Uranium Royalty (UROY) - 2023 Q2 - Quarterly Report

Consolidated Financial Statements Condensed Interim Consolidated Statements of Financial Position As of October 31, 2022, total assets increased to C$187.0 million, liabilities rose to C$17.0 million, and shareholders' equity grew to C$170.0 million, primarily due to inventory and short-term investment growth and an increased margin loan payable Consolidated Statements of Financial Position (as of Oct 31, 2022 vs. Apr 30, 2022) | Account | As at Oct 31, 2022 (C$ thousands) | As at Apr 30, 2022 (C$ thousands) | Change | | :--- | :--- | :--- | :--- | | Total Current Assets | 141,978 | 134,030 | ▲ C$7,948 | | Inventories | 82,542 | 75,030 | ▲ C$7,512 | | Short-term investments | 54,520 | 51,787 | ▲ C$2,733 | | Total Non-current Assets | 45,014 | 44,143 | ▲ C$871 | | Total Assets | 186,992 | 178,173 | ▲ C$8,819 | | Total Current Liabilities | 16,870 | 486 | ▲ C$16,384 | | Margin loan payable (Current) | 16,213 | — | ▲ C$16,213 | | Total Non-current Liabilities | 132 | 13,051 | ▼ C$12,919 | | Margin loan payable (Non-current) | — | 12,908 | ▼ C$12,908 | | Total Liabilities | 17,002 | 13,537 | ▲ C$3,465 | | Total Shareholders' Equity | 169,990 | 164,636 | ▲ C$5,354 | Condensed Interim Consolidated Statements of Loss and Comprehensive Income (Loss) For the six months ended October 31, 2022, the company reported a net loss of C$4.7 million and a total comprehensive loss of C$2.8 million, primarily due to increased operating expenses and a smaller unrealized gain on short-term investments Financial Performance Summary (in C$ thousands) | Metric | Three Months Ended Oct 31, 2022 | Three Months Ended Oct 31, 2021 | Six Months Ended Oct 31, 2022 | Six Months Ended Oct 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Operating loss | (1,860) | (1,603) | (3,294) | (2,994) | | Net loss for the period | (2,266) | (590) | (4,715) | (1,654) | | Total other comprehensive income | 6,421 | 6,485 | 1,905 | 10,226 | | Total comprehensive income (loss) | 4,155 | 5,895 | (2,810) | 8,572 | | Net loss per share, basic and diluted | (0.02) | (0.01) | (0.05) | (0.02) | Condensed Interim Consolidated Statements of Changes in Equity Shareholders' equity increased to C$170.0 million by October 31, 2022, primarily driven by net proceeds from the ATM offering and total other comprehensive income, partially offset by the net loss for the period Changes in Equity for the Six Months Ended October 31, 2022 (in C$ thousands) | Description | Amount | | :--- | :--- | | Balance at April 30, 2022 | 164,636 | | Common shares issued for cash (ATM offering) | 7,606 | | Agents' fees and issuance costs | (191) | | Share-based compensation | 737 | | Net loss for the period | (4,715) | | Total other comprehensive income | 1,905 | | Other (warrant exercises) | 12 | | Balance at October 31, 2022 | 169,990 | Condensed Interim Consolidated Statements of Cash Flows For the six months ended October 31, 2022, operating activities used C$7.7 million, primarily due to inventory investment, while financing activities generated C$8.9 million, leading to a net cash increase of C$0.14 million Cash Flow Summary for the Six Months Ended October 31 (in C$ thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Cash used in operating activities | (7,749) | (30,083) | | Cash generated from (used in) investing activities | (961) | (12,025) | | Cash generated from financing activities | 8,852 | 55,660 | | Net increase in cash | 144 | 13,554 | | Cash, end of period | 4,529 | 20,768 | Notes to Condensed Interim Consolidated Financial Statements Note 1: Corporate Information Uranium Royalty Corp. (URC) is a Canadian company focused on acquiring uranium royalties, investing in uranium-exposed companies, and holding physical uranium, with shares listed on TSX-V and NASDAQ - The company's core business strategy involves three main activities: acquiring royalties, investing in uranium-exposed companies, and holding physical uranium[7] - The company's common shares and listed warrants trade on the TSX Venture Exchange under symbols 'URC' and 'URC.WT', respectively, and its common shares trade on the NASDAQ under 'UROY'[8] Note 2: Basis of Preparation The unaudited condensed interim consolidated financial statements were prepared in accordance with IFRS (IAS 34) and use Canadian dollars as the presentation currency, following consistent accounting policies - The financial statements comply with IFRS as issued by the IASB, applicable to interim financial statements (IAS 34)[9] - The financial statements are presented in Canadian dollars, which is the functional currency of the parent company, URC[11] Note 4: Short-term Investments As of October 31, 2022, short-term investments increased to C$54.5 million, primarily comprising Yellow Cake plc shares, which are pledged as security for the company's margin loan Fair Value of Short-term Investments (in C$ thousands) | Holding | Oct 31, 2022 | Apr 30, 2022 | | :--- | :--- | :--- | | Yellow Cake plc | 46,906 | 44,912 | | Queen's Road Capital Investment Ltd. | 5,758 | 6,875 | | Sprott Physical Uranium Trust Fund | 1,856 | Nil | | Total Fair Value | 54,520 | 51,787 | - The company has an option to acquire U3O8 from Yellow Cake, up to a maximum of US$31.25 million, between 2019 and 2028[18] - The ordinary shares of Yellow Cake are pledged as security for the margin loan (Note 8)[20] Note 5: Inventories As of October 31, 2022, physical uranium inventory increased to 1,548,068 pounds, with a carrying value of C$82.5 million Uranium (U3O8) Inventory | Metric | As at Oct 31, 2022 | As at Apr 30, 2022 | | :--- | :--- | :--- | | Pounds of U3O8 | 1,548,068 | 1,448,068 | | Carrying Value (C$ thousands) | 82,542 | 75,030 | Note 6: Royalties and Royalty Options The company's royalty portfolio was valued at C$44.9 million as of October 31, 2022, encompassing various royalty types on key uranium projects across Canada, the US, and Namibia Carrying Value of Royalties by Project (in C$ thousands) | Project | As at Oct 31, 2022 | As at Apr 30, 2022 | | :--- | :--- | :--- | | McArthur River project | 11,543 | 11,543 | | Roughrider project | 5,923 | 5,923 | | Cigar Lake project | 4,704 | 4,704 | | Michelin project | 4,262 | 4,262 | | Other Projects | 18,474 | 17,641 | | Total | 44,906 | 44,023 | - The company holds a 1% gross overriding royalty on a portion of Orano's share of production from the McArthur River Project and a 10-20% sliding scale net profits interest (NPI) royalty on a portion of Orano's share of production from the Cigar Lake Project[31] Note 8: Margin Loan Payable The company has a margin loan facility of up to US$15 million, secured by Yellow Cake shares, with an outstanding balance of C$16.2 million as of October 31, 2022, maturing in May 2023 - The margin loan facility is for a maximum of approximately C$18.5 million (US$15 million) and is secured by a pledge of all Yellow Cake shares held by the company[33][34] Margin Loan Movement (in C$ thousands) | Description | Amount | | :--- | :--- | | Balance, as at April 30, 2022 | 12,908 | | Draw-down | 3,889 | | Principal payment | (1,710) | | Interest expense | 816 | | Interest paid | (625) | | Unrealized foreign exchange loss | 935 | | Balance, as at October 31, 2022 | 16,213 | Note 9: Issued Capital The company utilizes an At-the-Market (ATM) equity program, raising C$7.6 million in gross proceeds, and as of October 31, 2022, had 17.6 million warrants and 1.24 million share options outstanding At-the-Market Equity Program - On September 1, 2022, the company renewed its ATM Program, allowing it to distribute up to US$40 million of common shares at prevailing market prices[38] - During the six months ended October 31, 2022, the company issued 2,066,319 common shares under the ATM Program for gross proceeds of C$7.6 million[39] Warrants and Share Options - As of October 31, 2022, there were 17,578,842 warrants outstanding, including 17,483,254 listed warrants with an exercise price of $2.00 per share[42][43] Share Options Movement (Number of options) | Description | Number of Options | Weighted Avg. Exercise Price ($) | | :--- | :--- | :--- | | Balance at April 30, 2022 | 755,000 | 3.62 | | Granted | 500,750 | 3.29 | | Forfeited | (12,500) | 3.71 | | Balance at October 31, 2022 | 1,243,250 | 3.50 | - Share-based compensation expense recognized during the six months ended October 31, 2022, was C$737 thousand[49] Note 10: Financial Instruments and Risk Management The company faces credit, liquidity, interest rate, currency, and price risks, managing liquidity with C$125.1 million working capital and being sensitive to currency and equity price fluctuations - The company's working capital (current assets less current liabilities) was C$125,108 thousand as at October 31, 2022, which management believes is sufficient for at least the next twelve months[54] - A 10% change in the CAD/USD exchange rate would impact net loss by approximately C$1.4 million due to the USD-denominated margin loan[57] - A 10% change in the equity prices of the company's short-term investments would impact other comprehensive income by approximately C$4.1 million, net of tax[58] Note 11: Related Party Transactions Total remuneration for directors and key management personnel increased to C$681 thousand for the six months ended October 31, 2022, comprising salaries, directors' fees, and share-based compensation Key Management Compensation (in C$ thousands) | Category | Six Months Ended Oct 31, 2022 | Six Months Ended Oct 31, 2021 | | :--- | :--- | :--- | | Management salaries | 175 | 158 | | Directors' fees | 97 | 92 | | Share-based compensation | 409 | 386 | | Total | 681 | 636 | Note 12: Operating Segments The company operates as a single segment focused on uranium royalties, investments, and physical uranium, with assets primarily in Canada but global exposure through royalties and investments - The company conducts its business as a single operating segment, which is the acquiring and assembling a portfolio of royalties, investing in companies with direct exposure to uranium and holding of physical uranium[61] Note 13: Commitments The company is committed to purchase 500,000 pounds of physical uranium for US$32.5 million from CGN Global Uranium Ltd, with deliveries scheduled in three tranches through April 2025 - The company is committed to purchase 500,000 pounds of physical uranium at a weighted average price of US$47.71 per pound, for a total of C$32.5 million, from CGN Global Uranium Ltd[62] - Delivery dates for the committed uranium purchase are set for October 2023 (300k lbs), June 2024 (100k lbs), and April 2025 (100k lbs)[62] Note 14: Subsequent Events Subsequent to period end, the company acquired US royalties for US$1.5 million and issued 1.9 million shares via its ATM program for C$6.8 million in gross proceeds - On November 17, 2022, the company agreed to acquire a portfolio of royalties on several US projects from Anfield Energy Inc. for US$1.5 million in cash[64] - Subsequent to October 31, 2022, the company issued an additional 1,897,802 shares under its ATM Program for gross proceeds of approximately C$6.8 million[65]