)O(8) THICKNESS (FT.)
---- ---------------- ---------------- ---------------

f2 636,000 0.078 15.1
f2.5 4,020,000 0.061 33.8
f7.5 2,086,000 0.114 26.2
f8.5 1,068,000 0.097 22.3
f12 1,643,000 0.072 39.1
f18-fm 519,000 0.106 16.2
--------- ----- ----
Total 9,972,000 0.081 27.2

The mineral deposits are estimated at 9,972,000 mineralized tons at an average
grade of 0.081% U(3)O(8). Total uranium recovery would normally be expected to
be in the range of 70% to 75% of this in place mineralization. These recovery
losses are not incorporated into these figures. While drilling to date supports
the tonnage and average grade of mineralized material as shown above, it does
not support a reserve classification at this time.

GURVAN-SAIHAN JOINT VENTURE PROJECT - IN SITU MINING CONSIDERATIONS

In Situ Leach is viewed as the most viable technique for exploitation of the
uranium deposits in Mongolia. Not only does ISL enjoy the benefits of lower
capital and front-end development expenditures than conventional open pit or
underground operations, it also often has more attractive operating costs.
Another major appeal of ISL is the minimal surface and related environmental
impacts incurred in comparison with conventional mining and milling operations.

The deposits at Haraat and Hairhan are suitable for ISL. Pilot tests have been
run at Haraat, and preliminary testing was conducted in 1998 at Hairhan. The
1998 work at Hairhan confirmed that this deposit is amenable to acid ISL, and
the test yielded favorable recovery and reagent usage rates.

The substantially richer deposit at Hairhan, coupled with the fact that all
mineralization of interest is below the water table, has elevated Hairhan ahead
of Haraat as a potential commercial project. Although laboratory and field data
are encouraging, full scale testing must be successfully conducted to confirm
the operating parameters and costs for an ISL mine in Mongolia.

OTHER AREAS

Work in other concession areas has been mainly of a reconnaissance nature
involving prospecting, car-borne scintillometer surveys and regional drilling.
Initial exploratory drilling was conducted at Gurvan-Saihan and Hairhan in 1996
and in the Ulziit Depression in 1997. A total of seven widely spaced fences over
an 18 km long trend were drilled at Gurvan-Saihan with mineralization
intersected in six of the seven fences. The best results was 0.102% U over 1.3
meters. Examples of other intersections are 0.062% U over 1.2 meters, 0.06% U
over 1.6 meters, 0.04% U over 1.9 meters, 0.036% U over 4.8 meters, 0.024% U
over 1.1 meters, and 0.018% U over 4.0 meters.

In the Ulziit Depression, reconnaissance work between 1958 to 1963 located five
uranium occurrences and 10 radiometric anomalies. After initial stratigraphic
drilling in 1996, prospect drilling was begun in 1998. A total of 123 holes,
totaling 17,300 meters, were drilled in 1998, which included initial
reconnaissance drilling on two of the areas acquired in 1997. A 60 kilometer
oxidation-reduction interface has been identified, and several uranium anomalies
have been located. Additional exploration work is required in this very large
area.

Reconnaissance drilling was also conducted in 1998 in the Undurshil Depression,
although the limited results to date have not been as favorable as for other
areas held by the Joint Venture.

PERMITTING

As discussed above, due to deteriorating commodity prices and other factors, the
Registrant has shutdown all of its mines. The Registrant intends to keep those
properties on a shutdown status indefinitely, pending any significant
improvements in commodity markets, or possibly the sale or joint venture of all
or a portion of such properties to or with other parties.

The permitting status of the various mines as of March 31, 2002, is set out
below.

SUNDAY MINE COMPLEX

The Sunday Mine Complex is fully permitted for its mining activities. Recent
changes in the laws of Colorado could give rise to additional future permitting
requirements.

In recent years, the State of Colorado passed a law that provides that the
Colorado Division of Minerals and Geology ("DMG") can determine that a mine is a
Designated Mining Operation (a "DMO") if it is a mining operation at which
"toxic or acidic chemicals used in extractive metallurgical processing are
present on site or acid- or toxic-forming materials will be exposed or disturbed
as a result of mining operations". If a mine is determined to be a DMO, the most
significant result is the requirement that it submit an Environmental Protection
Plan (an "EPP"). The EPP must identify the methods the operator will utilize for
the protection of human health, wildlife, property and the environment from the
potential toxic- or acid-forming material or acid mine drainage associated with
the operations. The EPP must be submitted to the DMG for review, and after a
public hearing, a decision must be made within 120 days of the submission of a
complete application, unless the application is considered to be complicated,
which would extend the deadline to 180 days.

In 1995, DMG notified Energy Fuels that it believed that the Sunday Mine Complex
was a DMO, because of the potential that storm water could come in contact with
the low grade waste rock on site. Energy Fuels disputed this assertion. Testing
was performed on the waste rock. In November 1996, the DMG advised Energy Fuels
that the test results of the average uranium content of the waste dumps at the
mine sites satisfied the DMG that the Sunday Mine Complex is not a DMO. However,
the DMG also advised that its determination could change if site conditions or
circumstances change. As mining activities were re-initiated at these mines, the
DMG has reserved the right to submit a new notice of determination, which may
require additional environmental review. As of March 31, 2000, the Registrant
has not been notified of any additional permitting requirements relating to its
mining activities at the Sunday Mine Complex.

OTHER COLORADO PLATEAU PROPERTIES

The Rim, Van 4 and certain other Colorado Plateau properties are also permitted
for mining.

ARIZONA STRIP PROPERTIES

The Canyon Mine is the first mine to be permitted in the portion of the Arizona
Strip that is south of the Grand Canyon. The Canyon Mine is located on federal
lands administered by the United States Forest Service and is near the southern
rim of the Grand Canyon. The plan of operations submitted by Energy Fuels in
1984 for development and operation of the mine generated significant public
comment resulting in the preparation of an environmental

impact statement by the United States Forest Service. The United States Forest
Service for the State of Arizona approved the plan set forth by Energy Fuels and
issued all necessary federal and state permits and approvals. The Havasupai
Indian Tribe and others filed appeals. The United States Forest Service for the
State of Arizona and Energy Fuels prevailed on all appeals. During the
permitting process, Energy Fuels constructed all the necessary service
facilities at the mine site. Energy Fuels agreed with the United States Forest
Service not to implement underground development during the environmental impact
statement process. Energy Fuels did not resume underground development at the
mine site after the appeals were decided, due to the decrease in uranium prices
at that time.

In 1992, the State of Arizona updated its laws relating to groundwater issues,
requiring that an Aquifer Protection Permit be obtained. It is not expected that
there will be any problems of any significance in obtaining this permit, and the
Registrant is currently permitted to commence mining at the Canyon Property
during submittal, review and update to the Aquifer Protection Permit.

As with the Canyon Mine, the Pinenut and Kanab North mines require that an
Aquifer Protection Permit be obtained. Work is currently in progress to obtain
these Aquifer Protection Permits. All of these projects are currently permitted
to commence mining during submittal, review and update to these Aquifer
Protection Permits. The Arizona 1 Mine currently has an Aquifer Protection
Permit and is fully permitted for mining.

RECLAMATION

The Registrant is responsible for the environmental and reclamation obligations
relating to all of its existing properties and assets, as well as for all
reclamation and environmental obligations associated with all mined out,
inactive, reclaimed or partially reclaimed properties acquired from Energy
Fuels.

The total amount of the estimated reclamation liability is approximately $13.3
million with restricted cash and marketable securities of approximately $8.3
million securing the liability, as of September 30, 1999. As a result of the
reduction in the Mill bond discussed under the heading White Mesa Mill Closure
Costs above, this amount was reduced to approximately $11.8 million as of
February 10, 2000. All of the Registrant's properties and the White Mesa Mill
were permitted through either state or federal authorities. As a part of the
permit requirements, reclamation and decommissioning bonds are in place to cover
the estimated cost of final project closures. The major cost is for closure of
the White Mesa Mill and tailings cells which is estimated at $11.5 million as of
September 30, 1999 ($9.7 million as at February 10, 2000). The Registrant has
posted a reclamation bond to the NRC for this amount.

Although the Registrant's financial statements contain as a liability the
Registrant's current estimate of the cost of performing these reclamation
obligations, and the bonding requirements are generally periodically reviewed by
applicable regulatory authorities, there can be no assurance or guarantee that
the ultimate cost of such reclamation obligations will not exceed the estimated
liability contained on the Registrant's financial statements.

SWISS ROYALTY INTEREST

Two Swiss Utilities acquired a 40% limited partnership interest in almost all of
Energy Fuels' properties in the United States. This limited partnership interest
did not apply to the Mongolia Property.

In 1995, after commencement of the bankruptcy proceedings against Energy Fuels,
the Swiss Utilities agreed to fund the milling of approximately 200,000 tons of
stockpiled mineralized material, the proceeds of which were used to repay this
funding provided by the Swiss Utilities, and to provide working capital to the
bankrupt estates. As part of this financing and mill run, Energy Fuels and the
Swiss Utilities agreed to convert the Swiss Utilities' 40% limited partnership
interest in the United States properties into a royalty (the "Swiss Royalty") of
9% of all uranium and 5% of all vanadium and all other minerals produced from
the United States properties owned by Energy Fuels at the time that the royalty
was granted. The Swiss Royalty will apply to all production from the Colorado
Plateau District properties and Arizona Strip properties acquired on the
Acquisition, as well as the Reno Creek property, most of the Dewey Burdock
property and the Bull Frog property. The Swiss Royalty Interest does not apply
to the

Mongolia property, nor to any tolled mineralized material, or purchased
mineralized material from third parties, or Alternate Feeds that are processed
in the White Mesa Mill, nor to any properties acquired by Energy Fuels after the
date that the Swiss Royalty Interest was granted.

Subsequent to the Acquisition, the Registrant has amended the Swiss Royalty
amount to 4.5% of all uranium and 2.5% of vanadium for the period from January
1, 1998 to December 31, 2000. The Registrant will make an advance royalty
payment of $250,000 per year, which is fully recoupable annually against any
royalties for the applicable calendar year. Subsequent to December 31, 2000, the
royalty reverts to its original terms.

OTHER ASSETS OF REGISTRANT

EMPLOYEES

As of March 31, 2000, the Registrant employs a total of 39 people, of which 17
are located at the head office in Denver, 19 are located at the White Mesa Mill,
and three are located in Ulaanbaatar, Mongolia. Additional staff reductions are
anticipated at head office over the remainder of this fiscal year.

ADMINISTRATIVE OFFICES

The Registrant has a head office in Denver, Colorado, as well as field offices
in Blanding, Utah, and Ulaanbaatar, Mongolia.

EQUIPMENT

The Registrant acquired extensive mining equipment from Energy Fuels. Given the
Registrant's decision to suspend all U.S. mining operations, the Registrant is
currently in the process of selling its mining equipment.

SALES CONTRACTS

As of March 31, 2000, the Registrant has uranium sales contracts with certain
U.S. and foreign customers under which the Registrant has the obligation to
supply to those utilities a total of approximately 1,600,000 pounds of uranium
during the next five years at prices in excess of the current spot price for
uranium.

ITEM 3. LEGAL PROCEEDINGS

Under the NRC's Alternate Feed Guidance, the Mill is required to obtain a
specific license amendment allowing for the processing of each new alternate
feed material. See "Alternate Feed Processing." On July 23, 1998, the NRC issued
an amendment to the Registrant's Mill license allowing the receipt and
processing of certain alternate feed material (the "Ashland 2 Materials") from a
Formerly Utilized Sites Remedial Action Program ("FUSRAP") site at the White
Mesa Mill. On July 22, 1998, Envirocare of Utah, Inc., a company licensed by the
NRC to dispose of 11e.(2) uranium bearing byproduct materials at its facility in
Tooele County, Utah, filed a request for a hearing with the Atomic Safety and
Licensing Board ("ASLB") for the purpose of challenging the issuance of the
Registrant's license amendment. On August 19, 1998, the ASLB Presiding Officer
assigned to the matter dismissed Envirocare's petition for lack of standing.
Envirocare appealed its decision to the full Commission of the NRC on August 31,
1998. The Registrant and the NRC Staff both filed oppositions to Envirocare's
appeal on September 15, 1998. On November 14, 1998, the full Commission of the
NRC denied Envirocare's appeal. On September 23, 1998, Envirocare filed a
Petition for Review in the United States Court of Appeals for the District of
Columbia Circuit, appealing the decision in a prior case (In the Matter of
Quivira Mining Company) upon which the dismissal of Envirocare's claim against
the Registrant was based. On October 22, 1998, the Registrant was added as an
intervener in the Quivira appeal. Envirocare also appealed to the United States
Court of Appeals for the District of Columbia the decision of the full
Commission of the NRC denying Envirocare standing on the Ashland 2 matter. This
appeal and the Quivira appeal referred to above were joined as an appeal. On
October 22, 1999, the Court of Appeals dismissed Envirocare's appeal, confirming
the NRC's decision denying Envirocare standing in these matters.

On July 23, 1998, the State of Utah also filed a petition requesting a hearing
on the Registrant's aforementioned license amendment relating to the Ashland 2
Materials. By Order dated September 1, 1998, Utah's Petition was granted. Utah's
Petition articulates two substantive concerns: 1) that hazardous wastes, as
defined by the Resource Conservation and Recovery Act (42 U.S.C. ss. 690 et
seq.) contained in the alternate feed material to be processed at the site would
be disposed of at the site, and 2) that the Registrant was not in fact
processing the alternate feed material primarily for its uranium source material
content, in alleged contravention of NRC regulations and State law. Utah alleges
that the NRC Staff misinterpreted NRC Guidance on this matter. The first of
these two issues was amicably resolved between the parties (Utah indicated to
the Registrant that its concerns that the alternate feed material might contain
hazardous wastes was resolved by additional analytical and other data which was
forwarded to Utah by the Registrant). On February 9, 1999, the ASLB Presiding
Officer ruled in favor of the Registrant on the second issue, finding that the
Registrant's license amendment met all of the requirements of the applicable
statutes and regulations and was appropriately granted. The State of Utah
appealed the decision of the ASLB Presiding Officer to the full Commission of
the NRC for review. On February 10, 2000, the NRC Commissioners rendered their
decision upholding the decision of the ASLB Presiding Officer and confirming the
validity of the license amendment for the Ashland 2 Materials, thereby resolving
in the Registrant's favor the long-standing dispute with the State of Utah over
the types of alternate feed materials that can be processed at the White Mesa
Mill. The State of Utah did not appeal this decision to the U.S. Court of
Appeals.

On October 15, 1998, the Registrant submitted a request to the NRC to amend the
Registrant's Mill license to allow for the receipt and processing of additional
FUSRAP alternate feed materials (the "Ashland 1 Materials"). This amendment
relating to the Ashland 1 Materials was approved and issued in February 1999.
Anticipating that the license amendment for the Ashland 1 Materials would be
granted, on December 2, 1998, the State of Utah filed a petition requesting a
hearing on the requested Ashland 1 license amendment, on essentially the same
grounds as for the Ashland 2 amendment. On December 18, 1998, the Registrant
responded by not contesting the State's request for a hearing.

In addition to the State of Utah, Envirocare, Pack Creek Ranch Company, a group
called the Concerned Citizens of Utah and the Navajo Utah Commission filed
petitions requesting a hearing on the Ashland 1 license amendment. The
Registrant has filed submissions with the ASLB Presiding Officer assigned to the
Ashland 1 license amendment opposing standing with respect to each of these
additional submissions. The NRC Presiding officer denied standing to each of
these parties. Envirocare appealed this decision to the full Commission of the
NRC. The Commission denied Envirocare's appeal. The hearing on the Ashland 1
license amendment had been put in abeyance pending the outcome of the appeal of
the Ashland 2 decision before the full Commission of the NRC. On March 13, 2000,
as a result of the NRC's decision on the Ashland 2 appeal, the State of Utah
withdrew its request for a hearing on the Ashland 1 license amendment.

The Registrant intends to continue to defend its positions and the validity of
its license amendments and proposed license amendments. If the Registrant does
not ultimately prevail in any such actions and any appeals therefrom, the
Registrant's ability to process alternate feeds containing lower levels of
uranium, in certain circumstances, may be adversely affected since NRC license
amendments are required for each alternate feed transaction.

During a sampling event at the White Mesa Mill in May, 1999, the Registrant
discovered unusually high levels of chloroform in one monitoring well which
monitors the water in the perched zone, and is located cross-gradient from the
Mill's tailings impoundments. Initial investigations by independent experts
retained by the Registrant indicate that the source of the chloroform is not
from Mill operations or from the Mill's tailings cells. Rather the source
appears to be from a temporary laboratory facility that was located at the Mill
site prior to construction and operation of the Mill, and that disposed of
laboratory wastes into a State of Utah inspected and approved disposal leach
field. Further investigations are ongoing. On August 23, 1999, while
acknowledging that this contamination does not threaten groundwater resources in
the regional aquifer, because the aquifer is separated from the perched zone by
some 1,200 feet of low-permeability rocks, the State of Utah issued a Corrective
Action Order requiring the Registrant to investigate the source and extent of
chloroform contamination and, if necessary, to develop a corrective action plan
to address the chloroform contamination. The Registrant is performing
investigations and taking actions in accordance with the Corrective Action
Order. Although investigations to date indicate that this contamination appears
to be contained in a manageable area, the scope and costs of remediation have
not yet been determined and could be significant.

ITEM 4. CONTROL OF THE REGISTRANT

(a) As far as it is known to the Registrant, the Registrant is not directly
or indirectly owned or controlled by another corporation(s) or any
foreign government.

(b) Information is set forth below with respect to persons known to the
Registrant to be the owner of more than ten percent of the Registrant's
voting securities as of January 24, 2000 and the total amount of these
securities owned by the officers and directors as a group.

IDENTITY OF PERSON OR GROUP NUMBER OF COMMON SHARES OWNED PERCENTAGE
--------------------------- ----------------------------- ----------

Adolf H. Lundin 22,500,000(1) 34.3%
Directors and Officers as a
group (8 persons) 24,575,926 37.5%

(1) These shares are held in escrow pursuant to the terms of an Escrow
Agreement among the Registrant, Adolf H. Lundin, Lukas H. Lundin and The
Montreal Trust Company of Canada. Pursuant to the terms of the
agreement, one-fifth of the shares have been released from escrow one
year following the date of listing of the Registrant's common shares on
The Toronto Stock Exchange, i.e. on May 16, 1998. The balance of the
shares will be released as to one-fifth on each of the following
anniversary dates so that all of the shares will be released by May 16,
2002.

ITEM 5. NATURE OF THE TRADING MARKET

The Ontario Business Corporations Act, the Securities Act of the Province of
Ontario and the rules and policies of The Toronto Stock Exchange govern issuance
and trading of the Registrant's common stock.

As of March 29, 2000, 10,966,355 of the Registrant's outstanding common stock
were registered in the names of residents of the United States. The Registrant's
common stock is issued in registered form and the percentage of shares reported
to be held by U.S. shareholders of record is taken from the records of The
Montreal Trust Company of Canada, the registrar and transfer agent for the
Common Stock.

The common shares of the Registrant are currently listed on The Toronto Stock
Exchange in Canada. The Registrant's common shares commenced trading on The
Toronto Stock Exchange on May 16, 1997. The following table sets forth the high
and low closing prices and the volume of the common shares traded on The Toronto
Stock Exchange during the periods indicated:

PERIOD HIGH LOW VOLUME
------ ---- --- ------
(Cdn $) (Cdn $)

May-June 1997 1.50 1.00 16,785,754
July-September 1997 1.32 0.96 10,353,679
October-December 1997 1.45 0.84 7,910,042
January-March 1998 1.40 0.92 4,192,792
April-June 1998 1.08 0.50 19,140,463
July-September 1998 0.57 0.38 8,669,927
October-December 1998 0.59 0.38 9,520,910
January-March 1999 0.72 0.44 4,522,095
April-June 1999 0.53 0.26 2,280,235
July-September 1999 0.37 0.22 3,226,428
October-December 1999 0.32 0.19 2,760,819
January-March 24, 2000 0.28 0.13 4,490,600

The closing price of the common shares on The Toronto Stock Exchange on March
24, 2000, was Cdn$0.21.

CURRENCY TRANSLATIONS

As the Registrant's stock is traded in Canadian dollars, the following table
sets forth the exchange rates for one Canadian dollar expressed in terms of one
U.S. dollar for the past five fiscal years and the calendar quarters ended
12/31/98, 3/31/99, 6/30/99, 9/30/99 and December 31, 1999:

YEAR AVERAGE LOW - HIGH SEPTEMBER 30
---- ------- --------------- ------------

1995 0.7275 0.7023 - 0.7478 0.7438
1996 0.7329 0.7235 - 0.7513 0.7301
1997 0.7221 0.6947 - 0.7483 0.7236
1998 0.6898 0.6321 - 0.7292 0.6533
1999 0.6681 0.6423 - 0.6912 0.6812

CALENDAR QUARTER ENDED AVERAGE LOW-HIGH LAST DAY OF QUARTER
---------------------- ------- -------- -------------------

12/31/98 0.6485 0.6423 - 0.6579 0.6535
03/31/99 0.6614 0.6551 - 0.6700 0.6628
06/30/99 0.6793 0.6649 - 0.6912 0.6789
09/30/99 0.6727 0.6611 - 0.6842 0.6812
12/31/99 0.6795 0.6691 - 0.6924 0.6924

Exchange rates are based upon the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York.

The noon rate of exchange on March 24, 2000 reported by the United States
Federal Reserve Bank of New York for the conversion of United States dollars
into Canadian dollars was $0.6804 (Cdn.$1.00 = U.S.$0.6804).

ITEM 6. EXCHANGE CONTROLS AND OTHER LIMITATIONS AFFECTING SECURITY HOLDERS

Canada has no system of exchange controls. There are no foreign exchange
restrictions on the export or import of capital or on the remittance of
dividends, interest, or other payments to non-resident holders of the
Registrant's securities.

The Registrant is subject to the Investment Canada Act. Under the Investment
Canada Act, the acquisition of "control" of certain "businesses" by
"non-Canadians" is subject to either notification or review requirements by
Investment Canada , a governmental agency, and where review is required, will
not be allowed unless they are found likely to be of net benefit to Canada. The
term "control" is defined as any one or more non-Canadian persons acquiring all
or substantially all of the assets used in the Canadian business, or acquisition
of the voting shares of a Canadian corporation carrying on the Canadian business
or the acquisition of the voting interests of an entity controlling the Canadian
corporation. The acquisition of the majority of the outstanding shares or the
acquisition of less than a majority but 1/3 or more of the voting shares unless
it can be shown in fact that the purchaser will not control the Canadian company
shall be deemed to be "control".

An acquisition will be reviewable by Investment Canada only if the value of the
assets of the Canadian business being acquired is Cdn$5 million or more in the
case of a "direct" acquisition (or where the Canadian asset acquired constitute
more than 50% of the value of all entities acquired), or Cdn$50 million or more
in the case of an "indirect" acquisition.

These thresholds have been increased for the purpose of acquisition of Canadian
businesses by investors from members of the World Trade Organization ("WTO"),
including Americans, or WTO member-controlled companies. A direct acquisition by
a WTO investor is reviewable only if it involves the direct acquisition of a
Canadian business with assets as of March 31, 2000, of Cdn$192 million or more
(this figure is adjusted annually to reflect inflation). Indirect acquisitions
by WTO investors are not reviewable, regardless of the size of the Canadian
business acquired, unless the Canadian, assets acquired constitute more than 50%
of the value of all entities acquired, in which case the Cdn$192 million
threshold applies.

These increased thresholds do not apply to acquisitions of Canadian businesses
engaged in certain sensitive areas such as uranium production, financial
services, transportation or cultural heritage or national identity. If the
forgoing thresholds are not met, the acquisition of a Canadian business will not
be subject to review unless it relates to Canada's cultural heritage or national
identity.

If an investment is reviewable, an application for review in the form prescribed
by regulation is normally required to be filed with the Agency (established by
the Act) prior to the investment taking place and the investment may not be
consummated until the review has been completed. There are, however, certain
exceptions. Applications concerning indirect acquisitions may be filed up to 30
days after the investment is consummated; applications concerning reviewable
investments in culture-sensitive sectors are required upon receipt of a notice
for review.

There is, moreover, provision for the Minister (a person designated as such
under the Act) to permit an investment to be consummated prior to completion of
review if he is satisfied that delay would cause undue hardship to the acquirer
or jeopardize the operation of the Canadian business that is being acquired. The
Agency will submit the application to the Minister, together with any other
information or written undertakings given by the acquirer and any representation
submitted to the Agency by a province that is likely to be significantly
affected by the investment.

The Minister will then determine whether the investment is likely to be of net
benefit to Canada, taking into account the information provided and having
regard to factors of assessment where they are relevant. Some of the factors to
be considered are the effect of the investment on the level and nature of
economic activity in Canada, including the effect on employment, on resource
processing on the utilization of parts, components and services produced in
Canada, and on exports from Canada. Additional factors of assessment include (i)
the degree and significance of participation by Canadians in the Canadian
business and in any industry in Canada of which it forms a part; (ii) the effect
of the investment on productivity, industrial efficiency, technological
development, product innovation and product variety in Canada; (iii) the effect
of the investment on competition within any industry or industries in Canada;
(iv) the compatibility of the investment with national industrial, economic and
cultural policies taking into consideration industrial, economic and cultural
policy objectives enunciated by the government or legislature of any province
likely to be significantly affected by the investment; and (v) the contribution
of the investment to Canada's ability to compete in world markets.

If an acquisition of control of a Canadian business by a non-Canadian is not
reviewable, the non-Canadian must still give notice to Investment Canada of the
acquisition of a Canadian business within 30 days after its completion.

There are no limitations under Canadian law on the right of nonresident or
foreign owners to hold or vote the common stock of the Registrant.

ITEM 7. TAXATION

The following paragraphs set forth United States and Canadian income tax
considerations about the ownership of common shares of the Registrant, as of
March 31, 2000. There may be relevant state, provincial or local income tax
considerations, which are not discussed.

UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of possible United States federal income tax
consequences, under current law, applicable to a U.S. Holder (as defined below)
of common shares of the Registrant. This discussion does not

address consequences peculiar to persons subject to special provisions of
federal income tax law, such as those described below as excluded from the
definition of a U.S. Holder. In addition, this discussion does not cover any
state, local or foreign tax consequences. (See "Taxation -- Certain Canadian
Federal Tax Considerations" below.)

The following discussion is based upon the sections of the Internal Revenue Code
of 1986, as amended (the "Code"), Internal Revenue Service ("IRS") rulings,
published administrative positions of the IRS and court decisions that are
applicable as of March 31, 2000, any or all of which could be materially and
adversely changed, possibly on a retroactive basis, at any time. This discussion
does not consider the potential effects, both adverse and beneficial, of any
recently proposed legislation which, if enacted, could be applied, possibly on a
retroactive basis, at any time. Accordingly, holders and prospective holders of
common shares of the Registrant are urged to consult their own tax advisors
about the state, and local tax consequences of purchasing, owning and disposing
of common shares of the Registrant.

U.S. HOLDERS

As used herein, a "U.S. Holder" means a holder of common shares of the
Registrant who is a citizen or individual resident of the United States, a
corporation or partnership created or organized in or under the laws of the
United States or of any political subdivision thereof or a trust whose income is
taxable in the United States irrespective of source. This summary does not
address the tax consequences to, and U.S. Holder does not include persons
subject to specific provisions of federal income tax law, such as tax-exempt
organizations, qualified retirement plans, individual retirement accounts and
other tax-deferred accounts, financial institutions, insurance companies, real
estate investment trusts, regulated investment companies, broker-dealers,
non-resident alien individuals, persons or entities that have a "functional
currency" other than the U.S. dollar, shareholders who hold common shares as
part of a straddle, hedging or a conversion transaction, and shareholders who
acquired their stock through the exercise of employee stock options or otherwise
as compensation for services. This summary is limited to U.S. Holders who own
common shares as capital assets. This summary does not address the consequences
to a person or entity holding an interest in a shareholder or the consequences
to a person of the ownership exercise or disposition of any options, warrants or
other rights to acquire common shares.

DISTRIBUTIONS ON COMMON SHARES OF THE REGISTRANT

U.S. Holders receiving dividend distributions (including constructive dividends)
with respect to common shares of the Registrant are required to include in gross
income for United States federal income tax purposes the gross amount of such
distributions equal to the U.S. dollar value of such dividends on the date of
receipt (based on the exchange rate on such date) to the extent that the
Registrant has current or accumulated earnings and profits, without reduction
for any Canadian income tax withheld from such distributions. Such Canadian tax
withheld may be credited, subject to certain limitations, against the U.S.
Holder's United States federal income tax liability or, alternatively, may be
deducted in computing the U.S. Holder's United States federal taxable income,
but in the case of an individual only applies to those who itemize deductions.
(See discussion that is more detailed at "Foreign Tax Credit" below.) To the
extent that distributions exceed current or accumulated earnings and profits of
the Registrant, they will be treated first as a return of capital up to the U.S.
Holders' adjusted basis in the common shares and thereafter as gain from the
sale or exchange of the common shares. Preferential tax rates for long-term
capital gains are applicable to a U.S. Holder which is an individual, estate or
trust. There are currently no preferential tax rates for long- term capital
gains for a U S. Holder, which is a corporation.

In the case of foreign currency received as a dividend that is not converted by
the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have
a tax basis in the foreign currency equal to its U.S. dollar value on the date
of receipt. Any gain or loss recognized upon a subsequent sale or other
disposition of the foreign currency, including an exchange for U.S. dollars,
will be ordinary income or loss.

Dividends paid on the common shares of the Registrant will not generally be
eligible for the dividends received deduction provided to corporations receiving
dividends from certain United States corporations. A U.S. Holder which is a
corporation may, under certain circumstances, be entitled to a 70% deduction of
the United States source portion of dividends received from the Registrant
(unless the Registrant qualifies as a "foreign personal holding Registrant" or a
"passive foreign investment company," as defined below) if such U.S. Holder owns
shares

representing at least 10% of the voting power and value of the Registrant. The
availability of this deduction is subject to several complex limitations, which
are beyond the scope of this discussion.

FOREIGN TAX CREDIT

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax
with respect to the ownership of common shares of the Registrant may be
entitled, at the option of the U.S. Holder, to either a deduction or a tax
credit for such foreign tax paid or withheld. Generally, it will be more
advantageous to claim a credit because a credit reduces United States federal
income taxes on a dollar-for-dollar basis, while a deduction merely reduces the
taxpayer's income subject to tax. This election is made on a year-by-year basis
and applies to all foreign taxes paid by (or withheld from) the U.S. Holder
during that year. There are significant and complex limitations which apply to
the credit, among which is the general limitation that the credit cannot exceed
the proportionate share of the U.S. Holder's United States income tax liability
that the U.S. Holder's foreign source income bears to his or its worldwide
taxable income. In the determination of the application of this limitation, the
various items of income and deduction must be classified into foreign and
domestic sources. Complex rules govern this classification process. In addition,
this limitation is calculated separately with respect to specific classes of
income such as "passive income", "high withholding tax interest", "financial
services income", "shipping income", and certain other classifications of
income. Dividends distributed by the Registrant will generally constitute
"passive income" or, in the case of certain U.S. Holders, "financial services
income" for these purposes. The availability of the foreign tax credit and the
application of the limitations on the credit are fact specific, and holders and
prospective holders of common shares of the Registrant should consult their own
tax advisors regarding their individual circumstances.

DISPOSITION OF COMMON SHARES OF THE REGISTRANT

A U.S. Holder will recognize gain or loss upon the sale of common shares of the
Registrant equal to the difference, if any, between (i) the amount of cash plus
the fair market value of any property received, and (ii) the shareholder's tax
basis in the common shares of the Registrant. This gain or loss will be capital
gain or loss if the common shares are a capital asset in the hands of the U.S.
Holder, which will be a short-term or long-term capital gain or loss depending
upon the holding period of the U.S. Holder. Gains and losses are netted and
combined according to special rules in arriving at the overall capital gain or
loss for a particular tax year. Deductions for net capital losses are subject to
significant limitations. For U.S. Holders who are individuals, any unused
portion of such net capital loss may be carried over to be used in later tax
years until such net capital loss is thereby exhausted. For U.S. Holders that
are corporations (other than corporations subject to Subchapter S of the Code),
an unused net capital loss may be carried back three years from the loss year
and carried forward five years from the loss year to be offset against capital
gains until such net capital loss is thereby exhausted.

OTHER CONSIDERATIONS

In the following circumstances, the above sections of this discussion may not
describe the United States federal income tax consequences resulting from the
holding and disposition of common shares:

FOREIGN PERSONAL HOLDING REGISTRANT

If at any time during a taxable year more than 50% of the total combined voting
power or the total value of the Registrant's outstanding shares is owned,
directly or indirectly, by five or fewer individuals who are citizens or
residents of the United States and 60% or more of the Registrant's gross income
for such year was derived from certain passive sources (e.g., from dividends
received from its subsidiaries), the Registrant may be treated as a "foreign
personal holding Registrant". In that event, U.S. Holders that hold common
shares would be required to include in gross income for such year their
allocable portions of such passive income to the extent the Registrant does not
actually distribute such income.

FOREIGN INVESTMENT REGISTRANT

If 50% or more of the combined voting power or total value of the Registrant's
outstanding shares are held, directly or indirectly, by citizens or residents of
the United States, United States domestic partnerships or corporations, or
estates or trusts other than foreign estates or trusts (as defined by the Code
Section 7701 (a)(31)), and the Registrant

is found to be engaged primarily in the business of investing, reinvesting, or
trading in securities, commodities, or any interest therein, it is possible that
the Registrant may be treated as a "foreign investment company" as defined in
Section 1246 of the Code, causing all or part of any gain realized by a U.S.
Holder selling or exchanging common shares to be treated as ordinary income
rather than capital gain.

PASSIVE FOREIGN INVESTMENT REGISTRANT

As a foreign corporation with U.S. Holders, the Registrant could potentially be
treated as a passive foreign investment company ("PFIC"), as defined in section
1296 of the Code, depending upon the percentage of the Registrant's income which
is passive, or the percentage of the Registrant's assets which is producing
passive income. U.S. Holders owning common shares of a PFIC are subject to an
additional tax and to an interest charge based on the value of deferral of tax
for the period during which the common shares of the PFIC are owned, in addition
to treatment of gain realized on the disposition of common shares of the PFIC as
ordinary income rather than capital gain. However, if the U.S. Holder makes a
timely election to treat a PFIC as a qualified electing fund ("QEF") with
respect to such shareholders interest therein, the above-described rules
generally will not apply. Instead, the electing U.S. Holder would include
annually in his gross income his pro rata share of the PFIC's ordinary earnings
and net capital gain regardless of whether such income or gain was actually
distributed. A U.S. Holder of a QEF can, however, elect to defer the payment of
United States federal income tax on such income not currently received subject
to an interest charge on the deferred tax. Alternatively, a U.S. Holder may
elect to "mark to market" his or her shares in the Registrant at the end of each
year as set forth in Section 1296 of the Code. Special rules apply to U.S.
Holders who own their interests in a PFIC through intermediate entities or
persons.

The Registrant believes that it was not a PFIC for its fiscal year ended
September 30, 1997, and quarters ended December 31, 1997 and March 31, 1998. If
in a subsequent year the Registrant concludes that it is a PFIC, it intends to
make information available to enable an U.S. Holder to make a QEF election in
that year. There can be no assurance that the Registrant's determination
concerning its PFIC status will not be challenged by the IRS, or that it will be
able to satisfy record keeping requirements which will be imposed on QEF's.

CONTROLLED FOREIGN CORPORATION

If more than 50% of the voting power of all classes of stock or the total value
of the stock of the Registrant is owned, directly or indirectly, by citizens or
residents of the United States, United States domestic partnerships and
corporations or estates or trusts other than foreign estates or trusts, each of
whom own 10% or more of the total combined voting power of all classes of stock
of the Registrant ("United States shareholder"), the Registrant could be treated
as a "controlled foreign corporation" under Subpart F of the Code. This
classification would effect many complex results including the required
inclusion by such United States shareholders in income of their pro rata shares
of "Subpart F income" (as specially defined by the Code) of the Registrant. In
addition, under Section 1248 of the Code, gain from the sale or exchange of
stock by a holder of common shares of the Registrant who is or was a United
States shareholder at any time during the five year period ending with the sale
or exchange is treated as ordinary dividend income to the extent of earnings and
profits of the Registrant attributable to the stock sold or exchanged. Because
of the complexity of subpart F and because it is not clear that Subpart F would
apply to the holders of common shares of the Registrant, a more detailed review
of these rules is outside of the scope of this discussion.

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The summary below, as of March 31, 2000, is restricted to the case of a holder
(a "Holder") of one or more common shares who for the purposes of the Income Tax
Act (Canada) (the "Act") is a non-resident of Canada, holds his common shares as
capital property and deals at arm's length with the Registrant.

DIVIDENDS

A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to
25%, or such lower rate as may be available under an applicable tax treaty, of
the gross amount of any dividend paid or deemed to be paid on his common shares.
Under the Canada-U.S. Income Tax Convention (1980) (the "Treaty") the rate of
Part XIII Tax applicable to a dividend on common shares paid to a Holder who is
a resident of the United States is generally

reduced to 15% of the gross amount of the dividend or to 5% if the Holder is a
company that beneficially owns at least 10% of the voting stock of the
Registrant. The Registrant will be required to withhold the applicable amount of
Part XIII Tax from each dividend so paid and remit the withheld amount directly
to the Receiver General for Canada for the account of the Holder.

DISPOSITION OF COMMON SHARES

A Holder who disposes of a common share, including by deemed disposition on
death, will not be subject to Canadian tax on any capital gain (or capital loss)
thereby realized unless the common share constituted "taxable Canadian property"
as defined by the Act. Generally, a common share will not constitute taxable
Canadian property of a Holder unless he held the common share as capital
property used by him carrying on a business (other than an insurance business)
in Canada, or he or persons with whom he did not deal at arm's length alone or
together held or held options to acquire, at any time within the five years
preceding the disposition, 25% or more of the shares of any class of the capital
stock of the Registrant.

A Holder who is a resident of the United States and who realizes a capital gain
on a disposition of a common share that was taxable Canadian property will
nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax
thereon unless (a) more than 50% of the value of the common share is derived
from, or for an interest in, Canadian real estate, including Canadian mineral
resource properties, (b) the common share formed part of the business property
of a permanent establishment that the Holder has or had in Canada within the 12
months preceding the disposition, or (c) the Holder (i) was a resident of Canada
at any time within the ten years immediately, and for a total of 120 months
during the 20 years, preceding the disposition, and (ii) owned the common share
when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on
a disposition of a common share must include three quarters of the capital gain
(taxable capital gain) in computing his taxable income earned in Canada. The
Holder may, subject to certain limitations specified in the Act, deduct three
quarters of any capital loss (allowable capital loss) arising on disposition of
taxable Canadian property from taxable capital gains realized in the year of
disposition in respect to taxable Canadian property and, to the extent not so
deductible, from such taxable capital gains of any of the three preceding years
or any subsequent year.

ITEM 8. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data of the
Registrant for the periods ended September 30, 1999, 1998 and 1997, and was
prepared in accordance with Canadian generally accepted accounting principles
("Canadian GAAP"). The table also summarizes certain corresponding information
prepared in accordance with United States generally accepted accounting
principles ("U.S. GAAP"). This selected consolidated financial data includes the
accounts of the Registrant and its subsidiaries. All amounts stated are in
United States dollars:

PERIOD FROM
INCORPORATION
FISCAL YEAR ENDED FISCAL YEAR ENDED OCT. 3, 1996,
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 TO SEPT. 30, 1997
------------------ ------------------ -----------------

Revenues $ 14,046,832 $ 32,940,876 $ 523,865
Net Income (loss)
- Canadian GAAP $(17,097,677) $ 1,617,331 $ 18,694
- US GAAP $(21,290,100) $ (2,349,312) $ (1,674,797)
Net Income (loss) per equity share
- Canadian GAAP $ (.26) $ .02 $ --
- US GAAP $ (.32) $ (.04) $ (.04)
Total assets
- Canadian GAAP $ 45,891,809 $ 54,770,714 $ 57,200,339
- US GAAP $ 35,223,282 $ 48,494,610 $ 54,890,878
Total liabilities
- Canadian GAAP $ 23,914,059 $ 15,695,287 $ 19,667,648
- US GAAP $ 23,914,059 $ 15,695,287 $ 19,667,648

Cash Dividends $ -- $ -- $ --

ITEM 9. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of
the Registrant for the fiscal years ending September 30, 1999, 1998 and 1997,
should be read in conjunction with the consolidated financial statements of the
Registrant and related notes therein. THIS DISCUSSION CONTAINS FORWARD LOOKING
STATEMENTS - SEE "SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS." The
Registrant's consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles. Please refer to Note 18 of
the Consolidated Financial Statements for a discussion of the differences
between Canadian and United States accounting principles and practices that
affect the Registrant.

RESULTS OF OPERATIONS

For the year ended September 30, 1999, International Uranium Corporation ("the
Registrant") incurred a net loss of $17,097,677, compared to a net profit of
$1,617,331 and $18,694 for the year ended September 30, 1998 and the period
ended September 30, 1997. This loss was attributable primarily to weak commodity
prices. While prices fluctuated somewhat during the year, the uranium market
ended the fiscal year at $9.75 per pound U(3)O(8). The vanadium market saw
prices plunge dramatically from $5.37 per pound V(2)O(5) at the beginning of the
fiscal year to $1.84 per pound by year's end. This caused the Registrant to
write down its ore stockpiles, which contain approximately seven pounds of
vanadium for every pound of uranium, and finished goods inventories by
$7,709,170. These same low commodity prices combined with low expectations of
any appreciable price recovery in the near term also resulted in the Registrant
reducing the carrying value of all of its U.S. mineral properties to zero. The
amount of this write-off was $7,039,958. In addition, the Registrant also
wrote-off the remaining unamortized portion of goodwill in the amount of
$541,641.

During the year, the Registrant had total revenues of $14,046,832. Of these
revenues, $9,758,317 (69%) was from sales of uranium ("U(3)O(8)") and $4,288,515
(31%) was derived from the Registrant's process milling of alternate feeds. In
addition, the Registrant delivered 400,000 pounds U(3)O(8) at a purchase price
of $10.80 per pound to a customer under a deferred sales arrangement. This
agreement grants the purchaser the option to put the U(3)O(8) back to the
Registrant at a price of $10.55 per pound U(3)O(8) at any one time during the
period of October 1, 2001 to March 1, 2003. The transaction was accounted for as
a deferred credit of $4,320,000 and the cost of inventory of $4,248,875 was
reclassified as an other asset. If and when the put option is exercised, these
amounts will be reclassified as revenues and cost of sales, respectively.

These results are significantly lower than the corresponding results for the
year ended September 30, 1998, where the Registrant had total revenues of
$32,940,876, consisting of $19,890,300 in U(3)O(8) sales and $13,050,576 of
revenues from process milling of alternate feeds. For the period ended September
30, 1997, which was the Registrants first year of operations, total revenues
were only $1,305,812.

The spot market value of uranium remained depressed and basically flat during
the fiscal year. It began the fiscal year at $9.75 per pound U(3)O(8), rose to
$10.85 in March, then declined during the remainder of the fiscal year back to
$9.75 in September. The spot market value of vanadium, however, suffered a
tremendous decline. It began the fiscal year at $5.37 per pound V(2)O(5) and
then declined during the remainder of the fiscal year to $1.84 in September. As
a result, the Registrant elected to only sell a very small quantity of the
V(2)O(5) it produced during the year. Also, due to the continued depressed price
for U(3)O(8), the Registrant only sold U(3)O(8) into existing contracts and
elected not to enter into any additional spot market contracts during the year.

Of the Registrant's 1999 uranium sales, 100% of the material was sourced from
uranium purchased under pre-existing contracts. The $9,758,317 of uranium sales
proceeds resulted from four separate sales transactions. Approximately 69% of
the sales revenues (61% of the material delivered) arose from long-term
contracts and the balance were from existing spot market contracts.

The Registrant's alternate feed projects this year consisted primarily of the
processing of over 44,000 tons of uranium-bearing soil materials received from
the Ashland 2 former defense site near Buffalo, New York. The Registrant
received a recycling fee for this project, which contributed $3,794,195, or 88%,
of the total process milling revenues for the year. The remaining alternate feed
revenues of $494,320 came primarily from the sale of a product from a prior
year's alternate feed project. The Registrant also produced approximately
160,000 pounds of U(3)O(8) from another alternate feed source. The Registrant
did not receive a recycling fee for this project, and the U(3)O(8) remains in
inventory to be sold at a later date. The Registrant's processing costs relating
to alternate feeds totaled $3,213,789 for 1999 resulting in a gross profit from
alternate feeds of $1,074,726.

Selling, general and administrative expenses for 1999 totaled $4,445,190
compared to $3,580,149 in 1998 and $1,007,832 for the period ended September 30,
1997. The increase in 1999 was due to an increase in outside legal and
professional expenses related to the Registrant's development of its alternate
feed business and to mine standby costs due to the suspension of mining
operations. Depreciation, amortization and depletion expense was $664,633 in
1999, compared to $734,267 and $41,387 in 1998 and 1997 respectively. Net
interest and other income decreased to $857,739 in 1999 from $1,128,562 in 1998
and $781,947 in 1997. These total revenues and expenses combined with the
extensive write-offs stated above resulted in a net loss of $17,097,677 in 1999
compared to net income before taxes of $1,858,892 in 1998 and $18,694 in 1997.

The Registrant continued the mining of uranium and vanadium-bearing materials
from its Sunday and Rim Mine complexes in the Colorado Plateau District of
western Colorado and eastern Utah until mid-1999. At that time, the Registrant
elected to suspend mining operations as a result of continuing weak uranium and
vanadium prices and the expectation that these conditions would not improve for
the next few years. The shut down of the mines took several months to complete,
and was completed in November, 1999. The Registrant has also completely
written-off the carrying value of its U.S. mineral properties for the same
reason. Prior to the cessation of mining activities, approximately 87,250 tons
of mined material, with a U(3)O(8) grade of 0.28% and a V(2)O(5) grade of 1.9%
were mined from company and independent mines. All of the mined material was
shipped to the White Mesa Mill (the "Mill") and the Registrant commenced the
milling of this material during June. As of September 30, 1999, approximately
72,750 tons of material had been fed to the Mill leaving approximately 14,500
tons in stockpile. This stockpile was written down to the net realizable value
of $144,112 based on current spot market prices.

During fiscal 1999 the process of shutting down the Registrant's Dove Creek
field office was commenced. All labor and disbursements incurred during fiscal
1999 in the process of shutting down the Dove Creek office were expensed as
Selling, General and Administrative as incurred. There were no severance, shut
down or reclamation obligations associated with the shut down of the Dove Creek
office; therefore, no additional costs were required to be accrued at fiscal
year end. Also, in February, 2000 the Registrant commenced actively seeking
potential purchasers for its U.S. mining properties and taking other steps, such
as dropping nonessential property holdings and reducing mining staff, to
minimize its holding costs for mining properties. No properties were sold during
fiscal 1999 and no severance obligations were outstanding at year end. Sales of
mining equipment began in June 1999 and continued through October 2000. Proceeds
from the sale of surplus mining equipment were $322,660 for fiscal 1999,
resulting in a gain of $168,141. As the expected net realizable value of the
Registrant's mining equipment was equal or greater than its book value, no
change in classification of mining equipment was made as a result of the
decision to sell the equipment.

During fiscal 1999, the Mill produced 493,418 pounds U(3)O(8) and 870,960 pounds
V(2)O(5). This includes both uranium produced from conventional mined material
as well as uranium recovered from alternate feeds. During the first quarter of
fiscal 2000, the conventional mill run was completed which produced an
additional 157,709 pounds U(3)O(8) and 1,125,520 pounds V(2)O(5). Actual mill
recoveries were lower than historical levels due primarily to the short mill run
and certain operational problems. These inventories have been written down to
spot market prices as of September 30, 1999.

The Registrant suspended the application and review process for a permit to mine
from the Wyoming Department of Environmental Quality and for a source material
license from the Nuclear Regulatory Commission for the Reno Creek in situ leach
project, located in the Powder River Basin of Wyoming. This review process could
be reinstituted at any time. The Registrant has also written-off all of its
investment and development expenditures related to this project. These decisions
were, again, related to weak market prices for uranium.

The Gurvan-Saihan Joint Venture, the Registrant's uranium development and
exploration program in Mongolia, conducted a limited field program during 1999,
focusing most of its efforts on data analysis and production cost modeling for
future mining operations. The Joint Venture has now delineated proven and
probable mineral deposits for this program of approximately 21.67 million tons
of mineralized material at an average grade of approximately 0.052% U(3)O(8).
Total cash expenditures by the Registrant relating to this Joint Venture were
$912,990 in 1999, compared to $3,209,363 in 1998 and $1,191,525 in 1997. Due to
depressed commodity prices, the Joint Venture activities were shut down in early
fiscal 2000.

The Registrant continued to increase its focus on acquiring and processing
alternate feeds during the year, which resulted in the Registrant successfully
processing over 44,000 tons of material from a former government weapons, or
FUSRAP (Formerly Utilized Sites Remedial Action Program), site near Buffalo, New
York. Based on the success of this project the Registrant signed a contract to
process materials from another FUSRAP site and began to receive these materials
in July. This project should generate over 100,000 tons of uranium-bearing
materials for recycle through the Mill, for which the Registrant will receive a
recycling fee in addition to retaining all of the uranium recovered. The
recycling fee is paid when the material is delivered to the Mill and recorded as
deferred revenue until the material is processed.

CAPITAL RESOURCES AND LIQUIDITY

The Registrant's working capital at September 30,1999 was $11,635,665 of which
$469,407 consisted of cash and cash equivalents. This compares to working
capital of $20,298,166 and $24,283,678 in 1998 and 1997 respectively. Cash and
cash equivalents decreased from $13,953,355 in 1997 to $6,282,275 in 1998.
Income from operations after adjustments for expenses not affecting cash
(depreciation depletion, amortization of contract purchase costs, and other)
used $580,686 of cash compared to providing $3,522,003 in 1998 and $57,581 in
1997. Net cash used by operations in 1997 was $3,163,190 and then increased to
$5,544,038 in 1998 and to $9,970,712 in 1999. The Registrant also continued to
utilize cash to increase its inventory levels. This inventory increase in 1999
is primarily due to production from the Registrant's conventional mill run.

Trade and other receivables remained relatively flat at $2,226,303 at the end of
the fiscal year compared to $2,979,600 at the end of fiscal 1998, despite the
significant decline in revenues from $32.9 million in 1998 to $14 million in
1999. This was due mainly to the fact that revenues for 1998 included some large
uranium sales and alternate feed contracts that were concluded and fully paid
prior to year end. The Registrant's credit policy, generally payment in full
within 30 days after receipt, remains the same.

Expenditures for property, plant and equipment totaled $2,057,178 in 1999,
compared to $3,812,556 during 1998 and $2,679,149 in 1997. The majority of these
expenditures represent improvements and circuit modifications at the Mill to
allow for more efficient mined material and alternate feed processing.
Investments in the Gurvan-Saihan Joint Venture totaled $983,367 in 1999.

The Registrant is projecting only minor expenditures during fiscal year 2000 for
property, plant and equipment, and expenditures on the Mongolia mineral
properties are projected to be only $327,000. No significant capital
expenditures are anticipated for the Mill during fiscal 2000.

During March 1999, in order to provide the Registrant with more short-term cash
flexibility, a $10,000,000 working capital loan agreement was established with
Norwest Bank. The one-year facility provides for advances based on applicable
receivable levels and U(3)O(8) inventories. This facility has been reduced to
$9,000,000 in order to secure a letter of credit. As of September 30, 1999,
$950,000 was outstanding under this new facility.

ENVIRONMENTAL RESPONSIBILITY

Each year, the Registrant reviews the anticipated costs of decommissioning and
reclaiming its mill and mine sites as part of its environmental planning
process. These estimated costs are also formally reviewed by the Registrant when
it submits license renewal applications to regulatory authorities. Based on this
review, it was determined that the Registrant's estimated reclamation obligation
of $13,265,700 is currently sufficient to cover these projected future costs.

The Registrant has also posted bonds securing these liabilities and has
deposited restricted cash and marketable securities on account of these
obligations. The amount of the restricted cash and marketable securities
collateralizing the Registrant's reclamation obligation was $8,344,541 at
September 30, 1999.

The Registrant has detected some chloroform contamination at the Mill site that
appears to have resulted from the operation of a temporary laboratory facility
that was located at the site prior to and during the construction of the Mill
facility. The source and extent of this contamination are currently under
investigation, and a corrective action plan, if necessary, is yet to be devised.
Although the investigations to date indicate that this contamination appears to
be contained in a manageable area, the scope and costs of remediation have not
yet been determined and could be significant. See "Legal Proceedings".

2000 FISCAL YEAR OUTLOOK

The Registrant is currently in the process of redefining the focus of its
business activities.

Historically, the Registrant's operations were significantly dependent upon
uranium and vanadium prices. Due to the low spot price for vanadium and the
continued depressed market for uranium, the Registrant suspended all U.S. mining
activities in 1999. As a result of this suspension, the Registrant completely
wrote-off the carrying value of its U.S. mineral properties in 1999. The
Registrant also does not anticipate that these commodity prices will recover to
levels that would warrant reactivation of these mines for several years. The
Registrant intends to keep those properties in a shutdown status indefinitely,
pending any significant improvements in commodity prices, or possibly sell or
joint venture all or a portion of such properties and interest to or with other
parties. As of March 31, 2000, the Registrant is in the process of closing its
Colorado Plateau and Arizona mining offices and is actively seeking potential
purchasers for its mining properties and mining equipment and taking other steps
to minimize its holding costs for mining properties.

The Registrant has therefore decided to focus its resources and attention in
fiscal 2000 on the development of the alternate feed business. Although the
Registrant is pursuing several alternate feed projects, it currently only has
firm contracts for approximately four months of processing during fiscal year
2000. The Registrant remains optimistic that it will secure additional alternate
feed contracts; however, unless a significant increase is obtained, the Mill
will not be reactivated in fiscal 2000 and the Registrant will probably not be
profitable for the year.

In order to reduce costs, the Registrant began consolidating certain of its
mining locations during the fourth quarter of 1999. The Registrant will be
making additional cost reductions at all levels, including reducing its
workforce in both its operating and administrative areas.

RISKS AND UNCERTAINTIES

YEAR 2000

This risk involves the potential for the Registrant's operations to be disrupted
by the failure of computer systems, which were not designed to function using
dates for the new century. The Registrant has developed and implemented plans
for making necessary program conversions and software upgrades. The cost of
developing and implementing these conversions and upgrades was not material.

The Registrant has not experienced any adverse effects to date relating to this
Year 2000 issue. Note that it is not possible to be certain that all aspects of
the Year 2000 issue affecting the Registrant, including those related to the
efforts of customers, suppliers, or other third parties, will be fully resolved.

REGULATORY CHALLENGES

Under the NRC's Alternate Feed Guidance, the Mill is required to obtain a
specific license amendment allowing for the processing of each new alternate
feed material. Certain of the Mill's license amendments have been challenged by
various third parties in the past, although none of such challenges have been
successful to date. The Registrant intends to continue to defend its positions
and the validity of its license amendments and proposed license amendments. If
the Registrant does not ultimately prevail in any such actions and any appeals
therefrom, the Registrant's ability to process certain types of alternate feeds,
in certain circumstances, may be adversely affected, which could have a
significant impact on the Registrant.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Registrant wishes to caution readers that disclosures made in the foregoing
Management's Discussion and Analysis and elsewhere in this annual report
represent forward-looking statements. These forward-looking statements involve
known and unknown risks and uncertainties which may cause the actual results,
performance or achievements of the Registrant to be materially different from
any future results, performance or achievements expressed or implied by any
forward-looking statements made by or on behalf of the Registrant.

Risk factors that affect the Registrant's results and the above discussion of
the 2000 outlook include, but are not limited to, volatility and sensitivity to
market prices for uranium and vanadium, competition, environmental regulations,
the impact of changes in foreign currencies' exchange rates, political risk
arising from operating in Mongolia, changes in government regulation and
policies including trade laws and policies, demand for nuclear power, dependence
on limited number of customers, replacement of reserves and production, receipt
of permits and approvals from governmental authorities (including amendments for
each alternate feed transaction) and other operating and development risks.

As a result of the foregoing and other factors, no assurance can be given as to
the future results, levels of activity and achievement.

ITEM 9A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY EXCHANGE RATE SENSITIVITY

The Registrant's functional currency is the U.S. dollar, and its activities are
predominantly executed using the U.S. dollar. The Registrant incurs a small
portion of its expenditures in Canadian and Mongolian currencies; however, it is
not subject to significant operational exposures due to fluctuations in those
currencies.

The Common shares of the Registrant are currently only listed on The Toronto
Stock Exchange in Canada and thus, the shares are purchased and sold in Canadian
dollars. Therefore, please refer to Item 5 for more information relating to the
Registrant's share price information and the tables relating to the
U.S./Canadian dollar currency translations.

The Registrant has not entered into any agreements or purchased any instruments
to hedge any possible currency risks at this time.

INTEREST RATE SENSITIVITY

The Registrant currently has no significant long-term or short-term debt
requiring interest payments. Thus, the Registrant has not entered into any
agreement or purchased any instrument to hedge against possible interest rate
risks at this time.

The Registrant's interest earning investments are primarily short-term, or can
be held to maturity, and thus, any reductions in future income or carrying
values due to future interest rate declines are believed to be immaterial.

COMMODITY PRICE SENSITIVITY

The Registrant is subject to price risk due to changes in the market value of
uranium and vanadium regarding its future sales revenues and carrying values
relating to its finished goods, ore stockpiles and property holdings.

The Registrant's finished goods and mill-feed stockpile inventories are recorded
at the lower of cost or net realizable value as of September 30, 1999.

The Registrant has entered into future long-term sales contracts for uranium at
prices in excess of its carrying value and market value for its inventory as of
September 30 1999. Thus, the Registrant has reduced its current exposure to
future uranium price decreases to the extent of the quantities covered by the
long-term contracts. However, the Registrant's current and future inventories
that are not covered by long-term contracts are subject to market price risk.

The Registrant has not entered into any future vanadium sales contracts at this
time, and therefore its revenue and profits from vanadium sales are subject to
future price changes.

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT

The names, municipalities of residence, positions with the Registrant, and
principal occupations of the directors and executive officers of the Registrant
as of March 31, 2000, are as follows:

NAME AND MUNICIPALITY FIRST
OF RESIDENCE OFFICE HELD PRINCIPAL OCCUPATION ELECTED
--------------------- ----------- -------------------- -------

LUNDIN, LUKAS H.(1) Chairman of the Board and Chairman of the Board of the May
Vancouver, Canada Director Registrant; Director and Officer of 1997
a number of publicly-traded natural
resource companies.

HOELLEN, EARL E. President, Chief Executive President and Chief Executive May
Denver, USA Officer and Director Officer of the Registrant. 1997

FRYDENLUND, DAVID C. Vice President, General Counsel, Vice President, General Counsel and May
Denver, USA Corporate Secretary and Director Corporate Secretary of the 1997
Registrant.

CRAIG, JOHN H. Director Lawyer, partner, Cassels Brock & May
Toronto, Canada Blackwell, Barristers and Solicitors 1997

HARROP, CHRISTOPHER J.F. Director Chairman of Northern Securities, Inc. May
Toronto, Canada 1997

RAND, WILLIAM A. Director Self-employed businessman. May
Vancouver, Canada 1997

LUNDIN, ADOLF H.(1) Director Director and Officer of a number of May
Geneva, Switzerland publicly-traded natural resource 1997
companies.

HOCHSTEIN, RON F. Vice President, Chief Operating Vice President and Chief Operating October
Denver, USA Officer Officer of the Registrant 1999

TOWNLEY, RICK L. Vice President, Treasurer and Vice President Finance, Chief July
Denver, USA Chief Financial Officer Financial Officer of the Registrant 1999

(1) Lukas H. Lundin is the son of Adolf H. Lundin

Directors are elected annually to one year terms at the annual meeting of
shareholders and serve until the next annual meeting or until their successor is
duly elected. Executive Officers are appointed by the directors and serve until
replaced by the directors or their resignation.

Please note Item 13 below for information relating to interests of Management in
certain transactions.

ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS

DIRECTOR COMPENSATION

No remuneration has been paid to directors of the Registrant in their capacities
as directors since the date of incorporation. The directors are reimbursed for
their expenses incurred to attend meetings of the Registrant.

AGGREGATE COMPENSATION FOR ALL OFFICERS AND DIRECTORS

An aggregate amount of $601,954 as compensation, was paid by the Registrant
during its fiscal year ended September 30, 1999, to all directors and officers
as a group.

SUMMARY COMPENSATION

The following table summarizes the compensation of each of the named executive
officers of the Registrant for the year ended September 30, 1999:

ANNUAL COMPENSATION
FOR THE YEAR ENDED SEPTEMBER 30, 1999

OTHER ANNUAL SECURITIES UNDER
NAME AND PRINCIPAL COMPENSATION OPTIONS GRANTED
POSITION SALARY (1) BONUS (US$) (#)
------------------ ---------- ----- ------------ ----------------

Earl E. Hoellen
President and Chief
Executive Officer $180,000 Nil $ 2,500(7) 375,000

David C. Frydenlund,
Vice President, General
Counsel and Corporate
Secretary(2) $152,100(3) Nil $ 9,000(4) 200,000

Harold R. Roberts
Vice President,
Operations(8) $140,000 Nil $ 2,525(7) 75,000

Rick L. Townley,
Vice President, Finance
and Chief Financial
Officer(6) $105,000 Nil $ 2,025(7) Nil

Thad L. Meyer,
Vice President, Finance
and Chief Financial
Officer(5) $ 93,149(5) Nil $ 1,042(5) 125,000

NOTES TO SUMMARY COMPENSATION TABLE

(1) The Registrant's currency for disclosure purposes is US dollars, which
is the functional currency of the Registrant's operations.

(2) Mr. Frydenlund has a contract of employment with the Registrant's
subsidiary, International Uranium (USA) Corporation. The expiry date of
the employment contract is June 30, 2000. There is no compensatory plan
or arrangement provided in such contract in respect of resignation,
retirement, termination, change in control of the Registrant or
responsibilities, other than a commitment by the Registrant to pay
certain relocation expenses to be incurred by Mr. Frydenlund.

(3) During the fiscal year ended September 30, 1999, a total of $152,100
was earned by Mr. Frydenlund, of which $150,000 was paid and $2,100 was
accrued.

(4) Other annual compensation is $9,000, being the dollar value of imputed
interest benefits from a loan provided to Mr. Frydenlund.

(5) Mr. Meyer's employment was terminated effective June 30, 1999. Mr.
Meyer received as severance three (3) month's salary as well as accrued
benefits in the amount of $1,042 under the Registrant's subsidiary's
401K plan.

(6) Mr. Townley was appointed Vice President, Finance, Chief Financial
Officer and Treasurer of the Registrant effective July 1, 1999.

(7) Amounts represent 401(k) matching contributions made to the named
executive's retirement account per the Corporation's 401(k) Benefit
Plan available to all eligible employees.

(8) Mr. Roberts' employment was terminated effective January 31, 2000. Mr.
Ron F. Hochstein has assumed Mr. Roberts' responsibilities.

ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM THE REGISTRANT

STOCK OPTION PLAN

The shareholders of the Registrant adopted an employee stock option plan (the
"Stock Option Plan"), under which the board of directors, or a committee
appointed for such purposes, may from time to time grant to directors, officers,
eligible employees of, or consultants to, the Registrant or its subsidiaries, or
to employees of management companies providing services to the Registrant
(collectively, the "Eligible Personnel") options to acquire Common Shares in
such numbers, for such terms and at such exercise prices as may be determined by
the board or such committee. The purpose of the Stock Option Plan is to advance
the interests of the Registrant by providing Eligible Personnel with a financial
incentive for the continued improvement of the Registrant's performance and
encouragement to stay with the Registrant.

The maximum number of Common Shares that may be reserved for issuance for all
purposes under the Stock Option Plan is 6,700,000 Common Shares and the maximum
number of Common Shares which may be reserved for issuance to any one insider
pursuant to share options and under any other share compensation arrangement may
not exceed 5% of the Common Shares outstanding at the time of grant (on a
non-diluted basis). Any Common Shares subject to a share option which for any
reason is cancelled or terminated without having been exercised will again be
available for grant under the Stock Option Plan.

The maximum number of Common Shares that may be reserved for issuance to
insiders of the Registrant under the Stock Option Plan and under any other share
compensation arrangement is limited to 10% of the Common Shares outstanding at
the time of grant (on a non-diluted basis).

The board of directors of the Registrant has the authority under the Stock
Option Plan to establish the option price at the time each share option is
granted. The option price may not be lower than the market price of the Common
Shares at the time of grant.

Options granted under the Stock Option Plan must be exercised no later than 10
years after the date of grant and options are not transferable other than by
will or the laws of dissent and distribution. If an optionee ceases to be an
Eligible Person for any reason whatsoever other than death, each option held by
such optionee will cease to be exercisable 30 days following the termination
date (being the date on which such optionee ceases to be an Eligible Person). If
an optionee dies, the legal representative of the optionee may exercise the
optionee's options within one year after the date of the optionee's death but
only up to and including the original option expiry date.

The following table sets out information with respect to the options to purchase
common shares of the Registrant outstanding as of March 31, 2000:

NUMBER OF
CLASS OF COMMON SHARES OPTION PRICE OPTION
OPTIONEES UNDER OPTION DATE OF GRANT (CDN $) EXPIRY DATE
--------- ------------- ------------- ------------ -----------

Executive officers and 1,375,000 May 9, 1997 1.25 May 8, 2000
directors as a group 100,000* May 9, 1997 0.75 May 8, 2000
250,000 July 1, 1997 1.25 June 30, 2000
575,000 January 14, 1999 0.75 January 13, 2002
Total: 250,000 October 11, 1999 0.75 October 10, 2002
----------
2,550,000
654,000* May 9, 1997 0.75 May 8, 2000
All option holders as a 1,375,000 May 9, 1997 1.25 May 8, 2000
group (including 250,000 July 1, 1997 1.25 May 8, 2000
executive directors) 50,000* March 20, 1998 0.75 March 8, 2001
700,000 January 14, 1999 0.75 January 13, 2002
250,000 October 11, 1999 0.75 October 10, 2002
----------
Total: 3,279,000

* Represents options repriced from Cdn $1.25 to Cdn. $.75 on
June 17, 1998.

The following table summarizes individual grants of options to purchase or
acquire securities of the Registrant or any of its subsidiaries to each of the
named executive officers and directors as of March 31, 2000

NUMBER OF
EXECUTIVE OFFICER COMMON SHARES OPTION PRICE OPTION EXPIRY
AND DIRECTORS UNDER OPTION DATE OF GRANT (CDN $ DATE
----------------- ------------- ------------- ------------ -------------

Earl E. Hoellen 1,000,000 May 9, 1997 1.25 May 8, 2000
375,000 January 14, 1999 0.75 January 13, 2002
David C. Frydenlund 250,000 May 9, 1997 1.25 May 8, 2000
250,000 July 1, 1997 1.25 June 30, 2000
200,000 January 14, 1999 0.75 January 13, 2002
Adolf H. Lundin 25,000 May 9, 1997 1.25 May 8, 2000
Lukas H. Lundin 25,000 May 9, 1997 1.25 May 8, 2000
William A. Rand 25,000 May 9, 1997 1.25 May 8, 2000
John H. Craig 25,000 May 9, 1997 1.25 May 8, 2000
Christopher J.F.Harrop 25,000 May 9, 1997 1.25 May 8, 2000
Rick L. Townley 100,000 May 9, 1997 0.75 May 8, 2000
Ron F. Hochstein 250,000 October 11, 1999 0.75 October 10, 2002
TOTAL: 2,550,000

ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS

Lukas H. Lundin, John H. Craig, Christopher J.F. Harrop, Adolf H. Lundin, and
William A. Rand are also directors and officers of other natural resource
companies and, consequently, there exists the possibility for such directors and
officers to be in a position of conflict relating to any future transactions or
relationships between the Registrant or common third parties. However, the
Registrant is unaware of any such pending or existing conflicts between these
parties. Any decision made by any of such directors and officers involving the
Registrant are made in accordance with their duties and obligations to deal
fairly and in good faith with the Registrant and such other companies. In

addition, each of the directors of the Registrant, discloses and refrains from
voting on, any matter in which such director may have a conflict of interest.

None of the present directors, senior officers or principal shareholders of the
Registrant and no associate or affiliate of any of them has any material
interest in any transaction of the Registrant or in any proposed transaction
which has materially affected or will materially affect the Registrant except as
described herein.

During the year ended September 30, 1999 the Registrant incurred legal fees of
$12,524 to Cassels Brock & Blackwell, a law firm of which John H. Craig is a
partner.

During the year ended September 30, 1999, the Registrant paid management and
administrative service fees of $94,108 to a company owned by the Chairman of the
Registrant, Lukas H. Lundin, which provides office premises, secretarial and
other services in Vancouver. The Registrant continues to pay monthly fees of Cdn
$12,840 to this service company.

During the period ended September 30, 1997, the Registrant loaned $200,000 to
David C. Frydenlund, an officer and a director of the Registrant, in order to
facilitate relocation to the Registrant's headquarters. This loan is
non-interest bearing and is payable on the earlier of termination of employment
or June 30, 2000. The loan is secured by the officer's personal residence.

PART II

ITEM 14 . DESCRIPTION OF SECURITIES TO BE REGISTERED

Not applicable.

PART III

ITEM 15. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 16. CHANGES IN SECURITIES AND CHANGES IN SECURITY FOR REGISTERED
SECURITIES

None

PART IV

ITEM 17. FINANCIAL STATEMENTS

See Pages F-1 through F-12 incorporated herein by reference. The Registrant has
filed a Notification of Late Filing on Form 12b-25 regarding the required
financial statements footnote entitled "Differences Between Canadian and United
States Accounting Principles and Practices," that are currently under discussion
with SEC staff. All other financial statement requirements have been included in
this filing.

ITEM 18. FINANCIAL STATEMENTS

Not applicable.

ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

a) The following consolidated statements, together with the report of
PricewaterhouseCoopers LLP thereon, are filed as part of this Annual
Report:

Page
----

Index to Consolidated Financial Statements ........................................................ F-i
Auditors' Report to the Directors ................................................................. F-1
Consolidated Balance Sheets at September 30, 1999 and 1998 ........................................ F-2
Consolidated Statements of Operations and (Deficit) Retained Earnings
For the Years Ended September 30, 1999 and 1998 and Period
from October 3, 1996 to September 30, 1997 ..................................................... F-3
Consolidated Statements of Cash Flow for the Years Ended
September 30, 1999 and 1998 and Period
from October 3, 1996 to September 30, 1997 ..................................................... F-4
Notes to the Consolidated Financial Statements .................................................... F-5

All other schedules are omitted because they are not applicable or
because the required information is contained in the Consolidated
Financial Statements or Notes thereto.

b) Documents filed as exhibits to this Annual Report:

1.1 Registrant's Corporate Structure Chart

SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant certifies that it meets all of the requirements for filing
on Form 20-F and has duly caused this Annual Report to be signed on its behalf
by the undersigned, thereunto duly authorized.

INTERNATIONAL URANIUM CORPORATION

By: /s/ David C. Frydenlund
-----------------------------
David C. Frydenlund, Vice
President and General Counsel

Dated: April 9, 2002
-----------------------------

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGE
----

Auditors' Report to the Directors......................................F-1

Consolidated Balance Sheets at September 30, 1999 and 1998.............F-2

Consolidated Statements of Operations and Retained Earnings
For Periods Ended September 30, 1999, 1998 and 1997.................F-3

Consolidated Statements of Cash Flow for the Periods Ended
September 30, 1999, 1998 and 1997...................................F-4

Notes to the Consolidated Financial Statements.........................F-5

F-i

AUDITORS' REPORT TO THE DIRECTORS

We have audited the consolidated balance sheets of International Uranium
Corporation as at September 30, 1999, and 1998 and the consolidated statements
of operations and (deficit) retained earnings, and cash flow for the years ended
September 30, 1999 and 1998 and for the period ended September 30, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at September 30,
1999 and 1998 and the results of its operations and cash flow for the years
ended September 30,1999 and 1998 and for the period ended September 30, 1997, in
accordance with generally accepted accounting principles in Canada.

/s/ PricewaterhouseCoopers LLP
------------------------------
Chartered Accountants
Vancouver, Canada
November 25, 1999

F-1

INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNITED STATES DOLLARS)

SEPTEMBER 30,1999 SEPTEMBER 30, 1998
----------------- ------------------

ASSETS
Current assets:
Cash and cash equivalents $ 469,407 $ 6,282,275
Marketable securities -- 11,731
Trade and other receivables 2,226,303 2,979,600
Inventories (Note 3) 11,930,637 12,481,713
Favorable uranium sales contracts (Note 4) -- 729,730
Prepaid expenses and other 191,425 188,532
----------------- -----------------
14,817,772 22,673,581

Properties, plant and equipment, net (Note 5) 6,790,627 13,516,937
Mongolia mineral properties (Note 6) 10,484,299 9,500,932
Notes receivable 202,016 203,538
Restricted cash and marketable securities (Note 7) 9,344,541 8,300,375
Other asset (Note 8) 4,248,875 --
Goodwill and other, net 3,679 575,351
----------------- -----------------
$ 45,891,809 $ 54,770,714
================= =================

LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities $ 2,132,614 $ 1,761,841
Notes payable (Note 9) 1,049,493 37,963
Deferred revenue -- 575,611
----------------- -----------------
3,182,107 2,375,415

Notes payable, net of current portion 22,811 54,172
Reclamation obligations (Note 10) 13,265,700 13,265,700
Deferred revenue 3,123,441 --
Deferred credit (Note 8) 4,320,000 --
----------------- -----------------
23,914,059 15,695,287
----------------- -----------------

SHAREHOLDERS' EQUITY
Share capital (Note 11) 37,439,402 37,439,402
(Deficit) retained earnings (15,461,652) 1,636,025
----------------- -----------------
21,977,750 39,075,427
----------------- -----------------
$ 45,891,809 $ 54,770,714
================= =================

The accompanying notes are an integral part of these financial statements

F-2

INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND (DEFICIT) RETAINED EARNINGS
(UNITED STATES DOLLARS)

PERIOD FROM
INCORPORATION
YEAR ENDED YEAR ENDED ON OCTOBER 3, 1996
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 TO SEPTEMBER 30, 1997
--------------------- --------------------- ---------------------

OPERATIONS
Revenue
Uranium sales $ 9,758,317 $ 19,890,300 $ --
Process milling 4,288,515 13,050,576 523,865
--------------------- --------------------- ---------------------
Total revenue 14,046,832 32,940,876 523,865
--------------------- --------------------- ---------------------
Costs and expenses
Uranium cost of sales 8,387,867 17,829,592 --
Process milling expenditures 3,213,789 10,066,538 237,719
Selling, general and administrative 4,445,190 3,580,149 1,008,012
Write-down of inventories (Note 13) 7,709,170 -- --
Depreciation 664,633 734,267 41,387
--------------------- --------------------- ---------------------
24,420,649 32,210,546 1,287,118
--------------------- --------------------- ---------------------

(Loss) income before the following (10,373,817) 730,330 (763,253)

Write-off of mineral properties (Note 13) (7,039,958) -- --
Write-off of goodwill (Note 13) (541,641) -- --
Net interest and other income 857,739 1,128,562 781,947
--------------------- --------------------- ---------------------
(Loss) net income before taxes (17,097,677) 1,858,892 18,694

Provision for income taxes -- 241,561 --
--------------------- --------------------- ---------------------
(LOSS) NET INCOME FOR THE YEAR $ (17,097,677) $ 1,617,331 $ 18,694
===================== ===================== =====================

(Loss) net income per common share $ (0.26) $ 0.02 $ --
===================== ===================== =====================

(DEFICIT) RETAINED EARNINGS
Retained earnings, beginning of period 1,636,025 18,694 --
(Loss) net income (17,097,677) 1,617,331 18,694
--------------------- --------------------- ---------------------
(DEFICIT) RETAINED EARNINGS, END OF PERIOD $ (15,461,652) $ 1,636,025 $ 18,694
===================== ===================== =====================

Weighted average number of
common shares outstanding 65,525,066 65,694,048 42,067,497
===================== ===================== =====================

The accompanying notes are an integral part of these financial statements

F-3

INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(United States Dollars)

PERIOD FROM
INCORPORATION
YEAR ENDED YEAR ENDED ON OCTOBER 3, 1006
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 TO SEPTEMBER 30, 1997
------------------- ------------------ ---------------------

CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
(Loss) net income for the period $ (17,097,677) $ 1,617,331 $ 18,694
Items not affecting cash
Depreciation and amortization 664,633 734,267 41,387
Gain on sale of equipment (168,141) (99,865) (2,500)
Amortization of uranium sales contract purchase cost 729,730 1,270,270 --
Write-down of inventories 7,709,170 -- --
Write-off of mineral properties 7,039,958 -- --
Write-off of goodwill 541,641 -- --
------------------- ------------------ ---------------------
(580,686) 3,522,003 57,581
Changes in non-cash working capital items
Decrease in marketable securities 11,731 28,247 17,334
Decrease (increase) in trade and other receivables 753,297 (2,916,402) (63,198)
Increase in inventories (10,490,259) (2,019,516) (9,113,859)
(Increase) decrease in other current assets (35,568) 242,053 (433,497)
(Decrease) increase in liability for inventory purchases -- (5,050,000) 5,050,000
Increase in other accounts payable and accrued liabilities 370,773 799,976 961,865
(Decrease) increase in due to related parties -- (150,399) 150,399
------------------- ------------------ ---------------------
NET CASH USED IN OPERATIONS (9,970,712) (5,544,038) (3,373,375)
------------------- ------------------ ---------------------

INVESTING ACTIVITIES
Properties, plant and equipment (2,057,178) (3,812,556) (2,679,149)
Mongolia mineral properties (912,990) (3,209,363) (1,191,525)
Proceeds from sale of surplus equipment 322,660 102,310 2,500
Notes receivable -- -- (856,892)
Collection of notes receivable 1,522 4,794,117 3,028,380
Increase in restricted marketable securities (1,044,166) (355,020) (7,945,356)
Acquisition of Energy Fuels, net of cash received -- -- (10,081,071)
------------------- ------------------ ---------------------
NET CASH USED IN INVESTMENT ACTIVITIES (3,690,152) (2,480,512) (19,723,113)
------------------- ------------------ ---------------------

FINANCING ACTIVITIES
Stock purchase for retirement -- (74,595) --
Increase (decrease) in notes payable 980,166 62,639 (1,057)
Common shares issued for cash -- -- 38,876,591
Share issue costs -- -- (2,186,137)
Increase in deferred credit 4,320,000 -- --
Increase in deferred revenue 2,547,830 365,426 210,185
------------------- ------------------ ---------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,847,996 353,470 36,899,582
------------------- ------------------ ---------------------

Decrease in cash and cash equivalents (5,812,868) (7,671,080) 13,803,094
Cash acquired on acquisition of Thornbury -- -- 150,261
Cash and cash equivalents, beginning of period 6,282,275 13,953,355 --
------------------- ------------------ ---------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 469,407 $ 6,282,275 $ 13,953,355
------------------- ------------------ ---------------------

SUPPLEMENTARY CASH FLOW INFORMATION
Cash interest paid $ 113,523 $ 29,515 $ 3,544
Cash interest received $ 786,926 $ 1,276,122 $ 778,264

Non-cash investing and financing activities
Transfer of inventory to other asset $ 4,248,875 $ -- $ --
Common shares issued on amalgamation $ -- $ -- $ 823,543

The accompanying notes are an integral part of these financial statements

F-4

Notes to the Consolidated Financial Statements
September 30, 1999, 1998 and for the Period
October 3, 1996 to September 30, 1997
(United States Dollars)

1. ORGANIZATION AND NATURE OF OPERATIONS

International Uranium Corporation and its subsidiaries (the "Company")
is a company engaged in the exploration for and the production of
uranium concentrates and the selling and trading of these concentrates
in the international nuclear fuel market. In addition, the Company also
produces and sells vanadium, as well as other minerals that can be
produced as a co-product with uranium.

The Company owns the 2,000-ton per day White Mesa Mill (the "Mill")
near Blanding, Utah. The Mill is used to process the Company's mined
ore along with ore purchased or toll milled from other independent
mines. The Mill is also used to process alternate feeds, which
generally are ores or residues from other processing facilities that
contain uranium in quantities or forms that are either uneconomic to
recover or cannot be recovered at these other facilities, but can be
recovered at the Mill.

2. SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in Canada.
Differences with respect to accounting principles generally accepted in
the United States are disclosed in Note 19.

a) Use of estimates

The preparation of consolidated financial statements in
conformity with generally accepted accounting principles
requires the Company's management to make estimates and
assumptions that affect the amounts reported in these
financial statements and notes thereto. Actual results could
differ from those estimated.

b) Basis of consolidation

The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, International
Uranium Holdings Corporation, International Uranium Alberta
Corporation, International Uranium (Bermuda) Ltd.,
International Uranium Company (Mongolia) Ltd., and
International Uranium (USA) Corporation.

c) Cash and cash equivalents

Cash and cash equivalents consist of cash on deposit and
highly liquid short-term interest bearing securities with
maturities at the date of purchase of three months or less.

d) Marketable securities and restricted short-term investments

Marketable securities and restricted short-term investments
are valued at the lower of cost or market value. Fixed income
securities, which are to be held to maturity, are recorded at
amortized cost.

e) Inventories

Ore stockpiles, which consist of uranium and vanadium bearing
ores from the Registrant's mining operations; in-process
inventories, which consist of partially processed uranium and
vanadium bearing ores, and uranium and vanadium concentrates
are valued at the lower of cost or net

F-5

realizable value using the first-in, first-out method.
Consumable parts and supplies are valued at the lower of
weighted average cost or net realizable value.

f) Properties, plant and equipment

Mineral properties and plant and equipment are recorded at
cost or net realizable value. Mineral properties are depleted
by the units-of-production method based on ore reserves. Plant
and equipment are depreciated on a straight-line basis over
their estimated useful lives from three to fifteen years.
Plant and equipment placed on stand-by are depreciated over
their remaining lives.

g) Exploration properties

The Company defers the property acquisition costs and ongoing
exploration expenditures on properties still in the
exploration stage and carries these as assets until the
results of the exploration projects are known. If a project is
successful, the cost of the property and the related
exploration and development expenditures will be amortized
over the life of the property utilizing the
units-of-production method. If a project is unsuccessful, the
mining property and the related exploration expenditure are
written off.

h) Environmental protection and reclamation costs

The estimated reclamation liabilities for the Mill, mines and
any exploration properties requiring reclamation are based on
the greater of the bonded amount for each property, as
determined by applicable regulatory authorities, and an
engineering estimate, performed by the Company, of the work
required to reclaim the property.

The estimated costs for decommissioning and reclaiming
producing mineral properties, plant and equipment acquired by
purchase have been fully accrued on an undiscounted basis.

Estimated costs of decommissioning and reclamation associated
with newly acquired or developed mineral properties, plant and
equipment, as well as revised regulatory requirements are
accrued through periodic charges to earnings, on the
units-of-production basis in the case of mine costs or on the
straight line basis in the case of mill costs. Actual costs of
decommissioning and reclamation incurred at the time of
closure are deducted against this accrual.

Environmental costs not associated with the decommissioning or
reclamation of producing mineral properties, plant and
equipment are capitalized as property, plant and equipment
costs where they result in the betterment of an asset, or
expensed as incurred in all other circumstances.

i) Foreign currency translation

These consolidated financial statements are denominated in
United States dollars, the Company's functional currency.
Substantially all of the Company's assets and operations are
located in the United States, with the exception of the
Gurvan-Saihan Joint Venture (Note 6). The majority of its
costs are denominated in United States dollars and all of its
products for sale are priced in United States dollars.

Amounts denominated in foreign currencies are translated into
United States dollars as follows:

a) Monetary assets and liabilities at the rates of
exchange in effect at balance sheet dates;

b) Non-monetary assets at historical rates;

c) Revenue and expense items at the average rates for
the period.

F-6

The net effect of the foreign currency translation is included
in the statement of earnings.

j) (Loss) net income per share

(Loss) net income per common share is calculated using the
weighted average number of shares issued and outstanding
during each year. Fully diluted (loss) net income per common
share is not presented if the exercise of warrants and options
is anti-dilutive.

k) Asset Impairment

The Company reviews and evaluates its long-lived assets for
impairment when events or changes in circumstances indicate
that the related carrying amounts may not be recoverable. An
impairment loss is measured as the amount by which asset
carrying value exceeds fair value. Fair value is generally
determined using estimated future cash flow analysis. An
impairment is considered to exist if total estimated future
cash flows on an undiscounted basis are less than the carrying
amount of the asset. An impairment loss is measured and
recorded based on undiscounted estimated future cash flows.
Future cash flows are determined by subtracting production,
capital and reclamation costs from estimated revenues.
Estimated revenues are based on estimated uranium and vanadium
prices (considering current and historical prices, price
trends and related factors) and estimates of the pounds of
uranium and vanadium to be produced. Assumptions underlying
future cash flow estimates are subject to risks and
uncertainties. Any differences between significant assumptions
and actual market conditions and/or the Company's performance
could have a material effect on the Company's financial
position and results of operations.

l) Revenue recognition

In accordance with normal industry practices, the Company
contracts for future delivery of uranium produced. Sales
revenue is recorded in the period that title passes to the
customer along with the risks and rewards of ownership.

Process milling fees are recognized as the applicable material
is processed, in accordance with the specifics of the
applicable processing agreement.

Deferred revenues represent processing proceeds received or
receivable on delivery of materials but in advance of the
required processing activity.

m) Reclassifications

Certain amounts in prior years have been reclassified to
conform to the 1999 presentation.

n) Share Option Plan

The Company has a share option plan which is described in Note
11.c). No compensation expense is recognized when share
options are issued or re-priced at market value. Any
consideration on exercise of share options is credited to
share capital.

F-7

3. INVENTORIES

September 30, 1999 September 30, 1998
------------------ ------------------

Vanadium Concentrates $ 1,257,604 $ --
Uranium Concentrates 8,583,323 7,838,433
Ore Stockpiles 144,112 3,117,441
In Process 569,499 79,600
Parts and Supplies 1,376,099 1,446,239
------------------ ------------------
$ 11,930,637 $ 12,481,713
================== ==================

4. FAVORABLE URANIUM SALES CONTRACTS

In May 1997, the Company completed the acquisition of substantially all
of the uranium producing assets and assumed certain obligations of
Energy Fuels, Ltd., Energy Fuels Exploration Company and Energy Fuels
Nuclear, Inc. (collectively "Energy Fuels"). As part of the Energy
Fuels assets, the Company acquired uranium supply contracts with
certain utilities. At the time of the Energy Fuels purchase, the value
of these contracts was determined to be $2,000,000 based on the excess
of the sales price over the market value of the uranium to be
delivered. Of this value, $729,730 related to deliveries made in the
first quarter of the year ending September 30, 1999.

6. PROPERTIES, PLANT AND EQUIPMENT

Accumulated
Depreciation,
Amortization
Depletion & September 30,
Cost Write-offs 1999 Net
------------- ------------- -------------

Mill Buildings & Equipment $ 6,438,203 $ 1,494,998 $ 4,943,205
Other Machinery & Equipment 2,645,798 798,376 1,847,422
Mineral Properties 7,616,865 7,616,865 --
------------- ------------- -------------
$ 16,700,866 $ 9,910,239 $ 6,790,627
============= ============= =============

Accumulated
Depreciation,
Amortization
Depletion & September 30,
Cost Write-offs 1998 Net
------------- ------------- -------------

Mill Buildings & Equipment $ 5,044,364 $ 666,215 $ 4,378,149
Other Machinery & Equipment 2,811,926 427,465 2,384,461
Mineral Properties 7,054,197 299,870 6,754,327
------------- ------------- -------------
$ 14,910,487 $ 1,393,550 $ 13,516,937
============= ============= =============

At September 30, 1999, as a result of the shutdown of the Company's
mining operations, capital assets include other machinery and equipment
held for resale, with an aggregate net book value (being the

F-8

estimated net realizable value) of $212,483. These surplus assets are
expected to be sold over time as opportunities for sale arise, and the
actual proceeds to be realized on the sale of the surplus assets could
vary from the carrying value.

7. MONGOLIA MINERAL PROPERTIES

Mongolia mineral properties are made up of the Company's 70% interest
in the Gurvan-Saihan Joint Venture (the "Venture") which holds nine
uranium exploration areas covering 14,700 square kilometers in central
eastern Mongolia. The other parties of the Venture are the Mongolian
government as to 15% and Geologorazvedka, a Russian geological concern,
as to 15%. A royalty in the amount of 4.0% is payable to the Mongolian
government. The Company has proportionately consolidated its 70%
interest in the Venture, which is substantially represented by Mongolia
mineral properties. To date the Company has funded all expenditures and
expects to do so for the foreseeable future.

7. RESTRICTED CASH AND MARKETABLE SECURITIES

Amounts represent cash and marketable securities the Company has placed
on deposit to secure its reclamation bonds and certain other
obligations (Notes 8 & 10).

Restricted cash and marketable securities consist of:

September 30, 1999 September 30, 1998
------------------ ------------------

Cash and Cash Equivalents $ 2,512,567 $ 670,531
Fixed Income Securities 6,831,974 7,629,844
------------------ ------------------
$ 9,344,541 $ 8,300,375
================== ==================

The fair value of restricted cash and marketable securities
approximated carrying value.

8. OTHER ASSET

On September 13, 1999 the Company entered into a uranium concentrates
sale and put option agreement with a third party. The Company
transferred 400,000 pounds U308 at a purchase price of $10.80 per pound
U308 under this agreement giving the third party the option to put up
to an equivalent quantity to the Company at $10.55 per pound U308 at
any one time within the period beginning October 1, 2001 and ending
March 1, 2003. The transaction was accounted for as a deferred credit
and the cost of the inventory was reclassified as an other asset. A
portion of the transaction is secured by an irrevocable letter of
credit (Note 7).

9. NOTES PAYABLE

Notes payable consists primarily of $950,000 due under a $10 million
working capital loan agreement with Norwest Bank Colorado, NA. The note
matures on March 31, 2000 and all amounts outstanding under the
agreement are secured by accounts receivable and uranium inventory.

10. PROVISION FOR RECLAMATION

As part of the acquisition of Energy Fuels, the Company assumed
responsibility for the environmental and reclamation obligations of
Energy Fuels relating to all existing mines and the Mill, as well as
for all reclamation and environmental obligations associated with mined
out, inactive, reclaimed or partially reclaimed mines and properties,
that were so acquired.

F-9

The Company has estimated the total amount of the reclamation liability
at $13,265,700. The Company has posted bonds in favor of the United
States Nuclear Regulatory Commission and the applicable state
regulatory agencies securing these liabilities and has deposited
marketable securities on account of the obligation (Note 7).

Elements of uncertainty in estimating reclamation and decommissioning
costs include potential changes in regulatory requirements,
decommissioning and reclamation alternatives. Actual costs will differ
from those estimated and such differences may be material.

11. SHARE CAPITAL

a) Authorized - unlimited number of common shares.

b) Issued and outstanding

Number of Shares Amount
---------------- ----------------

Shares Issued for Cash $ 26,500,000 $ 4,906,166
Conversion of Special Warrants 37,800,000 31,784,288
Amalgamation $ 1,443,066 $ 823,543
---------------- ----------------
Balance-September 30, 1997 65,743,066 37,513,997
Shares Purchased for Retirement $ (218,000) $ (74,595)
---------------- ----------------
Balance-September 30, 1998 and 1999 $ 65,525,066 $ 37,439,402
================ ================

o The Company issued 26,500,000 common shares at $0.25 Cdn per
share for total proceeds of $6,625,000 Cdn ($4,906,166 US).

o In May 1997, the Company completed a private placement
financing of 37,800,000 common shares pursuant to the exercise
of special warrants that had been issued in March 1997 at a
price of Cdn $1.25 ($0.90) per special warrant for net
proceeds of Cdn $44,217,190 ($31,784,288), after deducting
share issue costs and agent fees of Cdn $3,032,802
($2,186,137).

o In May 1997, the Company completed the acquisition of
substantially all of the uranium producing assets and assumed
certain obligations of Energy Fuels Ltd., Energy Fuels
Exploration Company and Energy Fuels Nuclear, Inc.
(collectively "Energy Fuels") for an approximate total
consideration of $35 million. Energy Fuels was in Chapter 11
Bankruptcy proceedings in the United States. The acquisition
price was settled as follows:

Cash payment to vendors $ 19,354,336
Direct acquisition costs 1,937,631
Reclamation obligations assumed 13,265,700
Notes payable assumed $ 30,556
------------
$ 34,588,223
============

The acquisition was accounted for by the purchase method. The
allocation of the purchase price is summarized as follows:

Cash and certificates of deposit $11,210,896
Favorable uranium sales contracts 2,000,000
Notes receivable 7,169,143
Parts and supplies inventory 999,994
Properties, plant and equipment 8,208,190
Mongolia mineral properties $ 5,000,000
-----------
$34,588,223
===========

F-10

The Energy Fuels assets included several developed and
partially developed mines on standby, as well as numerous
targeted mines and exploration properties, within the states
of Colorado, Utah, Arizona, Wyoming and South Dakota, as well
as a 70% interest in a joint venture with the government of
Mongolia and a Russian geological concern to develop and
produce uranium reserves in Mongolia.

Assets purchased also include the 2,000 ton per day White Mesa
Mill near Blanding, Utah. The Mill also has a vanadium
recovery circuit.

Concurrent with the acquisition of Energy Fuels, in May 1997,
the Company completed an amalgamation with Thornbury Capital
Corporation ("Thornbury"). Each of the shareholders of
Thornbury received one common share in the amalgamated company
for every five common shares held prior to the amalgamation
and the shareholders of the Company received one common share
for every one common share held prior to the amalgamation. As
a result of this transaction, the shareholders of the Company
acquired control of Thornbury, and accordingly, the
transaction has been accounted for as an acquisition by the
Company of Thornbury.

The acquisition is summarized as follows:

Purchase consideration
1,443,066 common shares issued $ 823,543
Net Assets acquired at book value (150,261)
---------
Excess purchase consideration $ 673,282
=========

Attributed to
Marketable securities $ 57,312
Goodwill 615,970
---------
$ 673,282
=========

The purpose of the amalgamation was to facilitate the
financing of the Energy Fuels purchase and to achieve public
company status.

c) Stock options

The Company has adopted an Employee Stock Option Plan under
which the Board of Directors may from time to time grant to
directors, officers, eligible employees of, or consultants to,
the Company or its subsidiaries, or to employees of management
companies providing services to the Company, options to
acquire common shares in such numbers for such terms and at
such exercise prices as may be determined by the Board. The
purpose of the Stock Option Plan is to advance the interests
of the Company by providing eligible personnel with a
financial incentive for the continued improvement of the
Company's performance and encouragement to stay with the
Company. All options granted to date expire three years from
the date of the grant of the option. Options were outstanding
as follows:

Expiry September 30 September 30 September 30
Date 1999 1998 1997
----------- ------------ ------------ ------------

Option Price per Share
Cdn $1.25 5/00 - 6/00 1,875,000 2,000,000 2,639,000
Cdn $0.75* 5/00 - 3/01 739,000 814,000 --
Cdn $0.75 1/02 775,000 -- --
---------- ---------- ----------
3,389,000 2,814,000 2,639,000
========== ========== ==========

*Represents options granted to employees other than executive
officers and directors repriced from Cdn $1.25 to Cdn $.75 on
June 17, 1998.

F-11

12. INCOME TAXES

Non-capital loss carry forwards for Canadian tax purposes of
approximately $1.1 million begin to expire in 2004. For U.S. income tax
purposes, loss carry forwards of $3.5 million begin to expire in 2015
unless utilized. The benefits of these amounts have not been reflected
in these consolidated financial statements.

13. WRITE-DOWN OF ASSETS

As a result of a prolonged period of low uranium and vanadium prices,
the Company adjusted the carrying value of certain assets to their
estimated fair values resulting in an impairment loss of $15,290,769.
The write-down included $6,193,916 for ore stockpiles and in process
inventory, $1,515,254 for uranium and vanadium concentrates, $7,039,958
for mineral properties and $541,641 for goodwill.

14. SEGMENTED INFORMATION

a) Geographic segments

September 30, 1999 September 30, 1998 September 30, 1997
------------------ ------------------ ------------------

Revenue
Canada $ -- $ -- $ --
United States 14,046,832 32,940,876 523,865
Mongolia -- -- --
------------------ ------------------ ------------------
Total $ 14,046,832 $ 32,940,876 $ 523,865
================== ================== ==================

Net Income
Canada $ (463,753) $ (608,062) $ (13,310)
United States (16,580,589) 2,235,975 47,534
Mongolia (53,335) (10,582) (15,530)
------------------ ------------------ ------------------
Total $ (17,097,677) $ 1,617,331 $ 18,694
================== ================== ==================

Property, Plant and Equipment, net
Canada $ -- $ -- $ --
United States 6,357,892 12,966,199 10,060,736
Mongolia 432,735 550,738 797,943
------------------ ------------------ ------------------
Total $ 6,790,627 $ 13,516,937 $ 10,858,679
================== ================== ==================

b) Major customers

The Company's business is such that, at any given time, it sells
its uranium concentrates to and enters into process milling
arrangements with a relatively small number of customers. The
customers with whom it does business vary substantially from year
to year. During the year ended September 30, 1999, a process
milling customer and a major utility accounted for 27% and 33% of
total revenues, respectively. Accounts receivable from any
individual customer will exceed 10% of total accounts receivable
on a regular basis.

15. RELATED PARTY TRANSACTIONS

a) During the year ended September 30, 1999, the Company incurred
legal fees of $12,524 with a law firm of which a partner is a
director of the Company. Amounts due to this firm were $1,134 as
of September 30, 1999. Legal fees incurred with this law firm were
$50,197 for the year ended September 30, 1998 and $188,692 for the
year ended September 30, 1997.

b) During the year ended September 30, 1999, the Company incurred
management and administrative

F-12

service fees of $94,108 with a company owned by the Chairman of
the Company which provides office premises, secretarial and other
services in Vancouver. Management and administration fees of
$99,383 were paid to this same company during the period ended
September 30, 1998. During 1997 the management and administration
fees totaled $343,641 which included costs incurred throughout
1996 in pursuing the acquisition of Energy Fuels assets.

c) During the period ended September 30, 1997, the Company loaned
$200,000 to an officer of the Company in order to facilitate
relocation to the Company headquarters. This loan is non-interest
bearing and is payable on the earlier of termination of employment
or June 30, 2000. The loan is secured by the officer's personal
residence.

16. COMMITMENTS

Certain Swiss utilities hold a royalty (the "Swiss Royalty") of 4.5% of
all uranium and 2.5% of vanadium and all other minerals produced during
the period from January 1, 1998 through December 31, 2000 from certain
of the United States properties. Advance royalty payments in the amount
of $250,000 are made each year during this period. The royalty
increases to 9% of all uranium and 5% of vanadium on January 1, 2001,
however the advance payments terminate. The Swiss Royalty does not
apply to the Mongolia mineral properties, nor to any tolled or
purchased ore of or from third parties that is processed in the Mill,
nor to any properties acquired after the date that the Swiss royalty
was granted.

17. FINANCIAL INSTRUMENTS

As at September 30, 1999 and 1998, the fair value of the Company's
financial instruments approximates their carrying values because of the
short-term nature of these instruments and, where applicable, because
interest rates approximate market rates.

18. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE

The Year 2000 Issue arises because many computerized systems use two
digits rather than four to identify a year. Date-sensitive systems may
recognize the Year 2000 as 1900 or some other date, resulting in errors
when information-using Year 2000 dates is processed. In addition,
similar problems may arise in some systems, which use certain dates in
1999 to represent something other than a date. The effects of the Year
2000 Issue may be experienced before, on, or after January 1, 2000, and
if not addressed, the impact on operations and financial reporting may
range from minor errors to significant systems failure, which could
affect an entity's ability to conduct normal business operations. It is
not possible to be certain that all aspects of the Year 2000 Issue
affecting the entity, including those related to the efforts of
customers, suppliers, or other third parties, will be fully resolved.

19. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES ACCOUNTING PRINCIPLES
AND PRACTICES

The consolidated financial statements have been prepared in accordance
with accounting principles and practices generally accepted in Canada
(Canadian GAAP) which differ in certain respects from those principles
and practices that the Company would have followed had its consolidated
financial statements been prepared in accordance with accounting
principles and practices generally accepted in the United States (U.S.
GAAP).

F-13

September 30, September 30,
1999 1998
--------------- ---------------
CONSOLIDATED BALANCE SHEETS

Properties, plant and equipment Canadian basis $ 6,790,627 $ 13,516,937
Depreciation of assets held for
resale 15,772 --

Exploration expenditures -- (1,005,022)
--------------- ---------------
U.S. basis $ 6,806,399 $ 12,511,915
--------------- ---------------

Mongolia mineral properties Canadian basis $ 10,484,299 $ 9,500,932
Write-off Mongolia Mineral
Properties (a) (4,802,289) --
Exploration expenditures (b) (5,682,010) (4,698,643)
--------------- ---------------
U.S. basis $ -- $ 4,802,289
--------------- ---------------

Notes receivable Canadian basis $ 202,016 $ 203,538
Shareholder loan reclassification (c) (200,000) (200,000)
--------------- ---------------
U.S. basis $ 2,016 $ 3,538
--------------- ---------------

Goodwill and other Canadian basis $ -- $ 575,351
Amalgamation (d) -- (572,439)
--------------- ---------------
U.S. basis $ -- $ 2,912
--------------- ---------------

Share capital Canadian basis $ 37,439,402 $ 37,439,402
Shareholder loan reclassification (c) $ (200,000) $ (200,000)
Amalgamation (d) (615,970) (615,970)
--------------- ---------------
U.S. basis $ 36,623,432 $ 36,623,432
--------------- ---------------

Retained earnings Canadian basis $ (15,461,652) $ 1,636,025
Write-off Mongolia Mineral
Properties (a) (4,802,289) --
Exploration expenditures (b) (5,682,010) (5,703,665)
Goodwill (d) 615,970 43,531
Depreciation of assets held for
resale (e) 15,772 --
--------------- ---------------
U.S. basis $ (25,314,209) $ (4,024,109)
--------------- ---------------

September 30, September 30, September 30,
1999 1998 1997
------------------ ------------------ ------------------

CONSOLIDATED STATEMENTS OF EARNINGS

Net (loss) income under Canadian GAAP $ (17,097,677) $ 1,617,331 $ 18,694
Write-off of Mongolia mineral properties (4,802,289) -- --
Write-off of mineral properties 1,005,022 -- --
Exploration expenditures (912,990) (3,997,447) (1,706,218)
Capitalized depreciation (70,377) -- --
Goodwill 572,439 30,804 12,727
Depreciation of assets held for resale 15,772 -- --
------------------ ------------------ ------------------
Net loss under U.S. GAAP $ (21,290,100) $ (2,349,312) $ (1,674,797)
------------------ ------------------ ------------------
Basic/diluted net loss per share, U.S. GAAP $ (0.32) $ (0.04) $ (0.03)
------------------ ------------------ ------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash provided by (used in) operations under Canadian GAAP $ (9,970,712) $ (5,544,038) $ (3,373,375)
Exploration expenditures (912,990) (3,997,447) (1,706,218)
------------------ ------------------ ------------------
Cash provided by (used in) operations under U.S. GAAP $ (10,883,702) $ (9,541,485) $ (5,079,593)
------------------ ------------------ ------------------

Cash provided by (used in) investing activities under
Canadian GAAP $ (3,690,152) $ (2,480,512) $ (19,723,113)
Exploration expenditures 912,990 3,997,447 1,706,218
------------------ ------------------ ------------------
Cash provided by (used in) investing activities under U.S. GAAP $ (2,777,162) $ 1,516,935 $ (18,016,895)
------------------ ------------------ ------------------

a. Under Canadian GAAP, the Company determined that the carrying amount of its
Mongolian mineral properties was not impaired at September 30, 1999 based
on an estimated resource of approximately 22.5 million pounds of uranium.
U.S. GAAP and SEC rules requires the impairment analysis to be based on
proven or probable reserves, therefore the carrying amount of the Mongolian
mineral properties have been written off for U.S. GAAP purposes.

b. Under Canadian GAAP, the Company defers the property holding costs and
ongoing exploration expenditures on properties still in the exploration
stage and carries these as assets until the results of the exploration
projects

F-14

are known. If a project is successful, the costs of the property and the
related exploration and development expenditures will be amortized over the
life of the property utilizing the units-of-production method. If the
project is unsuccessful, the mining property and the related exploration
expenditures net of any recoveries on disposition of the properties or
related assets, are written off. Under U.S. GAAP, these costs are expensed
as incurred.

c. SEC practices require shareholder loans to be reclassified as a deduction
for shareholders' equity.

d. Under Canadian GAAP the amalgamation of the Company with Thornbury has been
accounted for as an acquisition of Thornbury resulting in the recording of
goodwill. Under U.S. GAAP, the transaction has been accounted for as a
recapitalization whereby the net monetary assets of Thornbury would be
recorded at fair value, except that no goodwill or other intangibles would
be recorded. The goodwill recorded under Canadian GAAP has been applied to
reduce the share capital of the Company under U.S. GAAP.

e. Under Canadian GAAP the Company's surplus assets continue to be
depreciated. Under U.S. GAAP assets held for resale are recorded at the
lower of cost or net realizable value and are not depreciated.

f. Under U.S. GAAP, comprehensive loss consists of net loss only.

g. Under U.S. GAAP, the sub-total before changes in non-cash working capital
items in the consolidated statements of cash flow would be deleted.

h. Under U.S. GAAP, write-offs of mineral properties and goodwill and
decreases in reclamation obligations would be included in operating (loss)
income in the Consolidated Statements of Operations and (Deficit) Retained
Earnings.

F-15

Index to Exhibits

Exhibit Number Description
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1.1 Company's Corporate Structure Chart