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ANNUAL REPORT

February 28, 2009




  510 - 510 Burrard Street
  Vancouver, BC V6C 3A8
    Tel: (604) 484-2212
    Fax: (...
INNOVATION
    UNEARTHS VALUE

 To the Shareholders:                                                                      ...
Financial Statements
February 28, 2009 and February 29, 2008
(Canadian Funds)




Index                                   ...
DAVIDSON & COMPANY LLP                                                  Chartered Accountants
                            ...
URANIUM NORTH RESOURCES CORP
Balance Sheets
Canadian Funds

                                                              ...
URANIUM NORTH RESOURCES CORP.
Statements of Operations and Comprehensive Loss
Canadian Funds

                            ...
URANIUM NORTH RESOURCES CORP.
Statements of Cash Flows
Canadian Funds

                                                   ...
URANIUM NORTH RESOURCES CORP.
Statements of Shareholders’ Equity

Years Ended February 28, 2009 and February 29, 2008
Cana...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.
Notes to Financial Statements
Years Ended February 28, 2009 and February 29, 2008
Canadian F...
URANIUM NORTH RESOURCES CORP.

Management’s Discussion and Analysis

For the Period Ended February 28, 2009               ...
URANIUM NORTH RESOURCES CORP.

Management’s Discussion and Analysis

For the Period Ended February 28, 2009               ...
URANIUM NORTH RESOURCES CORP.

Management’s Discussion and Analysis

For the Period Ended February 28, 2009               ...
URANIUM NORTH RESOURCES CORP.

Management’s Discussion and Analysis

For the Period Ended February 28, 2009               ...
URANIUM NORTH RESOURCES CORP.

Management’s Discussion and Analysis

For the Period Ended February 28, 2009               ...
Quarterly Financial Statements
Quarterly Financial Statements
Quarterly Financial Statements
Quarterly Financial Statements
Quarterly Financial Statements
Quarterly Financial Statements
Quarterly Financial Statements
Quarterly Financial Statements
Quarterly Financial Statements
Quarterly Financial Statements
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Quarterly Financial Statements

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Quarterly Financial Statements

  1. 1. ANNUAL REPORT February 28, 2009 510 - 510 Burrard Street Vancouver, BC V6C 3A8 Tel: (604) 484-2212 Fax: (604) 484-7143
  2. 2. INNOVATION UNEARTHS VALUE To the Shareholders: RESOURCES CORP The central theme for 2008 was to demonstrate size potential TSX-V: UNR of our three key projects, Amer Lake, Kam and Hawk. The Uranium North team has worked with common purpose Uranium North was early to recognize the value of and steady resolve over the past 12 months to achieve this. exploring for uranium in Nunavut. Nunavut is one of the fastest growing emerging mineral districts, a final frontier Though it has been a challenging year in the commodity where surface exploration techniques can result in major and equity markets, Uranium North has shown strength in discoveries. Nunavut offers a straightforward land tenure advancing its projects and has positioned itself for growth system, a single environmental review process and supports in an emerging uranium industry. responsible uranium exploration. Nuclear power is the world’s fastest- growing major source of energy. In 2008, we again added to our team of experts by hiring The long-term fundamentals for the Dr. Allan Armitage as the VP of Exploration. Allan has vast metal remain strong and prices experience exploring for uranium and other minerals in are on the rise. northern regions including Nunavut. He compliments the team by bringing to Uranium North a high degree Our approach has been to of expertise in defining mineral resources using modern find new opportunities in exploration techniques. The unique experience, skills and historic data. The success foresight of Uranium North’s team differentiates us from our of this approach peers and I believe, will play a large role in our success. is evident in the advancement of our Through our commitment for discovery, the Company has Amer Lake, Kam Mark Kolebaba integrated innovative, cost effective exploration techniques and Hawk projects. with our new geological concepts. Now in 2009, we have initiated a two-phase drill program on Amer Lake; phase 1, At Amer Lake, historic drilling outlined a 6.7 to 7.4 million to confirm continuity of the existing deposit to develop a pound uranium deposit. Work by the Company in fiscal resource and, phase 2, to expand the mineralized zone to year 2008 demonstrated the potential to expand to, what the south and east. I believe, could be in excess of 50 million pounds with an immediate target of 11.5 to 17.5 million pounds in 2009. Our Company is strong, stable and on course. We believe our goals are realistic and we are confident in our approach At Kam, the best historical drill intersection was 0.15% U3O8 to create near and long term value. The upcoming year will over 4 metres. Interpretation by Uranium North led to a be exciting as Uranium North works towards attaining our new target oriented east-west rather than north-south. By target of delineating an 11.5 to 17.5 million pound uranium turning the drill holes 90o relative to historic drill holes, resource at Amer Lake. drill intersections more than doubled in terms of grade and width. Grades of 0.4% U3O8 over 10 metres, including grades Finally, on behalf of the Board of Directors and the of 1.6% U3O8 over 1 metre are impressive anywhere. management team of Uranium North, I sincerely thank you, the shareholder, for your strong support and confidence Similarly at Hawk, with only three drill holes, the Company during this past year and for sharing in our determination to demonstrated continuity and confirmed mineralization deliver a significant uranium resource. from 2.7 metres down to 144 metres depth. Historical exploration concluded that uranium mineralization On Behalf of the Board of Directors, was limited to small shallow discontinuous pods with a maximum depth extent of 60 metres. The Uranium North team reinterpreted the data and suggested LETTER deep penetrating mineralized chutes along structure. Mark Kolebaba May 26, 2009 FROM THE PRESID E N T
  3. 3. Financial Statements February 28, 2009 and February 29, 2008 (Canadian Funds) Index Page Auditors’ Report to the Shareholders 1 Financial Statements Balance Sheets 2 Statements of Operations and Comprehensive Loss 3 Statements of Cash Flows 5 Statements of Shareholders’ Equity 5 Notes to Financial Statements 6 - 22
  4. 4. DAVIDSON & COMPANY LLP Chartered Accountants A Partnership of Incorporated Professionals AUDITORS' REPORT To the Shareholders of Uranium North Resources Corp. We have audited the balance sheet of Uranium North Resources Corp. as at February 28, 2009 and the statements of operations and comprehensive loss, cash flows and shareholders’ equity for the year then ended. 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 audit. We conducted our audit 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 financial statements present fairly, in all material respects, the financial position of the Company as at February 28, 2009 and the results of its operations and its cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. The audited financial statements at February 29, 2008 and for the year then ended were examined by another auditor who expressed an opinion without reservation on those statements in their report dated June 9, 2008, except as to Note 12(b) which is as of June 19, 2008. "DAVIDSON & COMPANY LLP" Vancouver, Canada Chartered Accountants May 20, 2009 -1- 1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6 Telephone (604) 687-0947 Fax (604) 687-6172
  5. 5. URANIUM NORTH RESOURCES CORP Balance Sheets Canadian Funds February 28, February 29, 2009 2008 ASSETS Current Cash and cash equivalents $ 1,795,130 $ 2,208,198 Receivables 36,110 373,567 Prepaid expenses 2,594 52,000 Field supplies - 68,912 1,833,834 2,702,677 Mineral properties (Note 5) 11,858,106 8,913,291 Equipment (Note 6) 28,351 17,819 $ 13,720,291 $ 11,633,787 LIABILITIES Current Accounts payable and accrued liabilities $ 353,533 $ 382,400 Due to related parties (Note 11) 69,507 396,102 Note payable (Note 7) - 300,000 423,040 1,078,502 Future income tax liability (Note 13) 818,000 628,580 1,241,040 1,707,082 SHAREHOLDERS’ EQUITY Share capital (Note 8) 13,904,724 11,004,572 Option compensation 852,387 720,666 Contributed surplus 135,430 91,091 Deficit (2,413,290) (1,889,624) 12,479,251 9,926,705 $ 13,720,291 $ 11,633,787 Nature and Continuance of Operations (Note 1) Subsequent Events (Note 15) On behalf of the Board: “Mark Kolebabat” “Maynard Brown” Mark Kolebaba Maynard E. Brown See Accompanying Notes to the Financial Statements -2-
  6. 6. URANIUM NORTH RESOURCES CORP. Statements of Operations and Comprehensive Loss Canadian Funds Years Ended February 28, February 29, 2009 2008 General and administrative expenses Accounting and audit $ 70,784 $ 50,630 Administration and management fees 101,167 112,856 Amortization 7,148 2,834 Annual report and meeting 5,814 5,951 Consulting fees 14,640 58,343 Directors’ fees 90,000 55,000 Filing fees 13,349 9,709 Interest 17,913 15,041 Investor relations and promotion 276,902 333,144 Legal fees 14,009 18,843 Office and miscellaneous 38,375 24,559 Rent 46,810 27,892 Stock-based compensation (Note 8(e)) 137,016 323,738 Transfer agent fees 22,285 18,413 Wages and benefits 15,380 - (871,592) (1,056,953) Other items Interest income 80,479 110,649 Property investigation - (1,671) Recovery of mineral property expenditures previously written off 1,000 - Write-off of mineral properties (Note 5) (792,309) (255,692) Loss before income taxes (1,582,422) (1,203,667) Future income tax recoveries (Note 13) 1,058,756 446,993 Net loss and comprehensive loss for the year $ (523,666) $ (756,674) Basic and diluted loss per share $ (0.01) $ (0.03) Weighted average number of common shares outstanding 38,035,077 24,136,958 See Accompanying Notes to the Financial Statements -3-
  7. 7. URANIUM NORTH RESOURCES CORP. Statements of Cash Flows Canadian Funds Years Ended February 28, February 29, 2009 2008 Cash flows provided by (used in) operating activities Loss for the year $ (523,666) $ (756,674) Items not involving cash Amortization 7,148 2,834 Stock-based compensation 137,016 323,738 Loan interest payable 8,795 - Write-off of mineral properties 792,309 255,692 Future income tax recoveries (1,058,756) (446,993) (637,154) (621,403) Net change in non-cash working capital items Receivables 337,457 (337,661) Prepaid expenses 49,406 13,249 Field supplies - (68,912) Accounts payable and accrued liabilities (5,098) (35,203) Due to related parties (297,534) 348,565 (552,923) (701,365) Cash flows used in investing activities Expenditures on mineral properties, net of recoveries (3,691,981) (5,708,075) Purchase of equipment (17,680) (20,653) (3,709,661) (5,728,728) Cash flows provided by financing activities Shares issued for cash, net of issue costs 3,849,516 3,485,919 3,849,516 3,485,919 Decrease in cash and cash equivalents (413,068) (2,944,174) Cash and cash equivalents, beginning of year 2,208,198 5,152,372 Cash and cash equivalents, end of year $ 1,795,130 $ 2,208,198 Supplemental Disclosure with Respect to Cash Flow (Note 9) See Accompanying Notes to the Financial Statements -4-
  8. 8. URANIUM NORTH RESOURCES CORP. Statements of Shareholders’ Equity Years Ended February 28, 2009 and February 29, 2008 Canadian Funds Total Share Capital Option Contributed Shareholders’ No. of Shares Amount Compensation Surplus Deficit Equity (Note 8) (Note 8(e)) Balance, February 28, 2007 21,973,774 $ 8,510,317 $ 396,928 $ - $ (1,132,950) $ 7,774,295 Shares issued for cash Private placements, net of issue costs 5,420,500 3,399,068 3,399,068 Exercise of options 139,499 59,845 59,845 Exercise of warrants 21,000 27,006 27,006 Issued for other consideration Mineral interests 188,536 175,000 175,000 Tax cost on flow-through shares renunciation (1,075,573) (1,075,573) Stock-based compensation 323,738 323,738 Fair value of finder’s fee warrants (91,091) 91,091 - Loss for the year (756,674) (756,674) 5,769,535 2,494,255 323,738 91,091 (756,674) 2,152,410 Balance, February 29, 2008 27,743,309 $11,004,572 $720,666 $91,091 $ (1,889,624) $ 9,926,705 Shares issued for cash Private placements, net of issue costs 13,530,363 3,849,516 3,849,516 Issued for other consideration Tax cost on flow-through shares renunciation (1,248,176) (1,248,176) Issue of shares for debt 1,689,281 337,856 337,856 Stock-based compensation 137,016 137,016 Fair value of finder’s fee warrants (39,044) 39,044 - Fair value of options cancelled (5,295) 5,295 - Loss for the year (523,666) (523,666) 15,219,644 2,900,152 131,721 44,339 (523,666) 2,552,546 Balance February 28, 2009 42,962,953 $ 13,904,724 $ 852,387 $ 135,430 $ (2,413,290) $ 12,479,251 See Accompanying Notes to the Financial Statements -5-
  9. 9. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 1. Nature and Continuance of Operations The Company was incorporated on March 2, 2006 pursuant to the Company Act (British Columbia) and on December 7, 2006 the common shares of the Company were listed for trading on the TSX Venture Exchange (“Exchange”). The Company is in the process of actively exploring its mineral properties and has not yet determined whether these properties contain ore reserves that are economically recoverable. The Company is considered to be in the exploration stage and does not have operating cash flow. For the year ended February 28, 2009, the Company reported net loss of $523,666 (2008 - $756,674), has a history of losses and an accumulated deficit of $2,413,290 (2008 - $1,889,624). Senior employees and a consultant of the Company have mutually agreed to defer 10% of their salaries or fees and the independent directors’ of the Company deferred their retainer. These amounts will accrue as a debt owing by the Company and shall not bear interest. At the Company’s election, this debt can be satisfied in cash and/or common shares. Management is actively seeking to raise the necessary capital to meet its funding requirements and have undertaken available cost cutting measures. These financial statements have been prepared on a going concern basis in accordance with Canadian generally accepted accounting principles, which assumes the realization of assets and liquidation of liabilities in the normal course of business. The Company’s ability to continue as a going concern is dependent on continued financial support from its shareholders and other related parties, the ability of the Company to raise equity financing, and the attainment of profitable operations, external financings and further share issuances to meet the Company’s liabilities as they become payable. These financial statements do not reflect adjustments in the carrying value of the assets and liabilities, the reported expenses, and the balance sheet classifications used, that would be necessary if the Company was unable to realize its assets and settle its liabilities as a going concern in the normal course of operations, and that such adjustment could be material. 2. Significant Accounting Policies (a) Basis of Presentation These financial statements have been prepared in accordance with Canadian generally accepted accounting principles and the functional currency is the Canadian dollar. (b) Cash and cash equivalents The Company considers cash and cash equivalents to be cash and short-term investments with redeemable features or original maturities of three months or less from the date of acquisition, and readily convertible to known amounts of cash without a significant risk of change in value. (c) Mineral Properties Acquisition costs of mineral properties and direct exploration and development expenditures thereon are capitalized on an individual prospect basis. Costs relating to properties abandoned are written-off when such decision is made. When production is attained, these costs will be reclassified as mining assets and amortized using the unit-of-production method based upon estimated recoverable reserves. If, after management review, it is determined that the carrying amount of a mineral property is impaired, that property is written down to its estimated net realizable value. A mineral property is reviewed for impairment quarterly, or whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. -6-
  10. 10. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 2. Significant Accounting Policies (Continued) (c) Mineral Properties (Continued) The recoverability of amounts shown for mineral property is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to develop the properties and future profitable production from the properties or proceeds from disposition. The Company has investigated title to its mineral properties and, to the best of its knowledge, it has ownership thereof and the properties are in good standing. (d) Property Option Agreements From time to time, the Company may acquire or dispose of properties pursuant to the terms of option agreements. Due to the fact that options are exercisable entirely at the discretion of the optionee, the amounts payable or receivable are not recorded. Option payments are recorded as mineral properties or recoveries when the payments are made or received. The Company does not accrue the estimated costs of maintaining its mineral interests in good standing. (e) Equipment Equipment is recorded at cost less accumulated amortization. Amortization is recognized using the following: Furniture and fixtures - 20% declining balance Computer equipment - 30% declining balance (f) Stock-Based Compensation The Company accounts for stock-based payments to directors, employees and non-employees, including direct awards of stock, using the Black-Scholes option pricing model, a fair value based method, and are recorded over the period the stock-based payments are vested with a corresponding increase in shareholders’ equity under option compensation. When stock options are exercised the corresponding fair value is transferred to share capital. When stock options are forfeited, cancelled or expired the corresponding fair value is transferred to contributed surplus. (g) Earnings (Loss) per Share Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share. The dilutive effect of convertible securities is reflected in diluted earnings per share by application of the “if converted” method. The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per share by application of the treasury stock method. For the years presented, this calculation proved to be anti-dilutive and is not presented separately. -7-
  11. 11. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 2. Significant Accounting Policies (Continued) (h) Asset Retirement Obligation An asset retirement obligation is an obligation associated with the retirement of tangible long-lived assets that the Company is required to settle. The Company recognizes the fair value of a liability for an asset retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability. The Company does not have any significant asset retirement obligations. (i) Share Capital Share capital is comprised of proceeds from share issuances, net of issue costs. Shares issued for consideration other than cash are valued at the quoted market price on the date of issue. Canadian tax legislation permits a company to issue flow-through common shares whereby the deduction for tax purposes relating to qualified resource expenditures is claimed by the investor(s) rather than the company. The Company records a future income tax liability and a reduction in share capital for the estimated tax benefit transferred to the investor(s), when expenditures are renounced. Where applicable, portion of future income tax assets not recognized in previous years, due to the recording of valuation allowance, may be offset against related future income tax liabilities and recognized as a recovery of future income taxes in the Statement of Operations (j) Future Income Taxes Future income taxes are recorded using the asset and liability method. Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs. To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess. (k) Management’s Estimates The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant areas of estimate include the impairment of assets and rates for amortization, accrued liabilities, future income tax balances and valuation allowances, and the inputs used in calculating stock-based compensation. Actual results may differ from those estimates and may impact future results of operations and cash flows. -8-
  12. 12. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 2. Significant Accounting Policies (Continued) (l) Financial Instruments The Company classifies all financial instruments as either held-for-trading, available-for-sale, held- to-maturity, loans and receivables or other financial liabilities. Financial instruments are required to be measured at fair value on initial recognition. Measurement in subsequent periods depends on the financial instruments classification. Held-for-trading instruments are measured at fair value with unrealized gains and losses recognized in results of operations. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income. Instruments held-to-maturity, loans and receivables and other financial liabilities are measured at amortized cost. The Company has classified its cash and cash equivalents as held-for-trading. Receivables are classified as loans and receivables. Accounts payable and accrued liabilities, due to related parties and note payable are classified as other financial liabilities; all of which are measured at amortized cost. (m) Comprehensive Income Comprehensive income is defined as the change in equity (net assets) from transactions and other events from non-owner sources. Other comprehensive income is defined as revenues, expenses, gains and losses that, in accordance with primary sources of GAAP, are recognized in comprehensive income, but excluded from net income. This would include holding gains and losses from financial instruments classified as available-for-sale. The Company does not have any comprehensive income items. (n) Certain Comparative Figures Certain comparative figures have been reclassified to conform to the current year’s presentation. 3. Change in Accounting Policies Effective March 1, 2008, the Company adopted the following new accounting standards issued by the Canadian Institute of Chartered Accountants (“CICA”) relating to financial instruments. These new standards have been adopted on a prospective basis with no restatement to prior period financial statements. (a) Financial instruments CICA Handbook Section 3862, Financial Instruments – Disclosures, which requires entities to provide disclosures in their financial statements that enable users to evaluate (i) the significance of financial instruments for the entity's financial position and performance; and (ii) the nature and extent of risks arising from financial instruments to which the entity is exposed during the period and at the balance sheet date, and how the entity manages those risks. The principles in this section complement the principles for recognizing, measuring and presenting financial assets and financial liabilities in Section 3855, Financial Instruments – Recognition and Measurement, Section 3863, Financial Instruments – Presentation, and Section 3865, Hedges. CICA Handbook Section 3863, Financial Instruments – Presentation, which is to enhance financial statement users' understanding of the significance of financial instruments to an entity's financial position, performance and cash flows. This section establishes standards for presentation of financial instruments and non-financial derivatives. It deals with the classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the classification of related interest, dividends, losses and gains, and the circumstances in which financial assets and financial liabilities are offset. -9-
  13. 13. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 3. Change in Accounting Policies (Continued) (b) Capital disclosures CICA Handbook Section 1535 establishes standards for the disclosure of (i) an entity’s objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The adoption of these sections had no impact on the Company’s financial statements other than additional disclosure in Notes 10 and 14. 4. Recent Accounting Pronouncements (a) Goodwill and Intangible Assets The AcSB issued CICA Handbook Section 3064 which replaces Section 3062, “Goodwill and Other Intangible Assets”, and Section 3450, “Research and Development Costs”. This new section establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets. Standards concerning goodwill remain unchanged from the standards included in the previous Section 3062. The section applies to interim and annual financial statements relating to fiscal years beginning on or after October 1, 2008. (b) Business Combinations, Non-controlling Interest and Consolidated Financial Statements In January 2009, the CICA issued Handbook Sections 1582 “Business Combinations”, 1601 “Consolidated Financial Statements” and 1602 “Non-controlling Interests” which replace CICA Handbook Sections 1581 “Business Combinations” and 1600 “Consolidated Financial Statements”. Section 1582 establishes standards for the accounting for business combinations that is equivalent to the business combination accounting standard under IFRS. Section 1582 is applicable for the Company’s business combinations with acquisition dates on or after January 1, 2011. Section 1601 together with Section 1602 establishes standards for the preparation of consolidated financial statements. Section 1601 is applicable for the Company’s interim and annual consolidated financial statements for its fiscal year beginning January 1, 2011. Early adoption of these Sections is permitted and all three Sections must be adopted concurrently. The Company does not anticipate the adoption of the above standards will have a significant impact on the Company’s financial statements. (c) International Financial Reporting Standards (“IFRS”) In 2006, the AcSB published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008 the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada's own GAAP. The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The transition date of March 1, 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended February 28, 2011. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time. - 10 -
  14. 14. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 5. Mineral Properties As at February 28, 2009 and February 29, 2008, the Company’s mineral interests are comprised of properties located in Canada. Expenditures incurred on mineral interests are as follows: Amer Lake S. Baker Thelon Hepburn Nunavut Nunavut NWT NWT Sask. Others Total Balance, February 29, 2008 $3,054,721 $2,596,194 $209,652 $823,789 $1,325,957 $902,978 $8,913,291 Additions during period: Acquisition costs - - - - - - - Exploration: Project management 99,781 142,596 - 109 5,636 4,361 252,483 Airborne - - - 3,502 1,949 151,233 156,684 Camp costs 60,473 39,000 - - - 3,288 102,761 Drilling 1,337,839 1,442,067 - - 16,332 - 2,796,238 Geology 148,959 109,666 1,127 15,880 37,169 15,785 328,586 Geophysics 47,920 31,435 - - 50,479 - 129,834 Geochemistry 1,637 - - 48 - - 1,685 Mob/Demobilization - 16,200 - - - - 16,200 Permitting 26,242 220 - - 19,218 32,219 77,899 Prospecting 4,393 - - - 55,907 - 60,300 Property 5,569 11,323 - - 107 8,409 25,408 1,732,813 1,792,507 1,127 19,539 186,797 215,295 3,948,078 Less: Recoveries - - - (18,153) - (192,801) (210,954) Write-off - - - - (236,036) (556,273) (792,309) - - - (18,153) (236,036) (749,074) (1,003,263) Net additions 1,732,813 1,792,507 1,127 1,386 (49,239) (533,779) 2,944,815 Balance, February 28, 2009 $4,787,534 $4,388,701 $210,779 $825,175 $1,276,718 $369,199 $11,858,106 - 11 -
  15. 15. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 5. Mineral Properties (Continued) Amer Lake S. Baker Thelon Hepburn Nunavut Nunavut NWT NWT Sask. Others Total Balance, February 28, 2007 $756,742 $726,758 $388,162 $184,481 $417,326 $479,540 $2,953,009 Additions during 2008: Acquisition costs 125,000 62,988 - - 50,000 164,935 402,923 Exploration: Project management 133,458 71,478 - 4,807 30,271 36,806 276,820 Airborne 124,044 679,248 - 369,485 470,039 - 1,642,816 Camp costs 56,895 43,462 - 59,978 - - 160,335 Geochemistry 19,160 - - - - - 19,160 Geology 1,284,653 678,052 - 282,263 16,087 215,407 2,476,462 Geophysics - - - - 335,876 - 335,876 Mobilization 498,351 - - - - - 498,351 Permitting 5,086 - - - 6,358 - 11,444 Property maintenance 51,332 2,805 - - - 55,034 109,171 Prospecting - 353,662 - 6,770 - 206,948 567,380 2,172,979 1,828,707 - 723,303 858,631 514,195 6,097,815 Less: Recoveries - (22,259) (178,510) (83,995) - - (284,764) Write-off - - - - - (255,692) (255,692) - (22,259) (178,510) (83,995) - (255,692) (540,456) Net additions 2,297,979 1,869,436 (178,510) 639,308 908,631 423,438 5,960,282 Balance, February 29, 2008 $3,054,721 $2,596,194 $209,652 $823,789 $1,325,957 $902,978 $8,913,291 The Company holds the following mineral claims and permits: (a) Amer Lake, Nunavut The Company holds a 100% interest in certain claims subject to a 2% gross overriding royalty (“GOR”) in respect of diamonds, a 5% royalty on uranium production and a 2% net smelter returns royalty (“NSR”) in respect of other metals. The Company also acquired a 100% interest in certain permits near Amer Lake, from an option agreement with MPH Consulting Limited (“MPH”) by paying $100,000 (paid) and issuing 312,865 common shares of the Company (issued) in 2007 and 2008. The permits are subject to a 3% royalty on uranium payable to MPH, of which the Company may purchase two-thirds of this royalty for total cash payments of $2,000,000. In addition, the permits are also subject to a 2% NSR, a 3% royalty on uranium and a 2% GOR on diamonds, all payable to Diamonds North. (b) S. Baker, Nunavut The Company holds a 100% interest in certain claims subject to a 2% GOR in respect of diamonds, a 5% royalty on uranium production and a 2% NSR in respect of other metals. - 12 -
  16. 16. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 5. Mineral Properties (Continued) (c) Thelon, NWT The Company holds a 100% interest subject to an agreement with Bayswater Uranium Corp. (“Bayswater”) who has an option to earn an 80% interest, and holds the right to explore for and develop uranium and all other metals (except diamonds) in additional claims subject to a 5% royalty on uranium production and a 2% NSR in respect of other metals. In order to earn their 80% interest, Bayswater was required to making staged exploration expenditures totaling $4,000,000, of which $2,000,000 has been incurred to date. The Company and Bayswater have agreed to suspend the remaining required exploration expenditures due to permitting restrictions and a formal amendment to the agreement is pending. (d) Hepburn, NWT The Company holds a 100% interest to explore for and develop uranium subject to a 5% uranium royalty. (e) Saskatchewan The Company acquired a 100% interest in certain claims in the Athabasca Basin of Saskatchewan, from an option agreement with MPH, by paying $5,000 and issuing 166,666 common shares of the Company in 2007. The permits are subject to a 2% royalty on uranium payable to MPH, of which the Company may purchase one-half of this royalty for a cash payment of $1,000,000. In addition, the property is also subject to a 2% NSR, a 3% royalty on uranium and a 2% GOR on diamonds, all payable to Diamonds North. These claims include: i. Beatty River, Saskatchewan The Company holds a 100% interest in claims acquired by staking. During the year ended February 28, 2009, the Company allowed the claims to lapse and, accordingly, wrote-off expenditures of $236,036. ii. Carswell East, Saskatchewan The Company holds a 100% interest in claims acquired by staking. (f) Others (i) Tasiq, Nunavut The Company held a 100% interest to explore and develop uranium and all other metals (except diamonds) subject to a 5% uranium royalty and a 2% NSR in respect of other metals. During the year ended February 29, 2008, the Company abandoned the property and, accordingly, wrote-off expenditures of $255,692. - 13 -
  17. 17. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 5. Mineral Properties (Continued) (f) Others (Continued) (ii) Tasiq-2, Nunavut The Company held a 100% interest to explore and develop uranium and all other metals (except diamonds) subject to a 5% uranium royalty and a 2% NSR in respect of other metals. During the year ended February 28, 2009, the Company allowed the claims to lapse and, accordingly, wrote-off acquisition and exploration costs of $55,817. (iii) Hawk and Yathkyed, Nunavut The Company holds three exploration permits covering two separate properties in the Thelon Region of Nunavut. The Company made a one-time cash payment to MPH of $25,000 and issued a total of 42,337 shares in respect of the initial property acquisition in 2008. (iv) Thelon-East, NWT The Company held certain exploration permits in the NWT. During the year ended February 28, 2009, the Company abandoned the property and, accordingly, wrote-off expenditures of $500,456. 6. Equipment Details are as follows: Accumulated Net February 28, 2009 Cost Amortization Book Value Furniture and fixtures $ 12,777 $ (2,228) $ 10,549 Computer equipment 25,556 (7,754) 17,802 $ 38,333 $ (9,982) $ 28,351 Accumulated Net February 29, 2008 Cost Amortization Book Value Furniture and fixtures $ 5,277 $ (528) $ 4,749 Computer equipment 15,376 (2,306) 13,070 $ 20,653 $ (2,834) $ 17,819 - 14 -
  18. 18. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 7. Note Payable In 2006, Diamonds North Resources Ltd. (“Diamonds North”), a company related by virtue of directors in common, advanced a working capital loan in the amount of $300,000 to the Company. The loan was repayable in whole or in part on demand and accrued interest at 5% per annum. The loan and accrued interest or any portion thereof was convertible at the sole discretion and option of Diamonds North into securities of the Company at a per share price equal to $0.75 per share. On March 15, 2008, the entire loan plus accrued interest was to mature. Prior to maturity, the Company and Diamonds North proposed to amend the terms of the loan agreement by extending the due date for repayment of the principal and interest to December 31, 2008, reducing the conversion price under the loan to $0.54 per share and the Company would pay a $6,000 administration fee. The companies agreed not to proceed with the amendment and entered into a Debt Settlement Agreement dated October 1, 2008 pursuant to which the outstanding loan and accrued interest was converted into common shares. The Company issued 1,689,281 common shares to Diamonds North, at a price of $0.20 per share to settle an aggregate of $337,856 in debt. 8. Share Capital (a) Authorized Unlimited common shares without par value. (b) Escrowed Shares Of the shares issued, a total of 3,877,500 common shares were issued subject to escrow provisions pursuant to the policies of the Exchange. As at February 28, 2009, 1,163,250 (2008 – 2,326,500) common shares remained in escrow and are to be released from escrow in two equal installments in six-month intervals. (c) Private Placements Fiscal 2009 (i) In June 2008, the Company completed the first tranche of a non-brokered private placement for the issue of 12,287,031 flow-through common shares at a purchase price of $0.30 per share. Finder’s fees of $164,755 were paid and 698,859 warrants to purchase up to 698,859 common shares at a price of $0.45 per share were issued. The warrants expire on June 6, 2009. Using the Black-Scholes option pricing model, a fair value of $36,095 was assigned to these warrants and added to contributed surplus. The fair value of the compensatory warrants was estimated using the Black-Scholes option pricing model with a risk free rate of 1.93%, an expected life of 1 year, an expected volatility of 83% and an expected dividend yield of 0%. The Company incurred additional share issue costs in the amount of $29,547 in connection with the placement. (ii) In June 2008, the Company completed the second tranche of a non-brokered private placement for the issue of 1,243,332 flow-through common shares at a purchase price of $0.30 per share. Finder’s fees of $12,500 were paid and 58,333 warrants to purchase up to 58,333 common shares at a price of $0.45 per share were issued. The warrants expire on June 18, 2009. Using the Black-Scholes option pricing model, a fair value of $2,949 was assigned to these warrants and added to contributed surplus. The fair value of the compensatory warrants was estimated using the Black-Scholes option pricing model with a risk free rate of 1.93%, an expected life of 1 year, an expected volatility of 83% and an - 15 -
  19. 19. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds expected dividend yield of 0%. The Company incurred additional share issue costs in the amount of $2,792 in connection with the placement. 8. Share Capital (Continued) (c) Private Placements (Continued) Fiscal 2008 (i) In October 2007, the Company completed a non-brokered private placement for the issue of 2,642,500 flow-through common shares at a purchase price of $0.80 per share. Finder’s fees of $105,000 were paid and 183,750 warrants to purchase up to 183,750 common shares at a price of $0.80 were issued of which 175,000 warrants expire on February 15, 2009 and 8,750 warrants expire on April 11, 2009. Using the Black-Scholes option pricing model, a fair value of $45,284 was assigned to these warrants and added to contributed surplus. The Company incurred additional share issue costs in the amount of $13,079 in connection with the placement. (ii) In December 2007, the Company completed the first tranche of a non-brokered private placement for the issue of 2,136,000 flow-through common shares at a purchase price of $0.55 per share. Finder’s fees of $58,740 were paid and 149,520 warrants to purchase up to 149,520 common shares at a price of $0.60 were issued. The warrants expire on December 21, 2008. Using the Black-Scholes option pricing model, a fair value of $37,309 was assigned to these warrants and added to contributed surplus. The Company incurred additional share issue costs in the amount of $7,316 in connection with the placement. (iii) In January 2008, the Company completed the second tranche of a non-brokered private placement for the issue of 642,000 units at a purchase price of $0.48 per unit. Each unit consisted of one common share and one-half of one non-transferable share purchase warrant. Each whole share purchase warrant entitles the holder to acquire one additional common share at a price of $0.60 per common share until January 23, 2009. Finder’s fees of $12,000 were paid and 35,000 warrants to purchase up to 35,000 common shares at a price of $0.60 were issued. The warrants expire on January 23, 2009. Using the Black- Scholes option pricing model, a fair value of $8,499 was assigned to these warrants and added to contributed surplus. The Company incurred additional share issue costs in the amount of $1,756 in connection with the placement. (d) Stock Options Options to purchase common shares have been granted to directors, officers, employees and consultants at an exercise price determined by reference to the market value on the date of grant. Under the Company’s stock option plan, the Company may grant stock options for the purchase of up to 8,254,000 common shares. Vesting of stock options is either at 25% on the date of grant and 12.5% every quarter thereafter, or at the discretion of the board of directors. As at February 28, 2009, the Company had stock options outstanding for the purchase of 4,689,573 common shares (2008 – 2,946,403) of which 3,289,573 stock options (2008 – 2,230,778) were exercisable at February 28, 2009, with a weighted average exercise price of $0.69 per option. - 16 -
  20. 20. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 8. Share Capital (Continued) (d) Stock Options (Continued) Weighted Average Shares Exercise Price Outstanding at February 28, 2007 2,812,149 $ 0.76 Granted 350,000 0.68 Exercised (139,499) 0.43 Cancelled (76,247) 0.69 Outstanding at February 29, 2008 2,946,403 0.77 Granted 1,850,000 0.15 Cancelled/Expired (106,830) 0.43 Outstanding at February 28, 2009 4,689,573 $ 0.53 The following summarizes information about stock options outstanding at February 28, 2009: Exercise Number Expiry Date Price of Shares March 30, 2009 $1.021 33,333 August 8, 2009 0.944 90,830 October 18, 2009 0.858 50,000 January 27, 2010 0.858 8,333 March 22, 2010 0.987 41,250 May 17, 2010 0.729 74,999 April 12, 2011 0.848 268,328 July 13, 2011 1.020 22,500 October 11, 2011 0.750 1,950,000 May 1, 2012 0.920 150,000 February 8, 2013 0.500 200,000 September 19, 2013 0.150 1,800,000 Options outstanding 4,689,573 Subsequent to February 28, 2009, 33,333 stock options with an exercise price of $1.021 expired unexercised on March 30, 2009. - 17 -
  21. 21. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 8. Share Capital (Continued) (e) Stock-Based Compensation During the year ended February 28, 2009, the Company granted stock options to acquire up to 1,850,000 (2008 – 350,000) common shares at an exercise price of $0.15, and recorded stock- based compensation expense of $137,016 (2008 - $323,758) based on the fair value of options vested during the year. The weighted average fair value of options granted in 2009 was $0.10 per option. The stock-based compensation expense was calculated using the Black-Scholes option pricing model using the following weighted average assumptions: February 28, February 29, 2009 2008 Risk-free interest rate 3.08% 3.12% Expected dividend yield - - Expected stock price volatility 105% 116% Expected option life in years 5 5 Option pricing models require the input of highly subjective assumptions, particularly as to the expected price volatility of the stock. Changes in these assumptions can materially affect the fair value estimate. (f) Warrants At February 29, 2009, the Company had outstanding warrants to purchase an aggregate of 765,942 common shares as follows: Outstanding Outstanding at at Exercise February 29, February 28, Price Expiry Date 2008 Issued Exercised Expired 2009 $ 0.95 September 6, 2008 4,746,450 - - (4,746,450) - $ 0.60 December 21, 2008 149,520 - - (149,520) - $ 0.60 January 23, 2009 356,000 - - (356,000) - $ 0.80 February 15, 2009 175,000 - - (175,000) - $ 0.80 April 11, 2009 8,750 - - - 8,750 $ 0.45 June 6, 2009 - 698,859 - - 698,859 $ 0.45 June 18, 2009 - 58,333 - - 58,333 5,435,720 757,192 - (5,426,970) 765,942 Subsequent to the year ended February 28, 2009, 8,750 warrants with an exercise price of $0.80 expired unexercised on April 11, 2009. - 18 -
  22. 22. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 9. Supplemental Disclosure With Respect To Cash Flows 2009 2008 Significant non-cash investing and financing activities: Operating activities - - Investing activities Field supplies applied to mineral properties $ 68,912 $ - Shares issued for acquisition of mineral interests - 175,000 Financing activities Income tax effect on flow-through share renouncement $ 1,248,176 $ 1,075,573 Fair value of finder’s fee warrants issued 39,044 91,091 Repayment of loan and interest payable in common shares 337,856 - Accounts payable included in mineral properties 309,130 332,899 Other cash flow information Interest paid - - Income taxes paid - - Cash and cash equivalents consists entirely of cash on deposit. 10. Capital Management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration of its mineral properties and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk. The Company defines its capital as shareholder’s equity. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets. In order to facilitate the management of its capital requirements, the Company prepares periodic expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions. The Company’s investment policy is to keep as much of its cash treasury on deposit in an interest bearing Canadian chartered bank account. - 19 -
  23. 23. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 11. Related Party Transactions In addition to the note payable disclosed in Note 7 the Company had the following related party transactions and balances: (a) Included in receivables is $Nil (2008 - $25,244) due from Diamonds North, a company related by virtue of directors in common, for shared office costs. (b) For the year ended February 28, 2009, an officer of the Company charged a total of $30,000 (2008 - $30,000) which has been expensed as administration fees. (c) For the year ended February 28, 2009, an officer of the Company charged a total of $40,600 (2008 - $31,930) for accounting services. (d) For the year ended February 28, 2009, a director of the Company charged a total of $58,750 (2008 - $4,000) for consulting fees, which has been charged to mineral properties. (e) For the year ended February 28, 2009, administration fees of $29,008 (2008 - $32,037), rent of $46,810 (2008 - $27,892) and management fees of $40,909 (2008 - $50,819) were charged by Diamonds North. (f) Amounts due to related parties, totalling $69,507 (2008 - $396,102), consists of $49,568 (2008 - $2,386) for fees owed to directors and an officer of the Company, and $19,938 (2008 - $393,716) to Diamonds North for shared administrative expenses and exploration costs. The above transactions, occurring in the normal course of operations, are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties. 12. Segmented Information The Company has one operating segment, being mineral exploration, and all assets of the Company are located in Canada. 13. Income Taxes The Company has accumulated non-capital losses for Canadian income tax purposes of approximately $2,170,000 (2008 - $1,322,000). The losses may be carried forward to reduce taxable income in future years and, unless utilized, will expire through 2028 Significant components of the Company’s future tax assets and liabilities, after applying enacted corporate income tax rates of 25% (February 29, 2008 – 33.6%), are as follows: February 28, February 29, 2009 2008 Future income tax assets Non-capital losses carried forward $ 543,000 $ 343,761 Temporary differences on other assets 134,000 155,814 677,000 499,575 Future income tax liability Mineral properties (1,495,000) (1,128,155) $ (818,000) $ (628,580) - 20 -
  24. 24. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 13. Income Taxes (Continued) The reconciliation of income tax provision computed at statutory rates to the reported income tax provision is as follows: Years Ended February 28, February 29, 2009 2008 Income tax benefit computed at Canadian statutory rates $ 486,600 $ 404,432 Temporary differences not recognized (183,000) (26,535) Permanent differences not recognized (42,700) (111,827) Recognition of previously unrecognized tax assets 797,856 180,923 Future income tax recovery $ 1,058,756 $ 446,993 The Company renounced $4,059,109 (2008 - $3,288,800) of its mineral property expenditures to flow- through shareholders. The resultant loss of these tax deductions, which is treated as a cost of issuing flow-through shares, gives rise to a future income tax liability of $1,248,176 (2008 - $1,075,573). This liability has been offset by the Company’s recognition of future income tax assets that have been previously offset by a valuation allowance. As at February 28, 2009, the amount of flow-through proceeds remaining to be expended is approximately $1,180,684. 14. Financial Instruments The Company's financial instruments consist of cash and cash equivalents, receivables, accounts payable and accrued liabilities and due to related parties. The fair value of these financial instruments approximates their carrying value, due to the short term nature of these instruments. Credit Risk Credit risk is the risk of a financial loss to the Company if counterparty to a financial instrument fails to meet its contractual obligations. The Company’s cash and cash equivalents are primarily held in major Canadian financial institutions. The Company’s receivables consist mainly of GST receivables due from the Federal Government of Canada. Management believes that the credit risk concentration with respect to financial instruments included in receivables in minimal. Interest Rate Risk The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary assets and liabilities. Liquidity Risk The Company ensures that there is sufficient capital in order to meet annual business requirements, after taking into account administrative, property holding and exploration budgets, against cash and cash equivalent holdings. As the Company does not have operating cash flow, the Company has relied primarily on equity financings to meet its capital requirements. The current financial crisis increases liquidity risk, as other things being equal, the price of an asset will be reduced if the holder cannot sell the asset immediately. - 21 -
  25. 25. URANIUM NORTH RESOURCES CORP. Notes to Financial Statements Years Ended February 28, 2009 and February 29, 2008 Canadian Funds 14. Financial Instruments (Continued) Foreign Exchange Risk The Company is not exposed to significant foreign exchange risk as it operates in Canada and makes few foreign currency purchases. 15. Subsequent Events Subsequent to the year ended February 28, 2009, the Company settled outstanding invoices owing to MPH Consulting Ltd. totaling $305,452 with a cash payment of $100,000 (paid) and issuance of 600,000 common shares (issued) of the Company. - 22 -
  26. 26. URANIUM NORTH RESOURCES CORP. Management’s Discussion and Analysis For the Period Ended February 28, 2009 Form 51-102F1 Description of Business and Report Date Uranium North Resources Corp. (“the Company” or “Uranium North”) is an exploration stage company engaged in the acquisition and exploration of uranium properties. The principal properties are located in northern Canada throughout Nunavut (“NU”), the Northwest Territories (“NWT”) and Saskatchewan. The Company trades on the TSX Venture Exchange (“Exchange”) under the symbol “UNR” and is a reporting issuer in British Columbia and Alberta. The following discussion and analysis of the financial position and results of operations for the Company should be read in conjunction with the audited financial statements and the notes thereto for the year ended February 28, 2009. This Management’s Discussion and Analysis (“MD&A”) may contain forward-looking statements that involve risks and uncertainties. Forward-looking statements in this MD&A are only made as of May 25, 2009 (the “Report Date”). These statements involve known and unknown risks, uncertainties, and other factors that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievement expressed or implied by these forward looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include market prices, exploration success, continued availability of capital, and general economic, market or business conditions. This list is not exhaustive and these and other factors should be considered carefully; readers should not place undue reliance on the Company’s forward-looking statements. As a result of the foregoing and other factors, no assurance can be given as to any such future results, levels of activity or achievements and neither the Company nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. The Company disclaims any intention and assumes no obligation to update any forward-looking statement contained in this document, even if new information becomes available, as a result of future events or for any other reason. Allan Armitage, Ph.D (P. Geo), the Company's qualified person, reviews the exploration projects described throughout the MD&A. and is responsible for the design and conduct of the exploration programs and the verification and quality assurance of analytical results. Highlights for the Year Ended February 28, 2009 On June 6, 2008, the Company completed the first tranche of a non-brokered private placement for the issue of 12,287,031 flow-through common shares at a price of $0.30 per share for gross proceeds of $3,686,109. On June 18, 2008, the Company completed the second and final tranche of a non-brokered private placement for the issue of 1,243,332 flow-through common shares at a price of $0.30 per share for gross proceeds of $373,000. In early July 2008, the first drill hole was completed on the KAM South claim on the South Baker property, which intersected basement rocks with zones of anomalous radioactivity associated with extensive alteration. Initially four drill holes were planned for KAM, however, due to this early success more drill holes are being planned. Three additional holes are planned to test the eastern side of the structure and two holes are planned to test the western side. On September 10, 2008, the Company announced that the drill program on the South Baker property in Nunavut was completed. On September 23, 2008, the Company announced the appointment of Dr. Allan E. Armitage as Vice President of Exploration. On October 21, 2008, the Company announced a Debt Settlement Agreement with Diamonds North (See Financing Activities). - 23 -
  27. 27. URANIUM NORTH RESOURCES CORP. Management’s Discussion and Analysis For the Period Ended February 28, 2009 Form 51-102F1 In September 2008, the Company terminated its contract with MPH Consulting Ltd. In October 2008, the Company had successfully completed the 2008 exploration drilling program on its Amer Lake property. The exploration program was comprised of 15 reverse circulation drill holes, resulting in the discovery of several new zones with anomalous radioactivity. More than 500 samples were submitted for detailed analysis. On November 26, 2008, the Company announced the results from the summer drill program on the Hawk prospect of the South Baker project in Nunavut. Drilling intersected three uranium mineralized zones in two drill holes, confirming the presence of significant shallow U3O8 mineralization and providing key information on the orientation of a sizeable mineralized zone. On December 4, 2008, the Company announced the discovery of high-grade uranium mineralization on the KAM prospect located on the South Baker property in Nunavut. Five drill holes at KAM intersected uranium mineralization along a 200 metre zone with several significant mineralized intersections including grades up to 1.59% U3O8. These drill results significantly expand the size potential of the KAM prospect. Mineralization at KAM is near surface and is open to the north, south, and at depth. Surface exploration indicates additional uraniferous zones may exist to the west. On January 13, 2009, the Company announced the intersection of uranium mineralization south and east of the Main Zone uranium deposit located on the Amer property in Nunavut. Reverse circulation (RC) holes completed in the area of the deposit intersected uranium mineralization south of the Main Zone and along strike of the deposit. The drilling confirms grade and thickness of mineralization intersected in historic drilling within the deposit and significantly expands the size potential of the deposit. Mineralization is near surface and is open to the south, east and southwest. On January 23, 2009, the Company announced an evaluation of historic data and 2008 drill hole data on the Amer Lake Main Zone uranium deposit in Nunavut demonstrating a minimum target of 11.5 to 17.5 million pounds from 6,200,000 tonnes at 0.084% U3O8 to 13,400,000 tonnes at 0.06% U3O8 respectively. The deposit extends from surface to a depth of 140 metres. Infill drilling in 2009 has the potential to greatly increase the size of the deposit and will provide the basis for the preparation of a National Instrument 43-101 compliant resource. Outlook The Company has just completed Phase 1 of an infill drilling program on the Amer Lake project in Nunavut. A total of 1,216 metres in 10 reverse circulation (RC) drill holes were completed. A total of 586 RC samples will be assayed, with results expected within six weeks. The Company is currently preparing for the Phase 2 drill program. Events Subsequent to February 28, 2009 The Company arranged payment for outstanding invoices owing to MPH Consulting Ltd. totalling $305,452 with a cash payment of $100,000 (paid) and issuance of 600,000 common shares (issued) of the Company. Significant Events, Transactions and Activities on Mineral Properties In order to more fully understand Uranium North’s financial results, it is important that the reader gain an appreciation for the significant events, transactions and activities on mineral properties. Field surveys were carried out on more than 50 prospects on the Amer Lake, South Baker, Thelon UNR, Hepburn, Carswell East and Beatty River properties. To date 1,750 rock samples, 2,150 soil samples and approximately 50,000 line km of airborne geophysical data have been collected. - 24 -
  28. 28. URANIUM NORTH RESOURCES CORP. Management’s Discussion and Analysis For the Period Ended February 28, 2009 Form 51-102F1 Summary of Phase One exploration includes: (i) Amer Lake, Nunavut In October 2008, the Company had successfully completed the 2008 exploration drilling program on its Amer Lake property. The exploration program comprised of 15 reverse circulation drill holes, resulting in the discovery of several new zones with anomalous radioactivity. More than 500 samples were submitted for detailed analysis. In addition, ground prospecting identified several radioactive boulder trains. A total of 1,763 metres of RC drilling were completed in 2008 in sixteen holes. All holes were drilled vertically. All intersections reported are down-hole, core-length intervals using a 0.01% U3O8 cut-off grade. The true thickness of mineralized zones is yet to be determined. Results of the 2008 exploration drill program are as follows: Drill hole From (m) To (m) Interval (m) % U3O8 lbs/ton UNR-15 115.52 117.04 1.52 0.292 5.84 126.16 130.72 4.56 0.075 1.5 including 129.2 130.72 1.52 0.203 4.06 UNR-5 1.52 4.56 3.04 0.022 0.44 19.76 21.28 1.52 0.106 2.12 UNR-4 15.2 18.24 3.04 0.014 0.28 27.36 30.4 3.04 0.018 0.36 33.44 34.96 1.52 0.015 0.30 38 42.56 4.56 0.027 0.54 53.2 54.72 1.52 0.047 0.94 69.92 71.44 1.52 0.012 0.24 UNR-21 74.48 77.52 3.04 0.032 0.64 86.64 89.68 3.04 0.017 0.34 100.32 101.84 1.52 0.048 0.96 115.52 118.56 3.04 0.022 0.44 123.12 124.65 1.53 0.021 0.42 Plans for the Main Zone deposit include immediate modeling of historic and 2008 drill holes to better understand the geological characteristics of the mineralization. A re-evaluation of the historic resource incorporating the 2008 RC data is also being completed in order to determine the potential range in quantity and grade of uranium mineralization in the Main Zone. This will provide a target for the next phase of exploration. Drilling is planned for 2009 in and around the deposit area and will include infill drilling to reduce the drill spacing within the deposit, and expansion drilling southwest, south and east of the deposit. This work will allow the Company to complete a compliant 43-101 resource calculation, and expand the resource. (ii) S. Baker, Nunavut Hawk Prospect - Several radiometric anomalies have been identified near the known Hawk uranium prospect. These anomalies are 200-500 metres in diameter and include areas coincident with boulder samples collected in 2007 that have yielded U3O8 values ranging from less than 0.1 to 4.39%. At least two of the radiometric anomalies appear to be new and untested by previous explorers. An initial drill program has been planned to verify the historical drill data and begin to test the extent of the uranium mineralization of Hawk Lake - 25 -
  29. 29. URANIUM NORTH RESOURCES CORP. Management’s Discussion and Analysis For the Period Ended February 28, 2009 Form 51-102F1 Three drill holes were completed during the 2008 program. Anomalous radioactivity was intersected in two of the holes. A total of 69 samples have been submitted for analysis. On November 26, 2008, the Company announced the results from the summer drill program on the Hawk prospect of the South Baker project in Nunavut. Drilling intersected three uranium mineralized zones in two drill holes, confirming the presence of significant shallow U3O8 mineralization and providing key information on the orientation of a sizeable mineralized zone. Results of the 2008 drill program are as follows: Drill hole From (m) To (m) Interval (m) % U3O8 HL-01-08 2.7 7.7 5.0 0.05 HL-01-08 10.5 27.3 16.8 0.07 Including 11.7 16.7 5.0 0.14 HL-01-08 40.7 55.0 14.3 0.16 Including 42.7 48.7 6.0 0.31 HL-02-08 89.5 93.5 4.0 0.05 HL-02-08 104.5 107.5 3.0 0.08 HL-02-08 131.5 144.0 12.5 0.15 Including 133.5 135.5 2.0 0.29 Including 141.0 143.0 2.0 0.31 All intersections reported are down-hole, core-length intervals. The true thickness of mineralized zone is yet to be determined. Plans for Hawk include modeling of historic and 2008 drill holes to better understand the orientation of the mineralization. Drilling is planned for 2009 on the Hawk target and will be designed to test along strike and down dip extension of the known mineralization. KAM Prospect - Linear magnetic low features identified from the magnetic data, which may relate to structurally controlled alteration associated with uranium mineralization, are coincident with a uranium bearing boulder train that extends for approximately two kilometres. Further, a radiometric anomaly identified along the magnetic low feature is coincident with uraniferous boulders collected in 2007 that have yielded U3O8 values ranging from less than 0.1 to 2.98%. In early September 2008, the Company completed its drilling program on the Kam property. The objective of the South KAM exploration program was to further outline and expand known mineralized zones. Five of the six holes completed during the drill program intersected zones with anomalous radioactivity, while drill-hole four, located two kilometers west of the South Kam prospect, did not reach bedrock. The drilling has outlined what appears to be two or more north – south trending zones that are open to the north, south and to depth. All holes were drilled at a 45 degree angle to a depth of about 200 metres. Drilling only tested to a maximum vertical depth of about 130 metres. The Company anticipates that the uranium mineralization extends below the tested depth and that similar uraniferous zones may exist to the west. More than 160 core samples were submitted for uranium assays. On December 4, 2008, the Company announced the discovery of high-grade uranium mineralization on the KAM prospect located on the South Baker property in Nunavut. Five drill holes at KAM intersected uranium mineralization along a 200 metre zone with several significant mineralized intersections including grades up to 1.59% U3O8. These drill results significantly expands the size potential of the KAM prospect. Mineralization at KAM is near surface and is open to the north, south, and at depth. Surface exploration indicates additional uraniferous zones may exist to the west. - 26 -
  30. 30. URANIUM NORTH RESOURCES CORP. Management’s Discussion and Analysis For the Period Ended February 28, 2009 Form 51-102F1 Results of the 2008 drill program are as follows: Interval Drill hole From (m) To (m) (m) % U3O8 lb/ton K-05-08 50.2 60.2 10 0.3 6 Including 53.2 57.2 4 0.56 11.2 K-05-08 103.7 108.7 5 0.42 8.4 Including 105.7 106.7 1 1.16 23.2 K-03-08 150.1 157 6.9 0.23 4.6 K-03-08 175.67 184.7 9.03 0.36 7.2 Including 177.7 181.7 4 0.7 14 Including 177.7 178.7 1 1.59 31.8 K-02-08 16.13 19.13 3 0.03 0.6 K-02-08 27.13 35.13 8 0.12 2.4 Including 31.13 35.13 4 0.21 4.2 K-02-08 40.13 42.13 2 0.04 0.8 K-02-08 187.45 188.45 1 0.14 2.8 K-04-08 147 149.48 2.48 0.03 0.6 K-04-08 173.7 177.34 3.64 0.06 1.2 K-04-08 179.81 183.2 3.39 0.04 0.8 K-06-08 168.14 169.14 1 0.1 2 Plans for KAM include modeling of historic and 2008 drill holes to better understand the orientation of the mineralization. Drilling is planned for 2009 on the KAM target and will be designed to test along strike and at depth to further delineate the mineralized zone. (iii) Carswell East and Beatty River, Saskatchewan Based on the 2007 for Carswell East, the Company focused exploration efforts on the west side of the property. Work completed includes geological and limited water sampling. Also a detailed interpretation of geophysical data was completed by TerraNotes Ltd. The purpose of the interpretation was to target areas for detailed deep penetrating electromagnetic surveying to better delineate drill targets In the year ended February 28, 2009, the Company allowed the Beatty River claims to lapse and, accordingly, wrote-off expenditures totalling $236,036. - 27 -

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