Project Summary

The McArthur River project is a fully developed property with an underground mine operation located in Northern Saskatchewan, Canada approximately 620 km north of Saskatoon. The project is currently owned by a joint venture between Cameco (69.805%) and Orano (30.195%).

As of December 31, 2020, Cameco reported estimated: (i) proven and probable mineral reserves of 391.9 Mlbs of U3O8 at an average grade of 6.89% U3O8; and (ii) measured and indicated resources, exclusive of reserves, of 10.3 Mlbs at an average grade of 2.45% U3O8 and inferred resources of 2.6 Mlbs at an average grade of 2.85% U3O8.

The project’s maximum annual production is estimated at 18 Mlbs U3O8 per year, though it has been given approval to produce up to 25 Mlbs U3O8 per year. Mining at McArthur River utilizes unique ground freezing to mitigate risks of high-pressure ground water and a blend of blasthole stoping and raise-bore mining. The ore is ground, thickened and blended into a slurry which is then shipped 80 km south to the Key Lake mill for processing and production of calcined uranium ore concentrate.

Totaling historical production and all current reserves and resources, it has an attributable endowment of 730.2 Mlbs of U3O8. This makes the McArthur River uranium mine the world’s largest known high-grade uranium deposit, extracting approximately 325.4 million pounds U3O8 since the start of production in 1999. Operating costs are estimated to be $14.97 per pound U3O8 over the life of mine, placing this operation amongst the lowest cost uranium projects in the world.

The current McArthur River project is comprised of a portion of one mineral lease, ML 5516, covering 1,380 hectares, and a further 23 mineral claims totaling 84,508 hectares as outlined in the 2018 McArthur River technical report. The McArthur River deposit was discovered in 1988, the mine went into production in 1999. The deposit is a high-grade, unconformity-related uranium deposit with an average stated grade of 6.89% U3O8 for remaining reserves disclosed by Cameco as at December 31, 2020. Mineralization occurs between 500 to 640 metres below surface with a strike length of approximately 1800 m.

In 2018, Cameco disclosed that it was put on care and maintenance due to weak uranium market conditions. Cameco has stated that production will not resume at McArthur River until they have secured enough long-term uranium sales contracts to justify a re-start decision.

Royalty Details

The royalty is a 1% Gross Overriding Royalty (“GOR”) on a 9.063% share of uranium production from the McArthur River project derived from Orano’s current 30.195% production interest in the project. The pounds exposed to the royalty equate to 30.015% of the pounds attributed to Orano to equal the original 9.063% equity portion. Acquisition of the royalty is subject to customary closing conditions, including receipt of requisite approval of the TSX Venture Exchange and requisite consents.

Included in the royalty is the option to take physical uranium “in kind” with notice. This is done by book transfer and provides potential upside exposure to the physical uranium price. URC maintains a valid storage account at Cameco’s Blind River, Ontario refinery, through which it can receive deliveries by book transfer.

The only portion of reserves not covered by the royalties is that portion on the McArthur River project that crosses onto the adjacent Read Lake project. In the 2019 Technical Report, this was identified as 0.35 Mlbs of Reserves or 0.09% of stated Reserves for McArthur River.

The royalty covers the majority of the current project, with the exception of a portion of claims S-105655 and S-105656 of the currently defined McArthur River project lands. There are no identified resources on the portion of the claims not covered by the royalty.

Royalty History

The original joint venture established over the McArthur River area in 1976 was the Keefe-Henday joint venture between Canadian Kelvin Resources Ltd. and Asamera Oil Corporation Ltd. The Keefe Lake Joint Venture was later divided into three separate project areas, the Dawn Lake, McArthur River, and Waterbury Lake project areas. In 1980, a joint venture agreement was entered into to govern exploration on McArthur River. After establishment of the joint venture, the predecessor company to Reserve Minerals, Reserve Oil and Minerals Corporation, acquired a 7.5% equity stake in the McArthur River project. Through several changes in joint venture partners, Reserve Oil and Minerals Corporation subsequently owned a 9.063% interest in the McArthur River project. As part of a re-structuring to sell its interest in the project to Saarberg-Interplan, Reserve assigned a 1% gross overriding royalty to its wholly owned subsidiary L-Bar Minerals. Through subsequent acquisitions and consolidation of the original equity interest, Orano Canada Inc. assumed the current royalty. In 1993, L-Bar Minerals Corporation was renamed to Reserve Minerals Corporation, which held the royalty until purchase by Uranium Royalty Corp.

Historical Deposit Information

In addition to the resources outlined at the McArthur River Mine, several historical uranium deposits and showings have been discovered on the project. These include the P2 Main, BJ Lake, and Harrigan Zone showings. These historical deposits do not have any resources attributed to them.

Note on Technical Disclosure

Unless otherwise indicated, the scientific and technical information disclosed herein regarding: (i) the McArthur River Mine has been derived from a technical report titled "McArthur River Operation, Northern Saskatchewan, Canada" prepared for Cameco Corporation and dated effective December 31, 2018 and Cameco’s Management’s Discussion and Analysis for the Year Ended December 31, 2020.