Uranium Royalty (UROY) - 2023 Q3 - Quarterly Report

Consolidated Financial Statements Condensed Interim Consolidated Statements of Financial Position As of January 31, 2023, Uranium Royalty Corp. reported total assets of $192.6 million, an increase from $178.2 million as of April 30, 2022, driven by increases in inventories and short-term investments, while total liabilities rose to $16.5 million from $13.5 million, mainly due to an increase in the margin loan payable, resulting in total shareholders' equity increasing to $176.1 million from $164.6 million Consolidated Statements of Financial Position (in thousands of CAD) | Account | As at Jan 31, 2023 ($) | As at Apr 30, 2022 ($) | | :--- | :--- | :--- | | Total Current Assets | 147,843 | 134,030 | | Total Non-current Assets | 44,785 | 44,143 | | Total Assets | 192,628 | 178,173 | | Total Current Liabilities | 16,424 | 486 | | Total Non-current Liabilities | 86 | 13,051 | | Total Liabilities | 16,510 | 13,537 | | Total Shareholders' Equity | 176,118 | 164,636 | Condensed Interim Consolidated Statements of Loss and Comprehensive Income (Loss) For the nine months ended January 31, 2023, the company reported a net loss of $6.5 million, compared to a net loss of $3.7 million in the prior-year period, driven by higher operating expenses and increased interest expense, resulting in a total comprehensive loss of $3.8 million, a significant shift from a comprehensive income of $3.8 million in the same period last year Key Performance Indicators (in thousands of CAD, except per share data) | Metric | Nine Months Ended Jan 31, 2023 | Nine Months Ended Jan 31, 2022 | | :--- | :--- | :--- | | Operating loss | (5,296) | (4,170) | | Net loss for the period | (6,512) | (3,653) | | Total comprehensive income (loss) | (3,822) | 3,821 | | Net loss per share, basic and diluted | (0.07) | (0.04) | - Key expense drivers for the nine months ended January 31, 2023, included investor communications and marketing ($1.48M), interest expense ($1.28M), professional fees ($0.70M), and share-based compensation ($0.85M)[3] Condensed Interim Consolidated Statements of Changes in Equity Shareholders' equity increased from $164.6 million at April 30, 2022, to $176.1 million at January 31, 2023, primarily driven by $14.2 million in net proceeds from the At-the-Market (ATM) offering and $2.7 million in total other comprehensive income, partially offset by a net loss of $6.5 million for the period Changes in Equity for the Nine Months Ended January 31, 2023 (in thousands of CAD) | Description | Amount ($) | | :--- | :--- | | Balance at April 30, 2022 | 164,636 | | Net proceeds from At-the-Market offering | 14,224 | | Share-based compensation | 849 | | Proceeds from exercise of options and warrants | 231 | | Net loss for the period | (6,512) | | Total other comprehensive income | 2,690 | | Balance at January 31, 2023 | 176,118 | Condensed Interim Consolidated Statements of Cash Flows For the nine months ended January 31, 2023, cash increased by $6.0 million, with $10.3 million used in operating activities primarily for inventory purchases, $0.8 million generated from investing activities, and a significant inflow of $15.4 million from financing activities, mainly from the At-the-Market offering and net proceeds from the margin loan Cash Flow Summary for the Nine Months Ended January 31 (in thousands of CAD) | Activity | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Cash used in operating activities | (10,250) | (59,842) | | Cash generated from (used in) investing activities | 769 | (12,024) | | Cash generated from financing activities | 15,447 | 71,475 | | Net increase (decrease) in cash | 5,966 | (391) | | Cash, end of period | 10,351 | 6,823 | Notes to Condensed Interim Consolidated Financial Statements Note 1. Corporate Information Uranium Royalty Corp. (URC) is a Canadian-incorporated company engaged in acquiring and assembling a portfolio of uranium royalties, investing in companies with direct uranium exposure, and holding physical uranium, with its common shares listed on the TSX-V under 'URC' and on the NASDAQ under 'UROY' - The company's principal business activities are acquiring uranium royalties, investing in uranium-exposed companies, and holding physical uranium[6] Note 2. Basis of Preparation The unaudited condensed interim consolidated financial statements were prepared in accordance with International Financial Reporting Standards (IFRS), specifically IAS 34, Interim Financial Reporting, with accounting policies consistent with those in the annual financial statements for the year ended April 30, 2022, and presented in Canadian dollars - The financial statements comply with IFRS and IAS 34 and should be read in conjunction with the April 30, 2022 annual statements[8] - The financial statements include URC and its wholly-owned subsidiaries, Uranium Royalty (USA) Corp. and Reserve Minerals, LLC[12] Note 4. Short-term Investments As of January 31, 2023, the fair value of short-term investments was $54.2 million, up from $51.8 million at April 30, 2022, primarily consisting of shares in Yellow Cake plc ($47.8 million) and Queen's Road Capital Investment Ltd. ($6.3 million), with the Yellow Cake shares pledged as security for a margin loan Fair Value of Short-term Investments (in thousands of CAD) | Investment | Jan 31, 2023 ($) | Apr 30, 2022 ($) | | :--- | :--- | :--- | | Yellow Cake plc | 47,843 | 44,912 | | Queen's Road Capital Investment Ltd. | 6,337 | 6,875 | | Total | 54,180 | 51,787 | - The company's ordinary shares of Yellow Cake are pledged as security for its margin loan facility[19] Note 5. Inventories The company's physical uranium holdings increased during the period, with URC holding 1,548,068 pounds of U3O8 with a carrying value of $82.5 million as of January 31, 2023, compared to 1,448,068 pounds valued at $75.0 million as of April 30, 2022 Physical Uranium (U3O8) Inventory | Metric | As at Jan 31, 2023 | As at Apr 30, 2022 | | :--- | :--- | :--- | | Pounds of U3O8 | 1,548,068 | 1,448,068 | | Carrying Value (thousands of CAD) | $82,542 | $75,030 | Note 6. Royalties and Royalty Options The carrying value of the company's royalties portfolio increased to $44.7 million as of January 31, 2023, from $44.0 million at April 30, 2022, with the acquisition of a royalty on the Dawn Lake Project for $139,000 during the period, and the portfolio includes key royalties on projects such as McArthur River, Cigar Lake, and Roughrider Royalties and Royalty Options Value (in thousands of CAD) | Description | Amount ($) | | :--- | :--- | | Balance, as at April 30, 2022 | 44,023 | | Additions | 139 | | Foreign currency translation | 521 | | Balance, as at January 31, 2023 | 44,683 | - In Q3 FY2023, the company acquired a 10% to 20% sliding scale NPI royalty on a 7.5% share of uranium production from the Dawn Lake project[31] Note 8. Margin Loan Payable The company maintains a margin loan facility with the Bank of Montreal, secured by its Yellow Cake shares, with an outstanding balance of $15.7 million as of January 31, 2023, a maximum amount of approximately $18.6 million (US**$15 million**), and a maturity date of May 5, 2023, with subsequent repayments and drawdowns occurring after the period end - The margin loan is subject to an interest rate of Adjusted Term SOFR Rate plus 5.50% per annum[34] Margin Loan Movement (in thousands of CAD) | Description | Amount ($) | | :--- | :--- | | Balance, as at April 30, 2022 | 12,908 | | Draw-down | 3,889 | | Principal payment | (1,710) | | Interest expense & FX loss | 1,806 | | Interest paid | (1,165) | | Balance, as at January 31, 2023 | 15,728 | - Subsequent to January 31, 2023, the company made a partial repayment of $13.7 million (US**$10 million**) and an additional drawdown of $6.8 million (US**$5 million**)[36] Note 9. Issued Capital The company actively utilized its At-the-Market (ATM) equity program, issuing 4.0 million common shares for gross proceeds of $14.6 million during the nine months ended January 31, 2023, with the ATM program renewed in September 2022 for up to US**$40 million**, and share-based compensation for the nine-month period amounting to $849,000 Common Shares and At-the-Market Program The company renewed its At-the-Market (ATM) equity program on September 1, 2022, allowing for the distribution of up to US**$40 million** in common shares, and during the nine months ended January 31, 2023, the company issued 4,029,021 common shares under the ATM program, raising gross proceeds of $14.6 million - During the nine months ended January 31, 2023, the Company issued 4,029,021 common shares under the ATM Program for gross proceeds of $14,589,000, with related costs of $365,000[41] Reserves (Warrants and Options) As of January 31, 2023, the company had 17.5 million warrants outstanding, primarily exercisable at $2.00 per share, and 1.2 million share options outstanding with a weighted average exercise price of $3.50, with 500,750 new options granted during the nine-month period at a weighted average exercise price of $3.29 Share Option Activity | Description | Number of options | Weighted Average Exercise Price ($) | | :--- | :--- | :--- | | Balance at April 30, 2022 | 755,000 | 3.62 | | Granted | 500,750 | 3.29 | | Forfeited | (20,000) | 3.40 | | Exercised | (37,500) | 3.49 | | Balance at January 31, 2023 | 1,198,250 | 3.50 | - Share-based compensation expense recognized during the nine months ended January 31, 2023, was $849,000 (2022: $1,127,000)[49] Note 10. Financial Instruments and Risk Management The company is exposed to various financial risks, including credit, liquidity, commodity price, interest rate, currency, and other price risks, with liquidity risk managed by monitoring cash reserves, and a working capital of $131.4 million as of January 31, 2023, while being sensitive to currency fluctuations and equity price changes in its short-term investments - A 10% change in the CAD/GBP exchange rate would impact other comprehensive income by approximately $4.1 million, net of tax, due to its short-term investments[57] - A 10% change in the equity prices of its short-term investments would impact other comprehensive income by approximately $4.7 million, net of tax[58] - As of January 31, 2023, the company had a working capital of $131.4 million, which management believes is sufficient for at least the next twelve months[55] Note 11. Related Party Transactions Transactions with key management personnel are the primary related party transactions, with total remuneration for directors and key management amounting to $906,000 for the nine months ended January 31, 2023, including salaries, fees, and share-based compensation Remuneration of Key Management (in thousands of CAD) | Category | Nine Months Ended Jan 31, 2023 ($) | Nine Months Ended Jan 31, 2022 ($) | | :--- | :--- | :--- | | Management salaries | 268 | 219 | | Directors' fees | 149 | 137 | | Share-based compensation | 489 | 479 | | Total | 906 | 835 | Note 13. Commitments The company has a commitment to purchase 500,000 pounds of physical uranium from CGN Global Uranium Ltd for a total of $31.7 million, with deliveries scheduled between October 2023 and April 2025, and additionally committed to acquiring a portfolio of royalties from Anfield Energy Inc. for US**$1.5 million**, which was paid at closing on February 7, 2023 - Commitment to purchase 500,000 lbs of U3O8 from CGN at a weighted average price of US**$47.71** per pound, for delivery between 2023 and 2025[62] - Agreed to acquire a portfolio of royalties from Anfield Energy Inc. for US**$1.5 million**, which closed on February 7, 2023[63] Note 14. Subsequent Events Subsequent to the reporting period ended January 31, 2023, the company purchased an additional 200,000 pounds of U3O8 for $13.9 million, at a weighted average price of US**$51.00** per pound - After January 31, 2023, the company purchased 200,000 pounds of U3O8 at a weighted average price of US**$51.00** per pound for a total of $13.9 million[64]