The following management's discussion and analysis of the Company's financial condition and results of operations contain forward-looking statements that involve risks, uncertainties and assumptions including, among others, statements regarding our capital needs, business plans and expectations. In evaluating these statements, you should consider various factors, including the risks, uncertainties and assumptions set forth in reports and other documents we have filed with or furnished to the SEC, including, without limitation, this Form 10-K filing for the fiscal year ended July 31, 2012 including the consolidated financial statements and related notes contained herein. These factors, or any one of them, may cause our actual results to differ materially from any forward-looking statement made in this document. Refer to "Forward-Looking Statements" and "Item 1A. Risk Factors".

Results of Operations for the Fiscal Years Ended July 31, 2012, 2011 and 2010

General

The Company recorded a net loss for each of the fiscal years ended July 31, 2012, 2011 and 2010 ("Fiscal 2012", "Fiscal 2011" and "Fiscal 2010", respectively) of $25,084,000 ($0.32 per share), $27,358,000 ($0.40 per share) and $14,479,000 ($0.25 per share), respectively. Expenses during Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $30,251,000, $27,907,000 and $22,431,000, respectively. During Fiscal 2012, the Company generated a gross profit of $5,645,000 from sales of uranium concentrates (Fiscal 2011 and Fiscal 2010:
$Nil). During Fiscal 2010, the Company recorded income from discontinued operations of $8,534,000 ($0.14 per share) relating to the sale of its 49% interest in Cibola Resources, LLC.

The Company currently operates in a single reportable segment and is focused on uranium mining and related activities, including exploration, development, extraction and processing of uranium concentrates.

Revenues and Cost of Sales

Since commencing uranium production for the first time at its Palangana Mine in November 2010, the Company completed a total of three sales of uranium concentrates to July 31, 2012, all of which were generated during Fiscal 2012. Two sales totaling 120,000 pounds were completed under an existing offtake agreement, fulfilling the Company's delivery commitments for the first year, and the third sale totaling 150,000 pounds was completed on the spot market. As a result of these sales, gross revenues of $13,757,000 was generated during Fiscal 2012 (Fiscal 2011 and 2010: $Nil) representing a total 270,000 pounds of uranium concentrates sold at an average price of $51 per pound.

For Fiscal 2012, cost of sales was $8,112,000 (Fiscal 2011 and 2010: $Nil) which included royalties of $1,651,000 and depreciation and depletion of $1,486,000. Cost of sales for uranium concentrates is determined using the average cost per pound in inventories at the end of the month prior to the month in which the sale occurs, and includes royalties and other direct selling costs.

For Fiscal 2012, the Company generated a gross profit of $5,645,000 (Fiscal 2011 and 2010: $Nil) from the sale of uranium concentrates.

Expenses

Expenses during Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $30,251,000, $27,907,000 and $22,431,000, respectively, and these year-to-year increases reflect the substantial growth of the Company over the past three fiscal years.

Mineral property expenditures during Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $14,939,000, $11,420,000 and $6,439,000, respectively. These expenditures include amounts relating to property maintenance and exploration and development activities including permitting and all other non-production related activities on the Company's mineral rights and properties. As disclosed under Risk Factors, the Company has not established proven and probable reserves through the completion of feasibility studies for any of its mineral properties in accordance with SEC Industry Guide 7. Accordingly, all expenditures relating to exploration and development activities are expensed as incurred.

                                                  Year Ended July 31,
                                              2012            2011           2010
Mineral Property Expenditures
  Palangana Mine                     $   7,597,102   $   7,859,841   $  3,643,662
 Goliad Project                            646,314         995,849      2,353,547
 Burke Hollow Project                    1,176,101               -              -
 Channen Project                           190,009               -              -
 Hobson                                    123,005         367,904         30,300
 Salvo Project                           1,113,659       1,268,088         83,788
 Nichols Project                           150,000          15,496          5,976
 Land work - Texas                         423,291         388,633        164,740
 Anderson Project                          375,058          13,707              -
 Workman Creek Project                      50,069               -              -
 Yuty Project                              627,623               -              -
 Coronel Oviedo Project                  2,207,255         250,992              -
 Other Mineral Property Expenditures       259,236         259,670        156,701
                                     $  14,938,722   $  11,420,180   $  6,438,714

A breakdown by specific mine/project and major expenditure categories are as follows:

º Palangana Mine: Property maintenance (Fiscal 2012: $57,000; Fiscal 2011:
$94,000; Fiscal 2010: $214,000), exploration programs (Fiscal 2012:
$1,277,000; Fiscal 2011: $954,000; Fiscal 2010: $793,000), plant development (Fiscal 2012: $257,000; Fiscal 2011: $1,027,000; Fiscal 2010:
$189,000), wellfield development (Fiscal 2012: $5,530,000; Fiscal 2011:
$4,840,000; Fiscal 2010: $801,000) and disposal well development (Fiscal 2012: $476,000; Fiscal 2011: $945,000; Fiscal 2010: $1,647,000);

º Goliad Project: Property maintenance (Fiscal 2012: $41,000; Fiscal 2011:
$75,000; Fiscal 2010: $47,000), exploration programs (Fiscal 2012:
$451,000; Fiscal 2011: $516,000; Fiscal 2010: $2,307,000), plant development (Fiscal 2012: $111,000; Fiscal 2011: $396,000; Fiscal 2010:
$Nil) and wellfield development (Fiscal 2012: $43,000; Fiscal 2011: $9,000; Fiscal 2010: $Nil);

º Burke Hollow Project: Exploration programs (Fiscal 2012: $1,176,000; Fiscal 2011: $Nil; Fiscal 2010: $Nil);

º Channen Project: Exploration programs (Fiscal 2012: $190,000; Fiscal 2011:
$Nil; Fiscal 2010: $Nil);

º Salvo Project: Property maintenance (Fiscal 2012: $57,000; Fiscal 2011:
$59,000; Fiscal 2010: $34,000) and exploration programs (Fiscal 2012:
$1,057,000; Fiscal 2011: $1,209,000; Fiscal 2010: $50,000);

º Nichols Project: Property maintenance (Fiscal 2012: $150,000; Fiscal 2011:
$15,000; Fiscal 2010: $6,000);

º Anderson Project: Property maintenance (Fiscal 2012: $74,000; Fiscal 2011:
$Nil; Fiscal 2010: $Nil) and exploration programs (Fiscal 2012: $301,000; Fiscal 2011: $14,000; Fiscal 2010: $Nil);

º Yuty Project: Property maintenance (Fiscal 2012: $583,000; Fiscal 2011:
$Nil; Fiscal 2010: $Nil) and exploration programs (Fiscal 2012: $45,000; Fiscal 2011: $Nil; Fiscal 2010: $Nil); and

º Coronel Oviedo Project: Property maintenance (Fiscal 2012: $107,000; Fiscal 2011: $251,000; Fiscal 2010: $Nil) and exploration programs (Fiscal 2012:
$2,100,000; Fiscal 2011: $Nil; Fiscal 2010: $Nil).

General and administrative expenses during Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $14,037,000, $15,187,000 and $15,154,000, respectively. General and administrative expenses were comprised of salaries, management and consulting fees (Fiscal 2012: $3,866,000; Fiscal 2011: $4,001,000; Fiscal 2010:
$3,082,000), office, investor relations, communications and travel (Fiscal 2012:
$5,836,000; Fiscal 2011: $3,702,000; Fiscal 2010: $4,410,000), stock-based compensation expense (Fiscal 2012: $2,743,000; Fiscal 2011: $6,343,000; Fiscal 2010: $7,029,000) and professional fees (Fiscal 2012: $1,592,000; Fiscal 2011:
$1,141,000; Fiscal 2010: $633,000).

Total general and administrative expenses, excluding stock-based compensation, have increased year-to-year over the past three fiscal years (Fiscal 2012:
$11,294,000; Fiscal 2011: $8,844,000; Fiscal 2010: $8,125,000). Throughout this period, the Company's general and administrative support has increased overall as a result of substantial growth through strategic corporate and property acquisitions. Starting in December 2009, through the acquisition of South Texas Mining Venture, L.L.P., the Company acquired the Palangana Mine and the Hobson Facility which included its Corpus Christi office and existing infrastructure. For the remainder of Fiscal 2010 and during the first half of Fiscal 2011, the Company focused on the initial development of the Palangana Mine towards production, including preparation of the Hobson Facility, and in November 2010, became a uranium producer. During Fiscal 2011, upon establishing a Paraguayan office for general and administrative support, the Company acquired the Coronel Oviedo Project and acquired additional acreage for this project during Fiscal 2012. During Fiscal 2012, through the acquisition of Cue Resources Ltd., the Company acquired the Yuty Project, its second major project in Paraguay. During Fiscal 2012, upon expansion of the New Mexico office for additional general and administrative support, the Company acquired the Anderson and Workman Creek Properties in Arizona and the Slick Rock Project located in Colorado. During Fiscal 2012, the Burke Hollow and Channen Projects were added to the Company's portfolio of South Texas projects.

Stock-based compensation expense represents the fair value of stock options granted to employees, directors, management and consultants, including common stock issued to consultants, as calculated using the Black-Scholes option-pricing model. During Fiscal 2012, stock-based compensation expense decreased as compared to Fiscal 2011 and 2010, primarily the result of a decrease in the number of stock options granted.

Depreciation, amortization and accretion during Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $1,276,000, $1,156,000 and $795,000, respectively. Depreciation, amortization and accretion include depreciation and amortization of long-term assets acquired in the normal course of operations and accretion of asset retirement obligations. For the past three fiscal years, these charges have increased overall as a result of the substantial growth experienced by the Company.

Impairment loss on mineral properties during Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $Nil, $143,000 and $44,000, respectively. These charges during the prior years resulted from the abandonment of certain mineral properties that were determined by management to be non-critical within the Company's portfolio of properties. During Fiscal 2011, the mineral properties abandoned were located in Utah ($15,000) and Texas ($128,000). During Fiscal 2010, the mineral properties abandoned were located in New Mexico ($11,000), Texas ($32,000) and Wyoming ($1,000).

Production and Inventories

During Fiscal 2012, the Palangana Mine produced 183,000 pounds of uranium concentrates while the Hobson Facility processed finished goods of 198,000 pounds of uranium concentrates. Since the commencement of production in November 2010 to July 31, 2012, the Hobson Facility has processed 323,000 pounds of finished goods-uranium concentrates of which 270,000 pounds have been sold, resulting in a balance of 53,000 pounds of finished goods-uranium concentrates remaining as of July 31, 2012.

At July 31, 2011, the total value of inventories was $2,776,000, of which $2,231,000 (80%) represents the value of finished goods-uranium concentrates, $506,000 (18%) represents the value of work-in-progress and $39,000 (2%) represents the value of supplies. The cash component of the total value of inventories was $2,064,000 and the non-cash component of the total value of inventory was $712,000.

Liquidity and Capital Resources

                                  July 31, 2012     July 31, 2011     July 31, 2010
Cash and cash equivalents       $    25,015,000   $    30,724,000   $    21,068,000
Working capital                      22,472,000        30,021,000        16,244,000
Total assets                         85,143,000        65,391,000        47,555,000
Total liabilities                     9,223,000         6,268,000         5,519,000
Shareholders' equity                 75,920,000        59,123,000        42,036,000

The Company realized revenue from uranium sales during the fiscal year ended July 31, 2012, however, it has a history of operating losses and significant negative cash flow since inception. Planned principal operations have commenced and existing cash resources along with forecasted sales for the upcoming fiscal year are expected to provide sufficient funds to carry out our plan of operations including exploration and development activities for the next twelve months. The Company's continuation as a going concern for a period longer than twelve months will be dependent upon the Company's ability to obtain adequate financing, as future capital expenditures of the Company are expected to be substantial.

Historically, the Company has been reliant primarily on equity financings from the sale of its common shares to fund its operations, and this reliance is expected to continue for the foreseeable future. At July 31, 2012, the Company has available for its use a Form S-3 "Shelf" Registration Statement to complete a public financing. However, there is no assurance that sufficient funds can continue to be raised in the future through equity financings, in which case the Company may not be able to continue exploration or development of its mineral projects, possibly leading to their abandonment. Other options would include entering into joint venture arrangements to continue advancing the Company's mineral projects, which would depend entirely on finding a suitable third party willing to enter into such an arrangement, typically involving an assignment of a percentage interest in the mineral project.

The continued operations of the Company, including the recoverability of the carrying values of its assets, are dependent ultimately on the Company's ability to achieve and maintain profitability and positive cash flow from its operations.

At July 31, 2012, we had $25,015,000 in cash and cash equivalents and working capital of $22,472,000. During Fiscal 2012, net cash flows decreased by $5,709,000 compared to an increase of $9,656,000 during Fiscal 2011 and a decrease of $3,198,000 during Fiscal 2010.

Operating Activities

Net cash used in operating activities during Fiscal 2012, Fiscal 2011 and Fiscal 2010 was $19,208,000, $23,676,000 and $13,572,000, respectively. During Fiscal 2012, the Company received total cash of $13,757,000 from sales of 270,000 pounds uranium concentrate (Fiscal 2011 and 2010: $Nil) and incurred production costs of $4,356,000 (Fiscal 2011:$2,000,000 and Fiscal 2010: $Nil). Other significant operating expenditures included mineral property expenditures and general and administrative costs. In addition, during Fiscal 2012, the Company incurred expenditures totaling $1,064,000 (Fiscal 2011: $1,213,000; Fiscal 2010:
$1,369,000) for cash settlement of asset retirement obligations.

Net cash provided by financing activities during Fiscal 2012, Fiscal 2011 and Fiscal 2010 was $20,192,000, $37,115,000, and $1,182,000, respectively. During Fiscal 2012, the Company completed a public offering of its common shares for net cash proceeds of $20,969,000. During Fiscal 2011, the Company completed a private placement offering of its common shares for net cash proceeds of $25,654,000. During Fiscal 2010, no public or private placement offerings were completed. During Fiscal 2012, the Company received net proceeds of $554,000 (Fiscal 2011: $11,452,000 and Fiscal 2010: $1,145,000) from the exercise of stock options and warrants. During Fiscal 2012, the Company paid $1,370,000 in cash for settlement of convertible debentures assumed from the Concentric acquisition.

Investing Activities

Net cash used in investing activities during Fiscal 2012 and Fiscal 2011 was $6,692,000 and $3,782,000 while net cash provided by investing activities in Fiscal 2010 was $9,192,000. During Fiscal 2012, the Company acquired mineral rights and properties totaling $4,184,000 (Fiscal 2011 $1,454,000 and Fiscal 2010: $1,422,000), purchased equipment for $1,322,000 (Fiscal 2011: $719,000 and Fiscal 2010: $167,000), paid $261,000 in cash (Fiscal 2011: $300,000 and Fiscal 2010: $Nil) as loan settlement relating to the acquisition of subsidiaries, and paid $933,000 (Fiscal 2011: $1,869,000 and Fiscal 2010: $223,000) towards reclamation deposits relating to our uranium mining and related activities. During Fiscal 2012, the Company received proceeds from the sale of assets and mineral rights totaling $8,000 (Fiscal 2011: $531,000 and Fiscal 2010:
$11,004,000).

Stock Options and Warrants

At July 31, 2012, the Company had stock options outstanding representing 9,559,271 common shares and share purchase warrants outstanding representing 1,558,812 common shares. The outstanding stock options have a weighted-average exercise price of $1.95 per share and the outstanding warrants have a weighted-average exercise price of $4.95 per share. At July 31, 2012, outstanding stock options and warrants represented a total 11,118,083 common shares issuable for gross proceeds of approximately $26,375,000 should these stock options and warrants be exercised in full. At July 31, 2012, outstanding in-the-money stock options and warrants represented a total 3,920,000 common shares exercisable for gross proceeds of approximately $2,070,000 should these stock options and warrants be exercised in full. The exercise of these stock options and warrants is at the discretion of the respective holders and, accordingly, there is no assurance that any of these stock options or warrants will be exercised in the future.

Plan of Operations

Our primary plan of operations for the next 12 months is to expand production at the Palangana Mine, continue development of the Goliad Project towards production and continue with the exploration of the Burke Hollow, Salvo and Channen Projects in Texas and other mineral projects in Arizona and Paraguay.

Material Commitments

The Company is currently renting or leasing office premises in New Mexico, Texas, Vancouver, British Columbia, Canada, as well as Paraguay with total monthly payments of $19,732. Office lease agreements expire between October 2012 and August 2013 for the United States and Canada. The Company also has various consulting agreements which will expire in less than one year.

                                                Payment Due by Period
                                      Less Than 1                                 More Than 5
Contractual               Total          Year         1-3 Years     3-5 Years        Years
Obligations
Capital Lease         $         -   $           -   $         -   $         -   $           -
Obligations
Operating Leases          580,384         433,339       147,045             -               -
Obligations
Purchase Obligations            -               -             -             -               -
Other Long-term         3,662,233         133,298     1,338,919             -       2,190,016
Liabilities

We are committed to pay our key executives a total of $803,386 per year for management services.

The Company entered into a multi-year uranium sales contract in June 2011, as amended in January 2012, requiring the delivery of a total 320,000 pounds of U3O8 by the Company over a three-year period starting in August 2011. The sales price will be based on published market price indicators at the time of delivery. During Fiscal 2012, the Company fulfilled its first-year delivery obligations under this contract.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Critical Accounting Policies

The following describes the Company's critical accounting policies, however, refer to Note 2: Summary of Significant Accounting Policies of the notes to the Company's consolidated financial statements as presented under Item 8. Financial Statements and Supplementary Data, disclosing all of the Company's significant accounting policies.

Inventories

Inventories are comprised of supplies, uranium concentrates and work-in-progress. Expenditures include mining and processing activities that will result in future production of uranium concentrates and depreciation and depletion charges. Mining and processing costs include labor, chemicals, directly attributable production expenditures and overhead related to production. Inventories are carried at the lower of cost or net realizable value and are valued and charged to cost of sales using the average costing method.

Mineral Rights

Expenditures relating to the acquisition of mineral rights are capitalized as incurred. Expenditures relating to exploration activities are expensed as incurred, while those relating to development activities are expensed when incurred prior to the completion of a bankable feasibility study establishing proven and probable reserves. Once proven and probable reserves are established, subsequent development expenditures relating to that project are capitalized.

Upon commencement of production, the project's capitalized expenditures are depleted over proven and probable reserves using the units-of-production method. Where proven and probable reserves have not been established, such capitalized expenditures are depleted over the estimated production life using the straight-line method. The Company has not established proven or probable reserves on any of its projects.

The carrying values of the mineral rights are assessed for impairment by management on a quarterly basis or when indicators of impairment exist. Should management determine that these carrying values cannot be recovered, the unrecoverable amounts are written off against earnings.

Various federal and state mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its mine projects to the pre-existing mine area average quality after the completion of mining.

Future reclamation and remediation costs, which include production equipment removal and environmental remediation, are accrued at the end of each period based on management's best estimate of the costs expected to be incurred at each project. Such estimates are determined by the Company's engineering studies which consider the cost of future surface and groundwater activities, current regulations, actual expenses incurred, and technology and industry standards.

In accordance with ASC 410, Asset Retirement and Environmental Obligations, the Company capitalizes the measured fair value of asset retirement obligations to mineral rights and properties. The asset retirement obligations are accreted to an undiscounted value until the time at which they are expected to be settled. The accretion expense is charged to earnings and actual retirement costs are recorded against the asset retirement obligations when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred will be recorded as a gain or loss in the period of settlement.

On a quarterly basis, the Company updates cost estimates, and other assumptions used in the valuation of asset retirement obligations at each of its mineral properties to reflect new events, changes in circumstances and any new information that is available. Changes in these costs have a corresponding impact on the asset retirement obligations.

Revenue Recognition

The recognition of revenue from the sale of uranium concentrates is in accordance with the guidelines outlined in ASC Section 605-10-25, Revenue Recognition. The Company delivers its uranium concentrates to a uranium storage facility and once the product is confirmed to meet the required specifications, the Company receives credit for a specified quantity measured in pounds. Future sales of uranium concentrates are expected to generally occur under uranium supply agreements or through the uranium spot market. Once a sale of uranium concentrates is negotiated, the Company will notify the uranium storage facility with instructions for a title transfer to the customer. Revenue is recognized once a title transfer of the uranium concentrates is confirmed by the uranium storage facility at which point the customer is invoiced by the Company.