<PAGE>

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 28, 2005
================================================================================
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                               -----------------
                                    FORM 20-F
                                -----------------

[ ]   REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES
      EXCHANGE ACT OF 1934

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
      ACT OF 1934

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2005

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

           FOR THE TRANSITION PERIOD FROM ___________ TO ____________.

[ ]   SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

         DATE OF EVENT REQUIRING THIS SHELL COMPANY REPORT ____________.

                                -----------------

                         COMMISSION FILE NUMBER: 0-24443

                        INTERNATIONAL URANIUM CORPORATION
               (Exact name of Company as specified in its charter)

                                 ONTARIO, CANADA
                 (Jurisdiction of incorporation or organization)

       SUITE 2101, 885 WEST GEORGIA STREET, VANCOUVER, B.C. CANADA V6C 3E8
                    (Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
                                      NONE

Securities registered or to be registered pursuant to Section 12(g) of the Act.
                         COMMON STOCK WITHOUT PAR VALUE
                                (Title of Class)

 Securities for which there is a reporting obligation pursuant to Section 15(d)
                                  of the Act:
                                      NONE

Indicate the number of outstanding shares of each of the Company's classes of
capital or common stock as of the close of the period covered by the annual
report:

         TITLE OF CLASS          ISSUED AND OUTSTANDING AS OF SEPTEMBER 30, 2005
-------------------------------  -----------------------------------------------
Common Stock, Without Par Value              81,569,066 common shares

<PAGE>

Indicate by check mark whether the Company (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

YES [X] NO [ ]

Indicate by check mark if the Company is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

YES [ ] NO [X]

If this report is an annual or transition report, indicate by check mark if the
Company is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.

YES [ ] NO [X]

If this is an annual report, indicate by check mark whether the Company is a
shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [ ] NO [X]

Indicate by check mark which financial statement item the Company has elected to
follow:

ITEM 17 [X] ITEM 18 [ ]

<PAGE>

                                TABLE OF CONTENTS

                                  INTRODUCTION

<TABLE>
<S>                                                                                          <C>
         Special Note Regarding Forward-Looking Statements................................    i
         Glossary of Terms................................................................    i

                                             PART I

Item 1  Identity of Directors, Senior Management and Advisers.............................    1
Item 2  Offer Statistics and Expected Timetable...........................................    1
Item 3  Key Information...................................................................    1
        A. Selected Financial Data........................................................    1
        B. Capitalization and Indebtedness................................................    2
        C. Reasons for the Offer and Use of Proceeds......................................    2
        D. Risk Factors...................................................................    2
Item 4  Information on the Company........................................................    6
        A. History and Development of the Company.........................................    6
           Description of Business........................................................    6
           Summary of Principal Assets of the Company.....................................    7
           History of Uranium Mining Operations...........................................    9
        B. Business Overview..............................................................    9
           Current Operations.............................................................    9
           Alternate Feed Processing......................................................   12
           Urizon Joint Venture...........................................................   13
           Moab Tailings Project..........................................................   14
           The Uranium Industry...........................................................   14
           The Vanadium Market............................................................   16
        C. Organizational Structure.......................................................   17
        D. Property, Plant and Equipment..................................................   18
           Canadian Uranium Exploration Properties........................................   18
           White Mesa Mill................................................................   26
           Summary of Mineralized Material Deposits.......................................   28
           Colorado Plateau District......................................................   29
           Henry Mountains Complex........................................................   31
           Arizona Strip..................................................................   33
           Mongolian Uranium Properties...................................................   35
           Fortress Properties............................................................   39
           Permitting.....................................................................   42
           Reclamation....................................................................   43
Item 5  Operating and Financial Review and Prospects......................................   44
Item 6  Directors, Senior Management and Employees........................................   56
        A. Directors and Senior Management................................................   56
        B. Compensation...................................................................   58
        C. Board Practices................................................................   59
        D. Employees......................................................................   62
        E. Share Ownership................................................................   62
Item 7  Major Shareholders and Related Party Transactions.................................   63
        A. Major Shareholders.............................................................   63
        B. Related Party Transactions.....................................................   63
        C. Interest of Experts and Counsel................................................   64
Item 8  Financial Information.............................................................   64
        A. Consolidated Statements........................................................   64
        B. Significant Changes............................................................   65
Item 9  The Offer and Listing.............................................................   65
        A. Offer and Listing Details......................................................   65
        B. Plan of Distribution...........................................................   65
        C. Markets .......................................................................   66
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                          <C>
Item 10 Additional Information............................................................   67
        A. Share Capital..................................................................   67
        B. Memorandum and Articles of Association.........................................   67
        C. Material Contracts.............................................................   69
        D. Exchange Controls..............................................................   69
        E. Taxation.......................................................................   70
        F. Dividends and Paying Agents....................................................   74
        G. Statement by Experts...........................................................   74
        H. Documents on Display...........................................................   74
        I. Subsidiary Information.........................................................   74
Item 11 Quantitative and Qualitative Disclosure about Market Risk.........................   74
Item 12 Description of Securities Other than Equity Securities............................   75

                                            PART II

Item 13 Defaults, Dividend Arrearages and Delinquencies...................................   75
Item 14 Material Modifications to the Rights of Security Holders and Use of Proceeds......   75
Item 15 Controls and Procedures...........................................................   75
Item 16 [Reserved]
        A. Audit Committee Charter........................................................   76
        B. Code of Ethics.................................................................   76
        C. Principal Accountant Fees and Services.........................................   76
        D. Exemption from the Listing Standards for Audit Committees......................   77
        E. Purchases of Equity Securities by the Issuer and Affiliated Persons............   77

                                           PART III

Item 17 Financial Statements..............................................................   77
Item 18 Financial Statements..............................................................   77
Item 19 Financial Statements and Exhibits.................................................   77
</TABLE>

<PAGE>

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

Except for the statements of historical fact contained therein, the information
under the headings "Item 4 - "Information on the Company," "Item 5 - "Operating
and Financial Review and Prospects," "Item 11 - Quantitative and Qualitative
Disclosure About Market Risk," and elsewhere in this Form 20-F constitutes
forward looking statements ("Forward Looking Statements") within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Such Forward Looking Statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to differ
materially from any future results, performance or achievements projected or
implied by such Forward Looking Statements. Such factors include, among others,
exploration risks, the ability of the Company to develop the alternate feed
business, dependence on a limited number of customers, limited operating
history, government regulation and policy risks, environmental risks,
reclamation obligations, and the other factors set forth in the section entitled
"Risk Factors".

ALL REFERENCE TO DOLLARS IN THIS FORM 20-F ARE DENOMINATED IN U.S. DOLLARS
UNLESS SPECIFIED OTHERWISE.

                                GLOSSARY OF TERMS

<TABLE>
<S>                  <C>
ALTERNATE            FEED Material or residues from other processing facilities
                     that contain uranium in quantities or forms that are either
                     uneconomic to recover or cannot be recovered at these other
                     facilities, but can be recovered either alone or in
                     conjunction with other co-products at the Company's
                     facilities;

BLM                  Means the United States Department of Interior Bureau of
                     Land Management;

CCD                  CIRCUIT The counter-current decantation circuit at the
                     White Mesa Mill, in which uranium-bearing solution is
                     separated from waste solids;

COMPANY              The Company and all of its subsidiaries on a consolidated
                     basis;

CONVERSION           A process whereby the purified uranium obtained in the
                     refining process is converted into forms suitable for
                     making nuclear fuel (UO(2)) or for enrichment (UF(6));

DOE                  United States Department of Energy;

$                    Means United States dollars and "CDN $" means Canadian
                     dollars;

E% U(3)O(8)          Means equivalent % U(3)O(8) as determined by a down hole
                     radiometric probe;

ENRICHMENT           A process whereby the U-235 isotope content is increased
                     from the natural level of 0.711% to a concentration of 3%
                     to 5% as required in fuel for light water reactors;

EIS                  Means Environmental Impact Statement;

EPA                  Means the United States Environmental Protection Agency;

ERDENE               Erdene Gold Inc., a corporation whose shares are traded on
                     the TSX Exchange;

FEE LAND             Means private land;

FORTRESS             Fortress Minerals Corp., a corporation in which the Company
                     holds an interest, and the shares of which are traded on
                     the TSX Venture Exchange;

FUSRAP               Formerly Utilized Sites Remedial Action Program;

GPT                  Grams per tonne;

HECTARE              Measurement of an area of land equivalent to 10,000 square
                     meters or 2.47 acres;
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                        <C>
ISL OR IN SITU LEACH       In situ leach mining is solution mining that is confined to
                           mineralized horizons and does not involve excavation and
                           removal of mineralized rock or subsequent processing of
                           such rock through a mill to recover uranium. Rather, the
                           mineralized material is mined by using groupings of wells
                           completed in the mineralized horizons to inject leach
                           solution, which is recovered in production wells. The
                           leaching solution selectively dissolves uranium
                           mineralization, and the solution is then processed to
                           recover contained uranium.

IUM                        International Uranium Mongolia, XXK, a wholly owned
                           Mongolian subsidiary of the Company;

KM                         Kilometer, a measurement of distance equivalent to 1,000
                           meters or 0.62 miles;

METER                      Meter, a measurement of distance equivalent to 39.37 inches;

MINERALIZATION             Means a natural aggregate of one or more metallic minerals;

MINERAL DEPOSIT OR
MINERALIZED MATERIAL       Is a mineralized body which has been delineated by
                           appropriately spaced drilling and/or underground sampling
                           to support a sufficient tonnage and average grade of
                           metal(s). Such a deposit does not qualify as a reserve
                           until a comprehensive evaluation based upon unit cost,
                           grade, recoveries, and other material factors conclude
                           legal and economic feasibility;

NI 43-101                  National Instrument 43-101 Standards of Disclosure for
                           Mineral Projects, promulgated by the Canadian Securities
                           Administrators;

NRC                        The United States Nuclear Regulatory Commission;

NSR                        ROYALTY An acronym for Net Smelter Returns Royalty, which
                           means the amount actually paid to the mine or mill owner
                           from the sale of ore, minerals and other materials or
                           concentrates mined and removed from mineral properties.
                           This type of royalty provides cash flow that is free of any
                           operating or capital costs;

PARTIALLY DEVELOPED        With respect to properties, means properties that contain
                           workings from previously operating mines that were shut
                           down due to a lack of economic feasibility of the remaining
                           mineralized material at the time the properties were shut
                           down;

PPB                        Parts per billion;

RESERVE                    That part of a mineral deposit which can be economically
                           and legally extracted or produced at the time of the
                           reserve determination;

SAG MILL                   The semi-autogenous grinding mill at the White Mesa Mill in
                           which the uranium ore is ground prior to the leaching
                           process;

TAILINGS                   Waste material from a mineral processing mill after the
                           metals and minerals of commercial value have been
                           extracted;

TON                        A short ton (2,000 pounds);

TONNE                      A metric tonne (2,204.6 pounds);

UDEQ                       State of Utah Department of Environmental Quality;

URANIUM OR U               Means natural uranium; 1% U=1.18% U(3)O(8);
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                        <C>
UF(6)                      Means natural uranium hexafluoride, produced by conversion
                           from U(3)O(8), which is not yet enriched or depleted;

U(3)O(8)                   Triuranium octoxide;

V(2)O(5)                   Vanadium pentoxide;

WHITE MESA MILL            Means the 2,000 ton per day uranium mill, with a vanadium
                           or other co-product recovery circuit, located near
                           Blanding, Utah that is owned by the Company's subsidiary,
                           IUC White Mesa, LLC. Also referred to as the "Mill;"

YELLOWCAKE                 Means the concentrate powder produced from uranium milling,
                           or from an in situ leach facility. Yellowcake typically
                           contains approximately 90% U(3)O(8) from conventional
                           mineralized material.
</TABLE>

                                       iii

<PAGE>

                                     PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

A. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data of
International Uranium Corporation (the "Company" or "IUC") for the fiscal years
ended September 30, 2005, 2004, 2003, 2002 and 2001, and was prepared in
accordance with Canadian generally accepted accounting principles ("Canadian
GAAP"). The table also summarizes certain corresponding information prepared in
accordance with United States generally accepted accounting principles ("U.S.
GAAP"). This selected consolidated financial data includes the accounts of the
Company and its subsidiaries. All amounts stated are in United States dollars:

                             SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
                      FISCAL YEAR ENDED   FISCAL YEAR ENDED   FISCAL YEAR ENDED   FISCAL YEAR ENDED   FISCAL YEAR ENDED
                         SEPTEMBER 30        SEPTEMBER 30        SEPTEMBER 30        SEPTEMBER 30        SEPTEMBER 30
                             2005              2004(1)              2003(1)              2002                2001
                      -----------------   -----------------   -----------------   -----------------   -----------------
<S>                   <C>                 <C>                 <C>                 <C>                 <C>
Revenues                $    130,816        $  2,424,456        $ 12,550,018         $  6,830,137        $    809,763

Net earnings (loss)
    Canadian GAAP       $ (2,372,188)       $ (2,186,679)       $  5,533,152         $    184,990        $ (2,822,876)
    US GAAP             $(12,801,866)       $ (8,239,055)       $  4,468,857         $   (353,907)       $ (2,822,876)

Basic/diluted
earnings (loss) per
equity share
    Canadian GAAP       $      (0.03)       $      (0.03)       $       0.08         $          -        $      (0.04)
    US GAAP             $      (0.19)       $      (0.11)       $       0.07         $      (0.01)       $      (0.04)

Total assets
    Canadian GAAP       $ 45,201,571        $ 39,387,555        $ 25,616,252         $ 32,379,270        $ 36,017,455
    US GAAP             $ 37,368,936        $ 38,452,180        $ 24,991,779         $ 32,063,607        $ 36,040,689

Net assets
    Canadian GAAP       $ 24,805,502        $ 20,532,482        $ 10,124,496         $  4,122,420        $  3,920,034
    US GAAP             $ 15,603,345        $ 19,597,107        $  8,570,748         $  3,806,757        $  3,943,268

Capital stock
    Canadian GAAP       $ 56,145,784        $ 50,305,480        $ 37,935,533         $ 37,466,609        $ 37,449,213
    US GAAP             $ 55,865,737        $ 49,960,859        $ 37,319,563         $ 36,850,639        $ 36,633,243

Number of shares          81,569,066          79,635,066          68,970,066           65,735,066          65,600,066
outstanding

Dividends declared      $          -        $          -        $          -         $          -        $          -
</TABLE>

----------
(1)   During the fiscal year ended September 30, 2005, the Company retroactively
      adopted the fair-value based method of accounting for stock options
      granted to employees requiring a restatement of prior periods under US
      GAAP. As a result, stock-based compensation expense under US GAAP
      increased by $737,904 for the fiscal year ended September 30, 2004 and by
      $35,751 for the fiscal year ended September 30, 2003. The effects of the
      restatement have been included in the table above.

                                      -1-
<PAGE>

B. CAPITALIZATION AND INDEBTEDNESS

Not Applicable.

C. REASONS FOR THE OFFER AND USE OF PROCEEDS

Not Applicable.

D. RISK FACTORS

The following risk factors should be considered in connection with any
investment in the Company.

NATURE OF MINERAL EXPLORATION AND MINING

The Company is engaged in exploration activity for uranium in Canada and
Mongolia. The Company is also engaged in precious and base metals exploration in
Mongolia and Russia through Fortress Minerals Corp. ("Fortress"), in which the
Company currently holds a 44.2% equity interest. The exploration and development
of mineral deposits involves significant financial and other risks over an
extended period of time, which even a combination of careful evaluation,
experience and knowledge may not eliminate. While discovery of a uranium,
precious or base metal deposit may result in substantial rewards, few properties
which are explored are ultimately developed into producing mines. Major expenses
are required to establish reserves by drilling and to construct mining and
processing facilities at a site. The Company's exploration properties are all at
the exploration stage and do not contain any reserves at this time. It is
impossible to ensure that the current or proposed exploration programs on
properties in which the Company has an interest will result in the delineation
of mineral deposits or in profitable commercial mining operations.

The operations of the Company are subject to the hazards and risks normally
incident to exploration, development and production of uranium, precious and
base metals, any of which could result in damage to life or property,
environmental damage and possible legal liability for such damage. While the
Company may obtain insurance against certain risks, the nature of these risks
are such that liabilities could exceed policy limits or could be excluded from
coverage. There are also risks against which the Company cannot insure or
against which it may elect not to insure. The potential costs which could be
associated with any liabilities not covered by insurance, or in excess of
insurance coverage, or compliance with applicable laws and regulations may cause
substantial delays and require significant capital outlays, adversely affecting
the future earnings and competitive position of the Company and, potentially its
financial viability.

Whether a uranium, precious or base metal deposit will be commercially viable
depends on a number of factors, some of which are: the particular attributes of
the deposit, such as its size and grade; costs and efficiency of the recovery
methods that can be employed; proximity to infrastructure; financing costs; and
governmental regulations, including regulations relating to prices, taxes,
royalties, infrastructure, land use, importing and exporting of minerals and
environmental protection. The effect of these factors cannot be accurately
predicted, but the combination of these factors may result in the Company not
receiving an adequate return on its invested capital.

VOLATILITY AND SENSITIVITY TO PRICES, COSTS AND EXCHANGE RATES

Because a significant portion of the Company's revenues have been derived from
the sale of uranium and vanadium in the past, the Company's net earnings can be
affected by the long- and short-term market price of U(3)O(8) and V(2)O(5).
Uranium and vanadium prices are subject to fluctuation. The prices of uranium
and vanadium have been and will continue to be affected by numerous factors
beyond the Company's control. With respect to uranium, such factors include the
demand for nuclear power, political and economic conditions in uranium producing
and consuming countries, uranium supply from secondary sources and uranium
production levels and costs of production.

During fiscal 2005, U(3)O(8) spot prices started at $20.00 per pound U(3)O(8) in
September 2004, and then increased to $31.25 per pound in September 2005 and to
$35.25 per pound as of December 5, 2005. Vanadium prices began the fiscal year
in the $5.00 to $6.50 per pound V(2)O(5) range. Vanadium prices ended the fiscal
year in the range of $18.00 to $23.00 per lb V(2)O(5). As of December 2, 2005,
V(2)O(5) prices were trading in the range of $11.70 to $13.00 per pound
V(2)O(5).

                                      -2-
<PAGE>

IMPRECISION OF MINERAL DEPOSIT ESTIMATES

Mineral deposit figures included in this document for uranium and vanadium are
estimates, and no assurances can be given that the indicated levels of recovery
will be realized. Such estimates are expressions of judgment based on knowledge,
mining experience, and analysis of drilling results and industry practices.
Valid estimates made at a given time may significantly change when new
information becomes available. While the Company believes that the mineral
deposit estimates included in this document are well established and reflect
management's best estimates, by their nature, mineral deposit estimates are
imprecise and depend upon statistical inferences which may ultimately prove
unreliable. Furthermore, none of the Company's mineral deposits are considered
reserves at this time, and there can be no assurances that any of such deposits
will ever be reclassified as reserves. Mineral deposit estimates included here
have not been adjusted in consideration of these risks and, therefore, no
assurances can be given that any mineral deposit estimate will ultimately be
reclassified as reserves.

MINING AND MILLING RISKS AND INSURANCE

The mining and milling of uranium and uranium-bearing materials is a capital
intensive commodity business and is subject to a number of risks and hazards.
These risks include but are not limited to volatility in capital and operating
costs, environmental pollution, accidents or spills, industrial accidents, labor
disputes, changes in the regulatory environment, natural phenomena (such as
inclement weather conditions, underground flooding and earthquakes), and
encountering unusual or unexpected geological conditions. Depending on the size
and extent of the event, various risks and hazards including the foregoing could
result in damage to, or destruction of, the Company's mineral properties,
personal injury or death, environmental damage, delays in or cessation of
production from the Company's Mill, mines or in its exploration or development
activities, monetary losses, cost increases which could make the Company
uncompetitive, and potential legal liability. In addition, due to the
radioactive nature of the materials handled in uranium mining and milling,
applicable regulatory requirements result in additional costs that must be
incurred by the Company on a regular and ongoing basis.

The Company maintains insurance against certain risks that are typical in the
uranium industry. As of December 19, 2005, this includes approximately
$50,300,000 of real and personal property insurance coverage for the White Mesa
Mill, $3,000,000 of business interruption insurance for the White Mesa Mill
caused by fire or other insured casualty, and $7,000,000 of general liability
insurance per occurrence. Although the Company maintains insurance in amounts it
believes to be reasonable, such insurance may not provide adequate coverage in
the event of certain unforeseen circumstances. Insurance against certain risks
(including certain liabilities for environmental pollution or other hazards as a
result of production, development or exploration), is generally not available to
the Company or to other companies within the uranium mining and milling
business.

ENVIRONMENTAL RISKS

The Company is required to comply with environmental protection laws and
regulations and permitting requirements, and the Company anticipates that it
will be required to continue to do so in the future. The material laws and
regulations within the U.S. that the Company must comply with are the Atomic
Energy Act, Uranium Mill Tailings Radiation Control Act of 1978 ("UMTRCA"),
Clean Air Act, Clean Water Act, Safe Drinking Water Act, Federal Land Policy
Management Act, National Park System Mining Regulations Act, and the State Mined
Land Reclamation Acts or State Department of Environmental Quality regulations,
as applicable. The Company also is required to comply with environmental
protection laws in Canada and Mongolia.

The Company complies with the Atomic Energy Act, as amended by UMTRCA, by
applying for and maintaining an operating license from the State of Utah.
Uranium milling operations must conform to the terms of such licenses, which
include provisions for protection of human health and the environment from
endangerment due to radioactive materials. The licenses encompass protective
measures consistent with the Clean Air Act and the Clean Water Act. The Company
utilizes specific employees and consultants in order to comply with and maintain
the Company's compliance with the above laws and regulations.

Although the Company believes that its operations are in compliance, in all
material respects, with all relevant permits, licenses and regulations involving
worker health and safety as well as the environment, the historical trend toward
stricter environmental regulation may continue. In addition, with the transition
of the regulatory authority from the U.S. Nuclear Regulatory Commission ("NRC")
to the State of Utah, the State is re-evaluating the applicable criteria for
ground water compliance, which could have a material adverse effect on Mill
operations.

                                      -3-
<PAGE>

The uranium industry is subject not only to the worker health and safety and
environmental risks associated with all mining businesses, but also to
additional risks uniquely associated with uranium mining and milling. The
possibility of more stringent regulations exists in the areas of worker health
and safety, the disposition of wastes, the decommissioning and reclamation of
exploration, mining and milling sites, and other environmental matters, each of
which could have a material adverse effect on the costs or the viability of a
particular project.

The Company has detected some chloroform contamination in the perched
groundwater zone at the Mill site. The contamination appears to have resulted
from the operation of a temporary laboratory facility that was located at the
site prior to and during construction of the Mill facility, and septic
drainfields that were used for laboratory and sanitary wastes prior to
construction of the Mill's tailings cells. See "Item 8. Financial Information -
Legal Proceedings." The source and extent of this contamination are currently
under investigation, and interim measures have been instituted in order to
contain the contamination and to pump contaminated groundwater into the Mill's
tailings cells. A final corrective action plan has not yet been developed.
Although investigations to date indicate that this contamination appears to be
contained in a manageable area, the scope and costs of remediation have not yet
been determined and could be significant.

RECLAMATION OBLIGATIONS

As owner and operator of the White Mesa Mill and numerous uranium and
uranium/vanadium mines, and for so long as the Company remains the owner
thereof, the Company is obligated to eventually reclaim such properties. Most
but not all of these reclamation obligations are bonded, and cash and other
assets of the Company have been reserved to secure this bonded amount. Although
the Company's financial statements contain, as a liability, the Company's
current estimate of the cost of performing these reclamation obligations, and
the bonding requirements are generally periodically reviewed by applicable
regulatory authorities, there can be no assurance or guarantee that the ultimate
cost of such reclamation obligations will not exceed the estimated liability
contained on the Company's financial statements. In addition, effective January
20, 2001, the BLM implemented new Surface Management (3809) Regulations
pertaining to mining operations conducted on mining claims on public lands. The
new 3809 regulations impose additional requirements for permitting of mines on
federal lands and may have some impact on the closure and reclamation
requirement for Company mines on public lands. If more stringent and costly
reclamation requirements are imposed as a result of the new 3809 rules, the
amount of reclamation bonds held by the Company and the reclamation liability
recorded in the Company's financial statements may need to be increased. See
"Item 4. Information on the Company - Reclamation."

PRODUCTION ESTIMATES

The Company prepares estimates of future production for particular operations.
No assurances can be given that production estimates will be achieved. Failure
to achieve production estimates could have an adverse impact on the Company's
future cash flows, earnings, results of operations and financial condition.
These production estimates are based on among other things, the following
factors: the accuracy of mineralized deposit estimates; the accuracy of
assumptions regarding ground conditions and physical characteristics of ores;
and, the accuracy of estimated rates and costs of mining and processing.

MONGOLIAN PROPERTIES

The Company owns uranium properties directly and through joint venture interests
and is undertaking a uranium exploration program in Mongolia. Fortress, in which
the Company holds a 44.2% equity interest, is also undertaking a precious and
base metals exploration program in Mongolia. As with any foreign operation,
these Mongolian properties and interests may be subject to certain risks, such
as adverse political and economic developments in Mongolia, foreign currency
controls and fluctuations, as well as risks of war and civil disturbances. Other
events may limit or disrupt activities on these properties, restrict the
movement of funds, result in a deprivation of contract rights or the taking of
property or an interest therein by nationalization or expropriation without fair
compensation, increases in taxation or the placing of limits on repatriations of
earnings. No assurance can be given that current policies of Mongolia or the
political situation within that country will not change so as to adversely
affect the value or continued viability of the Company's interest in these
Mongolian assets.

PROPERTY TITLE RISK

The Company has investigated its rights to explore and exploit all of its
material properties and, to the best of its knowledge, those rights are in good
standing. However, no assurance can be given that such rights will not be
revoked, or significantly altered, to its detriment. There can also be no
assurance that the Company's rights will not

                                      -4-
<PAGE>

be challenged or impugned by third parties, including the local governments, and
in Canada by First Nations and Metis.

The validity of unpatented mining claims on U.S. public lands is sometimes
uncertain and may be contested. Due to the extensive requirements and associated
expense required to obtain and maintain mining rights on U.S. public lands, the
Company's U.S. properties may be subject to various uncertainties which are
common to the industry, with the attendant risk that its title may be defective.

The Company is in the process of confirming certain title matters with respect
to its recently acquired Henry Mountains Complex claims and has withheld a
portion of the purchase price for those claims in the interim. Although the
Company is not currently aware of any existing title uncertainties with respect
to any of its other material properties, there is no assurance that such
uncertainties will not result in future losses or additional expenditures, which
could have an adverse impact on the Company's future cash flows, earnings,
results of operations and financial condition.

RELIANCE ON ALTERNATE FEED INCOME; DEPENDENCE ON ISSUANCE OF LICENSE AMENDMENTS

A portion of the Company's expected revenues and income over the next several
years is expected to result from processing alternate feed materials through the
White Mesa Mill. The Company's ability to process alternate feeds is dependent
upon obtaining amendments to its Mill license. There can be no assurance that
such license amendments will be issued by applicable regulatory authorities. See
"Item 4. Information on the Company - Alternate Feed Processing" and "Item 8.
Financial Information - Legal Proceedings."

Although the Company believes that alternate feed sources will continue to
generate income for the Company in the foreseeable future to help offset Mill
and mine standby costs, there can be no guarantees or assurance that this will
be the case.

DEPENDENCE ON KEY PERSONNEL

The Company's success will largely rely on the efforts and abilities of certain
key employees. Certain of these individuals have significant experience in the
uranium exploration, mining and milling industries. The number of individuals
with significant experience in this industry is small. While the Company does
not foresee any reason why such key employees will not remain with the Company,
if for any reason they do not, the Company could be adversely affected. The
Company has not purchased key man life insurance for any of these individuals.

INTERNAL CONTROLS

Internal controls over financial reporting are procedures designed to provide
reasonable assurance that transactions are properly authorized, assets are
safeguarded against unauthorized or improper use, and transactions are properly
recorded and reported. A control system, no matter how well designed and
operated, can provide only reasonable, not absolute, assurance with respect to
the reliability of financial reporting and financial statement preparation.

LIMITED OPERATING HISTORY

The Company began its business in May 1997, following the acquisition of assets
from the Energy Fuels group of companies (See "Item 4: Information on the
Company - History and Development of the Company"). As a result, the Company has
had a limited history of operations. There can be no assurance that the
Company's operations will be profitable.

GOVERNMENTAL REGULATION AND POLICY RISKS

Mining and milling operations and exploration activities, particularly uranium
mining and milling in the United States and alternate feed processing
activities, are subject to extensive regulation by state and federal
governments. Such regulation relates to production, development, exploration,
exports, taxes and royalties, labor standards, occupational health, waste
disposal, protection and remediation of the environment, mine and mill
reclamation, mine and mill safety, toxic substances and other matters.
Compliance with such laws and regulations has increased the costs of exploring,
drilling, developing, constructing, operating and eventual closure of the
Company's Mill, mines and other facilities. It is possible that, in the future,
the costs, delays and other effects associated with such laws and regulations
may have an impact on the Company's decisions as to whether to operate the Mill,
existing mines and other facilities or, with respect to exploration and
development properties, whether to proceed with exploration or

                                      -5-
<PAGE>

development. Furthermore, future changes in governments, regulations and
policies, could materially adversely affect the Company's results of operations
in a particular period or its long-term business prospects.

Worldwide demand for uranium is directly tied to the demand for energy produced
by the nuclear electric industry, which is also subject to extensive government
regulation and policies. The development of mines and related facilities is
contingent upon governmental approvals which are complex and time consuming to
obtain and which, depending upon the location of the project, involve various
governmental agencies. The duration and success of such approvals are subject to
many variables outside the Company's control. In addition, the international
marketing of uranium is subject to governmental policies and certain trade
restrictions, such as those imposed by the suspension agreements entered into by
the United States with certain republics of the former Soviet Union and the
agreement between the United States and Russia related to the supply of Russian
Highly Enriched Uranium ("HEU") into the United States.

URANIUM INDUSTRY COMPETITION AND INTERNATIONAL TRADE RESTRICTIONS

The international uranium industry is highly competitive in many respects,
including the supply of uranium. The Company markets uranium to utilities in
direct competition with supplies available from a relatively small number of
Western World uranium mining companies, from certain republics of the former CIS
and from excess inventories, including inventories made available from
decommissioning of military weapons. To a limited extent, the effects of the
supply of uranium from Russia are mitigated by a suspension agreement entered
into by the United States with Russia, that restrict imports into the United
States market. In addition, in January 1994, the United States and Russia signed
a 20-year agreement to convert HEU from former Russian nuclear weapons to an
enrichment level suitable for use in nuclear power plants, and certain annual
quantities of natural uranium from this agreement may be sold by Russia into the
United States market. The European Community also has an informal policy
limiting annual consumption of uranium sourced from the former CIS republics.
These agreements and any similar future agreements, governmental policies or
trade restrictions are beyond the control of the Company and may affect the
supply of uranium available in the United States, which is the largest market
for uranium in the world.

CONFLICTS OF INTEREST

Certain of the directors of the Company also serve as directors of other
companies involved in natural resource exploration and development, and
consequently there exists the possibility for such directors to be in a position
of conflict. Any decision made by such directors involving the Company will be
made in accordance with the duties and obligations of directors to deal fairly
and in good faith with the Company and such other companies. In addition, such
directors must declare, and refrain from voting on, any matter in which such
directors may have a conflict of interest. The Company believes that no material
conflicts of interest currently exist. See "Item 7. Major Shareholders and
Related Party Transactions - Related Party Transactions" and "Item 6.

Directors, Senior Management and Employees - Board Practices."

ITEM 4. INFORMATION ON THE COMPANY

A. HISTORY AND DEVELOPMENT OF THE COMPANY

                             DESCRIPTION OF BUSINESS

The Company is engaged in uranium exploration, mining and milling, including the
business of recycling uranium-bearing waste products at its White Mesa uranium
Mill as an alternative to the direct disposal of these waste products. In
addition, the Company sells uranium recovered from these operations. The Company
also sells vanadium and other metals that can be produced as a co-product with
uranium. The Company has uranium exploration programs in Mongolia and in the
Athabasca Region of Saskatchewan, Canada. The Company owns several uranium and
uranium/vanadium mines that have been shut down pending further improvements in
commodity prices. See "Current Operations". In addition, the Company owns a
44.2% equity interest in Fortress which is engaged in precious and base metal
exploration in Mongolia. See "Fortress Properties."

The Company is the product of an amalgamation under the Business Corporations
Act (Ontario) (the "Act") of two companies; namely, International Uranium
Corporation, incorporated on October 3, 1996 under the laws of the Province of
Ontario pursuant to the Act, and Thornbury Capital Corporation, incorporated
under the laws of the Province of Ontario by Letters Patent ("Thornbury") on
September 29, 1950. The amalgamation was made effective on May 9, 1997, pursuant
to a Certificate of Amalgamation dated that date. The amalgamated companies were
continued under the name "International Uranium Corporation." The Company
operates under the Act.

                                      -6-
<PAGE>

The head office of the Company is located at 2101 - 885 West Georgia Street,
Vancouver, B.C. Canada V6C 3E8, telephone number 604-689-7842. The Company's
United States operations are headquartered at Suite 950, 1050 Seventeenth
Street, Denver, CO 80265, telephone number 303-628-7798. The registered office
of the Company is located at Suite 2100, Scotia Plaza, 40 King Street West,
Toronto, Ontario, M5H 3C2, telephone number 416-869-5300.

The Company entered the uranium industry in May 1997 by acquiring substantially
all of the uranium producing assets of Energy Fuels Ltd., Energy Fuels
Exploration Company, and Energy Fuels Nuclear, Inc. (collectively "Energy
Fuels"). The Company raised Cdn $47.25 million through a special warrant private
placement and used cash of approximately Cdn $29.3 million ($20.5 million) to
purchase the Energy Fuels' assets. Energy Fuels was a uranium producer with
properties in the United States and Mongolia.

The Energy Fuels' assets acquired included several developed mines that were
shut down, several partially developed properties and exploration properties
within the states of Colorado, Utah, Arizona, Wyoming and South Dakota, as well
as the 2,000 ton per day White Mesa Mill near Blanding, Utah. The White Mesa
Mill is a fully permitted dual circuit uranium/vanadium mill. In addition to the
U.S. properties, the Company also acquired a 70% interest in a joint venture
with the government of Mongolia and a Russian government entity to explore for
uranium mineralization in Mongolia.

Due to deteriorating commodity prices at the time and other factors, the Company
ceased its uranium mining and exploration activities in 1999, and shut down all
of its mines and suspended its Mongolian uranium joint venture activities. The
Company also sold its uranium property in Wyoming and released its properties in
South Dakota. However, as a result of recent increases in uranium prices, the
Company has acquired and staked uranium exploration properties in Canada and
commenced exploration on certain of those properties in early fiscal 2004. The
Company has also recommenced its uranium exploration program in Mongolia. In
addition, the Company has purchased additional uranium properties in the U.S.
and is currently evaluating the possibility of recommencing certain of its U.S.
mining activities if uranium prices continue to increase.

Fortress, in which the Company owns a 44.2% equity interest, is undertaking a
precious and base metals exploration program in Mongolia and Russia. See
"Fortress Properties."

In addition to its uranium exploration programs, the Company continues to devote
resources to the development of the alternate feed, uranium-bearing waste
recycling business. The Company has had considerable success to date in this
initiative with the alternate feed business helping to offset Mill and mine
standby costs. The Company is continuing to pursue additional alternate feed
business. See "Alternate Feed Processing."

                   SUMMARY OF PRINCIPAL ASSETS OF THE COMPANY

UNITED STATES ASSETS

The Company's principal assets in the United States are the following:

      -     the White Mesa Mill, a 2,000 ton per day uranium and vanadium
            processing plant near Blanding, Utah. See "White Mesa Mill."

      -     the Arizona Strip uranium properties, in north central Arizona. See
            "Arizona Strip."

      -     the Colorado Plateau uranium properties, straddling the southwestern
            Colorado and Utah border. See "Colorado Plateau District."

      -     the Henry Mountains uranium complex, in south central Utah. See
            "Henry Mountains Complex."

      -     various uranium waste processing contracts and joint venture
            contracts. See "Alternate Feed Processing" and "Urizon Joint
            Venture."

                                      -7-
<PAGE>

CANADIAN ASSETS

In Canada, the Company has the following principal assets:

      -     a 75% interest in the Moore Lake uranium exploration property.

      -     an option to earn a 75% interest in the Lazy Edward Bay uranium
            exploration property.

      -     an option to earn a 75% interest in the Crawford Lake and Brown Lake
            exploration projects, subject to signing of formal agreements.

      -     an option to earn a 75% interest in the Kelic Lake, South Dufferin,
            Pendleton Lake and Cigar South uranium exploration properties and an
            option to earn a 51% interest in the North Wedge uranium exploration
            property.

      -     an option to earn a 51% interest in the Huard-Kirsch Lake uranium
            exploration property.

      -     a 50/50 joint venture in the Hatchet Lake exploration projects,
            subject to signing a formal agreement.

In addition, the Company has staked additional exploration ground totaling
285,683 hectares in the Athabasca Basin. See "Canadian Uranium Exploration
Properties."

MONGOLIAN PROPERTIES

The Company has the following principal assets in Mongolia:

      -     a 70% interest in the Gurvan Saihan Joint Venture. The other parties
            are the Mongolian Government as to 15% and Geologorazvedka, a
            Russian government entity, as to the remaining 15%. As of December
            19, 2005, the Gurvan Saihan Joint Venture holds 1.774 million
            hectares of uranium exploration properties in Mongolia. See
            "Mongolian Uranium Properties."

      -     Nine exploration licenses, totaling approximately 539,000 hectares
            as of December 19, 2005, which are wholly owned by the Company
            through its subsidiary International Uranium Mongolia, XXK ("IUM").

      -     an option to earn a 65% interest in 32 uranium exploration licenses
            totaling approximately 1.2 million hectares.

FORTRESS PROPERTIES

The Company has a 44.2% equity interest in Fortress and Fortress has the
following principal assets:

      -     gold and base metals exploration properties in Mongolia, totaling
            2.5 million hectares, as of December 19, 2005. See "Fortress
            Properties."

      -     an option to earn a 80% interest in the Svetloye gold project in
            eastern Russia. See "Fortress Properties."

Fortress is a Canadian corporation whose shares are listed on the TSX Venture
Exchange (ticker symbol: FST), and have traded in the range of Cdn $0.31 to Cdn
$0.80 per share between October 1, 2004 and November 30, 2005, with the total
volume of shares traded during that period being 35,396,300 shares.

PRINCIPAL CAPITAL EXPENDITURES AND DIVESTITURES

The Company's principal capital expenditures during the last three fiscal years
were $14,395,406 for mineral property exploration. Of that amount, $9,317,039
was spent on Canadian uranium exploration, $3,444,593 was spent on Fortress'
precious and base metals exploration program in Mongolia, and $1,633,774 was
spent on Mongolian uranium exploration. The Company expended $1,226,649 during
the last three fiscal years primarily on plant and equipment for its U.S.
operations. In addition, the Company contributed $1,500,000 in cash together
with its technology license to the Urizon Joint Venture. During this same time
period the Company raised proceeds of approximately $369,983 from the sale of
surplus mining equipment. In addition, due to a significant deterioration in the
market price of uranium and vanadium during the period 1999-2002, the Company
wrote off its investment in its Mongolian uranium joint venture and U.S. mining
properties at that time. However, with continued upward pressure on uranium
prices throughout fiscal 2004, the Company recommenced its uranium exploration
program in Mongolia (See "Mongolian Uranium Properties"), and is currently
evaluating the possibility of recommencing certain of its U.S. mining activities
if uranium prices continue to increase.

                                      -8-
<PAGE>

The Company expects to finance its uranium exploration program in Canada and
Mongolia and the potential restart of its U.S. mining operations through the
issuance of equity by the Company, and the development of the alternate feed
business, through internal sources. To this end, on October 14, 2005, the
Company completed a private placement offering of 6,000,000 common shares at a
price of Cdn $7.50 per share, and realized gross proceeds of Cdn $45,000,000. On
December 5, 2005, the Company raised Cdn $6,587,500 through the issuance of
850,000 flow through common shares at a price of Cdn $7.75 per share. See
"Canadian Uranium Exploration Properties," and "Financing Activities."

                      HISTORY OF URANIUM MINING OPERATIONS

The Company commenced conventional uranium/vanadium mining operations at its
Sunday Mine Complex in November 1997 and at its Rim Mine in January 1998 after
completion of minor development activities. These properties are located in the
Colorado Plateau District of western Colorado and eastern Utah, and contain high
grades of vanadium along with uranium.

To supplement its own production, the Company implemented a mill-feed purchase
program under which it intended to purchase feed for the Mill from many small
independent mines in the Uravan district of the Colorado Plateau mining region.
Unfortunately, this program did not materialize to the degree hoped, as the
independent miners found that their operations were not economic at then current
commodity prices, due to new regulatory and environmental licensing requirements
that had come into effect since they last operated.

The Company continued the mining of uranium and vanadium-bearing material from
its Sunday and Rim Mine complexes in the Colorado Plateau district until
mid-1999. At that time, the Company elected to suspend mining operations as a
result of continued weak uranium and vanadium prices and the expectation at that
time that these conditions would not improve for the next several years. The
shut down of the mines took several months to complete, and the process of
putting the mines on standby was completed in November 1999. Due principally to
the lack of success of the Company's mill-feed purchase program, the tonnage
ultimately delivered to the Mill was less than originally expected.
Approximately 87,250 tons of material, with a U(3)O(8) grade of 0.28% and a
V(2)O(5) grade of 1.9% were mined from the Company's mines and independent
mines. All of the material was shipped to the White Mesa Mill, and the Company
commenced the milling of this material in June 1999. The conventional mill run
was much shorter than originally anticipated, which impacted operating
efficiencies and, ultimately, unit production costs. In addition, certain
operational problems were encountered with the vanadium circuit which had not
operated since 1990, resulting in lower realized recoveries. Nevertheless, the
milling of the material was completed in October of 1999 and the Company
recovered approximately 487,000 pounds of U(3)O(8) in concentrates and
approximately 2.0 million pounds of vanadium.

Due to deteriorating commodity prices at the time and other factors, the Company
placed all of its U.S. mines on standby in fiscal 1999. The Company had also
written-off the carrying value of its U.S. mineral properties for the same
reason in fiscal 1999, and closed its Colorado Plateau mining office in fiscal
1999 and Arizona mining office in fiscal 2000. Uranium prices have since
improved, and the Company has initiated a uranium exploration program in Canada
(See "Canadian Uranium Exploration Properties"), and has recommenced its
Mongolian uranium exploration program (See "Mongolian Uranium Properties"). In
addition, the Company is currently evaluating the possibility of recommencing
certain of its U.S. mining activities if uranium prices continue to increase.

B. BUSINESS OVERVIEW

                               CURRENT OPERATIONS

Uranium prices have risen significantly since late fiscal 2003. As a result of
these increases in uranium prices, the Company acquired and staked uranium
exploration properties in the Athabasca Region of Saskatchewan, Canada, which
presently accounts for nearly one-third of the world's annual uranium
production, and commenced exploration on certain of those properties in early
fiscal 2004. See "Canadian Uranium Exploration Properties." The Company has also
recommenced its uranium exploration program in Mongolia. See "Mongolian Uranium
Properties". In addition, the Company is currently evaluating the possibility of
recommencing certain of its U.S. mining activities if uranium prices continue to
increase.

On August 16, 2004, the State of Utah assumed primary regulatory authority over
the Mill, from the United States Nuclear Regulatory Commission.

                                      -9-
<PAGE>

ALTERNATE FEED PROCESSING OVERVIEW

The White Mesa Mill is currently operating, processing an alternate feed
material which the Company received from Cameco Corporation ("Cameco"). The
Company estimates that in excess of 500,000 pounds of U(3)O(8) will be recovered
from these materials. See "Alternate Feed Processing" and "White Mesa Mill:
Current Condition and Operating Status".

During fiscal 2005, the Company continued to receive uranium bearing materials
under its existing contract with Cameco, and approximately 670 tons of material
from a commercial metals producer, approximately 540 tons of monazite sands from
Heritage Minerals Inc. in New Jersey, and approximately 140 tons of material
from Molycorp Inc. in California. During fiscal 2005, the Company did not
receive any materials under its existing Formerly Utilized Sites Remedial Action
Program ("FUSRAP") contract for the Linde site, near Buffalo, New York; however,
there is a possibility that the Company may receive additional quantities of
material from the Linde site in the future. As of November 30, 2005, the Mill
has approximately 46,053 tons of alternate feed material from the Linde,
Heritage and Molycorp sites and from the commercial metals producer that, along
with the Cameco materials received at the Mill to date, will be processed during
the current mill run, which began in March 2005 and is expected to run to the
end of fiscal 2006.

The Company intends to continue to devote resources to the development of the
alternate feed, uranium-bearing waste recycling business. The Company has had
considerable success to date in this initiative, and the alternate feed business
has helped to offset Mill and mine standby costs. This business will continue to
be a component of the Company's strategy for developing sources of feed for the
White Mesa Mill. See "Alternate Feed Processing."

Process milling of alternate feeds and related activities generated revenues of
$50,479, which was 39% of the Company's fiscal 2005 revenues. Alternate feed
processing activities in fiscal 2005 consisted primarily of the receipt of
materials from Heritage, Molycorp and a commercial metals processor. In the case
of these materials, the Company receives a recycling fee as these materials are
delivered, which is recorded as deferred revenue until the material is
processed, at which time it becomes revenue. In fiscal 2003, 2004 and 2005,
process revenues from alternate feed production and related activities were,
$12,415,001, $420,646 and $50,479, respectively, representing, close to 100%,
17% and 39% of total revenues for those periods. The remaining revenues received
during those periods were derived from the sale of vanadium black flake, which
was produced during the 1999 conventional ore mill run, and from engineering
services the Company provided, on a cost plus basis to a related company, which
was reclaiming a mine site in the U.S. There were no sales of uranium in fiscal
2005. As mentioned below (see "Marketing"), the Company has sold all of its
uranium inventory and uranium contracts, and all but approximately 65,000 pounds
of its vanadium inventories. It is therefore expected that future operating
revenues will be primarily from the Company's alternate feed business, or, if
commodity prices improve enough to justify production from the Company's U.S.
uranium properties, from future uranium and vanadium production.

URANIUM EXPLORATION AND DEVELOPMENT

As a result of increases in uranium prices, the Company acquired interests in
and staked uranium exploration properties in Canada in early fiscal 2004, and
commenced exploration on certain of those properties in fiscal 2004. The total
amount expended by the Company on the acquisition and exploration of Canadian
exploration properties in fiscal 2004 and 2005 was $2,309,178 and $7,007,861,
respectively. During fiscal 2005, the Company fulfilled its obligations to earn
its 75% interest in the Moore Lake project. In addition, the Company opened an
office in Saskatoon, Saskatchewan to support its Athabasca Basin exploration
program. Currently, the office has six personnel who are working on the
Company's Canadian uranium exploration programs. See "Canadian Uranium
Exploration Properties" and "The Uranium Industry."

Due to the depressed uranium market at the time and then current market
forecasts, the Company shut down the field operations at the Gurvan Saihan Joint
Venture in fiscal 2000. The decision was also made in fiscal 2000 to reduce the
carrying value of the Company's investment in the Gurvan Saihan Joint Venture by
$10,963,248. See "Mongolian Uranium Properties." The Company maintained its
office in Ulaanbaatar, Mongolia following the suspension of field activities in
2000. With higher uranium prices, the Company restarted uranium exploration for
the Gurvan Saihan Joint Venture in fiscal 2004, spending $35,198 on field work
during fiscal 2004 and $948,706 in fiscal 2005.

In late fiscal 2004, the Company also initiated a property acquisition and
uranium exploration program in Mongolia on properties acquired 100% for the
benefit of the Company, through the Company's wholly owned subsidiary IUM. In
fiscal 2004, the Company spent $17,878 on the IUM properties and in fiscal 2005
$220,718 on license

                                      -10-
<PAGE>

payments and initial field programs. In addition, in fiscal 2005, the Company
signed an option agreement with Erdene Gold Inc. ("Erdene") to earn a 65%
interest in 32 licenses for uranium exploration. In fiscal 2005, the Company
spent $411,274 on license payments, field programs and drilling and has met its
spending obligations under the option agreement. See "Mongolian Uranium
Properties".

MARKETING

Given the depressed uranium market at the time and continued forecasted weakness
in the uranium market, the Company decided to sell its entire uranium inventory
along with its remaining uranium sales contracts in fiscal 2000. The Company did
not produce or sell any uranium in fiscal 2005. The Company continues to hold
approximately 65,000 pounds of vanadium, as vanadium pregnant liquor. With the
increase in vanadium price to $11 to $13 per pound V(2)O(5), the Company is
continuing to evaluate opportunities to sell its remaining inventory.

MOAB TAILINGS PROJECT INITIATIVE

The Moab tailings pile is estimated to contain in excess of 12 million tons of
mill tailings, mill debris, contaminated soils, and cover material, located near
Moab, Utah, approximately 90 miles north of the White Mesa Mill. The location of
the tailings pile, adjacent to the Colorado River and an environmentally
sensitive wetlands, as well as the ongoing contamination of groundwater due to
seepage of pollutants into the River, have lead DOE to investigate several
alternatives for final remediation of the pile. In December 2002, the DOE
announced the initiation of an Environmental Impact Statement ("EIS") for the
remediation of the tailings pile, in which it evaluated several alternatives,
including the relocation of the Moab tailings pile to the White Mesa Mill by
slurry pipeline. In May 2003, the Company presented the White Mesa option for
inclusion in the DOE's EIS. DOE issued its final EIS on the Moab Tailings
Project in July 2005 and on September 14, 2005 issued a signed Record of
Decision ("ROD") stating that the tailings will be moved, predominately by rail,
to the proposed Crescent Junction, Utah, site, approximately 30 miles from the
Colorado River. As a result of this ROD, the Company is no longer pursuing this
initiative. See "Moab Tailings Project."

PRECIOUS AND BASE METALS EXPLORATION

During fiscal 2002 the Company commenced an exploration program for precious and
base metals in Mongolia. On June 23, 2004, the Company sold its Mongolian
precious and base metals assets to Fortress, in consideration of a majority
share ownership interest in Fortress. Fortress is a public company traded on the
Toronto Venture Exchange. As of December 19, 2005, the Company holds a 44.2%
equity interest in Fortress. Fortress' land holdings for the precious and base
metals exploration program total 2.5 million hectares in Mongolia. In March
2005, Fortress signed an agreement with Phelps Dodge Exploration Company
("PDEC") in which PDEC can earn up to a 70% interest in any of Fortress'
projects in Mongolia. In April 2005, Fortress agreed to terms with PDEC to
acquire up to an 80% interest in Svetloye Gold Corporation ("SGC"). SGC holds a
100% indirect interest in an exploration license over the Svetloye gold project
in the Khabarovsk region of eastern Russia. See "Fortress Properties."

FINANCING ACTIVITIES

In order to fund exploration work on the Company's Canadian uranium properties
(see "Canadian Uranium Exploration Properties"), the Company completed the
following private placements:

<TABLE>
<CAPTION>
                    NO. OF COMMON   ISSUE PRICE PER
  DATE OF ISSUE        SHARES            SHARE         GROSS PROCEEDS
------------------  -------------   ---------------    --------------
<S>                 <C>             <C>                <C>
November 12, 2003      2,000,000       Cdn $1.10       Cdn $2,200,000
September 21, 2004     1,250,000       Cdn $4.00       Cdn $5,000,000
March 10, 2005         1,000,000       Cdn $7.00       Cdn $7,000,000
December 5, 2005         850,000       Cdn $7.75       Cdn $6,587,500
</TABLE>

Because the proceeds from the issuance of these shares will be used solely for
exploration on eligible Canadian mineral properties, these shares, which are
regular common shares, are considered "flow-through" shares for Canadian income
tax purposes. Under Canadian income tax rules, a flow-through share is a
mechanism whereby the flow-through share investor is entitled to deduct certain
Canadian exploration and development expenditures incurred by the Company, and
the Company renounces its ability to deduct such expenditures.

                                      -11-
<PAGE>

In addition to the foregoing flow through share financings, on December 19,
2003, the Company completed a private placement offering for a total of
6,700,000 common shares at a price of Cdn $1.50 per share, and realized gross
proceeds of Cdn $10,050,000. Net proceeds of the offering were used for uranium
exploration as well as for general working capital purposes. Furthermore, on
October 14, 2005, the Company completed a private placement offering for a total
of 6,000,000 common shares at a price of Cdn $7.50 per share, and realized gross
proceeds of Cdn $45,000,000. Net proceeds of the offering are expected to be
used towards reopening of the Company's U.S. mining operations and for general
working capital purposes.

                            ALTERNATE FEED PROCESSING

Commissioned in 1980, the White Mesa Mill has processed conventionally mined
mineralized material for the recovery of uranium and vanadium for many years. In
addition, the Company's State of Utah Radioactive Materials License gives the
Company the right to process other uranium-bearing materials known as "alternate
feeds," pursuant to an Alternate Feed Guidance adopted by the NRC in 1995 and
amended in 2000. Alternate feeds are uranium-bearing materials, which usually
are classified as waste products to the generators of the materials. Requiring a
routine amendment to its license for each different alternate feed, the Company
can process these uranium-bearing materials and recover uranium, in some cases,
at a fraction of the cost of processing conventional ore, alone or together with
other valuable metals such as niobium, tantalum and zirconium. In other cases,
the generators of the alternate feed materials are willing to pay a recycling
fee to the Company to process these materials to recover uranium and then
dispose of the remaining byproduct in the Mill's licensed tailings cells, rather
than directly disposing of the materials at a disposal site. This gives the
Company the ability to process certain alternate feeds and generate earnings
that are largely independent of uranium market prices. By working with the
Company and taking the recycling approach, the suppliers of alternate feed
materials can significantly reduce their remediation costs, as there are only a
limited number of disposal sites for uranium-bearing materials in the United
States.

To date, the Mill has received fourteen license amendments, authorizing the Mill
to process seventeen different alternate feed materials. Of these amendments,
eight involve the processing of feeds provided by nuclear fuel cycle facilities
and private industry and one has involved the processing of DOE material. These
nine feed materials have been relatively high in uranium content and relatively
low in volume. The remaining five amendments have been to allow the Mill to
process uranium-bearing soils from former defense sites, known as Formerly
Utilized Sites Remedial Action Program ("FUSRAP") sites, which are being
remediated by the U.S. Army Corps of Engineers (the "Corps"). These materials
are typically relatively low in uranium content but relatively high in volume.
The Company has received and processed approximately 52,000 tons of FUSRAP
material from the Ashland 2 site, approximately 172,830 tons of FUSRAP material
from the Ashland 1 site and approximately 78,390 tons of FUSRAP material from
the Linde site, all near Buffalo, New York. In addition, another 39,000 tons of
Linde material is currently stockpiled at the Mill, which will be processed
during the current Mill run. Previously, material excavated from FUSRAP sites
was only directly disposed of at one of the few direct disposal sites in the
country, and at considerable cost. The Corps, charged with the task of reducing
the cost of this remediation program, awarded these contracts to the Company to
recycle the materials and recover uranium before disposing of the resulting
tailings in the Mill's tailings cells. By processing these soils through the
Mill for the recovery of uranium, the Corps was able to clean up these sites at
less cost than would have been incurred had the disposal-only option been used.

While the progress made to date is considerable, there have been regulatory
uncertainties associated with this uranium recycling business. As noted, the
Company's license gives the Company the right, with appropriate amendments, to
process alternate feeds. Some of the Company's alternate feed projects have been
challenged in the past by the State of Utah, a commercial disposal company and
other parties. However, the legal dispute between the Company and the State of
Utah was resolved in 2000, and the Company now works closely and in cooperation
with the Utah Department of Environmental Quality ("UDEQ") on all Mill
regulatory matters. The State of Utah became an Agreement State for the
regulation of uranium mills in Utah on August 16, 2004, and at that time assumed
primary regulatory jurisdiction over the Mill. As of December 19, 2005, the
Company's White Mesa Mill has been granted fourteen license amendments for
processing alternate feeds out of fourteen requests, and the Company has
successfully defended all challenges, to date.

In conducting its alternate feed business to date, the Company has not been
dependent on patents or technological licenses or new manufacturing processes
(other than those that have been developed by the Company as necessary),
although it has been dependent upon entering into commercial contractual
relations with generators of alternate feed materials. Costs of processing
alternate feed materials are dependent upon costs of raw materials and labor,
which in the case of some reagents, while readily available, can be volatile.

                                      -12-
<PAGE>

The Company intends to continue to devote resources to the development of the
alternate feed, uranium-bearing waste recycling business. The Company expects
that income from recycling uranium-bearing materials can continue to help offset
Mill and mine standby costs, and, potentially, contribute to profitable
operations for the Company.

                              URIZON JOINT VENTURE

In November, 2002 the Company formed a 50/50 joint venture company, "Urizon
Recovery Systems, LLC", with Nuclear Fuel Services, Inc. ("NFS") to pursue the
development of a new, alternate feed program (the "USM Ore Program") for the
Company's White Mesa Mill that, if successful, could result in the Mill
producing two to three million pounds of yellowcake per year over at least a
three-year period.

NFS is a privately owned corporation with operations based in Erwin, Tennessee.
Since 1957, NFS has been a leader in the process development and production of
specialty nuclear fuels for commercial power, research reactors and naval
reactors. NFS is the supplier of highly enriched uranium fuel materials for the
U.S. Government. NFS has also developed and implemented the process for
recycling highly enriched uranium material into lower commercial enrichments.
This process supports the U.S government's program for downblending surplus
material from the weapons program into fuel for nuclear power reactors. In
addition, NFS is involved as a contractor at DOE facilities.

The USM Ore Program that Urizon is pursuing involves the development of a
process and construction of a plant at NFS' facility in Erwin, Tennessee, for
the blending of contaminated low enriched uranium with depleted uranium to
produce a natural uranium ore ("USM Ore"). The USM Ore will then be further
processed at the Mill to produce conventional yellowcake.

The primary source of feed for Urizon will be the significant quantities of
contaminated materials within the DOE complex. Throughout the DOE complex, there
are a number of streams of low enriched uranium that contain various
contaminants. These surplus nuclear materials often require additional
processing in order to meet commercial fuel cycle specifications. Urizon's USM
Ore Program will provide a solution to DOE that will enable DOE to deal with the
material, while at the same time recycling the material as a valuable energy
resource for reintroduction into the nuclear fuel cycle.

Blending low enriched uranium with depleted uranium to make a reconstituted
natural uranium ore that can be returned to the nuclear fuel cycle as yellowcake
has never been accomplished before. This program will allow DOE to deal with its
surplus low enriched uranium and depleted uranium in a cost effective manner,
while providing for the recovery of valuable energy resources that would
otherwise be lost through direct disposal of the materials, and, at the same
time providing a source of alternate feed materials for the Company's White Mesa
Mill.

The process is capable of recycling thousands of metric tons of surplus
materials within the DOE Complex. A preliminary report by the DOE in 2000 stated
there were 4,700 metric tons of contained surplus low enriched uranium at 28
sites across the DOE Complex, which would yield approximately 6 million pounds
of yellowcake, as well as other sources of materials suitable for the program.

The first phase of the project will be the preparation and submittal of a
request for an amendment to the Mill's license. Assuming receipt of regulatory
approvals, construction of the blending facility at NFS' site in Erwin,
Tennessee could be completed within two years of submittal. Commercial
production would be expected to last three to six years or longer depending on
the amount of DOE materials that are available.

                                      -13-
<PAGE>

Application testing was conducted from 2002 to 2004. Pursuant to its agreement
with NFS, the Company contributed $1.5 million to the joint venture in December
2002 to be used in connection with this project. The success of the program will
depend on DOE's support of the program as a means to disposition these surplus
nuclear materials within the DOE complex. An unsolicited proposal was submitted
by NFS to DOE in April 2003 for funding of this program. The DOE informed Urizon
in early 2004 that it was not prepared to accept the proposal at that time due
to funding considerations and other DOE priorities. During fiscal 2005, the DOE
selected a contractor who will manage the disposition of the materials that
would be the feedstock for the Urizon program, in conjunction with the closure
of an existing DOE site. The Joint Venture anticipates that it will have an
opportunity to propose the Urizon Program to the DOE contractor as a suitable
disposition option for this feedstock. In the interim, the Company will not be
submitting its license amendment application until the path forward is further
defined. The Joint Venture anticipates a decision will be made in fiscal 2006 as
to how DOE and its contractor intends to proceed on this matter.

                              MOAB TAILINGS PROJECT

The Moab Uranium mill tailings pile, which is now under the control of the DOE,
is located at the former Atlas Minerals Corporation site, approximately three
miles north of Moab, Utah, which is approximately 90 miles north of the White
Mesa Mill. The Moab tailings pile is estimated to contain in excess of 12
million tons of mill tailings, mill debris, contaminated soils and cover
material. The location of the tailings pile, adjacent to the Colorado River and
an environmentally sensitive wetlands, as well as the ongoing contamination of
groundwater and seepage of pollutants into the river, has lead DOE to
investigate several alternatives for final remediation of the pile.

In December 2002, DOE initiated the process to complete an EIS aimed at
evaluating several alternatives for remediation of the site, including a
proposal by the Company to relocate the tailings to the White Mesa Mill by
slurry pipeline. DOE issued its final EIS on the Moab Tailings Project in July
2005, and on September 14, 2005 issued a signed ROD stating that the tailings
will be moved, predominately by rail, to a site at Crescent Junction, Utah,
approximately 30 miles from Moab. Because of this ROD, the Company is no longer
pursuing this initiative.

                              THE URANIUM INDUSTRY

OVERVIEW

Commercial nuclear power generation began just over forty years ago and now
generates as much global electricity as was produced forty years ago by all
sources. The low operating cost of nuclear power combined with the increased
focus on climate change could result in increased electricity production from
nuclear generators in various areas of the world.

There are 103 operating nuclear reactors in the United States and a total of 441
worldwide, operating in 31 countries representing a total world nuclear capacity
of 368.3 gigawatts. A further 23 reactors with a capacity of 18.5 gigawatts are
under construction in 10 countries and an additional 39 reactors (40.9
gigawatts) are planned. With the only significant commercial use for uranium
being nuclear fuel for nuclear reactors, it follows that reactor requirements
will be the key component in the uranium market.

URANIUM SUPPLY AND DEMAND

The world's operating nuclear power reactors require about 174 million pounds of
uranium per year. As nuclear power capacity increases, the uranium fuel
requirement also increases. Demand for uranium can be supplied through either
primary production (newly mined uranium) or secondary sources (inventories and
alternate production). Secondary sources are of particular importance to the
uranium industry when compared to other commodity markets.

Over the five-year period 2000-2004, global primary uranium production averaged
95.24 million pounds of uranium. In 2003, primary production declined to 92.4
million pounds due to production problems at the McArthur River and Olympic Dam
production centers, however, in 2004, worldwide uranium production rose to 104.7
million pounds of uranium. Canada and Australia currently account for over half
the world's production. The United States production only represented about 2%
or 2.3 million pounds of uranium. During the last decade, takeovers, mergers and
closures have consolidated the uranium production industry. In 2004, eight
companies accounted for over 80% of primary production while the six largest
uranium mines produced almost 60% of the aggregate global production.

                                      -14-
<PAGE>

Primary uranium production presently supplies only 59% of the total annual
requirements of nuclear power generators. The remaining supply is from secondary
sources, which include inventories held by producers and utilities, government
inventories, and uranium recycled from government stockpiles. The recycling of
Highly Enriched Uranium ("HEU") from Russia is a unique subset of secondary
sources of supply. Surplus fissile military materials are converted from HEU
into low enriched uranium ("LEU") suitable for use in nuclear reactors. In
February 1993, the United States and Russia entered into an agreement (the
"Russian HEU Agreement") which provided for the United States to purchase 500
metric tons of Russian HEU over a 20-year period. In April 1996, the USEC
Privatization Act gave Russia the authority to sell Russian natural uranium
derived from the LEU (referred to as the "HEU Feed") in the United States over
the 20-year period under certain defined quotas. The USEC Privatization Act
provides a framework for the introduction of this Russian HEU Feed into the U.S.
commercial uranium market. Russia has been selling this HEU Feed through long
term supply agreements with various producers and other companies involved in
the nuclear fuel cycle.

Based upon recent assessments of future secondary uranium supply, the scheduled
uranium production forecast and forecasted nuclear generating capacity, there
appears to be a growing requirement for increased uranium production to meet the
forecast needs of Western reactors. Based upon the most recent assessment of
market trends published by the World Nuclear Association, "The Global Nuclear
Fuel Market; Supply and Demand 2005-2030," (September 2005), under Reference
Case conditions (uranium requirements, secondary supply) uranium production to
support Western reactors will need to expand from its 2004 level of 93.2 million
pounds, up to 123.0 million pounds in 2010 and reach 161.4 million pounds by
2015. These estimates are subject to a number of assumptions about future events
and the anticipated deficit could change if the assumptions are incorrect.

URANIUM PRICES

Most of the countries that use nuclear-generated electricity do not have a
sufficient domestic uranium supply to fuel their nuclear power reactors, and
their electric utilities secure a substantial part of their required uranium
supply by entering into medium-term and long-term contracts with foreign uranium
producers and other suppliers. These contracts usually provide for deliveries to
begin one to three years after they are signed and to continue for several years
thereafter. In awarding medium-term and long-term contracts, electric utilities
consider, in addition to the commercial terms offered, the producer's or
supplier's uranium reserves, record of performance and cost competitiveness, all
of which are important to the producer's or supplier's ability to fulfill
long-term supply commitments. Under medium-term and long-term contracts, prices
are established by a number of methods, including base prices adjusted by
inflation indices, reference prices (generally spot price indicators but also
long-term reference prices) and annual price negotiations. Many contracts also
contain floor prices, ceiling prices, and other negotiated provisions which
affect the amount paid by the buyer to the seller. Prices under these contracts
are usually confidential.

Electric utilities procure their remaining requirements through spot and
near-term purchases from uranium producers and other suppliers. These other
suppliers typically source their uranium from organizations holding excess
inventory, including utilities, producers and governments.

The spot market is the market for uranium purchased for delivery within one
year. Over the last nine years, annual spot market demand averaged just under 20
million pounds U(3)O(8) or about 12% of the annual world consumption. In 2004,
the total volume was 18.2 million pounds U(3)O(8), which was down from the 2003
level of 21.8 million pounds. The remaining component (about 85 to 90%) is the
term market where uranium is bought and sold under multi-year agreements between
nuclear utilities and uranium producers/suppliers. By way of definition, the
term uranium price reflects the initial base price under a newly-negotiated
multi-year uranium agreement with deliveries commencing 12-24 months in the
future and extending for 3-4 years thereafter.

Historically, spot prices have been more volatile than long-term contract
prices, increasing from $6.00 per pound in 1973 to $43.00 in 1977, and then
declining from $40.00 in 1980 to a low of $7.25 in October of 1991. From this
low in 1991, the spot price increased to $16.50 in June 1996. The primary
reasons for this increase were trade restrictions limiting the free flow of
uranium from the former CIS republics into the Western world markets, the Nuexco
bankruptcy under Chapter 11 of the United States Bankruptcy Code and related
defaults on deliveries, and the reluctance of uranium producers and inventory
holders to sell at low spot price levels. The drop in spot demand in the
following four years along with Russian HEU Feed sold under the USEC
Privatization Act largely contributed to a relatively steady drop in prices to
$7.40 in September 2000.

Prices remained depressed as a result of weak demand, falling to $7.10 in
January 2001, but, due to moderate increases in demand and production problems
at the McArthur River and Olympic Dam operations, prices rose to

                                      -15-
<PAGE>

$12.25 by September 2003. Another major impact to the market occurred in early
November 2003, as a result of Russia terminating a long term contract for the
supply of HEU Feed with Globe Nuclear Services and Supply GNSS, Limited
("GNSS"). Litigation is on-going between GNSS and the Russians over this
termination, and it is not possible to predict the outcome of such litigation or
the long term effect of this development on the market.

The uranium spot price started 2004 at $14.50 per pound U(3)O(8). Throughout
2004, due to limited availability of material and the concerns regarding the
GNSS/Russian dispute, the uranium spot price rose steadily to end 2004 at $20.70
per pound, a twenty year high. The spot uranium price rose steadily through the
first five months of 2005, reaching $29.00 per pound by the end of May. Uranium
prices for near-term delivery remained relatively stable during June-August but
then began to rise over the next several months as near-term demand applied
increasing pressure to available spot supplies. As of December 5, 2005, the spot
price increased further to $35.25 per pound U(3)O(8).

The term uranium price has undergone an even more pronounced increase over the
past several years, rising from just under US$11.00 per pound U(3)O(8), at the
end of 2002 to $15.50 per pound by the end of 2003. The Long-Term U(3)O(8) Price
rose to US$25.00 per pound U(3)O(8) by the end of December 2005 and escalated to
$35.00 per pound by November 30, 2005.

Future uranium prices will depend largely on the amount of incremental supply
made available to the market from the remaining excess inventories, HEU feed
supplies, other stockpiles and increased or new production from other uranium
producers.

COMPETITION

Uranium production is international in scope and is characterized by a
relatively small number of companies operating in only a few countries. In 2004,
four (4) companies, Cameco Inc., AREVA/Cogema, Rio Tinto and WMC Resources
Limited (now owned by BHP Billiton) produced approximately 57% of total world
output. Most of Western World production was from Canada and Australia which
produced a combined 52% of global uranium output in 2004. Moreover, in 2004,
Kazakhstan, Russia and Uzbekistan produced a combined 22% of worldwide uranium
while supplying significant quantities of uranium into Western World markets.
The Canadian uranium industry has in recent years been the leading world
supplier, producing nearly 30% of the world supply.

                               THE VANADIUM MARKET

The following is a brief summary of the vanadium market.

The Company produces and sells vanadium as a co-product of the production of
uranium from the Colorado Plateau District deposits. As of December 19, 2005,
the Company holds an inventory of approximately 65,000 pounds of V(2)O(5) as
vanadium pregnant liquor.

Vanadium is an essential alloying element for steels and titanium, and its
chemical compounds are indispensable for many industrial and domestic products
and processes. The principal uses for vanadium are: (i) carbon steels used for
reinforcing bars; (ii) high strength, low alloy steels used in construction and
pipelines; (iii) full alloy steels used in castings; (iv) tool steels used for
high speed tools and wear resistant parts; (v) titanium alloys used for jet
engine parts and air frames; and (vi) various chemicals used as catalysts.

Principal sources of vanadium are (i) titaniferous magnetites found in Russia,
China, Australia and South Africa; (ii) sludges and fly ash from the refining
and burning of U.S., Caribbean and Middle Eastern oils; and (iii) uranium
co-product production from the Colorado Plateau. While produced and sold in a
variety of ways, vanadium production figures and prices are typically reported
in pounds of an intermediate product, vanadium pentoxide, or V(2)O(5). The White
Mesa Mill is capable of producing three products, ammonium metavanadate ("AMV")
and vanadium pregnant liquor ("VPL"), both intermediate products, and vanadium
pentoxide ("flake", "black flake", "tech flake" or "V(2)O(5)"). The majority of
sales are as V(2)O(5), with AMV and VPL produced and sold on a request basis
only.

In the United States, although vanadium is produced through processing petroleum
residues, spent catalysts, utility ash, and vanadium bearing iron slag, the most
significant source of production historically has been as a byproduct of uranium
production from ores in the Colorado Plateau District, accounting for over half
of historic U.S. production. Vanadium in these deposits occurs at an average
ratio of six pounds of vanadium for every pound of uranium, and the financial
benefit derived from the byproduct sales have helped to make the mines in this
area

                                      -16-
<PAGE>

profitable in the past. Low prices for both uranium and vanadium in recent years
have forced producers in the Colorado Plateau District to place their facilities
on standby. However, increases in the price of both of these metals have given
rise to renewed interest in these facilities.

The market for vanadium has fluctuated greatly over the last 20 years. During
the early 1980s, quoted prices were in the range of $3.00 per pound, but
increased exports from China and Australia, coupled with the continued economic
recession of the 1980s drove prices to as low as $1.30 per pound. Prices
stabilized in the $2.00 - $2.45 per pound range until perceived supply problems
in 1988 caused by cancellation of contracts by China and rumors of South African
production problems resulted in a price run-up to a high of nearly $12.00 per
pound in February of 1989. This enticed new producers to construct additional
capacity, and oversupply problems again depressed the price in the early 1990s
to $2.00 per pound and below. Late in 1994, a reduction in supplies from Russia
and China, coupled with concerns about the political climate in South Africa and
a stronger steel market caused the price to climb to $4.50 per pound early in
1995. In the beginning of 1998, prices had climbed to a nine-year high of $7.00
caused by supply being unable to keep pace with record demand from steel and
aerospace industries. However, during the second half of 1998, prices began to
decline to $5.42 per pound by September 1998 and $2.56 per pound in December
1998. This was due to sudden decreases in Far East steel production, along with
suppliers from Russia and China selling available inventories at low prices in
order to receive cash. Since that time, prices fell dramatically to a range of
$1.20 to $1.50 per pound V(2)O(5) due in part to the difficult economic
conditions being experienced throughout the Pacific Rim and new sources of
supply. In the third quarter of 2003 vanadium prices started to increase because
of increased steel consumption and the shutdown of an Australian primary
producer. This trend continued through fiscal 2004. In fiscal 2005 demand from
China resulted in a significant price run-up culminating in all time highs of
$23.00 to $27.00 per pound V(2)O(5). Most recently, prices have declined to be
in the range of $11.00 to $13.00 per pound V(2)O(5) due to the ramp up of
Chinese vanadium production. Prices are anticipated to continue to decline from
these high levels but will likely level in the range of $4.00 to $6.00 per
pound.

World demand will continue to fluctuate in response to changes in steel
production. However, the overall consumption is anticipated to increase as
demand for stronger and lighter steels grows, augmented by the demand created by
new applications, such as the vanadium battery.

Vanadium has been largely producer-priced historically, but during the 1980s,
this came under pressure due to the emergence of new sources. As a result,
merchant or trader activity gained more and more importance. Prices for the
products that are produced by the Company are based on weekly quotations of the
London Metal Exchange ("LME"). Historically, vanadium production from the White
Mesa Mill has been sold into the world-wide market both through traders, who
take a 2% to 3% commission for their efforts and, to a lesser extent, through
direct contacts with domestic converters and consumers. While priced in U.S.
dollars per pound of V(2)O(5), the product is typically sold by the container,
which contains nominally 40,000 pounds of product packed in 55 gallon drums,
each containing approximately 550 pounds of product. Typical contracts will call
for the delivery of one to two containers per month over a year or two to a
customer with several contracts in place at the same time. Pricing is usually
based on the LME price and may include floor and ceiling price protection for
both the producer and seller. Spot sales are also made based on the current LME
quote.

C. ORGANIZATIONAL STRUCTURE

The Company conducts its business through a number of subsidiaries. A diagram
depicting the organizational structure of the Company and its subsidiaries,
including the name, country of incorporation and proportion of ownership
interest is included as Exhibit 1.1 to this Form 20-F.

All of the Company's U.S. assets are held through the Company's wholly owned
subsidiary International Uranium Holdings Corporation. International Uranium
Holdings Corporation ("IUH") holds its uranium mining and milling assets through
a series of Colorado limited liability companies: the White Mesa Mill through
IUC White Mesa LLC; the Colorado Plateau mines through IUC Colorado Plateau LLC,
IUC Sunday Mine LLC and IUC Properties LLC; the Arizona Strip properties through
IUC Arizona Strip LLC; and the Henry Mountains properties and other exploration
properties through IUC Henry Mountains LLC. All of the U.S. properties are
operated by International Uranium (USA) Corporation, a wholly owned subsidiary
of International Uranium Holdings Corporation.

The Company's 70% interest in the Gurvan Saihan Joint Venture in Mongolia is
held through International Uranium Company (Mongolia) Ltd, which is wholly owned
by International Uranium (Bermuda I) Ltd, a wholly owned subsidiary of the
Company. In addition to its interest in the Gurvan Saihan Joint Venture, the
Company also holds

                                      -17-
<PAGE>

its own uranium properties in Mongolia. These properties are held by
International Uranium Mongolia, XXK, a Mongolian entity, which is also wholly
owned by International Uranium Company (Mongolia) Ltd.

The Company's Canadian uranium exploration properties are held through
International Uranium Corporation.

The Company's 50% interest in Urizon Recovery Systems, LLC is held through IUC
Recovery LLC, which is owned as to 1% by IUH and as to 99% by IUH's wholly owned
subsidiary, International Uranium Recovery Corporation.

D. PROPERTY, PLANT AND EQUIPMENT

The following is an overview of the properties held by the Company as of
December 19, 2005:

                     CANADIAN URANIUM EXPLORATION PROPERTIES

The Company acquired interests in two uranium exploration properties (the Moore
Lake and Lazy Edward Bay properties) in the southeastern sector of the Athabasca
Basin region of northern Saskatchewan, Canada in early fiscal 2004, and
commenced exploration on the Moore Lake property in fiscal 2004, as described
below. In fiscal 2005, the Company earned its 75% interest in the Moore Lake
property and a joint venture is to be formed between JNR Resources Inc. ("JNR")
and the Company upon signing of formal agreements. The Company has also entered
into option agreements with JNR on a number of properties which were staked
under a strategic alliance with JNR. Furthermore, the Company has entered into
an option to earn a 51% interest in the Huard-Kirsch property and has entered
into a 50/50 joint venture on the Hatchet Lake group of properties, all of which
are located in the Athabasca Basin. The Company has also signed a letter of
intent to earn an interest in a third uranium property in the Basin, which is
subject to signing of formal agreements and regulatory approval. In addition,
the Company has staked additional ground in the Athabasca Basin region in fiscal
2004 and 2005, bringing its total staked and optioned land position to over
590,000 hectares in this area.

The right to explore for uranium is acquired by the Company in Saskatchewan
under mineral claims from the province of Saskatchewan. The term of a mineral
claim is two years, with the right to renew for successive one year periods. To
maintain a mineral claim in good standing, generally, the holder of a mineral
claim must spend a prescribed amount on exploration. Excess expenditures can be
applied to satisfy expenditure requirements for future claim years. Except for
exploration purposes, a mineral claim does not grant the holder the right to
mine minerals. A holder of a mineral claim in good standing has the right to
convert a mineral claim into a mineral lease. Surface exploration work on a
mineral claim requires additional government approvals.

The Athabasca Basin region hosts the world's richest uranium reserves. This
region fuels well over 10% of the United States' electrical power needs and
accounts for approximately one-third of the world's uranium production. The
locations of the Company's properties relative to existing mines are illustrated
on the following figure.

                                      -18-
<PAGE>

                                     [MAP]

To assist and advise the Company on the acquisition, exploration and development
of prospective uranium exploration properties in Canada, the Company has formed
a Uranium Exploration Advisory Committee. Heading the committee is Dr. Klaus
Lehnert-Thiel, P. Eng., P. Geo., an exploration geoscientist with over 30 years
of operations and management experience on uranium, gold, diamond and base
metals projects, predominantly in Canada. Considered an expert in the uranium
field, Dr. Lehnert-Thiel began his work in the Athabasca Basin of northern
Saskatchewan in the late 1960's where he was in charge of large integrated
exploration programs during the uranium exploration boom in the area following
the discovery of the Rabbit Lake mine. In the early 1970's, Dr. Lehnert-Thiel
joined Uranerz Exploration and Mining Limited and was part of the Key Lake
discovery team. The other members of the committee are Ron Netolitzky and Rick
Bailes. Messrs. Netolitzky and Bailes bring a wealth of uranium exploration,
Athabasca Basin, and economic geology experience to the team.

During fiscal 2005, the Company opened an office in Saskatoon, Saskatchewan to
support its Canadian exploration efforts. Currently the Company has six
employees at the office with geological, geophysical and administrative skills.
The Company is continuing to add staff to the office whose primary
responsibility will be the management and execution of the Company's Canadian
uranium exploration program.

There can be no assurance that the Company will develop any minable deposits
from its exploration properties, or that any minable deposits developed by the
Company from these properties would have uranium grades comparable to the
existing mines in the area.

MOORE LAKE PROJECT

Ownership and Status

On December 15, 2003, the Company entered into an option agreement with JNR
under which the Company acquired the option to earn up to a 51% interest in the
Moore Lake project by making aggregate investments and expenditures of Cdn $2.2
million over two years, of which Cdn $2,000,000 represent exploration
expenditures and

                                      -19-
<PAGE>

$200,000 represent subscriptions for equity in JNR. The Company may earn an
additional 24% interest in the project by making further aggregate exploration
expenditures of Cdn $2.0 million and subscriptions for equity in JNR of $200,000
within a four year time period. The project is subject to a 2.5% NSR royalty in
favor of Kennecott Canada Exploration Inc. ("Kennecott"), which can be bought
down to a 1.25% NSR royalty for an expenditure of Cdn $1 million. The Company
earned its 75% interest in the project in fiscal 2005 and is in the process of
formalizing a joint venture agreement with JNR. Future costs on the project will
be split between the Company and JNR on a 75%, 25% basis, respectively.

Property Description and Location

The Moore Lake property comprises eleven contiguous claims totaling
approximately 36,000 hectares, which includes additional ground to the northeast
and the southwest of the pre-existing Moore Lake property that was staked in
fiscal 2004. The property is located in the La Ronge Mining District of
Saskatchewan. The project lands are located in the southeastern portion of the
Athabasca basin. The location of the Moore Lake project is indicated on the
previous figure.

Physiography and Accessibility

The claims are accessible by float/ski equipped aircraft or by winter road
originating at km 38 of the McArthur River Road, approximately 20 km west of the
property. The property may be worked year round.

Geological Setting

Regional Geology The Athabasca Basin is an extensive sedimentary basin of Middle
Proterozoic age located primarily in northeast Saskatchewan, extending into
Alberta and occupying over 100,000 square kilometers. The basin is comprised
primarily of flat lying unmetamorphosed sandstones of the Athabasca Group, with
a maximum thickness of over 1,500 meters in its central portion.

The Rae (western portion) and eastern Hearne (eastern portion) provinces of the
Churchill Structural province underlie the Athabasca, separated by a major
structural suture, the Snowbird Line. The Rae and Hearne provinces are highly
deformed and metamorphosed and are comprised of Archean gneisses containing
infolded keels of Proterozoic metasedimentary and plutonic rocks. The Hearne
province in turn, is subdivided into the western Mudjatic and eastern Wollaston
domains based upon their tectonic settings, with the Mudjatic exhibiting a
sinuous arcuate character and the Wollaston comprising broad linear
metasedimentary belts wrapped around granitic Archean domes.

Property Geology The property is underlain by 200 meters to 350 meters of
Proterozoic Athabasca Group sandstone and conglomerates of the Manitou Falls A,
B and C formation. These units unconformably overlie Aphebian rocks of the
Wollaston Lithostructural Domain and Archean granites.

The Moore Lake property is cut by numerous east-west and northeast striking
fault systems, either in conjunction with, or independent of, graphitic
conductors on the property. In addition to these, a notable feature on the
property is the existence of an Archean granite dome in the southwestern portion
of the claims. This dome is mantled on its margins by graphitic metapelites and
is proximal to several significant fault systems. This setting is highly
analogous to that encountered at Key Lake and at several other unconformity type
uranium deposits in the Athabasca basin. A large diabase sill complex, the Moore
Lake Complex, exists along the northeast portion of the property.

Deposit Types

The target on the Moore Lake property is an Athabasca unconformity-type uranium
deposit. The geological model requires reactivated basement faults and two
distinct hydrothermal fluids, one of which is reducing, and originates in the
basement and is channelled along basement faults. A second, oxidizing fluid
originates within the Athabasca sandstone stratigraphy and migrates through the
inherent porosity therein. In appropriate circumstances, these two fluids mix
and precipitate uranium in a structural trap at the sub-Athabasca unconformity.

In cross section the model envisages a mushroom-shaped deposit replacing the
lower sandstone with a root zone extending into the basement along a fault
coincident with graphitic pelite. Perched mineralization may occur (or may have
been remobilized) in the controlling fault structures, in the sandstone, well
above the unconformity. It is

                                      -20-
<PAGE>

implicit in this model that basement faults have been reactivated in
post-Athabasca sandstone time and that the overlying stratigraphy, has been
locally disrupted.

In plan view the deposits can be hundreds of meters long and a few meters to 30
meters wide, following the trace of the underlying graphitic pelites and
associated faults, along the unconformity. The graphitic rocks are often the
locus of pre-Athabasca faulting that has been reactivated after Athabasca
deposition. Both reverse and normal faults have been associated with
mineralization. Displacement of the unconformity by tens of meters occurs at
some deposits. The Aphebian pelites generally overlie Archean granitoid basement
which provides a surface along which the pelites are frequently overthrust.
Alternatively, the structural role of the Archean granitoid can be assumed by
quartzite, occurring as Aphebian quartzite ridges in some areas.

Unconformity deposits are also marked by a complex mineralogy and geochemistry.
Pitchblende, uraninite and coffinite are the primary uranium minerals
accompanied by various copper sulphides, galena, sphalerite, hematite, and
native copper and gold. In some deposits, the diversity of minerals and
concentration of elements associated with uranium are low, whereas, in others,
many different mineral phases are present and elements are associated with
uranium in potentially economic quantities (e.g. gold at Cluff Lake, nickel at
Key Lake, and copper at Dawn Lake). Gangue minerals include quartz, calcite,
dolomite, ankerite, siderite, chlorite, sericite and adularia.

Uranium deposits are surrounded by extensive alteration envelopes that may
extend upwards into the Athabasca group for tens to even 100 meters or more
above the unconformity and penetrate well into the crystalline basement. It must
be noted that each deposit may exhibit its own distinctive alteration pattern.
The McArthur River deposit is characterized by silicification and chloritization
imprinted on an illitic background. Cigar Lake is characterized by
desilicification and illitization imprinted over a kaolinitic background.

Mineralization is often very high grade as at Cigar Lake and McArthur River
where average grade are in excess of 15% U and of medium grade such as Key Lake
or Eagle Point where average grades are in the 1% U to 2.5% U range.

Exploration History

Uranium exploration in the Moore Lake area has been carried out periodically
throughout the past 30 years, with exploration activities carried out by joint
ventures operated by Noranda, AGIP, Brinex and Cogema. The earliest work from
1977 to 1982 consisted largely of airborne geophysical surveys with ground
geophysical follow-up programs. Subsequent diamond drilling (6 holes)
intersected graphitic metapelites and sporadic illite alteration in two holes.

In 1986 and subsequent years, Interuranium Canada Limited carried out an
airborne geophysical survey over the property, followed by ground geophysical
surveys. These surveys identified a number of basement conductors on the
property, several of which were drill tested with 13 holes (3,703 meters).
Strongly graphitic Aphebian basement lithologies were intersected in five of the
holes. Fracture controlled pitchblende mineralization (0.03% U(3)O(8) over 0.25
meters) was intersected below the unconformity, while anomalous uranium (up to
0.34% U(3)O(8)) and trace elements were intersected in the basement in three
other holes.

JNR staked the property in 1999 and subsequently signed a joint venture with
Kennecott. In the spring of 2000, an initial diamond drilling program of five
holes (1,682 meters) identified significant uranium mineralization (0.442 e%
U(3)O(8) over 9.20 meters) at the Maverick zone in drill hole ML-03. Follow-up
drilling, (9 holes, 2,958 meters) was carried out in the summer of 2000. This
drilling confirmed the presence of a significant structural zone and an intense
hydrothermal system associated with the Maverick Zone, along with highly
enriched trace element geochemistry, most notably boron, nickel and uranium.

An extensive airborne and ground geophysical program took place during the
winter of 2000-2001. A total of 1,529 line km of airborne surveys were flown,
followed up by 81.8 km of line cutting and ground magnetics, 60.9 km of Moving
Loop, 39.2 km of gravity and 6 diamond drill holes (1,761.4 meters) on 4
scattered grids.

Ground surveys on the Raratonga, Venice and Puka Puka prospects identified
numerous drill targets that were associated with EM conductors, gravity and
magnetic features. A map illustrating the location of the prospects on the Moore
Lake Project is shown in the following figure.

                                      -21-
<PAGE>

                                     [MAP]

A hole drilled on the main Puka Puka conductor intersected anomalous geochemical
values within a strongly disrupted and altered sandstone column and graphitic
basement rocks. On the MLE and Venice grids, the drilling program identified
anomalous radioactivity and geochemistry in brittle deformed felsic intrusive
proximal to graphitic pelite.

In 2002, Kennecott carried out 2,257 meters of diamond drilling in 7 holes, of
which 5 were completed at the Maverick Zone, and the remaining 2 at the Puka
Puka and MLE targets. In addition, Moving Loop (7.8 km) and Fixed Loop (12.6 km)
surveys were carried out in the area of the Maverick Zone that year.

The work carried out on the Maverick Zone identified a well-defined and strongly
mineralized east-north-east trending conductive system. The best results
obtained were from ML-25, which returned 0.62% U(3)O(8) over 9.1 meters, below
the unconformity, including an interval of 12% U(3)O(8) over 0.4 meters, several
meters below the unconformity.

During 2004, JNR and IUC carried out 19,159 meters of diamond drilling in 52
holes on the Maverick Zone. A geophysical program involving 32 km of line
cutting and ground surveys was also performed in addition to a property wide
boulder sampling program. A series of seven single hole fences emplaced along
the trace of the main Maverick conductor successfully extended, by a minimum of
1.2 km, the east-northeast trend of the Maverick conductive system. These holes
intersected sheared graphitic pelite, intense alteration and geochemically
anomalous to weakly mineralized sandstone and basement rocks. Several of the
better intersections are from holes ML-55 and ML-61. The former has an intercept
of 6.2 meters (263-269.2) of 5.14% U(3)O(8), including 4.4 meters of 7.02%
U(3)O(8). In ML-61 there is a 10 meters intercept (264.68-274.68) of 4.03 e%
U(3)O(8) including a 1.4 meters intercept indicated at 19.96 e% U(3)O(8). In
ML-29, where 1.61 e% U(3)O(8) over 7.5 meters was obtained, an individual 0.5
meter sample assayed 7.91% U(3)O(8), 3.65% nickel, 2.8% arsenic, 1.6% copper,
0.9% cobalt and 5.3 gpt silver, confirming the polymetallic nature of the
mineralization, typical of an Athabasca unconformity-type uranium deposit.

2005 Exploration Program

In fiscal 2005, the Company and JNR conducted winter and summer exploration
programs on the Moore Lake property. The winter program at Moore Lake was
between January 22 and April 18, 2005. The geophysical

                                      -22-
<PAGE>

program consisted of a 66.8 km gravity survey, 302.2 km of Fixed Loop TEM and
23.3 km of reflection seismic surveying. The diamond drilling program included
31 holes totalling 10,533 meters of core.

The gravity work identified a significant extension to the main Maverick
structure over 3 km to the southwest, as well as westerly trending structural
elements. In the south western portion of the Maverick grid, a major gravity
high is interpreted to be a major quartzite unit, bounded by metasediments. The
TEM work defined a host of new conductors that will require extensive drill
testing. One of the most interesting situations is in the Nutana -West Venice
-Venice area where a major, 10-kilometer long, 500-meter wide conductive
corridor has been identified. The corridor is to a large extent, untested to
date. On the Avalon grid, a strong, 3.5 km long, northeast trending, southeast
dipping and untested conductor was located. On the Puka Puka grid, two weak
conductors with a combined strike length of 4.2 km were identified, trending
east-west and dipping to the south. Four flat lying conductive trends were
identified striking approximately east-west and with a combined strike length of
3.6 km, on the Raratonga Grid. The program on the Volhoffer Grid identified two
major conductors and several short strike length conductors which vary in length
from 1.5 km to a maximum of 2.5 km. They strike northeast-southwest and dip
steeply to the southeast. On the West Maverick grid two conductors with a
combined strike length of 1.0 km were defined.

The summer 2005 program was completed in October, 2005 and consisted of 59
diamond drill holes totalling 22,100 meters. The summer program was successful
in that two new potential uranium zones to the northeast of the Maverick Zone
were discovered. These two potential new zones of unconformity-style uranium
mineralization; the `527' zone and the `525' zone, were discovered along the
same structural corridor that hosts the Maverick Main Zone. Drill hole ML-527
returned a grade equivalent of 0.41% U(3)O(8) over 6.6 meters, including a 1.0
meter interval of 1.1 e% U(3)O(8) This hole was collared 450 meters northeast of
the Maverick high-grade discovery hole ML-25. This intersection compares well
with that obtained in ML-03, the very first hole to intersect significant
uranium mineralization in the Maverick Zone. Hole ML-525 which was collared
1,400 meters to the northeast of the discovery hole ML-25 returned an assay of
0.226% U(3)O(8) from a 4.5 meter interval of sandstone immediately above the
unconformity.

In addition to the discovery of the two new potential zones, the summer program
also yielded additional high-grade results from two holes which extended the
Maverick Main Zone. ML-97 returned 2.31% U(3)O(8) over 7.75 meters, including a
2.25 meter intercept of 6.73% U(3)O(8) which includes 12.4% U(3)O(8) over 1.0
meter. ML-90 returned 1.18% U(3)O(8) over 6.45 meters, including a 1.75 meter
intercept of 3.07% U(3)O(8). Indications to date are that the Maverick Zone is
up to 20 meters wide and from 3 meters to 15 meters thick and is open along
strike.

The 2005 program also drilled a number of holes on other targets on the Nutana
and West Venice grids. Geochemical results have been received for four holes
(ML-821, and 823 to 825) from the Nutana grid. ML-825 intersected a
35-meter-wide, strongly altered and faulted graphitic unit some 35 meters
beneath the unconformity. A 0.5 meter interval from a graphitic fault returned
0.319% U(3)O(8) along with anomalous levels of vanadium, copper and arsenic.
ML-824 intersected a 45 meter thick, strongly altered and faulted graphitic unit
some 25 meters beneath the unconformity. Also of note, is that the basal 50 to
70 meters of the sandstone column in both holes is enriched in uranium, lead,
boron and illite.

Geochemical results have been received for two holes (ML-819 and 820) from the
West Venice area. Although neither hole intersected any significant
mineralization, ML-820 did intersect a 25 meter wide quartzite ridge, followed
by a 15 meter wide fault zone enriched in boron and a narrow graphitic unit well
into the basement. The unconformity in this hole was some 50 meters shallower
than projected. This geological setting, which is conducive to the
ponding/deposition of metals from mineralized fluids, has a number of analogies
with that at McArthur River. ML-819 intersected on the hanging wall of the
targeted conductor and returned anomalous boron values from a 15 meter wide
basement fault zone. ML-819 and 820 represent the only two holes drilled on this
grid, as the majority of targets occur beneath muskeg and can only be tested in
the winter.

The West Venice - Nutana corridor will be one of the main target areas for the
upcoming 2006 winter's drilling campaign, particularly the muskeg-covered
flexure that joins the northeast-trending Nutana and east-northeast-trending
West Venice conductors.

Mineralization

The most encouraging discovery to date on the Moore Lake project has been the
Maverick Zone. This mineralization is found along a northeast trending,
southerly dipping, conductor-fault system that wraps around a core of Archean
granite and continues along an east-west trend. The mineralization is intimately
associated with

                                      -23-
<PAGE>

graphitic pelites, reactivated faulting and extensive clay replacement
associated with hydrothermal alteration in the sandstone and basement rocks.
Significant mineralized intercepts have been recovered along nearly 800 meters
of strike. The mineralized system has been traced by various densities of
drilling for over 3.0 km and an additional 1.0 km of the prospective corridor
remains to be drill tested.

The sandstone mineralization typically occurs as disseminated, interstitial,
sooty uraninite within the sandstone matrix, as irregular metallic masses and
irregular veinlets within the sandstone and locally as sooty fracture fillings.
In the basement rocks, the mineralization is typically disseminated uraninite
within fractured felsic intrusives, graphitic meta-pelites and non-graphitic
meta-pelitic rocks. The basement mineralization may also exist as irregular
sooty (locally metallic) masses or veinlets of uraninite. Both the basement and
sandstone mineralization may also be accompanied by masses or dendritic patches
of pyrite and nickel arsenides. Although the mineralization typically straddles
the unconformity, the disseminated, interstitial sandstone-hosted mineralization
is the dominant style identified so far.

Alteration of the sandstone column in the hanging wall of the Maverick Zone is,
manifest in cross section as a plume, at least 75 meters wide and extending for
at least 150 meters above the unconformity. The sandstone is bleached white,
desilicified and carries greater than 1 ppm U and greater than 200 ppm boron (as
dravite). Where cut by the reactivated basement fault, the sandstone is broken
into uncemented rubble. There is some illite within the core of the 75 meters
wide plume and dickite peripheral to the outer edges.

Basement alteration is manifest as a broad envelope around the controlling fault
structure and the graphitic pelite. There is clay replacement (kaolinite,
illite) of the pelites, graphitic pelites and granites as well as the
development of secondary hematite as disseminations and along fractures.

Proposed Exploration Program

The Company is very pleased with the results of its fiscal 2005 exploration
program on the Moore Lake property and has approved an extensive program for the
winter and summer of 2006. The objective of the winter program is to extend the
understanding and limits of the main Maverick Zone and explore the other grid
areas indicated for similar mineralization. A total of approximately 15,000
meters of drilling is planned using three drill rigs. In addition to the
drilling, approximately 100 line kilometers of ground based geophysics will be
completed. The 2006 summer program objectives will be focused on continued
extension of the Main Maverick Zone, and pending results of the winter program,
expansion of the 527 and 525 zones, as well as additional regional drilling.

LAZY EDWARD BAY PROJECT

On December 15, 2003, the Company entered into an agreement with JNR under which
the Company was granted the option for a period of two years to acquire a 75%
interest in the Lazy Edward Bay Project, in consideration for which the Company
would expend Cdn $500,000 to carry out two winter exploration programs. The
Company and JNR have agreed to extend the date by which the Company has to meet
its expenditure commitments from December 15, 2005 to April 30, 2006.

The Lazy Edward Bay project is comprised of eight mineral claims in the Cree
Lake area of the Northern Mining District, Saskatchewan, which were acquired by
staking in December 1999 and in January 2004.

The Lazy Edward Bay project area has been explored since 1969, with the bulk of
the work performed between 1977 and 1989 by a joint venture consisting of
Uranerz Exploration and Mining and SMDC (later to be Cameco). These exploration
programs included an extensive range of geophysical, geochemical and geological
techniques. Seventy three diamond-drill holes totaling 12,916 meters were
drilled in the project area during this period, mainly to test several
conductors at depth. Although several of these holes intersected notable
structure, alteration and geochemistry along extensive conductive systems, the
best uranium value obtained was 0.077%.

In the winter of 2000-2001, the JNR-Kennecott joint venture completed
geophysical programs that outlined several targets of note on the property. Of
the three targets drilled on the property, the best results were obtained along
the Horse Conductor, where significant faulting and desilicification occurs over
a minimum of 2 km of strike length. Enrichment of uranium pathfinder elements
such as copper, nickel, cobalt, vanadium and boron, as well as uranium (0.01%)
occur in the basement rocks along the entire Horse Conductor.

In March of 2002, the JNR-Kennecott joint venture carried out a two hole 172
meter diamond drilling program on the Lazy Edward Bay project. The drilling was
focused on the Blanchard Bay and Tommy Davis Bay areas in the

                                      -24-
<PAGE>

eastern portions of the property. Both holes intersected anomalous nickel, boron
and uranium in the sandstone column, with anomalous nickel and vanadium values
in the basement rocks peripheral to conductive systems.

In fiscal 2006, the Company is proposing a line cutting and ground geophysical
program, which will be followed up with a drilling program in fiscal 2007.

CRAWFORD LAKE/BROWN LAKE PROJECT

On January 8, 2004, the Company signed a letter of intent to earn up to a 75%
interest in the Crawford Lake and Brown Lake uranium properties from Phelps
Dodge Corporation of Canada, Limited, through total aggregate expenditures of
Cdn $2.5 million over a period of 4 years. Crawford Lake is a 6,000 hectare
uranium property, and Brown Lake is a 1,800 hectare uranium property. Both of
these properties are located in the heart of the Athabasca Basin of northern
Saskatchewan.

Historic work on the Crawford Lake project has defined a large-scale, intense
alteration zone within what appears to be an extensive hydrothermal system.
During the winter of 1997, three diamond drill holes were completed at Crawford
Lake for a total of 1,157 meters on a conductor in the northern sector of the
property. Extensive alteration, extending from approximately 100 meter depth
almost all the way down to the unconformity was encountered. This zone shows
strong friability with matrix dissolution, bleaching, argillitization and
disseminated pyrite mineralization.

Exploration work began on the Brown Lake property in 1976, when 62 holes were
drilled. The drilling intersected Athabasca sandstone with eight drill holes
intersecting low grade uranium mineralization. Further exploration of the
properties was carried out from 1999 to 2000, with over 46 line km of
geophysical ground surveys and drilling of four holes, totaling 1,360 meters.
This historic work has delivered encouraging signs of uranium mineralization in
a setting almost identical to the Key Lake deposit.

The Company is planning on carrying out a 1,800 meter drill program on both
these properties in winter over the first half of fiscal 2006.

STRATEGIC ALLIANCE PROPERTIES

In December 2003, the Company and JNR entered into a two year strategic
alliance, under which the parties agreed that, for any properties staked by JNR
in the Athabasca Basin, the Company has first right to elect to fund $500,000 of
eligible exploration expenditures to earn a 75% interest in the properties. The
Kelic Lake, South Dufferin, Pendleton Lake, Cigar South and North Wedge uranium
exploration properties fall under this agreement. The North Wedge property is
also a strategic alliance property, but the Company and JNR have agreed that the
Company can only earn a 51% interest by expenditures of $250,000 by April 30,
2007.

The Company flew 3,550 line km of airborne geophysics on the Kelic and South
Dufferin projects in October 2005 and will during the winter of 2006 undertake
line-cutting and ground geophysics to develop drill targets on the South
Dufferin, Pendleton Lake, Cigar Lake South and North Wedge properties.

OTHER PROPERTIES

On October 31, 2005, the Company entered into an option agreement with
Consolidated Abaddon Resources Inc. ("Abaddon") to earn a 51% interest in its
Huard-Kirsch Lake uranium exploration property which consists of three claims
covering a total of 13,538 hectares. To earn its interest in the property, the
Company made a payment of Cdn $25,000 to Abaddon upon closing and must incur Cdn
$200,000 of eligible exploration expenditures by April 30, 2006 and a further
Cdn $1.3 million by November 1, 2008. The Company will undertake a program of
ground geophysics including Fixed and Moving Loop surveys on the property during
the winter of 2006.

The Company has also entered into a 50/50 joint venture with Santoy Resources
Ltd. on 31 claims staked by the joint venture covering a total of 123,400
hectares. These claims are located in the northeastern portion of the Athabasca
Basin. The Company is working with Santoy to define a 2006 exploration program
on these properties.

In fiscal 2004 and 2005, the Company staked additional ground in the Athabasca
Basin, bringing its total staked and optioned land position to over 590,000
hectares, as indicated on the foregoing map. With this newly acquired land
package combined with existing properties, the Company has one of the largest
exploration land holdings in the Athabasca Basin.

                                      -25-
<PAGE>

Included in this additional ground is the Company's 100% owned Key Lake South
project, located southwest of Moore Lake. The Company has undertaken an airborne
geophysical program and is planning a 120 line km ground geophysical survey
followed up by a 2,300 meter drill program on this property during the 2006
winter program.

On the remainder of the properties stake by the Company, the Company has
completed a number of airborne geophysical programs and is currently evaluating
the data from these programs and the work done on the projects by previous
operators in order to develop exploration programs for the 2006 summer program.
The Company may also evaluate joint venture opportunities on select properties.

                                 WHITE MESA MILL

OVERVIEW

The White Mesa Mill, a fully permitted uranium mill with a vanadium co-product
recovery circuit, is located in southeastern Utah near the Colorado Plateau
District and the Arizona Strip. The Mill is approximately six (6) miles south of
the city of Blanding, Utah. Access is by state highway.

Construction of the White Mesa Mill started in 1979, and conventionally mined
uranium mineralized material was first processed in May 1980. The Mill cost $40
million to construct. With inflation, more stringent permitting requirements,
and the lack of suitable sites, the cost of constructing a facility such as the
White Mesa Mill, if possible, would be considerably more than that amount today.
The Mill is in compliance with NRC, State of Utah and EPA standards.

During mining, uranium mineralized material is received at the Mill and
stockpiled. The material is initially fed to an 18-foot diameter SAG Mill, and
then stored in slurry form in one of the two pulp storage tanks. The Mill
utilizes a two-stage leach process where overflow solution from the No. 1 CCD
Thickener is combined, in an "acid kill" step, with feed from the pulp storage
tanks. The slurry from this first stage leach is then separated in the pre-leach
thickener, with the solids going to the second stage leach and the clarified
solution going to the solvent extraction circuits. Concentrated sulfuric acid,
steam, and an oxidizer are added in the second stage leach. This slurry is
subsequently fed to the 8-stage CCD Circuit where the underflow is discharged to
tailings. In full operation, the Mill employs approximately 100 people.

CURRENT CONDITION AND OPERATING STATUS

The Mill recommenced milling in June 2002 and operated through May 2003,
following a period of standby that commenced in November 1999. During that
period of standby, the Mill had been receiving and stockpiling alternate feed
materials from the Ashland 1 and Linde FUSRAP sites, as well as other alternate
feed materials. While on standby, the Mill is maintained in good operating
condition and is capable of commencing a Mill run at any time without the need
for regulatory approvals.

During the 2002/2003 Mill run, the Mill processed 266,690 tons of alternate feed
materials from the Ashland 1, Linde, Heritage and Molycorp sites, of which
178,352 tons were processed in fiscal 2003. The Mill was on standby from June
2003 to mid-March 2005. The Mill began processing an alternate feed material on
March 21, 2005 and is currently operating with a staff of 20 Company personnel
and 22 contract personnel from White Mesa Inc., a local native owned company.
The Mill is currently processing alternate feed material received from Cameco
and will be processing Cameco material for the next six to nine months. The
Company estimates that in excess of 500,000 pounds of U(3)O(8) will be recovered
from these materials. After processing the Cameco materials, the Mill will
process the 46,053 tons of alternate feed materials from the Linde FUSRAP,
Heritage and Molycorp sites and from a commercial metals processor which are in
stockpile at the Mill.

In fiscal 2005, the Company signed a toll milling agreement with a Japanese
entity to process approximately 500 tons of uranium ore. This material was
processed in December 2005.

INVENTORIES

As of December 19, 2005, there were no inventories of U(3)O(8) at the Mill. As
of that date, there were approximately 65,000 pounds of vanadium, as vanadium
pregnant liquor, located at the Mill.

                                      -26-
<PAGE>

TAILINGS

Synthetic lined cells are used to contain tailings and, in one case, solutions
for evaporation. There is sufficient volume available, as of December 19, 2005,
for approximately another 120,000 tons of tailings solids, after taking into
account materials that have been received under existing contracts. Thereafter,
Cell 4A can be utilized after it is relined. Difficulties have been encountered
with damage to the seams in the liner for Cell 4A since it has not been used
since 1990. The Company has removed the old liner, cleaned out the tailings
basin and engaged an engineering firm to design a new lining system for Cell 4A
which will meet current regulatory requirements. After Cell 4A is relined,
approximately 2,000,000 tons of tailings solids can be disposed of in Cell 4A
before an additional cell will be needed.

The Environmental Statement for the Mill permits construction of additional
tailings cells, which can provide further tailings capacity of approximately 4.5
million tons.

REQUIRED CAPITAL EXPENDITURES

If a decision is made to reopen the U.S. mining operations, the Company has
estimated that capital requirements to prepare the Mill for processing uranium
and vanadium ores would be approximately $12.0 million. These funds would be
used for the purchase of new mobile equipment, refurbishment of the vanadium
circuit, miscellaneous maintenance and the relining of tailings Cell 4A, at an
estimated cost of $1,500,000-$3,000,000. In addition, if Cell 4A is put into
use, the reclamation obligation for the Mill would increase by approximately
$1,000,000, which would require an increase in the Mill's reclamation bond by
that amount.

RECENT OPERATIONS

Since January of 1995, the Mill has completed several campaigns: the processing
in 1995 and 1996 of approximately 200,000 tons of stockpiled mineralized
material, mainly from the Arizona Strip Mines; the processing in 1996 of an
alternate feed source; the processing in 1997 of three alternate feed sources;
the processing in 1998 of uranium-bearing tantalum residues; the processing in
1999 of two alternate feed sources and an 87,250 ton conventional mill run; and,
in 2002 and 2003 the Company processed 266,900 tons from four different
alternate feed sources. The current Mill run began in March 2005 and is expected
to last through to the end of fiscal 2006.

CLOSURE

THE FOLLOWING DISCUSSION OF THE COMPANY'S CURRENT PLANS FOR THE FUTURE OPERATION
OF THE MILL CONSTITUTES FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF FEDERAL
SECURITIES LAWS. SEE "SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS."

In the future, should the Company choose to shut down and close the Mill, it
would be subject to certain closure costs. The estimate of closure costs for the
Mill was prepared by the Company and approved by the UDEQ. These estimated
closure costs are summarized as follows:

                          WHITE MESA MILL CLOSURE COSTS

<TABLE>
<CAPTION>
CATEGORY
--------
<S>                                                   <C>
Mill dismantling and decommissioning                  $ 1,666,734
Tailings cell #1 Reclamation                            1,417,745
Tailings cell #2 Reclamation                            1,210,306
Tailings cell #3 Reclamation                            1,672,795
Tailings cell #4A Reclamation                              57,247
Miscellaneous - management, hygiene, radiation, etc.    2,044,029
                                                      -----------
Direct Costs                                            8,068,856
Contractors' Profit                                       806,886
Contingency                                             1,210,328
Licensing and bonding                                     161,377
Long term care fund                                       702,733
                                                      -----------
TOTAL ESTIMATED COSTS                                 $10,950,180
                                                      ===========
</TABLE>

                                      -27-
<PAGE>

Since September 30, 2004, the Mill's reclamation estimate and bonding
requirement increased from $10,618,895 to $10,950,180.

SEQUENTIAL RECLAMATION

As each tailings cell is filled with tailings, the water is drawn off and pumped
to the evaporation pond and the tailings solids allowed to dry. As each cell
reaches final capacity, reclamation will begin with the placement of interim
cover over the tailings. Additional cells are excavated into the ground, and the
overburden is used to reclaim previous cells. In this way there is an ongoing
reclamation process.

GROUND WATER DISCHARGE PERMIT

Although the Mill is designed as a facility that does not discharge to
groundwater, the Company has a Groundwater Discharge Permit ("GWDP") with UDEQ,
which is required for all similar facilities in the State of Utah, and
specifically tailors the implementation of the State groundwater regulations to
the Mill site. The State of Utah requires that every operating uranium mill in
the State have a GWDP, regardless of whether or not the facility discharges to
groundwater.

The GWDP for the Mill was finalized and implemented during the second quarter of
fiscal 2005. The GWDP requires that the Mill add forty additional monitoring
parameters and fifteen additional monitoring wells. In addition, the State and
the Company are currently determining the compliance levels for all the
monitoring parameters.

                    SUMMARY OF MINERALIZED MATERIAL DEPOSITS

The following is a summary of the Company's estimates of the uranium and
vanadium contained in mineral deposits (not confirmed at this time to be
compliant with NI 43-101 requirements) on the Company's properties, as of
December 19, 2005:

Conventional Mines

<TABLE>
<CAPTION>
          Project                   Mineralized Tons   %U(3)O(8)   %V(2)O(5)
          -------                   ----------------   ---------   ---------
<S>                                 <C>                <C>         <C>
    Arizona Strip Mines(1,4)
         Arizona(1)                        80,000        0.65
         Canyon                           108,000        0.90
         Pinenut                          110,000        0.43
                                    -------------      ------
         Total Arizona Strip              298,000        0.66

    Colorado Plateau(2,4)               1,335,600        0.21        1.23

    Henry Mountains
         Bullfrog(3,4)                  1,938,000        0.33
         Tony M(5)                      3,549,000        0.15
                                    -------------      ------
         Total Henry Mountains          5,487,000        0.22

In-Situ Leach Projects(6)
    Mongolia JV                        21,672,000        0.05
</TABLE>

----------

1)    The reported mineralized tons for the Arizona Strip mines include
      extraction dilution losses (which includes mining dilution and mining
      recovery losses).

2)    The reported mineralized tons for the Colorado Plateau mines include
      extraction dilution losses (which includes mining dilution and mining
      recovery losses).

3)    The reported mineralized tons for the Bullfrog Project do not include
      extraction dilution losses.

4)    Processing of uranium bearing material in a uranium/vanadium recovery mill
      normally results in recovery of approximately 94% to 98% of the contained
      uranium and 70% to 80% of the contained vanadium. Milling Recovery losses
      are not included in the foregoing table.

5)    The reported mineralized tons for the Tony M project include mine
      dilution, but exclude mining recovery losses.

6)    Total uranium recovery from ISL projects is normally in the range of 70%
      to 75% of the in place mineralization. These recovery losses are not
      incorporated in the foregoing figures for the Company's ISL projects.

The Company mined uranium and vanadium-bearing mineralized material from its
Sunday and Rim Mine complexes in the Colorado Plateau District from November
1997 to mid-1999. In mid-June 1999, the Company elected to suspend mining
operations because of weak uranium and vanadium prices and the expectation at
that time

                                      -28-
<PAGE>

that these conditions would not improve for the next few years. The Company also
wrote off the carrying value of its mineral properties for the same reason. At
this time, the Company has not completed the necessary studies to classify the
mineralized material as "reserves"; hence none of the above properties are
considered to contain "reserves" at this time but should be classified as
"mineral deposits." However, the Company is in the process of having NI 43-101
reports prepared by an independent consultant.

The Company recommenced its uranium exploration program in Mongolia in fiscal
2004 and is currently evaluating the possibility of recommencing certain of its
U.S. mining activities.

                            COLORADO PLATEAU DISTRICT

OVERVIEW

The Uravan mineral belt in the Colorado Plateau (the "Colorado Plateau
District") has a lengthy mining history, with the first shipment of mined
materials made to France in 1898. World War II brought increased attention to
the uranium mineralization in the Uravan area, and by the 1950s this district
was one of the world's foremost producers of both uranium and vanadium.
Production continued more or less uninterrupted until 1984 when low uranium
prices forced the closure of all operations. Production resumed in 1987, but
once again ceased in 1990. Total historical production from the Union Carbide
mines in the Uravan area (many of which were later purchased by Energy Fuels,
and hence the Company) is reported at 47 million pounds of U(3)O(8) and 273
million pounds of vanadium, yielding an overall ratio of V(2)O(5)/U(3)O(8) of
5.79.

EXPLORATION POTENTIAL

The uranium mineralization found in the Colorado Plateau was deposited in
alluvial fans by braided streams. The shape and size of the mineralized lenses
are extremely variable. As a result, exploration and mining have historically
involved conducting exploration to find a lense and then following its erratic
path, with little additional surface exploration drilling other than development
drilling in the course of following the lense. This is unlike other types of
mining where mineralization is almost completely delineated by surface
explorative drilling prior to mining.

The unusual nature of these deposits has therefore traditionally resulted in a
limited amount of resources being dedicated to delineate reserves prior to
mining. Traditionally, there will be some reserves that have been delineated at
the beginning of each year, uranium will be mined during the year and
approximately the same amount of reserves will remain delineated at the end of
the year. This pattern has persisted since the 1940s.

Based on this history of production from the Colorado Plateau, the Company
believes, that with high enough commodity prices, the potential to continue this
pattern of production exists and that additional mineral deposits will be
delineated each year that mining continues.

Presently mineral deposits estimated to contain approximately 1,335,600 tons
with an average grade of 0.208% U(3)O(8) and 1.234% V(2)O(5) have been
identified by the Company in its Colorado Plateau properties (not confirmed at
this time to be compliant with NI 43-101 requirements). These estimates take
into account extraction dilution losses, but do not include milling recovery
losses, which are estimated to be 2% to 6% for uranium and 20% to 30% for
vanadium.

GEOLOGY

The Company's properties in this geographic area are typical uranium-vanadium
deposits of the Colorado Plateau type located in the southern end of the Uravan
mineral belt. The rocks of the Colorado Plateau are predominately sedimentary
ranging in age from Precambrian to Tertiary and, although uranium mineralization
occurs in sediments of different ages, the most important deposits of the Uravan
belt occur in the Salt Wash Member of the Jurassic Morrison Formation.

The Salt Wash Member consists of light gray to light brown sandstones
interbedded with red-green siltstones and mudstones. The sandstones, which are
generally fine-grained and well to moderately sorted, are considered to have
been deposited as alluvial fans by braided streams. The mineralization occurs in
the lenticular sandstone deposits as tabular, elongate bodies generally parallel
to the bedding following the paleo-channels. Fine-grained uraninite is the
dominant uranium mineral accompanied by lesser amounts of coffinite. The chief
vanadium mineral is montrosite. In the oxidized parts of the deposits, the
distinctive yellow colored uranyl-vanadate mineral, carnotite, is common.

                                      -29-
<PAGE>

Individual deposits are small, varying in length from a few hundred to several
thousand feet and in width from a hundred to a thousand feet. Thickness varies
from a few inches to several tens of feet, but generally average between two to
five feet. Mines often contain several such mineralized deposits. The host
sediments are generally flat lying to low dipping with little structural
deformation.

OPERATIONS

The Company's principal mining complexes in the Colorado Plateau District
consist of the Deer Creek, Van 4, Sunday, and East Canyon (Rim) zones. The bulk
of the mineral deposits in the Colorado Plateau District are contained in three
areas: the Sunday Mine Complex; the Deer Creek complex, which includes the La
Sal and Pandora mines; and, the East Canyon Area, which includes the Rim Mine.
All of these areas have developed, permitted mines that have been shut down,
pending further improvement in commodity prices. The locations of these mines
are indicated on the following figure.

                            COLORADO PLATEAU DISTRICT

                                     [MAP]

The Company commenced conventional mining operations at its Sunday Mine Complex
in November 1997 and at its Rim Mine in January 1998 after completion of mine
development activities. The Company continued the mining of uranium and vanadium
bearing materials from these mines until mid-1999. During this mining campaign a
total of approximately 81,500 tons of mineralized material with a U(3)O(8) grade
of 0.28% and a V(2)O(5) grade of 1.9% was recovered from these mines. This
mineralized material, together with approximately 5,750 tons of mineralized
material from independent mines, was milled at the White Mesa Mill during the
period June 1999 to November 1999, to recover approximately 487,000 pounds of
U(3)O(8) and 2.0 million pounds of V(2)O(5). At that time, the Company elected
to suspend operations at these mines as a result of continued weak uranium and
vanadium prices and the expectation at that time that these conditions would not
improve for the next several years. The shutdown of the mines took several
months to complete and was completed in November 1999. The mines continue to
remain in

                                      -30-
<PAGE>

a shutdown status; however, the Company is evaluating re-commencing mining
operations pending further increases in the uranium price.

The Company has reopened a field office in Dove Creek, Colorado.

                             HENRY MOUNTAINS COMPLEX

In addition to the mineral properties on the Colorado Plateau and the Arizona
Strip, the Company also acquired the Bullfrog property from Energy Fuels, and in
fiscal 2005 acquired two key properties adjoining its existing Bullfrog mining
claims in Garfield County in southeast Utah (See the figure below.). The
properties that were added are comprised of a Utah State section and 17
privately-held unpatented mining claims, which together encompass the entire
Tony M Mine. The Tony M was extensively developed in the early 1980's but was
never put into production. Subsequent to the acquisition of the two new
properties, the Company renamed this group of projects the Henry Mountains
Complex.

The Henry Mountains Complex is located in eastern Garfield County, Utah, 20
miles north of Bullfrog Basin Marina on Lake Powell, about 40 air miles south of
Hanksville, Utah, and 125 miles from the White Mesa Mill. Access to the property
is by State highway. The location of the Henry Mountains Complex is indicated on
the figure under the heading "Colorado Plateau District - Operations."

The Henry Mountains Complex uranium deposits are hosted in basal sand units of
the Salt Wash member of the upper Jurassic Morrison Formation. Regionally the
Salt Wash has been the primary source of uranium/vanadium ores on the Colorado
Plateau throughout its history.

The Company has begun permitting with the State of Utah for a mine operations
permit.

                                      -31-
<PAGE>

                                     [MAP]

Bullfrog Property

More than 2,200 rotary drill holes have been completed on the Indian Bench,
Copper Bench and Southwest portions of the Bullfrog claims. There are no surface
or underground workings or infrastructure on the Bullfrog portion of the Henry
Mountains Complex.

In 1993, Energy Fuels personnel calculated an in-place mineral deposit of
1,938,000 tons at a grade of 0.33% U(3)O(8) on the Bullfrog claims. A higher
grade portion of the deposit was estimated by Energy Fuels to contain 1,300,000
tons at a grade of 0.42% U(3)O(8). These estimates (not confirmed at this time
to be compliant with NI 43-101 requirements) do not take into account extraction
dilution losses or milling recovery losses.

Tony M Mine

The Tony M mine portion of the Henry Mountains Complex was developed in the
early 1980's and is comprised of a Utah State section and 17 privately-held
unpatented mining claims. The Utah State section was offered by sealed
competitive bid in March 2005 and the Company was selected as the winning bidder
with an initial cash bid of U.S. $1.0 million. The State will receive an annual
advanced minimum royalty, which is a per acre payment multiplied

                                      -32-
<PAGE>

by the annual average uranium spot price. When mining operations are active, the
State will receive production royalties representing an 8% uranium NSR royalty
and a 4% vanadium NSR royalty. The advanced minimum royalties are deductible
against the production royalty payments. The term of the lease is ten (10) years
and can be extended.

In addition to the State section, the Company acquired 17 privately-held
unpatented mining claims in August 2005. Terms include cash payments of
$200,000, 250,000 shares of the Company, of which 147,000 have been issued to
the vendor of the claims. The remainder of the shares will be issued upon
confirmation of certain title matters relating to the claims. The vendor of the
claims will also retain a uranium and vanadium royalty of 4% and 2%,
respectively.

Prior mine development at the Tony M mine included dual declines over 10,000
feet long to access the defined mineral deposit, approximately 17 miles of
development workings, and three ventilation shafts.

A 1983 estimate by the previous operator calculated an in-place mineral deposit
of 3,549,000 tons at a grade of 0.15% U(3)O(8) (not confirmed at this time to be
compliant with NI 43-101 requirements). These estimates include mine dilution,
but exclude mining and milling recovery losses.

                                  ARIZONA STRIP

OVERVIEW

The Arizona Strip is an area bounded on the north by the Arizona/Utah state
line; on the east by the Colorado River and Marble Canyon; on the West by the
Grand Wash cliffs; and on the south by a mid-point between the city of Flagstaff
and the Grand Canyon. The area encompasses approximately 13,000 square miles.
The Arizona Strip is separate and distinct from the Colorado Plateau District.
The two mining districts are located approximately 200 air miles (310 road
miles) apart and have been historically administered as two separate mining
camps.

The Company owns four mines in the Arizona Strip, all of which have been shut
down pending further improvement in commodity prices.

Since 1980, when mine development first began at Hack Canyon II, the Arizona
Strip has produced in excess of 19 million pounds of uranium from seven mines,
each of which was owned and operated by Energy Fuels. Of these mines, Hack
Canyon I, II, and III, Pigeon and Hermit are mined out and have been reclaimed;
Pinenut, Kanab North, Canyon and Arizona 1 have remaining mineral deposits but
have been placed on shut down status pending improvements in commodity prices.
Mineralized material from the Arizona Strip mines can be hauled by truck from
the mine sites to the White Mesa Mill. The Arizona 1 Mine is 307 road miles, and
the Canyon Mine is 316 road miles from the Mill.

Due to the shutdown of mining activities and the Company's initiatives to reduce
the holding costs of its U.S. mineral properties, the Company sold its field
office in Fredonia Arizona, effective March 31, 2000.

MINE DEVELOPMENT

The mineral deposits occur in collapsed breccia pipes and range from 1,000 to
1,800 feet below surface with a mineralized interval of up to 600 feet thick.
Each of the mines in the Arizona Strip consists of one breccia pipe. The pipes
typically are 200 to 400 feet in diameter. Within this envelope, the mineral
deposits can be at times massive but often are irregular and discontinuous.

A 1,000 to 1,600 foot deep shaft is generally required to access the deposits.
In the case of the Hack Canyon I, II, and III mines, access was obtained through
declines driven from nearby canyons.

BACKGROUND GEOLOGY

Breccia pipes are collapse features created by cavern dissolution in the Redwall
Limestone, some 3,000 feet below present day surface. Overlying sediments
fracture as the cavern size increases and ultimately collapse forming a
pipe-like structure, which is filled with the rubble of the sediments. Uranium
mineralization occurs in this brecciated rock.

Uranium mineralization is hosted by the breccia in a sand, silt, and clay
matrix. The principal uranium mineral, pitchblende, occurs primarily in the
matrix, filling voids between sand grains and replacing rock fragments. Pyrite

                                      -33-
<PAGE>

is the principal gangue mineral. Calcite and gypsum are common cementing
minerals. Copper, lead and zinc minerals may also be present.

Nearly always, the pipe is haloed by alteration or a zone of bleaching resulting
from the partial removal of red iron minerals from formations surrounding the
pipe. "Ring fractures" are often seen at the pipe margins. These fractures may
also be an important host for associated mineralization and reserves.

DESCRIPTION

The Arizona Strip properties consist of four developed and partially developed
mines, being the Arizona 1, Canyon, Pinenut and Kanab North mines, all of which
have been shut down. The Arizona Strip properties are estimated to contain in
total approximately 298,000 tons with an estimated average grade of
approximately 0.66% U(3)O(8) (not confirmed at this time to be compliant with NI
43-101 requirements). These estimates take into account extraction dilution
losses, but do not include milling recovery losses which are estimated to be 2%
to 6% for uranium. The location of these mines is indicated on the following
figure.

                                  ARIZONA STRIP

                                     [MAP]

The Company is currently evaluating re-commencing mining operations on the
Arizona Strip pending further increases in the uranium price.

                                      -34-
<PAGE>

                          MONGOLIAN URANIUM PROPERTIES

COUNTRY OVERVIEW

Mongolia is a landlocked nation bounded by Russia to the north and China to the
east, south, and west. With an area of more than 1.5 million sq. km. (world's
7th largest country) and population of about 2.6 million people, Mongolia has
one of the lowest population densities in the world. The landscape includes
forested mountain ranges in the north, desert and low mountains in the south,
high mountains in the west, and vast steppes in the east. The climate is
continental with hot summers and long harsh winters.

Mongolia's population is relatively homogeneous in its ethnicity, language and
religion. More that 60% of the population is below the age of 30, and about one
third live in the capital city of Ulaanbaatar while most of the remainder live
as nomadic herdsmen throughout the country.

In 1921, Mongolia came under the influence of the Soviet Union, which dominated
the politics, economy and infrastructure of the country until 1990 when
Mongolia's transition to democracy and a free market economy was begun.

Since 1991, Mongolia has been on a course to implement comprehensive economic
reforms to develop a sustainable, independent economy. One of the primary
objectives of this program has been to encourage direct foreign investment to
stimulate growth of the economy; several laws have been enacted to support this
program.

The primary industries and sources of foreign trade in Mongolia are agriculture
and mineral products. Mongolia is one of the "last frontiers" for mineral
exploration. Large mineral deposits are located along geologic systems that
trend through Mongolia, but exploration in Mongolia is still in early stages. An
increasing number of mining and exploration companies are active in Mongolia.
Among the reasons for this increased attention are:

      -     The geology is considered by many to be highly prospective for large
            mineral deposits

      -     The country is under-explored

      -     The Government has demonstrated its commitment to developing the
            mineral sector by attracting foreign investment

      -     Appropriate laws have been enacted to encourage foreign investment

      -     Proximity to major metal markets in China, Japan, and South Korea.

Mongolia is an exporter of copper and molybdenum, a leading producer of
fluorspar, and an increasingly important gold producer. Mongolia possesses one
of the most progressive mineral regimes in Asia. The Mineral Law of Mongolia was
adopted in 1997 and provides a transparent licensing system that encourages
investment in this sector.

The Mineral Law allows any Mongolian citizen, foreign citizen or entity, or
legal person to hold any number of mineral exploration licenses, each up to
400,000 hectares. An exploration license holder is afforded the exclusive right
to conduct exploration within the license for up to seven years, the exclusive
right to obtain a mining license for any part of the exploration license, and
the right to transfer or pledge any part of an exploration license.

Mining license holders have the exclusive right to engage in mining within the
license for 60 years, with an additional 40 year extension allowed. A gross
royalty of 2.5% of the sales value of products sold is payable to the
Government.

The Mongolian Government is currently reviewing the Mineral Law, and various
amendments have been proposed which could significantly affect a portion of the
Company's uranium exploration efforts, in particular its option agreement with
Erdene and the uranium exploration properties held by IUM. The Company is
actively involved in efforts to work with the Mongolian government to provide
input into the amendment process. At this time there is no guarantee that any
amendments which the Government might make to the Mineral Law will be favorable
to mineral sector investors in Mongolia. If unfavorable amendments are enacted,
future exploration and the potential development of minerals deposits may become
uneconomic in Mongolia. However, the Gurvan Saihan Joint Venture (the "Joint
Venture") operates under a Mineral Agreement, which was signed prior to the
formation of the Mineral Law, and which generally takes priority over specific
terms and conditions contained in the Mineral Law.

                                      -35-
<PAGE>

Background and Property Descriptions

The Company owns a 70% interest and is the managing partner in the Gurvan Saihan
Joint Venture; the other participants in the Joint Venture are the Mongolian
government and a Russian government entity, each as to 15%. The Joint Venture
was formed in 1994, and originally held five concessions in Mongolia: the Choir,
Hairhan, Gurvan Saihan, Ulzit and Undershilin depressions. Following several
years of active exploration and pilot testing, the program was placed on
temporary standby in 2000 due to the continuing decline of world uranium prices
at that time.

As a result of recent increases in uranium prices, the Company resumed uranium
exploration for the Joint Venture in fiscal 2004. This involved acquiring new
exploration licenses in known prospective areas, adjusting the area held under
the five original Joint Venture concessions (including dropping the Undershilin
depression in its entirety), and conducting geologic data acquisition and review
and field reconnaissance on new license areas. As of December 19, 2005, the
Joint Venture held 16 exploration licenses, encompassing 1.774 million hectares.

In the third quarter of fiscal 2004, the Company formed its wholly owned
subsidiary IUM to conduct uranium exploration, solely for the account of the
Company and independent from the Joint Venture. As of December 19, 2005, IUM
controlled 539,000 hectares, which is made up of nine license areas.

In June 2005, the Company acquired an option to earn a 65% interest in Erdene's
portfolio of uranium licenses and applications, through expenditures of Cdn $6.0
million over a four year period. The Erdene properties are comprised of 32
licenses covering a total of 1.2 million hectares.

The uranium exploration licenses currently held by the Company, through the
Joint Venture, through IUM and through the Erdene option are shown on the
following figure:

                                     [MAP]

Exploration licenses in Mongolia are held under the Mineral Law of Mongolia,
enacted in 1997. The Mineral Law provides for secure rights for exploration, and
although no work commitments are required, annual license fee payments are
required, and these escalate through the allowable 7-year term of exploration
licenses. The Joint Venture holds four of its exploration areas under a Mineral
Agreement between the Joint Venture and the government of Mongolia. The Mineral
Agreement grants the Joint Venture unique terms for these four areas, and
although they have been assigned exploration licenses for purposes of land
management by the government, these areas are exempt from many of the provisions
of the Mineral Law regarding property holdings for exploration.

                                      -36-
<PAGE>

Geology

Uranium mineralization has been discovered in Cretaceous sediments in the south
central region of Mongolia. These deposits are hosted by fluvial, alluvial, and
lacustrine sediments where uranium is associated with carbonaceous sandstone,
siltstone, and clay. The prospective sedimentary basins ("depressions") are
related to a large regional tectonic belt that extends in an arc from northeast
to southwest Mongolia. Intrusion of granitic plutons, volcanic activity, and
structural deformation took place along this belt. Many of the intrusive
granites are anomalously high in uranium, and are the likely source of uranium,
which was later mobilized through weathering processes and subsequently
concentrated in sedimentary basins.

After active tectonism subsided, sedimentary basins formed along regional fault
zones and rifts. During Cretaceous times, sediments were deposited under humid,
tropical conditions, which formed thick sequences of carbonaceous, reduced
sediments. In later Cretaceous times, the climate became continental and drier,
and sediments from this period are often oxidized and weathered.

The Mongolia uranium exploration properties lie within this tectonic belt
through south-central Mongolia. The properties cover many prospective basins
with identified uranium anomalies and sediments of favorable age and composition
for uranium mineralization.

Prior to the entry of the Company in Mongolia, joint Russian-Mongolian
geological expeditions conducted regional uranium reconnaissance and drilling,
including resource delineation drilling on the Haraat deposit in the Choir
Depression. Following its formation in early 1994, the Joint Venture expanded
exploration into its other licensed areas, including the Hairhan Depression
where an important uranium discovery was made in late 1996.

The focus of Company exploration programs in Mongolia has been on
sediment-hosted deposits that can be exploited by In Situ Leach ("ISL")
technology. The Company, through the Gurvan Saihan Joint Venture, has conducted
two ISL pilot tests - one each at the Haraat deposit and at the Hairhan deposit.
These tests have confirmed that the geology and hydrology of the Company's
uranium properties are favorable for ISL development.

Exploration History

Since the Joint Venture's inception in 1994, it has invested over $11.5 million
in exploration on its concessions. To date, the early Joint Venture programs
included resource delineation and confirmation drilling in areas where past
Russian work had defined uranium resources in sediments. Joint Venture work
increased in the 1996 - 1998 time frame when drilling and ISL pilot testing were
conducted at both the Haraat deposit in the Choir Depression and the Hairhan
deposit in the Hairhan Depression. Initial stage exploration, including
car-borne gamma spectrometric surveys and reconnaissance drilling, were also
conducted in other Joint Venture license areas.

During the period from 1994 through 1998, the Joint Venture completed 147,000
meters of exploration, resource delineation, and ISL test drilling. Drilling was
conducted in all five of the original license areas, with the bulk of the work
being done at the Hairhan and Haraat deposits. Gamma spectrometric surveys,
totaling over 16,000 line kilometers, were conducted in all of the Joint Venture
original concession areas as well as a number of areas which were licensed in
1997 and which were subsequently reacquired by the Joint Venture in 2004.

Due to the continuing deterioration of world uranium prices in the late 1990's
and into the early 2000's, the Joint Venture work was placed on "standby", and
all of its exploration expenditures to that date were written off. The Joint
Venture's property holdings were preserved however, and the Joint Venture was
maintained.

Starting in early 2004, the Joint Venture began ramping up to resume uranium
exploration in Mongolia as the world uranium market entered a period of stronger
prices. Exploration licenses were obtained in areas known to be prospective
based on past Joint Venture investigations in the late 1990's. Based on this
past work, the Joint Venture resumed exploration activities, which included
34,000 meters of drilling on previously identified high priority targets in
2005.

Mineralization

Delineation drilling has been conducted at both the Haraat and Hairhan deposits.
Uranium mineralization at Haraat occurs at depths from surface to about 120
meters. The identified mineral deposits occur as sinuous lenses and bedded
mineralization localized along paleo river channels. Much of this mineralization
occurs above the natural water table and is not considered suitable for
exploitation by ISL under industry standard practices.

                                      -37-
<PAGE>

Mineral deposit estimates (not confirmed at this time to be compliant with NI
43-101 requirements) prepared by the Company for Haraat total 2,461 metric
tonnes uranium ("MTU") in zones below the natural water table. In addition,
mineral deposits totaling over 14,000 MTU have been delineated in horizons above
the water table.

At Hairhan, mineralization ranges from 10 to 120+ meters deep and averages 60 to
80 meters. The Hairhan deposit is compact with multiple, stacked mineralized
horizons in area of approximately 2 kilometers by 1.5 kilometers. All
mineralization of interest at Hairhan is below the natural water table. Mineral
deposit estimates (not confirmed at this time to be compliant with 43-101
requirements) prepared by the Company for Hairhan total 6,226 MTU. The combined
delineated mineralization at Hairhan and Haraat total 8,687 MTU suitable for ISL
exploitation.

ISL Pilot Testing

In 1996 the Joint Venture conducted an ISL Pilot Test at Haraat. This test
confirmed that the identified mineral deposit is amenable to ISL. Further
testing is required at Haraat to provide definitive criteria for feasibility
analysis.

A limited scale ISL test was conducted at Hairhan in 1998. This test was
directed specifically toward determining optimal leaching conditions. By
incorporating operational experience from test work at Haraat, the ISL leach
test at Hairhan successfully demonstrated that ISL is applicable at Hairhan. The
test results, including important viability factors such as uranium production
head grade, acid consumption, projected recovery factors, leaching time, and
production well flow rate, provide a solid basis for designing a commercial
demonstration projection at Hairhan.

The exploration successes at Hairhan and Haraat, combined with the ISL test work
results, confirm the potential for development of commercially viable uranium
deposits on the Company's properties in Mongolia.

2005 Exploration Program

The 2005 exploration program ran from April to mid-October 2005 and was
comprised of exploration drilling, gamma spectrometric surveys and general
prospecting. Exploration drilling on the Joint Venture properties, totaling
approximately 34,000 meters in 372 exploration drill holes, investigated four
areas where past geological and geophysical reconnaissance identified strong
uranium anomalies. In addition to the foregoing drilling, approximately 500
meters of drilling was completed on the Erdene properties near the end of the
field season. On the IUM properties, the 2005 exploration program entailed
prospecting, data compilation and preparation of plans for field reconnaissance
programs to be undertaken in 2006.

In all areas, the drilling targets were in the Cretaceous Dzuunbaayn formation,
comprised of alternating sequences of fluvial and lacustrine sandstones,
siltstones, clays, and coaley sediments deposited in intermontane basins.
Uranium mineralization is found in all rock types in these areas, but the
specific targets of interest are permeable sandstones which would be amenable to
the ISL mining method.

Drilling in the Gurvan Saihan Depression tested the previously identified
anomalous trend in the southeast portion of the license area. Initial step out
reconnaissance drilling was also conducted in the north, northeast, and
southwest portions of the depression to test channel systems entering into the
depression. A total of 158 exploration holes totaling 12,472 meters were
completed in the Gurvan Saihan Depression. Drilling data are being verified and
geologic interpretation is being completed to develop preliminary deposit models
in the Gurvan Saihan Depression. In addition, large areas of this depression
have not yet been evaluated. Given the widespread extent of uranium anomalies
encountered in the initial broad-spaced drilling in the depression, follow up
drilling is indicated.

The Urt Tsav / Hukh Tolgoi license area hosts some of the strongest surface
anomalies identified in prospecting work in the mid 1990's. The 2005 drilling
tested the exposed anomalies, which resulted in the delineation of a
paleo-drainage channel with intensely oxidized sandstones. The stratigraphy
consists of mostly red-colored sands, clays, silts and transitional facies.
Mineralization is localized at the contacts of red-colored sediments with gray
reduced rocks. Anomalous uranium mineralization was discovered within a six
kilometer long channel system ranging from 300 to 500 meters wide. Composite
mineral intercepts have average grades from 0.01% U up to 0.039% U over
thickness of 0.5 meter up to 10 meters. Although the mineralization encountered
in the 2005 program is low grade, further drilling on specific targets may be
warranted in the Urt Tsav area pending a full geologic interpretation of the
2005 data. Drilling on this license totaled 10,949 meters in 103 holes.

On the Ikh Khongor license area 48 holes were drilled totaling 4,315 meters.
Drilling indicated that surficial anomalies generally did not extend into the
subsurface, and the source of the identified surface anomalies was found

                                      -38-
<PAGE>

to be organic claystone horizons with anomalous uranium content. No further work
is planned for this area.

The 2005 drilling program concluded in the Navtgar license area, where 6,097
meters of drilling was completed in 63 holes. Anomalies identified by past gamma
spectrometric surveys were found to be localized in paleo-drainage valleys. The
surface anomalies are generally associated with shallow, recent oxidation.
Subsurface stratigraphy is characterized by extensive thickness of unoxidized
sandstone and argillaceous siltstone. Mineralization ranging from less than one
meter to up to 2.7 meters thick and grading from 0.01% U to 0.050% U was
encountered in weak oxidized sands with interbedded clay lenses. Geologic data
review is underway to assess the uranium mineral potential of the paleo-valleys
that were intersected. This area has impressive thicknesses of sandstone, and
given the magnitude of the hydrodynamic environment, further exploratory
drilling may be warranted.

In addition to the exploratory drilling summarized above, geologic
reconnaissance work was also conducted in 2005 in several new license areas
obtained by the Gurvan Saihan Joint Venture and in IUM licensed areas. Based on
the initial work in these new license areas, several targets have been advanced
and will be drill tested in the 2006 field program.

On the Erdene properties, Erdene completed extensive reconnaissance work and
performed about 500 meters of initial drilling in three target areas. The
results of the drill program are pending.

Proposed Exploration Program

The Company is evaluating the results of the 2005 programs and preparing for a
substantial expansion of the Mongolia exploration efforts in 2006. Exploration
drilling is planned for the central Gobi region in Cretaceous depressions that
are highly similar to the Joint Venture's Hairhan, Haraat and Gurvan Saihan
license areas, all of which host mineralized uranium deposits. Initial
prospecting and reconnaissance has been conducted in the central Gobi license
areas, and a number of targets have been identified for initial stratigraphic
drilling and to test surface radiometric anomalies. The Company also plans to
conduct initial reconnaissance drilling on the highest ranking Erdene licenses.
The total drilling projected for the 2006 field season is approximately 60,000
meters in more than 650 holes.

In addition to the drilling programs planned for 2006, prospecting, geologic
mapping, and reconnaissance work will continue on IUM and Erdene license areas.
Reconnaissance will include approximately 5,000 line kilometers of gamma
spectrometric surveys, combined with detailed radiometric traverses and geologic
mapping in areas of interesting anomalies. The objective of the 2006
reconnaissance work is to delineate targets for initial exploration drilling in
the following field season.

The Company will also investigate areas in Mongolia for possible uranium
exploration in new settings and geologic environments. The company will also
continue to evaluate properties submitted by third parties to determine if such
opportunities could increase the value of the Company's Mongolia holdings.

Given the improvement in uranium prices, the Company will begin re-evaluation of
the work done in the late 1990's for the Hairhan and Haraat uranium deposits.
The tripling of uranium prices in the past 2 years, offset in part by rapid
escalation of world energy prices and mining consumables, dictates that the
Company reassess the production opportunities for the current mineralized
deposits.

                               FORTRESS PROPERTIES

In early 2002, the Company initiated a regional exploration effort in Mongolia
for precious and base metals. In June 2004, the Company sold its precious and
base metals properties to Fortress, in consideration of a majority share
ownership position in Fortress. As of December 19, 2005, Fortress controls 2.5
million hectares in Mongolia under its precious and base metals exploration
program. In addition, Fortress has the right to earn up to an 80% interest in
the Svetloye Gold project located in eastern Russia from Phelps Dodge
Exploration Corporation ("PDEC"). As of December 19, 2005, the Company holds a
44.2% equity interest in Fortress.

Fortress is a Canadian corporation whose shares are listed on the TSX Venture
Exchange (ticker symbol: FST) with offices in Vancouver, Canada, Ulaanbaatar,
Mongolia and Khabarovsk, Russia. As a publicly listed company Fortress' public
disclosure documentation can be found on www.sedar.com. The following is a
summary of Fortress' activities.

                                     - 39 -

<PAGE>

Mongolia Properties

Mongolia has a variety of favorable environments for deposits of copper, gold
and related metals and has become the focus of worldwide exploration concerns
seeking to test its under-explored potential. Fortress has established a
significant land position in Mongolia for base and precious metals exploration.
Land acquisition has been guided by a concentrated reconnaissance program,
including review of available geologic and metallogenic data and analysis of
geophysical data and satellite imagery.

Work to date on the precious and base metals properties has involved field
reconnaissance, including review of available geologic and metallogenic data,
analysis of geophysical data and satellite imagery, and exploration drilling
programs that was conducted on certain of the properties in the 2003, 2004 and
the most recent 2005 field seasons.

Fortress' properties are described below, and shown in the following figure. All
of these properties are at the exploration stage. The properties contain no
known mineral deposits at this time and have no workings or infrastructure.

In March 2005, Fortress completed an alliance with PDEC in which PDEC can earn
up to a 70% interest in any of Fortress' projects in Mongolia. The earn-in is
subject to funding of certain exploration and development programs on the
properties and the investments in Fortress of $1.7 million, by way of private
placement in 2005, and a second investment of $1.3 million in 2006.

                                     [MAP]

In the nine months ending September 30, 2005, Fortress spent approximately Cdn
$1.5 million on its Mongolian properties.

Erdenet Region

The Erdenet area is an extension to the east of the host rocks of the Erdenet
Mine, a major copper mine and the largest mining operation in Mongolia, which is
owned 51% by the Mongolian government and 49% by the Russian government.
Fortress' Erdenet licensed area totals approximately 448,071 hectares and
Fortress is focusing on the following three project areas:

Teltiin Gol The Teltiin Gol Project is located in Selenge Aimag approximately
250 km north-northwest of the capital, Ulaanbaatar. The Teltiin Gol Project
totals 35,420 hectares. Based on the work completed to date, the Teltiin Gol
Project is believed to have potential for a structurally controlled, copper
and/or gold deposit. A 1,072 meter Phase One drilling program was completed
earlier in 2005. Based on the results of this program, Fortress

                                     - 40 -

<PAGE>

completed an additional drill program of approximately 1,000 meters during the
third quarter. Geochemical results are pending.

Oyuut Uul (Tomortolgoi) Occurring within the Selenge Belt, which hosts the
Erdenet and Boroo mines, Oyuut Uul is located in one of the more accessible of
the prospective areas of Mongolia. The recognized hydrothermal/geochemical
system is covered by three licenses, which are part of the Tomortolgoi group of
licenses, within the Erdenet block. The Oyuut Uul project area encompasses about
120,700 hectares. Work in 2004 consisted of geochemical sampling, ground
magnetic and IP surveying, and geological mapping. The 2005 field program
consisted of further geochemical sampling, field reconnaissance and 1,000 meters
of reverse circulation and core drilling. Based on results of the first phase
drill program, an additional 1,000 meter drill program is planned for early
2006.

Tsagaan Gozgor Fortress holds about 115,300 hectares in an area northwest of
Ulaanbaatar. The 2005 field program included geologic mapping and field
reconnaissance, stream sediment, rock chip and soil sampling.

Huvsgul

Huvsgul licenses are located in the Huvsgul Aimag, North Mongolia, 650 km
northwest of Ulaanbaatar. Fortress holds licenses throughout the Huvsgul region
covering 3,201,658 hectares. The 2005 field program included stream sediment
sampling and field reconnaissance. Geochemical results for the majority of the
reconnaissance programs have been received and results are encouraging. Numerous
anomalies have been identified for follow-up programs in 2006.

Burleg River The Burleg River district covers about 258,830 hectares. Previous
work by the Mongolian government had included 1:50,000 scale geologic mapping
and regional geochemistry resulting in the discovery of numerous gold in stream
anomalies throughout the prospect and the region. In 2003, the Company's
geologists discovered a 210 km(2) region with pan-concentrate values averaging
1.34 ppm Au. The 2004 field program included mapping and geochemical sampling
throughout the stream gold anomaly. This included the collection of 200 rock
chip, 400 soil, and 50 stream sediment samples. Soil surveys identified a 2 km X
300 m soil gold anomaly averaging 0.49 gpt Au, in soils and a larger, less
well-contained soils anomaly. The 2005 field program consisted of excavation of
mechanized trenches to define drill targets.

Shiveen Gol

The property consisted of five licenses that were held under option. These
licenses covered about 12,267 hectares in western Mongolia. Fortress decided not
to pursue its option on the Shiveen Gol property and consequently, all costs
related to the property were written off during the three month period ended
March 31, 2005.

Tsagaan Tolgoi

Fortress held licenses in the Tsagaan Tolgoi area, totaling 312,408 hectares,
which were relinquished in 2005.

Satyr Kudag (Gants Modot)

Fortress holds licenses covering 15,147 hectares in the Satyr Kudag area, which
is located in southwestern Mongolia. A rock sampling and mapping program was
undertaken in 2004. The 2005 field program included an IP survey, ground
magnetics, stream sediment and rock chip and soil sampling. Phase 1 drilling is
planned for early 2006.

Other Mongolian Properties

Fortress decided not to pursue further exploration work on the Davaa, Burkheer
Khar and Ulziit properties which resulted in a write off in the third quarter of
2005. Total expenditures on these properties totaled Cdn $312,000.

Svetloye Project

On April 27, 2005, Fortress agreed to terms with PDEC to acquire up to an 80%
interest in Svetloye Gold Corporation ("SGC"). SGC holds a 100% indirect
interest in an exploration license over the Svetloye gold project in the
Khabarovsk Region of eastern Russia. In consideration, Fortress paid PDEC
$500,000 for a 51% interest in SGC, and the remaining 29% interest will be
granted by PDEC upon the earlier to occur of (a) completion of 20,000

                                     - 41 -

<PAGE>

meters of drilling and 120,000 cubic meters of trenching, or (b) conversion of
the exploration license to a mining license. In addition to the initial purchase
of 51% of SGC, the agreement also includes the following terms:

            -     payment to PDEC of US$2,500,000 in cash and/or Fortress
                  shares, upon completion of a pre-feasibility study, provided
                  that the cash portion will not be less than USD$1,500,000;

            -     payment to PDEC of US$1.00 per proven and probable ounce of
                  gold defined at positive feasibility multiplied by PDEC's
                  interest in the Svetloye Project; and,

            -     payment to PDEC of a further $1.50 per ounce of gold produced
                  multiplied by PDEC's interest, if proven and probable reserves
                  are 5,000,000 ounces of gold or greater.

In the nine months ended September 30, 2005, Fortress had spent Cdn $1.9 million
on the Svetloye project, which includes the initial $500,000 payment to PDEC.

Fortress has completed magnetic and IP surveys as well as a 900 meter trenching
program on the Svetloye gold project. The results from the first 142 trench
samples received to date indicated extensive high grade gold concentrations at
surface and have identified a new high grade zone. In the new high grade
extension, Trench 13 intercepted 14 meters (entire length of the trench assayed
to date) grading 3.84 gpt Au.

Other highlights included Trench 5 East which returned 50.7 meters running 3.4
gpt Au, including 12 meters at 11.9 gpt Au and Trench 4 where samples graded
14.5 gpt Au over 23.2 meters, including a 15.3 meter intercept @ 20.0 gpt Au.
These two trenches are eastern extensions off of earlier trenches dug in 2004 by
PDEC and have now resulted in combined zones of 105.6 meters grading 5.5 gpt Au
and 162 meters grading 6.63 gpt Au, respectively.

A 10,000 meter drill program is scheduled to begin in January, 2006. An RD-750
combination drill capable of both diamond and reverse circulation drilling,
requisite fuel, and all the necessary equipment to complete the drill program is
currently in Okhotsk. A 270 kilometer winter road will be reopened for
mobilization of the drill equipment and supplies from Okhotsk to the site. To
support the efforts on the Svetloye Project, Fortress has opened an office in
Khabarovsk, Russia.

                                   PERMITTING

The permitting status of the various mines is set out below.

SUNDAY MINE COMPLEX

The Sunday Mine Complex is fully permitted for its mining activities. Recent
changes in the laws of Colorado could give rise to additional future permitting
requirements.

In recent years, the State of Colorado passed a law that provides that the
Colorado Division of Minerals and Geology ("DMG") can determine that a mine is a
Designated Mining Operation (a "DMO") if it is a mining operation at which
"toxic or acidic chemicals used in extractive metallurgical processing are
present on site or acid- or toxic-forming materials will be exposed or disturbed
as a result of mining operations." If a mine is determined to be a DMO, the most
significant result is the requirement that it submit an Environmental Protection
Plan (an "EPP"). The EPP must identify the methods the operator will utilize for
the protection of human health, wildlife, property and the environment from the
potential toxic- or acid-forming material or acid mine drainage associated with
the operations. The EPP must be submitted to the DMG for review, and after a
public hearing, a decision must be made by DMG.

In 1995, DMG notified Energy Fuels that it believed the Sunday Mine Complex was
a DMO, because of the potential that storm water could come in contact with the
low grade waste rock on site. Energy Fuels disputed this assertion. Testing was
performed on the waste rock. In November 1996, the DMG advised Energy Fuels that
the test results of the average uranium content of the waste dumps at the mine
sites satisfied the DMG that the Sunday Mine Complex is not a DMO. However, the
DMG also advised that its determination could change if site conditions or
circumstances change. As of December 19, 2005, the Company has not been notified
of any additional permitting requirements relating to its mining activities at
the Sunday Mine Complex.

OTHER COLORADO PLATEAU MINES

The Rim, Van 4 and certain other Colorado Plateau mines are also permitted for
mining.

                                     - 42 -

<PAGE>

HENRY MOUNTAINS COMPLEX

The Tony M mine permit was allowed to lapse by the previous operator. The
Company has filed for an exploration permit which will enable the Company to
regain access and inspect the Tony M underground workings. The Company has also
begun the permitting process for a mine permit for the Henry Mountains Complex,
which comprises both the Tony M mine and the Bullfrog property.

ARIZONA STRIP MINES

The Canyon Mine is the first mine to be permitted in the portion of the Arizona
Strip that is south of the Grand Canyon. The Canyon Mine is located on federal
lands administered by the United States Forest Service ("USFS") and is
approximately 18 miles south of the Grand Canyon. The plan of operations
submitted by Energy Fuels in 1984 for development and operation of the mine
generated significant public comment resulting in the preparation of an EIS by
the USFS. The USFS for the State of Arizona approved the plan set forth by
Energy Fuels and issued all necessary federal and state permits and approvals.
The Havasupai Indian Tribe and others filed appeals. The USFS for the State of
Arizona and Energy Fuels prevailed on all appeals. During the permitting
process, Energy Fuels constructed all the necessary service facilities at the
mine site. Energy Fuels agreed with the USFS not to implement underground
development during the EIS process. Energy Fuels did not resume underground
development at the mine site after the appeals were decided due to the decrease
in uranium prices at that time.

In 1992, the State of Arizona updated its laws relating to groundwater issues,
requiring that an Aquifer Protection Permit be obtained. If the Company desires
to resume the permitting effort in the future, an application for an Aquifer
Protection Permit will be required.

As with the Canyon Mine, the Pinenut and Kanab North mines require that Aquifer
Protection Permits be obtained. In the event that mining is resumed, sufficient
lead time will need to be allowed to secure the necessary Aquifer Protection
Permits for these mines. The Arizona 1 Mine currently has an Aquifer Protection
Permit and is fully permitted for mining.

                                   RECLAMATION

The Company is responsible for the environmental and reclamation obligations
relating to all of its existing exploration sites, mines and assets, as well as
for all reclamation and environmental obligations that are identified in current
permits and which are associated with all mined out, inactive, reclaimed or
partially reclaimed mines and properties acquired from Energy Fuels.

The total amount of the estimated reclamation liability is approximately $12.9
million with restricted cash and marketable securities of approximately $12.9
million securing the liability, as of September 30, 2005. All of the Company's
mines and the White Mesa Mill were permitted through either state or federal
authorities. As a part of the permit requirements, reclamation and
decommissioning bonds are in place to cover the estimated cost of final project
closures. The major cost is for closure of the White Mesa Mill and tailings
cells, which is estimated at approximately $10.9 million. The Company has posted
a reclamation bond to the State of Utah for that amount.

Although the Company's financial statements contain as a liability the Company's
current estimate of the cost of performing these reclamation obligations, and
the bonding requirements are generally periodically reviewed by applicable
regulatory authorities, there can be no assurance or guarantee that the ultimate
cost of such reclamation obligations will not exceed the estimated liability
contained on the Company's financial statements.

In addition, effective January 20, 2001, the BLM implemented new Surface
Management (3809) Regulations pertaining to mining operations conducted on
mining claims on public lands. The new Regulations impose significant
requirements on permitting of operations and on plans for reclamation and
closure of mining operations on public lands. The new Regulations were
challenged by industry and a revised final rule was issued on December 31, 2001.
The new 3809 regulations impose additional requirements on permitting of mines
on federal lands and may have some impact on the closure and reclamation
requirements for Company mines on public lands. However, the final rule deleted
many of the onerous conditions that were included in the initial version of the
new regulations. The Secretary of the Interior noted that many of the revisions
that were made in the final rule were dictated by limitations and enforceability
restrictions under the current law.

Final closure and reclamation plans will continue to be developed by the state
regulatory authorities and the BLM in those states where the Company has
permitted mines. Although the ultimate impact on reclamation bonds held by

                                     - 43 -

<PAGE>

the Company is yet to be determined, substantial increases in final reclamation
requirements, and hence the associated reclamation bonds posted by the Company,
are not expected beyond the normal bond increases required due to escalation.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of the financial condition and results of operations of
the Company for the fiscal years ending September 30, 2005, 2004, and 2003,
should be read in conjunction with the consolidated financial statements of the
Company and accompanying notes. THIS DISCUSSION CONTAINS FORWARD LOOKING
STATEMENTS - SEE "SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS." The
Company's consolidated financial statements are prepared in accordance with
generally accepted accounting principles in Canada. Note 17 of the consolidated
financial statements provides a discussion of the differences between Canadian
and United States accounting principles and practices affecting the Company. All
references in this Item 5 to years such as "2005," "2004" or "2003" relate to
the fiscal years ended September 30 of those years.

SELECTED ANNUAL FINANCIAL INFORMATION

<TABLE>
<CAPTION>
($000, except per share amounts)               2005           2004            2003
--------------------------------              ------         ------          -----
<S>                                           <C>            <C>             <C>
Revenues                                         130          2,424          12,550
Net (loss) income for the year                (2,372)        (2,187)          5,533
Basic (loss) income per share                  (0.03)         (0.03)           0.08
Total assets                                  45,202         39,388          25,616
Total long-term liabilities                   14,514         17,960          14,630
</TABLE>

RESULTS OF OPERATIONS

FISCAL 2005 VERSUS FISCAL 2004

The Company recorded a net loss of $2,372,188 ($0.03 per share) for 2005
compared with a net loss of $2,186,679 ($0.03 per share) for 2004, an increase
of $185,509.

Revenues totaled $130,816 for 2005 compared with $2,424,456 for 2004, a decrease
of $2,293,640. Revenues were higher in 2004 as a result of $1,582,628 in
vanadium sales and higher process milling and engineering service revenues.
Expenses totaled $9,047,092 for 2005 compared with $6,675,137 for 2004, an
increase of $2,371,955 due primarily to increases in process milling
expenditures, stock-based compensation and write-down of mineral property,
offset by a decrease in mill stand-by expenditures. Other income and expenses
totaled a net $6,570,889 for 2005 compared with $1,478,869 for 2004, an increase
of $5,092,020 due primarily to increases in gain on sale of short-term
investments, gain on foreign exchange and the recognition of dilution gain and
minority interest as a result of the Fortress consolidation, offset by the
initial recognition of the equity in loss of Fortress during 2005.

REVENUES

Revenues were $130,816 for 2005 compared with $2,424,456 for 2004, a decrease of
$2,293,640 or 95%. For 2005, revenues consisted of process milling fees of
$50,479 (2004: $420,646) generated under the Company's alternate feed processing
agreements and engineering service fees of $80,337 (2004: $421,182). Engineering
service fees relate to services provided by the Company, on a cost plus basis,
to a related company reclaiming a mine site in the U.S. For 2004, revenues also
included $1,582,628 from the sale of vanadium black flake from inventory. The
Company continues to hold approximately 65,000 pounds of vanadium in inventory,
as vanadium pregnant liquor, and is evaluating opportunities to sell this
inventory.

During 2005, the Company received deliveries of alternate feed material from two
sites. The Company receives a recycling fee for this type of alternate feed
material once it is delivered to the Mill. A portion of the fees for the
materials, equal to the costs that are incurred receiving materials, is
recognized as revenue, while the remaining recycling fees are recorded as
deferred revenue until the material is processed at which time they are recorded
as revenue. In addition, the Company resumed receipt of alternate feed materials
from a commercial metals producer in May 2005. The Company receives a fee on
receipt of these materials, representing approximately 22% of the total fees
from that producer, which is recorded as revenue, and a recycling fee,
representing the remaining 78% of the fees from that producer, which is recorded
as deferred revenue until the material is processed, at which time it

                                     - 44 -

<PAGE>

becomes revenue. In addition to the recycling fees, the Company will retain any
uranium recovered from these materials, which can be sold in subsequent periods,
at which time the revenue from the sales will be recorded.

During 2005, the Company received 1,355 tons (2004: 8,849 tons) of alternate
feed material and anticipates that receipt of alternate feed materials will be
at reduced levels until the second quarter of 2006 when a new alternate feed
generator is expected to begin shipments to the Mill. At September 30, 2005,
approximately 45,900 tons of alternate feed materials remained in stockpile
waiting to be processed during the current mill run.

The Mill began processing its stockpile of high-grade alternate feed materials
on March 21, 2005. The Mill had been on stand-by since May 2003. During 2005,
the Mill commenced processing of 4,170 tons of this material with the uranium to
be produced in the first quarter of 2006. As of September 30, 2005, there were
approximately 4,300 tons of these high-grade materials at the Mill to be
processed, containing approximately 474,000 lbs of uranium. The Company does not
receive a recycling fee for these types of material; however, the Company is
able to retain all of the proceeds received from the sale of the uranium
produced. In view of the continued rise in uranium prices expected by the
Company, it currently does not have commercial forward sales commitments for the
projected uranium production and will determine the most appropriate timing for
its uranium sales.

PROCESS MILLING AND MILL STAND-BY EXPENDITURES

The Mill began processing high-grade alternate feed material on March 21, 2005.
Prior to this and for all of 2004, the Mill was on stand-by.

Process milling expenditures were $1,438,844 for 2005 compared with $139,793 for
2004, an increase of $1,299,051 as a result of the Mill startup and operation.
In addition to the process milling expenditures, in-process costs of $1,695,096
were incurred processing the alternate feed material, which have been included
as part of inventory.

Mill stand-by expenditures were $1,037,995 for 2005 compared with $2,330,554 for
2004, a decrease of $1,292,559 as a result of the Mill startup. There were
approximately six months of stand-by at the Mill for 2005 compared with a full
twelve months for 2004.

Both process milling and mill stand-by expenditures consist primarily of payroll
and related expenses for personnel, environmental programs, contract services
and other overhead expenditures required to operate the Mill or to maintain the
Mill on stand-by. In general, a sufficient stockpile of alternate feed material
or other ores is required to justify an efficient mill run.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $4,537,574 for 2005 compared
with $3,443,013 for 2004, an increase of $1,094,561. This increase was primarily
the result of an increase in stock-based compensation expense of $723,702 and
the inclusion of $750,481 of selling, general and administrative expenses of
Fortress on a consolidated basis, offset by a decrease in engineering services
costs of $377,880 provided by the Company. Selling, general and administrative
expenses consist primarily of payroll and related expenses for personnel,
contract and professional services and other overhead expenditures.

STOCK-BASED COMPENSATION

Stock-based compensation expense was $1,179,901 for 2005 compared with $224,718
for 2004, of which $948,420 (2004: $224,718) is included in selling, general and
administrative expense and $231,481 (2004: Nil) is included in capitalized
mineral property expenditures. The increase of $955,183 was primarily the result
of a change in the weighted-average fair value per share under options granted
to $1.66 per share for 2005 from $0.48 per share for 2004. Further, the Company
adopted amended accounting standards effective October 1, 2004 requiring a fair
value-based method of accounting for stock options granted to employees,
including directors, and to non-employees. Prior to October 1, 2004, the
application of the fair value-method of accounting was limited to stock options
granted to non-employees. Had the Company adopted these standards for 2004, the
stock-based compensation expense would have increased from $224,718 to $998,373.
Refer to Change in Accounting Policy for further details.

                                     - 45 -

<PAGE>

WRITE-DOWN OF MINERAL PROPERTY

Write-down of mineral property was $1,869,790 for 2005 compared with Nil for
2004, an increase of $1,869,790. This write-down of mineral property
expenditures at March 31, 2005 relates to a decision by Fortress not to pursue
its option on the Shiveen Gol Property, a precious/base metal property located
in Mongolia. At September 30, 2005, the accounts of Fortress were no longer
reported on a consolidated basis; therefore, its Mongolian precious/base metal
properties were excluded from mineral properties reported on the Company's
consolidated balance sheet.

OTHER INCOME AND EXPENSES

Other income and expenses totaled a net $6,570,889 for 2005 compared with
$1,478,869 for 2004, an increase of $5,092,020.

Net interest and other income were $699,549 for 2005 compared with $533,158 for
2004. Gain on sale of short-term investments was $2,938,678 for 2005 compared to
a loss of $38,046 for 2004, an increase of $2,976,724. Gain on foreign exchange
was $559,600 for 2005 compared with $242,059 for 2004, an increase of $317,541
due to the strengthening of the Canadian dollar.

Dilution gain was $2,098,322 for 2005 compared with $548,549 for 2004, an
increase of $1,549,773, while minority interest recovery was $916,687 for 2005
compared with $134,219 for 2004, an increase of $782,468. Dilution gain
represents the Company's proportionate share of the increase in Fortress' net
assets resulting from the issuance of common shares by Fortress over the same
period. Minority interest represents the minority interest's proportionate share
of Fortress' loss for the period since acquisition. As an offset to these
increases, equity in loss in Fortress was $678,953 for 2005 compared to Nil for
2004 reflecting the application of the equity method to account for the
Company's investment in Fortress.

MINERAL PROPERTIES

General

Capitalized mineral property expenditures were $13,412,885 at September 30, 2005
compared with $6,171,263 at September 30, 2004, an increase of $7,241,622 during
2005, net of a $3,809,009 reduction in expenditures on the Mongolian
precious/base metal properties held by Fortress. A total of $11,050,631 in
mineral property expenditures were incurred on the Company's uranium properties,
of which $7,007,861 was incurred in Canada, $2,462,072 was incurred in the
United States and $1,580,698 incurred in Mongolia. During 2005, the accounts of
Fortress were no longer reported on a consolidated basis; therefore, its
Mongolian precious/base metal properties, with an opening balance of $3,809,009
at September 30, 2004, were excluded from mineral properties reported on the
Company's consolidated balance sheet at September 30, 2005. Further, Fortress
decided not to pursue its option on one of its Mongolian precious/base metal
properties resulting in a mineral property write-down of $1,869,790 during 2005.
Refer to Investment in Fortress Minerals Corp. for further details.

Uranium Exploration

During 2004, the Company acquired interests in and staked a number of uranium
exploration properties in the Athabasca Basin region of Saskatchewan, Canada and
commenced an exploration program on certain of those properties. The Company
continues to increase its land position in the Athabasca Basin region through
acquisitions and land staking.

Mineral property expenditures to September 30, 2005 were incurred primarily on
the Moore Lake Property, where the Company is undertaking an extensive drilling
program augmented by geophysical and geological field programs. During 2005, the
Company exercised its option to acquire a 75% interest in the Moore Lake
Property from JNR, subject to a 2.5% net smelter return royalty. Pursuant to the
exercise terms under the option agreement, the Company incurred a minimum Cdn
$4,000,000 in exploration expenditures and purchased common shares of JNR for
$317,458 (Cdn $400,000). The Company and JNR are formalizing the terms of a
75/25 joint venture agreement.

Capitalized mineral property expenditures on the Moore Lake Property were
$6,719,079 at September 30, 2005 compared with $1,779,392 at September 30, 2004,
an increase of $4,939,687 during 2005. The remainder of the Canadian-based
capitalized mineral property expenditures relates to other projects in the
Athabasca Basin region, for a total of $2,597,960 at September 30, 2005 compared
with $529,786 at September 30, 2004, an increase of $2,068,174 during 2005 as a
result of land staking costs, recording fees and geological field programs.

                                     - 46 -

<PAGE>

The Company has a 70% interest in the Gurvan Saihan Joint Venture in Mongolia.
The other parties to the joint venture are the Mongolian government as to 15%
and Geologorazvedka, a Russian government entity, as to 15%. During 2004, with
continued upward pressure on uranium prices, the joint venture recommenced its
uranium exploration program in Mongolia. Additional exploration licenses were
acquired by the joint venture in areas known to be prospective based on past
joint venture reconnaissance.

Capitalized mineral property expenditures on the Gurvan Saihan Joint Venture
were $983,904 at September 30, 2005 compared with $35,198 at September 30, 2004,
an increase of $948,706 as a result of acquisition and maintenance of licenses,
drilling, auto gamma surveys and field reconnaissance programs.

The Company also conducts uranium exploration, 100% for the Company's account,
through a Mongolian subsidiary. Capitalized mineral property expenditures under
this entity were $238,596 at September 30, 2005 compared with $17,878 at
September 30, 2004, an increase of $220,718 due to acquisition and maintenance
of licenses and field reconnaissance programs.

During 2005, the Company entered into an agreement with Erdene Gold Inc.
("Erdene") to acquire a 65% interest in Erdene's Mongolian uranium properties in
consideration for expenditures of Cdn $6 million over a four-year period. In
addition, the Company purchased, by way of private placement, one million common
shares of Erdene at a price of Cdn $1.00 per share. Capitalized mineral property
expenditures under this entity were $411,274 at September 30, 2005 compared with
Nil at September 30, 2004, an increase of $411,274 as a result of acquisition
and maintenance of licenses, auto gamma surveys and field reconnaissance
programs.

Uranium Development

During 2005, the Company was successful in a competitive bid for a state lease
in southeastern Utah. The Company paid an initial cash bonus payment of $1
million and annual advance minimum royalty and rental payments of $60,013. This
property is adjoined by a number of privately-held, unpatented mining claims
acquired by the Company that together comprise the Tony M Mine. These private
claims were acquired for $200,000 in cash payments and 250,000 common shares of
the Company, of which 147,000 common shares were issued at a value of $906,722.
The remainder of the shares will be issued subject to confirmation of certain
title matters.

The Tony M Mine adjoins the Company's existing Bullfrog exploration property,
which together are now referred to as the "Henry Mountains Complex". During
2005, the Company announced initiation of permitting for mining of the Henry
Mountains Complex.

Capitalized mineral property expenditures were $2,462,072 at September 30, 2005
compared with Nil at September 30, 2004, primarily as a result of the
acquisition and advanced royalty and rental payments.

INVESTMENT IN FORTRESS MINERALS CORP.

On June 23, 2004, the Company sold its Mongolian precious and base metals
exploration properties to Fortress Minerals Corp. ("Fortress"), a company
incorporated in Canada and listed for trading on the TSX Venture Exchange. In
exchange, the Company received 28,000,000 common shares of Fortress,
representing 63.14% of the then issued and outstanding common shares of
Fortress, and $656,580 in cash for reimbursement of costs incurred on the
exploration properties for the period from the date of agreement to the actual
transfer date. The net book value of the assets and liabilities transferred by
the Company was $3,088,201. No gain or loss was recognized on the transaction.

On September 1, 2004, Fortress completed a private placement of 4,987,500 units
at a price of Cdn $0.40 per unit of which the Company purchased 732,500 units at
a total cost of $220,069 (Cdn $293,000). Each unit consisted of one common share
and one-half of one share purchase warrant, each whole warrant entitling the
Company to purchase an additional common share at a price of Cdn $0.50 until
September 1, 2005 and thereafter at a price of Cdn $0.60 until expiry on
September 1, 2006. The Company's percentage ownership in Fortress decreased from
63.14% to 58.24% as a result of this private placement.

At September 30, 2004, the Company had an ownership interest in Fortress of
58.24% and was deemed to have control. Accordingly, the Company's consolidated
balance sheet and results of operations for 2004 include the accounts of
Fortress on a consolidated basis with recognition of the minority interests'
share of net assets and results of operations.

                                     - 47 -

<PAGE>

On April 30, 2005, as a result of Fortress issuing additional common shares to
third parties, the Company's ownership interest in Fortress was diluted to below
50% at which point the Company applied the equity method to account for its
investment in Fortress.

During the nine months ended June 30, 2005, 13,516,200 common shares of Fortress
were issued pursuant to private placements and exercise of warrants and stock
options providing $6,053,649 in net cash proceeds to Fortress. While the
Company's ownership interest in Fortress was diluted from 58.24% at September
30, 2004 to 49.26% at April 30, 2005, its proportionate share of the net assets
of Fortress increased by $1,932,252, which has been shown as a dilution gain.

At September 30, 2005, the Company held 28,732,500 common shares of Fortress,
representing 44.39% of the issued and outstanding common shares of Fortress, and
a share purchase warrant to acquire an additional 366,250 common shares of
Fortress at a price of Cdn $0.60 per share until expiry on September 1, 2006.

SUMMARY OF QUARTERLY FINANCIAL RESULTS

<TABLE>
<CAPTION>
                                                  2005              2005             2005            2005               2005
                                                   Q1                Q2               Q3              Q4                Year
                                               -----------        ----------     -----------    -----------        -----------
<S>                                            <C>                <C>            <C>            <C>                <C>
Total revenues                                 $     3,629        $      341     $    46,509    $    80,337        $   130,816
Net income (loss)                                 (708,625)          292,394         449,193     (2,405,150)        (2,372,188)
Basic and diluted earnings (loss) per share          (0.01)             0.00            0.01          (0.03)             (0.03)
                                               -----------        ----------     -----------    -----------        -----------
</TABLE>

<TABLE>
<CAPTION>
                                                   2004              2004            2004           2004              2004
                                                    Q1                Q2            Q3 (1)           Q4               Year
                                               -----------        ----------     -----------    -----------        -----------
<S>                                            <C>                <C>            <C>            <C>                <C>
Total revenues                                 $   390,624        $1,644,638     $         -    $   389,194        $ 2,424,456
Net income (loss)                               (1,165,555)         (455,458)     (1,197,908)       632,242         (2,186,679)
Basic and diluted earnings (loss) per share          (0.02)            (0.01)          (0.02)          0.01              (0.03)
                                               -----------        ----------     -----------    -----------        -----------
</TABLE>

(1)   In preparing the 2004 consolidated financial statements, the Company
      determined that the transfer of mineral properties to Fortress should be
      accounted for at book value. In the interim consolidated financial
      statements for the 2004 third quarter report, the Company had incorrectly
      recorded a loss of $478,839 as a result of this transaction. The summary
      table above reflects the corrected net loss for the 2004 third quarter.

Variations in the results of operations between the quarters for 2005 are
primarily the result of changes in expense and other income/expense items.
Results for 2005 Q1 include gain on foreign exchange of $542,543. Results for
2005 Q2 include stock-based compensation of $277,831 and write-down of mineral
property of $1,869,790, offset by gain on sale of short-term investments of
$2,893,377 and minority interest of $793,372. Results for 2005 Q3 include
stock-based compensation of $657,259 and equity in loss in Fortress of $122,087,
offset by dilution gain of $1,860,784. Results for 2005 Q4 include process
milling expenditures of $1,431,516 and equity in loss in Fortress of $556,866.

Variations in the results of operations between the quarters for 2004 are due to
a number of factors. Results for 2004 Q1 include stock-based compensation of
$220,037, offset by gain on foreign exchange of $141,099. Results for 2004 Q2
include vanadium cost of sales of $696,905 and loss on foreign exchange of
$112,734. Results for 2004 Q3 include loss on foreign exchange of $122,831.
Results for 2004 Q4 include dilution gain of $548,549 and minority interest of
$94,327.

RESULTS OF OPERATIONS

FISCAL 2004 VERSUS FISCAL 2003

IUC recorded a net loss of $2,186,679 ($0.03 per share) for the year ended
September 30, 2004, compared with net income of $5,533,152 ($0.08 per share) for
2003, reflecting primarily the fact that the Mill was operating in 2003 but had
been on standby throughout 2004. Results for 2004 included, a gain on change of
percentage interest in Fortress of $548,549, representing the Company's
proportionate share of the increase in Fortress' net assets resulting

                                     - 48 -

<PAGE>

from the issuance of equity by Fortress during the period, and minority interest
of $134,219, representing the minority interest's proportionate share of
Fortress' loss for the period since acquisition. In addition, the Company
recorded a gain of $585,133 for the recovery of future income taxes, which
relates to 2.0 million flow-through shares the Company issued on November 30,
2003 and a foreign exchange gain of $242,059. For 2003, results included mineral
property write-downs of $118,081, a $579,926 gain on the sale of short-term
investments, a $210,603 gain on the sale of land and equipment, and a $79,000
gain on the disposition of the "other asset."

REVENUES

Revenues for 2004 of $2,424,456 consisted of revenues from vanadium sales,
process milling fees generated under the Company's alternate feed processing
agreements, and fees from engineering services. Revenues for 2004 decreased
$10,125,562 or 81% as compared to $12,550,018 in 2003. The decrease was due to
the fact that the Mill was on stand-by during 2004.

During the second quarter of 2004 the Company sold its inventory of vanadium
black flake, which was produced during the 1999 conventional ore mill run,
leaving an ending inventory of approximately 65,000 pounds of vanadium, as
vanadium pregnant liquor. The Company is evaluating opportunities to sell this
inventory.

Revenue from engineering services of $421,182 during 2004 is for services the
Company provided, on a cost plus basis to a related company, which was
reclaiming a mine site in the U.S.

COST OF PRODUCTS AND SERVICES SOLD

During 2004, cost of goods sold of $706,274 was recognized as a result of the
sale of the Company's vanadium black flake inventory.

Process milling expenditures during 2004 of $139,793 represent expenditures
incurred receiving alternate feed materials. The expenditures decreased by
$4,531,406 or 97% as compared to process milling expenditures of $4,671,199
during 2003. The decrease is due to the fact that the Mill was on stand-by
during 2004. During 2004, the Company received 3,440 tons of alternate feed
material from the Linde site and an additional 5,409 tons of material from
another commercial metals producer. As of September 30, 2004, approximately
44,600 tons of material remained in stockpile waiting to be processed during the
current mill run.

MILL STAND-BY

Mill stand-by expenses consist primarily of payroll and related expenses for
personnel, parts and supplies, contract services and other overhead expenditures
required to maintain the Mill on stand-by status until a sufficient stockpile of
alternate feed material or other ores have been accumulated to justify an
efficient mill run. Mill stand-by expenditures were $2,330,554 for 2004 as
compared to $738,730 for 2003. The increase of $1,591,824 was primarily due to
twelve months of stand-by in 2004 versus approximately four months in 2003. At
September 30, 2004 sixteen management and maintenance personnel remained at the
Mill. During the then most recent mill run, which was completed in 2003, the
Mill maintained an average of 64 employees to process its stockpile of alternate
feed material.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses consist primarily of payroll and
related expenses for personnel, legal, contract services and other overhead
expenditures. Selling, general and administrative expenses for 2004 were
$3,443,013 as compared to $2,787,672 for 2003. This change, an increase of
$787,672 was the result of decreases in Urizon and other alternate feed
expenditures of $893,467, offset by increases of $1,454,798 in other selling,
general and administrative ("SGA") expenditures. These increases are
attributable to the engineering services that the Company provided, increased
audit/accounting fees, legal fees associated with the acquisition of the
Canadian uranium exploration properties, increased investor relation
expenditures and the Company's consolidation of Fortress' SGA. For 2004,
Fortress' SGA was $302,709.

EXPLORATION

Uranium Exploration

In the first quarter of 2004, the Company acquired interests in uranium
exploration properties in the Athabasca

                                     - 49 -

<PAGE>

Basin region of Saskatchewan, Canada and commenced an exploration program on
certain of those properties. During 2004, the Company continued to increase its
land position in the Athabasca Basin region through acquisition and land
staking. Total gross program expenditures, including capitalized exploration
expenditures, for 2004 were $2,326,265. Canadian exploration expenditures had
primarily been on the Moore Lake project where the Company had an extensive
drilling program augmented by geophysical and geological field programs.
Expenditures on the Moore Lake Project in 2004 were $1,779,392. The remaining
expenditures were for geological field programs and airborne geophysical surveys
on a number of other projects in the Athabasca region.

Exploration licenses were acquired by the Gurvan Saihan Joint Venture in areas
known to be prospective based on past joint venture reconnaissance. In addition,
the Company formed a new Mongolian business entity, IUM, in 2004 to conduct
uranium exploration, 100% for the Company's account, in frontier areas in
Mongolia. Total gross program expenditures for the Joint Venture and for the
Company's own account, including capitalized exploration expenditures, for 2004
of $213,548 increased by $8,269 as compared to $205,279 spent in 2003.

Precious and Base Metals Exploration

During the second quarter of 2002, the Company initiated a precious and base
metals exploration program in Mongolia. This program was funded 100% by the
Company until the second quarter of 2004. During the second quarter, the Company
entered into a Purchase Agreement with Fortress for the sale of 100% of the
exploration licenses held by the Company, in consideration for cash and a
majority equity interest in Fortress.

Fortress continued the active exploration program in 2004, including additional
drilling on the Shiveen Gol project in western Mongolia. A number of additional
projects were explored in detail in 2004 and are ready for initial drilling in
2005. Total gross program expenditures, including capitalized exploration
expenditures, for 2004 of $2,032,027 increased by $671,887 as compared to
$1,360,140 in 2003. Increased program expenditures in 2004 were attributable to
implementation of detailed geophysical and geochemical programs on the Teltiin
Gol prospect in the Erdenet area and a large regional gold geochemical survey in
the Huvsgol region. Based on the work in the Huvsgol region, approximately 40
new exploration licenses were obtained, which also contributed to the increase
in program expenditures.

MINORITY INTEREST

The minority interest share of Fortress' post acquisition loss for 2004 was
$134,219. On June 23, 2004 the Company completed the sale of its Mongolian base
and precious metals exploration properties held by its Bermuda subsidiary to
Fortress and began recording the minority interest's share of the losses. The
Company had expended $3,088,201 on these properties through June 23, 2004. In
consideration for transferring these properties to Fortress, the Company
received 28 million common shares of Fortress' capital stock, which gave the
Company a 63.14% interest in Fortress and cash of $656,580 for reimbursement of
costs incurred on the properties from the time of agreement to the transfer
date. No gain or loss has been recognized on the transaction. On September 1,
2004 Fortress completed a private placement of 4,987,500 common shares at Cdn
$0.40 per share. The Company purchased 732,500 of the common shares, which
resulted in the Company owning a 58.24% interest in Fortress as of September 30,
2004. The Company's percentage ownership in Fortress decreased from 63.14% to
58.24% as a result of this private placement and the Company recorded a gain on
dilution of $548,549.

OTHER INCOME AND EXPENSES

Other income and expenses (excluding gain on dilution and minority interest) for
2004 totaled a net $796,101 as compared to $1,375,738 for 2003. The decrease of
$579,637 was primarily the result of a decrease in gains of $617,972 on the sale
of short-term investments and a decrease in income from the sale of land and
equipment of $151,673. These decreases were offset by an increase in foreign
exchange gains of $230,233.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents were $6,111,119 at September 30, 2005 compared with
$12,044,955 at September 30, 2004, a decrease of $5,933,836 during 2005. This
decrease was due primarily to mineral property expenditures of $9,264,765, the
purchase of portfolio investments of $1,259,378 and net cash used in operating
activities of $4,414,006. These uses of cash are offset by net proceeds of
$5,992,681 received from the issuance of common shares through private
placements and exercise of stock options and net proceeds of $4,028,638 received
from the sale of short-term investments.

                                     - 50 -

<PAGE>

Working capital was $4,244,274 at September 30, 2005 compared with $15,467,462
at September 30, 2004, a decrease of $11,223,188 during 2005. This decrease was
due primarily to the $5,933,836 decrease in cash and cash equivalents discussed
above and to a $3,772,647 reclassification of deferred revenue previously
reported as a long-term liability to a current liability item. Deferred revenue
arises from a stockpile of approximately 45,900 tons of alternate feed material
expected to be processed during 2006.

Net cash used in operating activities was $4,414,006 during 2005 compared with
$884,097 during 2004, an increase of $3,529,909. Net funds used in operating
activities are comprised of net loss for the year, adjusted for non-cash items
and for changes in working capital items. Significant changes in working capital
items during 2005 include an increase of $2,134,254 (2004: $571,977 decrease) in
inventories and a decrease of $999,801 (2004: $742,190 increase) in trade and
other receivables. The increase in inventories during 2005 consists of process
milling costs of $1,695,906 and purchase of chemical reagents of $439,158, all
relating to the alternate feed material processing. The decrease in trade and
other receivables during 2005 is primarily the result of the collection of all
accounts receivables relating to alternate feed materials.

Net cash used in investment activities was $7,497,032 during 2005 compared with
$4,859,839 during 2004, an increase of $2,637,193. This increase was due
primarily to mineral property expenditures of $9,264,765 (2004: $4,186,908) and
the purchase of portfolio investments of $1,259,378 (2004: $892,221), offset by
net proceeds of $4,028,638 (2004: Nil) received from the sale of short-term
investments. During 2005, restricted investments increased by $458,350 (2004:
$380,119) as a result of interest income.

Net cash provided by financing activities was $5,977,202 during 2005 compared
with $14,149,812 during 2004, a decrease of $8,172,610. This decrease was due
primarily to private placement financings of $5,574,316 (2004: $12,408,969) and
private placement of Fortress common shares of Nil (2004: $1,209,204).

In total, these sources and uses of cash resulted in a net cash outflow of
$5,933,836 during 2005 compared with a net cash inflow of $8,405,876.

Subsequent to September 30, 2005, the Company completed two significant equity
financings for total gross proceeds of Cdn $51,587,500 ($43,702,776). On October
14, 2005, the Company completed a private placement of 6,000,000 common shares
at a price of Cdn $7.50 per share for gross proceeds of Cdn $45,000,000
($38,010,648). On December 5, 2005, the Company completed a private placement of
850,000 flow-through common shares at a price of Cdn $7.75 per share for gross
proceeds of Cdn $6,587,500 ($5,692,128) which funds are restricted to eligible
Canadian exploration expenditures.

The Company's existing cash and cash equivalents balance and, to a lesser
degree, its expected cash flow from its 2006 operations are sufficient to
satisfy its anticipated working capital requirements, capital expenditure
requirements and commitments under the Urizon Joint Venture for the next twelve
months. Additional funding through issuance of common shares may be required to
fund corporate opportunities.

OFF BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

TRANSACTIONS WITH RELATED PARTIES

During 2005, the Company incurred legal fees of $77,302 (2004: $169,026; 2003:
$45,847) with a law firm of which a partner is a director of the Company.

During 2005, the Company incurred management and administrative service fees of
$168,799 (2004: $136,335; 2003: $90,000) with a company owned by the Chairman of
the Company which provides investor relations, office premises, secretarial and
other services in Vancouver at a rate of Cdn $18,000 per month plus expenses. At
September 30, 2005, an amount of $70,238 (September 30, 2004: Nil) was due to
this company.

During 2005, the Company provided mine reclamation management and engineering
support services of $80,337 (2004: $421,182; 2003: $135,017) on a cost plus
basis to a company with common directors. At September 30, 2005, an amount of
$80,337 (September 30, 2004: $64,801) was due from this company.

During 2005, the Company entered into an agreement with Fortress to provide
executive and administrative services and charged an aggregate $20,921 for such
services. The executive services are billed on an hourly basis plus
out-

                                     - 51 -

<PAGE>

of-pocket expenses while the administrative services are at the rate of Cdn
$6,400 per month. At September 30, 2005, an amount of $28,696 was due from
Fortress relating to this agreement.

OUTSTANDING SHARE DATA

At September 30, 2005, there were 81,569,066 common shares issued and
outstanding and stock options outstanding to purchase a total of 1,863,000
common shares, for a total of 83,432,066 common shares on a fully-diluted basis.
At December 19, 2005, there were 88,419,066 common shares issued and outstanding
and stock options outstanding to purchase a total of 1,943,000 common shares,
for a total of 90,362,066 common shares on a fully-diluted basis.

CRITICAL ACCOUNTING ESTIMATES

The Company's significant accounting policies are summarized in Note 2 to the
consolidated financial statements. The preparation of the Company's consolidated
financial statements in conformity with generally accepted accounting principles
in Canada requires management to make judgments with respect to certain
estimates and assumptions. These estimates and assumptions, based on
management's best judgment, affect the reported amounts of certain assets and
liabilities, including disclosure of contingent liabilities. On an ongoing
basis, management re-evaluates its estimates and assumptions. Actual amounts,
however, could differ significantly from those based on such estimates and
assumptions.

Significant areas critical in understanding the judgments that are involved in
the preparation of the Company's consolidated financial statements and the
uncertainties inherent within them include the determination of impairment of
long-lived assets, assets retirement obligations and stock-based compensation.

Impairment of Long-Lived Assets

Effective October 1, 2003, the Company prospectively adopted CICA Handbook
Section 3063: "Impairment of Long-Lived Assets" ("Section 3063") which
established standards for the recognition, measurement and disclosure of
impairment of long-lived assets. Long-lived assets are impaired whenever events
or changes in circumstances indicate that the related carrying amounts may not
be recoverable in which case an impairment loss is recognized and charged to
operations. No impairment under Section 3063 was recognized for 2005 and 2004.

The Company's long-lived assets consist of plant and equipment, mineral
properties and intangible asset. These assets are recorded at cost and, as to
plant and equipment and intangible asset, depreciated on a straight-line basis
over their estimated useful lives of three to fifteen years. Expenditures
relating to mineral properties are capitalized at cost, less recoveries in the
pre-production stage, until such time these properties are put into commercial
production, sold or abandoned. Upon commencement of production, capitalized
mineral property expenditures will be charged to the results of operations over
the estimated life of the mine in accordance with the unit-of-production method.

At the end of each accounting period, the Company reviews the carrying value its
long-lived assets based on a number of factors. For capitalized mineral property
expenditures, these factors include analysis of exploration results, permitting
considerations and current economics. Should an impairment be determined, the
Company would write-down the recorded value of the long-lived asset to the
results of operations.

Asset Retirement Obligations

Effective October 1, 2002, the Company retroactively adopted CICA Handbook
Section 3110: "Asset Retirement Obligations" ("Section 3110") which established
standards for the recognition, measurement and disclosure of liabilities for
asset retirement obligations and the associated asset retirement costs. Asset
retirement obligations refer to the recognition of any statutory, contractual or
other legal obligation, related to the retirement of tangible long-lived assets
when such obligations are incurred, if a reasonable estimate of fair value can
be determined. These costs are amortized to operations over the life of the
asset. The implementation of Section 3110 did not have a material effect on the
Company's 2005, 2004 and 2003 consolidated financial statements.

The Company's asset retirement obligations consist of estimated future
decommissioning and reclamation costs of the Mill and U.S. mining properties,
and have been determined based on engineering estimates of the costs of
reclamation, in accordance with and reviewed periodically by state and federal
regulatory requirements. In the case of the Mill, the cost estimates are
reviewed annually by the State of Utah Department of Environmental Quality, and
adjusted by the Company to reflect the estimated costs of reclamation.

                                     - 52 -

<PAGE>

Applicable regulations require the Company to estimate reclamation costs on an
undiscounted basis under the assumption that the reclamation would be performed
at any time by a third party contractor. Management estimates that, once a
decision is made to commence reclamation activities, substantially all of the
reclamation activities could be completed in approximately 24-30 months. Since
September 30, 2004, the Mill's reclamation estimate and bonding requirement
increased from $10,618,895 to $10,950,180. There have been no changes to the
reclamation cost estimate of $1,984,700 for the Company's mining properties,
however the mine bonding requirements increased by $482,502 to $1,499,260 during
2005. Elements of uncertainty in estimating decommissioning and reclamation
costs include potential changes in regulatory requirements, decommissioning and
reclamation alternatives. Actual costs may be significantly different from those
estimated.

The Company has posted bonds (collateralized by cash and cash equivalents and
fixed income securities) in favor of the State of Utah and the applicable state
regulatory agencies in Colorado and Arizona as partial collateral for these
liabilities and has deposited fixed income securities on account of these
obligations.

Stock-Based Compensation

Effective October 1, 2004, the Company retroactively adopted, without
restatement, the amended standards of CICA Handbook Section 3870: Stock-Based
Compensation and Other Stock-Based Payments ("Section 3870") which established
standards for the recognition, measurement and disclosure of stock-based
compensation and other stock-based payments made in exchange for goods and
services. Section 3870 requires a fair value-based method of accounting for
stock options granted to employees, including directors, and to non-employees.

The fair value of each option granted is estimated on the date of grant using
the Black-Scholes option pricing model. This model requires the calculation of
certain variables, including the volatility of the Company's stock price,
requiring various estimates and assumptions be made by management. Actual
results may be significantly different from those calculated using this model.

CHANGES IN ACCOUNTING POLICIES

Effective October 1, 2004, the Company adopted the amended standards of the
Canadian Institute of Chartered Accountants Section 3870: Stock-Based
Compensation and Other Stock-Based Payments ("Section 3870"). Section 3870
establishes standards for the recognition, measurement and disclosure of
stock-based compensation and other stock-based payments made in exchange for
goods and services. It requires a fair value-based method of accounting for
stock options granted to employees, including directors, and to non-employees.

Prior to October 1, 2004, the application of the fair value-method of accounting
was limited to stock options granted to non-employees. The intrinsic value-based
method of accounting was applied to stock options granted to employees which did
not result in additional stock-based compensation expense as the exercise price
was equal to the market price on the grant date. Pro forma disclosure of net
income (loss) and earnings (loss) per share had the fair value-method been
applied to stock options granted to employees is required.

The Company has adopted the amendments to Section 3870 on a retroactive basis
without restatement of prior periods. As a result, a cumulative adjustment of
$773,655 to opening deficit effective October 1, 2004 has been reported
separately on the consolidated statements of deficit. This adjustment represents
the fair value of stock options granted to employees of $737,904 during 2004 and
$35,751 during 2003.

In January 2005, the CICA issued the following new accounting standards,
effective October 1, 2006:

      a)    CICA Handbook Section 1530: "Comprehensive Income" establishes
            standards for reporting comprehensive income, defined as a change in
            value of net assets that is not due to owner activities, by
            introducing a new requirement to temporarily present certain gains
            and losses outside of net income. The adoption of this new standard
            by the Company is not expected to have a material impact;

      b)    CICA Handbook Section 3251: "Equity" establishes standards for the
            presentation of equity and changes in equity during the reporting
            period. The adoption of this new standard by the Company is not
            expected to have a material impact; and,

      c)    CICA Handbook Section 3855: "Financial Instruments - Recognition and
            Measurement" establishes standards for the recognition,
            classification and measurement of financial instruments including
            the

                                     - 53 -

<PAGE>

            presentation of any resulting gains and losses. Assets classified as
            available-for-sale securities will have revaluation gains and losses
            included in other comprehensive income until these assets are no
            longer included on the balance sheet. At September 30, 2005, the
            Company had certain long-term investments that would be classified
            as available-for-sale securities under this new standard, and any
            unrealized gains and losses would be included in comprehensive
            income.

CONTRACTUAL OBLIGATIONS

At September 30, 2005, the Company has a reclamation obligation of $12,934,880,
the timing of which will depend upon the Company's business objectives. While
this reclamation obligation was valued on the assumption that the Company must
be able to fund reclamation of the White Mesa Mill and U.S. mining operations at
any time, the Company currently has no intention of placing the Mill or U.S.
mines into reclamation.

In addition, the Company's contractual obligations at September 30, 2005 are as
follows:

<TABLE>
<CAPTION>
                                                 Less Than                                        After
                                   Total          One Year      1-3 Years       4-5 Years        5 Years
                                 --------        ---------      ---------       ---------        -------
<S>                              <C>             <C>            <C>             <C>              <C>
Operating lease obligations      $410,575        $ 102,890      $ 275,450       $  32,235        $     -
                                 ========        =========      =========       =========        =======
</TABLE>

ENVIRONMENTAL RESPONSIBILITY

Each year, the Company reviews the anticipated costs of decommissioning and
reclaiming its Mill and mine sites as part of its environmental planning
process. The Company also formally reviews the Mill's reclamation estimate
annually with applicable regulatory authorities. The Mill and mine reclamation
estimates at September 30, 2005 are $12,934,880, which are currently expected to
be sufficient to cover the projected future costs for reclamation of the Mill
and mine operations. However, there can be no assurance that the ultimate cost
of such reclamation obligations will not exceed the estimated liability
contained in the Company's financial statements.

The Company has posted bonds as security for these liabilities and has deposited
cash, cash equivalents, and fixed income securities as collateral against these
bonds. For 2005 and 2004, the amount of these restricted investments
collateralizing the Company's reclamation obligations was $12,881,972 and
$12,487,066, respectively. The increase of $394,906 was due to interest income
from these investments.

As mentioned in previous reports, the Company had detected some chloroform
contamination at the Mill site that appeared to have resulted from the operation
of a temporary laboratory facility that was located at the site prior to and
during the construction of the Mill facility, and from septic drain fields that
were used for laboratory and sanitary wastes prior to construction of the Mill's
tailings cells. In April 2003, the Company commenced an interim remedial program
of pumping the chloroform-contaminated water from the groundwater to the Mill's
tailings cells. This will enable the Company to begin clean up of the
contaminated areas and to take a further step towards resolution of this
outstanding issue. Although the investigations to date indicate that this
contamination appears to be contained in a manageable area, the scope and costs
of remediation have not yet been determined and could be significant.

RESEARCH AND DEVELOPMENT

The Company does not have a formal research and development program. Process
development efforts expended in connection with processing alternate feeds are
included as a cost of processing. Process development efforts expended in the
evaluation of potential alternate feed materials that are not ultimately
processed at the Mill are included in Mill overhead costs. The Company does not
rely on patents or technological licenses in any significant way in the conduct
of its business.

TREND INFORMATION

During the period 1997 through 2000, the Company saw a deterioration in both
uranium and vanadium prices, from $11.00 per pound of U3O8 and $4.10 per pound
of V2O5 in October 1997 to $7.40 per pound of U3O8 and $1.70 per pound of V2O5
at the end of September 2000. As a result of these decreases in commodity
prices, the Company decided to cease its uranium and uranium/vanadium mining and
exploration activities in 1999, and shut down all of its uranium and
uranium/vanadium mines and its Mongolian Gurvan Saihan Joint Venture. Also as a
result of these

                                     - 54 -

<PAGE>

market events, the Company decided to marshal its resources and to concentrate
its operations primarily on the continuing development of the alternate feed,
uranium-bearing waste recycling business. Since then, commodity prices have
improved dramatically. During 2004, uranium prices increased 65%, from $12.20
per pound on October 1, 2003, to $20.00 per pound by September 30, 2004. As of
December 12, 2005, the uranium spot price had increased to $35.25 per pound. The
uranium market fundamentals are strong and most analysts do not forecast any
weakening of uranium prices over the next 3 to 5 years. As a result of the
increase in uranium price, the Company acquired and staked uranium exploration
properties in Canada in 2004 and has commenced an aggressive exploration program
on certain of those properties, as well as restarted its uranium exploration
program in Mongolia. Vanadium prices have also increased throughout the past 24
months and are currently trading in the range of $11.00 to $13.00 per pound
V2O5, off from their peak of $25.00 to $30.00 per pound reached earlier in 2005.
Historical vanadium prices range from $1.20 to $6.00 per pound V2O5. As a result
of the increases in both uranium and vanadium prices, the Company is currently
evaluating re-commencing mining activities in the U.S. and has begun processing
a uranium high-grade alternate feed material at the Mill. In addition, the
Company continues to evaluate opportunities to expand its existing asset
portfolio.

Although the Mill's tailings system currently has capacity to process all of the
alternate feed materials under contract with the Company, this capacity is
expected to run out within the next one to three years, depending on the level
of success of the Company in entering into contracts for the processing of
additional feed materials or if the Company decides to recommence U.S. mining
operations. In order to provide additional tailings capacity, the Company will
have to repair existing tailings Cell 4A, at an estimated cost of $1.5 - $3.0
million. In addition, if Cell 4A is put into use, the reclamation obligation for
the Mill would increase by approximately $1.0 million, which would require an
increase in the Mill's reclamation bond by that amount. The repair of Cell 4A
will provide the Company with approximately 2 million tons of additional
tailings capacity, which should be ample capacity for the foreseeable future.

OUTLOOK FOR 2006

The Mill is expected to produce approximately 500,000 pounds of U(3)O(8) from
the processing of a high-grade alternate feed material. The current mill run
began in March 2005 and is anticipated to last through the end of 2006. The
Company does not have any fixed contracts for this material and will evaluate
commercial opportunities for sale of the material throughout the year.

The Company continues to evaluate the restart of its U.S. mining operations.
Increases in projected operating costs have delayed the restart. However, if
uranium prices continue to improve as expected, the Company anticipates
re-opening its U.S. mining operations in 2006.

The Company's exploration programs will continue to expand through 2006, both in
Canada and Mongolia. Winter drilling programs will be undertaken on three
projects: Key Lake South, Crawford Lake and Moore Lake. The Company is also
interpreting the results of over 17,000 line km of airborne geophysics that were
flown in the first quarter of 2006 which will be followed up with summer field
geophysical programs and potentially additional drill programs. With the success
of the 2005 drilling program at Moore Lake, the Company and its joint venture
partner, JNR, will begin environmental baseline monitoring in 2006 in
preparation of future project development activities.

In Mongolia, the Company will maintain its exploration program at the same level
on its Joint Venture properties but will be ramping up exploration on its 100%
owned and Erdene optioned properties. Given the improvement in uranium prices,
and with prices projected to increase further into at least early 2006, the
Company will begin re-evaluation at the Gurvan Saihan Joint Venture's Hairhan
uranium deposit.

At the present time the Company is well financed for its planned 2006 programs
and will continue to aggressively evaluate acquisition and growth opportunities.

RISKS AND UNCERTAINTIES

Exploration for and development of mineral properties involves significant
financial risks, which even a combination of careful evaluation, experience and
knowledge may not eliminate. While discovery of an ore body may result in
substantial rewards, few properties, which are explored, are ultimately
developed into producing mines. Major expenditures may be required to establish
reserves by drilling, constructing mining and process facilities at a site,
developing metallurgical processes and extracting uranium and other metals from
ore. It is impossible to ensure that the current exploration programs of the
Company will result in profitable commercial mining operations.

                                     - 55 -

<PAGE>

Under the United States Nuclear Regulatory Commission's Alternate Feed Guidance,
the Mill is required to obtain a specific license amendment allowing for the
processing of each new alternate feed material. Various third parties have
challenged certain of the Mill's license amendments, although none of such
challenges have been successful to date. The Company intends to continue to
defend its positions and the validity of its license amendments and proposed
license amendments. If the Company does not ultimately prevail in any such
actions and any appeals therefrom, the Company's ability to process certain
types of alternate feeds, in certain circumstances, may be adversely affected,
which could have a significant impact on the Company.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in the foregoing Management's Discussion and
Analysis and elsewhere in this Form 20-F constitute forward-looking statements.
Such forward-looking statements involve a number of known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date the statements
were made, and readers are advised to consider such forward-looking statements
in light of the risks set forth below and detailed under "Item 3D. Risk
Factors."

Risk factors that could affect the Company's future results include, but are not
limited to, risks inherent in mineral exploration and mining activities and
other operating and development risks, competition, environmental regulations,
changes to reclamation requirements, dependence on a limited number of
customers, volatility and sensitivity to market prices for uranium and vanadium,
ability to attract and retain skilled employees, the ability to find and retain
qualified contractors, the impact of changes in foreign currencies' exchange
rates, political risk arising from operating in Mongolia, changes in government
regulation and policies including trade laws and policies, demand for nuclear
power, replacement of reserves and production, receipt of permits and approvals
from governmental authorities (including amendments for each alternate feed
transaction).

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. DIRECTORS AND SENIOR MANAGEMENT

The names, municipalities of residence, positions with the Company, and
principal occupations of the directors and executive officers of the Company as
of December 19, 2005, are as follows:

                                     - 56 -

<PAGE>

<TABLE>
<CAPTION>
NAME AND MUNICIPALITY                                   PRESENT PRINCIPAL OCCUPATION AND POSITION WITH THE COMPANY AND, IF
    OF RESIDENCE             SECURITY HOLDING (1)                        APPLICABLE, TERM AS DIRECTOR(2)
---------------------        --------------------     -----------------------------------------------------------------------
<S>                          <C>                      <C>
JOHN H. CRAIG                       50,000            -   Lawyer, partner of Cassels Brock & Blackwell LLP; Director of a
Toronto, ON                                               number of publicly-traded companies including: Lundin Mining
                                                          Corporation, Tanganyika Oil Company Ltd., Canadian Gold Hunter
                                                          Corp. and Tenke Mining Corp.

                                                      -   Director since May 9, 1997

BRIAN D. EDGAR                                        -   Director of Rand Edgar Investment Corporation, an investment
Vancouver, BC                                             company located in Vancouver, BC since 1991; President and CEO,
                                                          Dome Ventures Corporation; Director of a number of publicly-traded
                                                          companies including: Pender Financial Group Corporation, Red Back
                                                          Mining Inc., Valkyries Petroleum Corp., Lundin Mining Corporation
                                                          and White Knight Resources Ltd.

                                                      -   Director since March 22, 2005

DAVID C. FRYDENLUND                397,000            -   Vice President, General Counsel, and Corporate Secretary of the
Denver, CO                                                Company. During the period April 6, 2000 to June 30, 2005, Mr.
                                                          Frydenlund also served as CFO/Treasurer of the Company.

                                                      -   Director since May 9, 1997

RON F. HOCHSTEIN                   545,300            -   President and Chief Executive Officer of the Company since April 6,
Vancouver, BC                                             2000; from January 31, 2000 to April 6, 2000, Vice President and
                                                          Chief Operating Officer of the Company. President, Chief Executive
                                                          Officer and Director of Fortress Minerals Corp. since June 10,
                                                          2005. Director of a number of publicly-traded companies, including
                                                          Atacama Minerals Corp., JNR Resources Inc. and Santoy Resources
                                                          Ltd.

                                                      -   Director since April 6, 2000

MARK A. KATSUMATA                        -            -   Vice President and Chief Financial Officer of the Company since
Vancouver, BC                                             July 1, 2005. Chief Financial Officer of Fortress Minerals Corp.
                                                          since July 27, 2005.

LUKAS H. LUNDIN                    121,000            -   Chairman of the Board of the Company; Director and/or officer of a
Vancouver, BC                                             number of publicly-traded natural resource companies, including:
                                                          Lundin Petroleum AB, Atacama Minerals Corp., Valkyries Petroleum
                                                          Corp., Canadian Gold Hunter Corp., Tenke Mining Corp., Tanganyika
                                                          Oil Company Ltd. and Lundin Mining Corporation

                                                      -   Director since May 9, 1997

WILLIAM A. RAND                     10,000            -   Director of Rand Edgar Investment Corporation, an investment
Vancouver, BC                                             company located in Vancouver, BC since 1991; Chairman and Director,
                                                          Dome Ventures Corporation; Director of a number of publicly-traded
                                                          companies, including: Lundin Petroleum AB, Valkyries Petroleum
                                                          Corp., Canadian Gold Hunter Corp., Tenke Mining Corp., Tanganyika
                                                          Oil Company Ltd. and Lundin Mining Corporation

                                                      -   Director since May 9, 1997

EIRA M. THOMAS                                        -   Geologist; President and CEO, Stornoway Diamond Corporation;
Vancouver, BC                                             Director of a number of publicly-traded companies including:
                                                          Strongbow Exploration Inc., Aber Diamond Corporation, Fortress
                                                          Minerals Corp.; Director of NWT Chamber of Mines; Director of the
                                                          Prospectors and Development Association of Canada

                                                      -   Director since March 22, 2005
</TABLE>

(1)   Each of the Directors and Officers of the Company owns less than one
      percent of the outstanding shares of the Company. Includes the number of
      voting securities of the Company beneficially owned, directly or
      indirectly, or over which control or direction is exercised. The
      information as to shares beneficially owned or over which the directors
      exercise control or direction, not being within the knowledge of the
      Company, has been furnished by the respective directors individually.

(2)   All of the above-named directors and officers have held their present
      positions or other executive positions with the same or associated firms
      or organizations during the past five years with the exception of Mr. Mark
      A. Katsumata who was Chief Financial Officer, with the Manex Group of
      Companies.

(3)   Please note Item 7 below for information relating to interests of
      management in certain related party transactions.

                                     - 57 -

<PAGE>

B. COMPENSATION

DIRECTOR COMPENSATION

No remuneration has been paid to directors of the Company in their capacities as
directors since the date of incorporation, other than stock options described
under "Share Ownership" below. The directors are reimbursed for their expenses
incurred to attend meetings of the Company.

EXECUTIVE OFFICER COMPENSATION

The following table summarizes the compensation of each of the executive
officers of the Company for the year ended September 30, 2005:

                               ANNUAL COMPENSATION
                      FOR THE YEAR ENDED SEPTEMBER 30, 2005

<TABLE>
<CAPTION>
                                                                                  SECURITIES
                                                                                     UNDER
                                                                                   OPTIONS/
                                                               OTHER ANNUAL      SARS GRANTED         ALL OTHER
    NAME AND PRINCIPAL POSITION         SALARY       BONUS     COMPENSATION           (#)           COMPENSATION
----------------------------------     -------       -----     ------------      ------------       ------------
<S>                                    <C>           <C>       <C>               <C>                <C>
Ron F. Hochstein
President and Chief Executive          163,546(2)     Nil          Nil              400,000            4,877(3)
Officer(1)

David C. Frydenlund,
Vice President, General Counsel,       158,400        Nil          Nil              250,000              Nil
and Corporate Secretary(1)

Mark A. Katsumata
Vice President and Chief Financial      23,871(1)     Nil          Nil              100,000              Nil
Officer(4)

Harold R. Roberts
Vice President, Corporate              109,615        Nil          Nil               80,000            3,289(5)
Development of the Company's
subsidiary, International Uranium
(USA) Corporation (5)
</TABLE>

(1)   Each of Messrs. Ron F. Hochstein and David C. Frydenlund currently have
      contracts of employment with the Company or its subsidiary, International
      Uranium (USA) Corporation. There are no compensatory plans or arrangements
      provided in such contracts in respect of resignation, retirement,
      termination, change in control of the Company or responsibilities. The
      expiry date of the employment contracts for Messrs Hochstein and
      Frydenlund is September 30, 2006.

(2)   Salary was paid in Cdn $ and translated to US$ using an exchange rate of
      0.8177.

(3)   Mr. Hochstein received assistance for tax issues regarding his relocation
      to Canada.

(4)   Mr. Mark A. Katsumata joined the Company on July 1, 2005. Mr. Katsumata
      has an employment contract with the Company that expires on June 30, 2006.
      There are no compensatory plans or arrangements provided in such contract
      in respect of resignation, retirement, termination, change in control of
      the Company or responsibilities.

(5)   Mr. Harold R. Roberts recommenced employment with the Company on January
      1, 2005 as Vice President, Corporate Development of International Uranium
      (USA) Corporation. Mr. Roberts currently has a contract of employment with
      International Uranium (USA) Corporation. There are no compensatory plans
      or arrangements provided in such contract in respect of resignation,
      retirement, termination, change in control of the Company or
      responsibilities. The expiry date of Mr. Roberts' employment contract is
      December 31, 2006. In addition, $3,289 represents 401K matching
      contributions made to the named executive's retirement account per the
      Company's 401K Benefit Plan available to all eligible employees.

There were no long-term incentive plan awards made to any of the named executive
officers of the Company during the most recently completed financial year. In
addition, there are no plans in place with respect to any of the named
individuals for termination of employment or change in responsibilities under
employment contracts, apart from those separately disclosed herein.

                                     - 58 -

<PAGE>

              OPTION/SAR GRANTS DURING THE MOST RECENTLY COMPLETED
                                 FINANCIAL YEAR

<TABLE>
<CAPTION>
                                                                                           MARKET VALUE OF
                                                                                              SECURITIES
                                                                                              UNDERLYING
                         SECURITIES UNDER          % OF TOTAL                              OPTIONS/SARS ON
                           OPTIONS/SARS       OPTIONS/SARS GRANTED       EXERCISE OR         THE DATE OF
                             GRANTED             TO EMPLOYEES IN          BASE PRICE            GRANT             EXPIRATION
       NAME                    (#)               FINANCIAL YEAR        (CDN$/SECURITY)     (CDN$/SECURITY)           DATE
       (a)                     (b)                     (c)                   (d)                 (e)                  (f)
-------------------      ----------------     --------------------     ---------------     ---------------     ----------------
<S>                      <C>                  <C>                      <C>                 <C>                 <C>
Ron F. Hochstein                   -                     -                      -                   -                         -
David C. Frydenlund                -                     -                      -                   -                         -
Harold R. Roberts             80,000                  11.3%                 $4.27               $4.27          January 11, 2008
Mark A. Katsumata            100,000                  14.1%                 $5.28               $5.28             June 26, 2008
</TABLE>

(1)   The options are fully exercisable on the date of grant.

(2)   The exercise price of stock options is determined by the Board but shall
      in no event be less than the market price of the common shares of the
      Corporation as traded on the TSX on the day prior to the date of grant.
      The Corporation's practice is to price all incentive options at market or
      above, without discount.

       AGGREGATED OPTIONS/SAR EXERCISES DURING THE MOST RECENTLY COMPLETED
             FINANCIAL YEAR AND FINANCIAL YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                                                    VALUE OF UNEXERCISED
                                                                                                        IN-THE-MONEY
                                                                        UNEXERCISED OPTIONS/SARS      OPTIONS/SARS AT
                                                                            AT FISCAL YEAR           FISCAL YEAR END (2)
                          SECURITIES ACQUIRED      AGGREGATE VALUE              END (#)                  EXERCISABLE/
                              ON EXERCISE             REALIZED                EXERCISABLE/              UNEXERCISABLE
       NAME                       (#)                 (CDN$)(1)              UNEXERCISABLE                 (CDN$)
        (a)                       (b)                   (c)                       (d)                        (e)
-------------------       -------------------      ---------------      ------------------------    --------------------
<S>                       <C>                      <C>                  <C>                         <C>
Ron F. Hochstein                250,000              $ 1,722,500               400,000/Nil             $2,552,000/Nil
David C. Frydenlund             200,000                $ 794,000               250,000/Nil             $1,595,000/Nil
Harold R. Roberts                     -                        -                80,000/Nil               $249,600/Nil
Mark A. Katsumata                     -                        -               100,000/Nil               $211,000/Nil
</TABLE>

(1)   Based on the difference between the closing price of the Company's common
      shares as traded on the TSX on the date of exercise and the exercise price
      of the related options.

(2)   Based on the closing price of the common shares of the Corporation on the
      TSX on September 30, 2005 of Cdn$7.39.

A summary of the Company's Stock Option Plan is provided under "Share Ownership"
below.

C. BOARD PRACTICES

Directors are elected annually to one year terms at the annual meeting of
shareholders and serve until the next annual meeting or until their successor is
duly elected. Executive Officers are appointed by the directors and serve until
replaced by the directors or their resignation. Each of the current directors
was elected to his or her present term of office at the annual meeting of
shareholders of the Company held on March 22, 2005 with the exception of Ms.
Eira M. Thomas who was appointed a director at a subsequent meeting of the
Board.

Each of Messrs. Ron F. Hochstein, David C. Frydenlund, Mark A. Katsumata and Mr.
Harold R. Roberts have contracts of employment with the Company or its
subsidiary, International Uranium (USA) Corporation. There is no compensatory
plan or arrangement provided in such contracts in respect of resignation,
retirement, termination, change in control of the Company or responsibilities.
These employment contracts are renewable on an annual basis. None of the other
directors have service contracts with the Company or any of its subsidiaries.

                                     - 59 -

<PAGE>

The board of directors does not have an Executive Committee. The board has
established an Audit Committee, a Compensation Committee, a Corporate Governance
and Nominating Committee and an Environment, Health and Safety Committee. The
following table sets out the members of such Committees:

<TABLE>
<CAPTION>
                                                           CORPORATE GOVERNANCE        ENVIRONMENT, HEALTH AND
    AUDIT COMMITTEE          COMPENSATION COMMITTEE      AND NOMINATING COMMITTEE         SAFETY COMMITTEE
-----------------------     -----------------------      ------------------------      -----------------------
<S>                         <C>                          <C>                           <C>
William A. Rand (Chair)     William A. Rand (Chair)       William A. Rand (Chair)       John H. Craig (Chair)
    Brian D. Edgar              Lukas H. Lundin                John H. Craig               Eira M. Thomas
    Eira M. Thomas               John H. Craig                Eira M. Thomas             David C. Frydenlund
</TABLE>

AUDIT COMMITTEE

Charter of the Audit Committee

The Audit Committee oversees the accounting and financial reporting processes of
the Company and its subsidiaries and all audits and external reviews of the
financial statements of the Company on behalf of the Board, and has general
responsibility for oversight of internal controls, accounting and auditing
activities of the Company and its subsidiaries. All auditing services and
non-audit services to be provided to the Company by the Company's auditors are
pre-approved by the audit committee. The Committee reviews, on a continuous
basis, any reports prepared by the Company's external auditors relating to the
Company's accounting policies and procedures, as well as internal control
procedures and systems. The Committee is also responsible for examining all
financial information, including annual and quarterly financial statements,
prepared for securities commissions and similar regulatory bodies prior to
filing or delivery of the same. The Audit Committee also oversees the annual
audit process, quarterly review engagements, the Company's internal accounting
controls, the Code of Ethics, any complaints and concerns regarding accounting,
internal controls or auditing matters and the resolution of issues identified by
the Company's external auditors. The Audit Committee recommends to the Board the
firm of independent auditors to be nominated for appointment by the shareholders
and the compensation of the auditors. The Audit Committee meets a minimum of
four times per year. The Audit Committee's Charter is attached as Exhibit 1.2.

Composition of the Audit Committee

The members of the Audit Committee are William A. Rand, Brian D. Edgar and Eira
M. Thomas, all of whom are considered to be "independent" within the meaning of
applicable United States and Canadian securities regulations. All members of the
Audit Committee are considered to be "financially literate" within the meaning
of applicable Canadian securities regulations in that they each have the ability
to read and understand a set of financial statements that present a breadth and
level of complexity of accounting issues that are generally comparable to the
breadth and complexity of the issues that can reasonable be expected to be
raised by the Company's financial statements.

Relevant Education and Experience of Audit Committee Members

Each member of the Audit Committee has extensive experience in dealing with
financial statements, accounting issues, internal control and other related
matters relating to public resource-based companies. Mr. Rand is a retired
corporate and securities lawyer and mining executive, who has a commerce degree
with a major in accounting, and who has sat on a number of boards and audit
committees of similar public resource-based companies for over 25 years. Mr.
Edgar is also a retired corporate and securities lawyer with over 25 years of
experience dealing with publicly-traded companies and who has sat on a number of
boards and audit committees of similar types of companies. Ms. Thomas is a
professional geologist and serves as an executive officer and director of a
number of public resource-based companies. Ms. Thomas is also a director of
Northwest Territories Chamber of Mines and a director of the Prospectors and
Development Association of Canada.

COMPENSATION COMMITTEE

The Company's executive compensation program is administered by the Compensation
Committee, which is composed of a majority of independent directors who are
identified above. The Committee meets at least annually to receive information
on and determine matters regarding executive compensation, in accordance with
policies approved by the board of directors. Recommendations for changes to the
policies are also reviewed on an annual basis to ensure that they remain
current, competitive and consistent with the Company's overall goals.

                                     - 60 -

<PAGE>

The Committee's terms of reference include the responsibility to evaluate the
performance of the President and Chief Executive Officer and determine the level
of compensation paid to the President and Chief Executive Officer of the Company
and to other senior management and executive officers of the Company.

The Company's compensation philosophy for executives continues to follow three
underlying principles; namely, (i) to provide a compensation package that
encourages and motivates performance; (ii) to be competitive with other
companies of similar size and scope of operations so as to attract and retain
talented executives; and (iii) to align the interests of its executive officers
with the long-term interests of the Company and its shareholders through
stock-related programs.

When determining compensation policies and individual compensation levels for
executive officers, the Committee takes into consideration a variety of factors.
These factors include overall financial and operating performance of the
Company, the Committee and the Board's overall assessment of each executive's
individual performance and contribution towards meeting corporate objectives,
levels of responsibility, length of service, and industry comparables.

Executive compensation is comprised primarily of a base salary and participation
in the Corporation's incentive stock option and 401K plans, and may also consist
of bonuses and other perquisites which are awarded on an occasional basis.

Compensation is generally reviewed in the early part of each year having regard
to the prior year's performance both at a corporate level and individually in
order to determine compensation adjustments for the following year.

The Compensation Committee has also been mandated to review the adequacy and
form of the compensation of directors and to ensure that the compensation
realistically reflects the responsibilities and risk involved in being an
effective director.

CORPORATE GOVERNANCE AND NOMINATING COMMITTEE

The Corporate Governance and Nominating Committee is responsible for developing
and monitoring the Company's approach to corporate governance issues. The
Committee oversees the effective functioning of the Board, oversees the
relationship between the Board and management, ensures that the Board can
function independently of management at such times as is desirable or necessary,
identifies individuals qualified to become new Board members and recommends to
the Board the director nominees at each annual meeting of shareholders and, with
the assistance of the Board and where necessary, develops an orientation and
education program for new recruits to the Board. In identifying possible
nominees to the Board, the Corporate Governance and Nominating Committee
considers the competencies and skills necessary for the Board as a whole, the
skills of existing directors and the competencies and skills of each new nominee
will bring to the Board, as well as whether or not each nominee will devote
sufficient time and resources to the Board. The Corporate Governance and
Nominating Committee also annually reviews and makes recommendations to the
Board with respect to: (i) the size and composition of the Board; (ii) the
appropriateness of the committees of the Board; and (iii) the effectiveness and
contribution of the Board, its committees and individual directors having
reference to their respective mandates, charters and position descriptions. In
addition, the Committee delivers an annual statement on corporate governance to
the Board for inclusion in either the Company's annual report or management
information circular.

ENVIRONMENT, HEALTH AND SAFETY COMMITTEE

The mining and milling industry, by its very nature, can have a significant
impact on the natural environment. As a result, environmental planning and
compliance must play an ever-increasing part in the operations of any company
engaged in these activities. The Company takes these issues very seriously and
has established an Environment, Health and Safety Committee to oversee the
Company's efforts to act in a responsible and concerned manner with respect to
matters affecting the environment, health and safety.

                                     - 61 -

<PAGE>

D. EMPLOYEES

The following table sets out the number of employees of the Company and its
subsidiaries, none of whom are unionized, at September 30, 2005 for each of the
past three financial years, and a breakdown of persons employed by main category
of activity and geographic location.

                   NUMBER OF EMPLOYEES BY GEOGRAPHIC LOCATION

<TABLE>
<CAPTION>
LOCATION                                      2005          2004           2003
---------------                               ----          ----           ----
<S>                                           <C>           <C>            <C>
Vancouver, B.C.                                 3             2              -
Denver                                          5             2              9
White Mesa Mill                                19            16             15
Mongolia Office                                 3             2              4
                                              ---           ---            ---
Total                                          30            22             28
                                              ---           ---            ---
</TABLE>

At the White Mesa Mill, the Company also retains the services of White Mesa
Inc., an independent local native owned company, that employ 18 additional
personnel.

E. SHARE OWNERSHIP

See the table above under the heading "Directors and Senior Management" for
information as to the share ownership in the Company held by Directors and
Officers of the Company.

The following table summarizes individual grants of options to purchase or
acquire securities of the Company or any of its subsidiaries to each of the
named executive officers and directors as of December 19, 2005.

      STOCK OPTIONS HELD BY DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

<TABLE>
<CAPTION>
                                   NUMBER OF COMMON                            OPTION PRICE       OPTION EXPIRY
EXECUTIVE OFFICER AND DIRECTOR    SHARES UNDER OPTION     DATE OF GRANT          (CDN $)              DATE
------------------------------    -------------------   -----------------      ------------     -----------------
<S>                               <C>                   <C>                    <C>              <C>
John H. Craig                                  --
Brian D. Edgar                            100,000          June 1, 2005            5.18           May 31, 2008
David C. Frydenlund                       250,000       November 27, 2003          1.01         November 26, 2006
Ron F. Hochstein                          400,000       November 27, 2003          1.01         November 26, 2006
Mark Katsumata                            100,000         June 26, 2008            5.28           June 26, 2008
Lukas H. Lundin                           270,000       November 27, 2003          1.01         November 26, 2006
William A. Rand                           100,000       November 27, 2003          1.01         November 26, 2006
Harold R. Roberts                          80,000        January 11 1005           4.27         January 11, 2008
Eira M. Thomas                            100,000          June 1, 2005            5.18           May 31, 2008
Total                                   1,400,000
</TABLE>

STOCK OPTION PLAN

The major features of the Company's stock option plan (the "Stock Option Plan")
can be summarized as follows:

Under the Stock Option Plan the board of directors, or a committee appointed for
such purposes, may from time to time grant to directors, officers, eligible
employees of, or consultants to, the Company or its subsidiaries, or to
employees of management companies providing services to the Company
(collectively, the "Eligible Personnel") options to acquire Common Shares in
such numbers, for such terms and at such exercise prices as may be determined by
the board or such committee. The purpose of the Stock Option Plan is to advance
the interests of the Company by providing Eligible Personnel with a financial
incentive for the continued improvement of the Company's performance and
encouragement to stay with the Company.

The maximum number of Common Shares that may be reserved for issuance for all
purposes under the Plan is 10,700,000 Common Shares or such additional amount as
the Corporation's shareholders may approve from time to time. This maximum
number includes both Common Shares previously issued upon the exercise of
options over the entire term of the Plan since February 14, 1997 and Common
Shares issuable under outstanding options under the Plan. Any Common Shares
subject to a share option which for any reason is cancelled or terminated
without having

                                     - 62 -

<PAGE>

been exercised will again be available for grant under the Plan. The maximum
number of Common Shares that may be reserved for issuance to insiders of the
Corporation under the Plan and under any other share compensation arrangement is
limited to 10% of the Common Shares outstanding at the time of grant (on a
non-diluted basis). As of the end of fiscal 2005, the Company had remaining
3,890,000 common shares that may be reserved for issuance under the Stock Option
Plan.

The Board has the authority under the Plan to establish the option price at the
time each share option is granted. The option price may not be lower than the
market price, i.e. the closing price, of the Common Shares as traded on the
Exchange on the last trading day preceding the date on which the option is
approved by the Board.

The board of directors of the Company has the authority under the Stock Option
Plan to establish the option price at the time each share option is granted. The
option price may not be lower than the market price of the Common Shares at the
time of grant.

Options granted under the Stock Option Plan must be exercised no later than 10
years after the date of grant and options are not transferable other than by
will or the laws of dissent and distribution. If an optionee ceases to be an
Eligible Person for any reason whatsoever other than death, each option held by
such optionee will cease to be exercisable 30 days following the termination
date (being the date on which such optionee ceases to be an Eligible Person). If
an optionee dies, the legal representative of the optionee may exercise the
optionee's options within one year after the date of the optionee's death but
only up to and including the original option expiry date.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. MAJOR SHAREHOLDERS

Information is set forth below with respect to persons known to the Company to
be the owner of five percent or more of the Company's voting securities as of
December 19, 2005 and the total amount of these securities owned by the officers
and directors as a group.

                               MAJOR SHAREHOLDERS

<TABLE>
<CAPTION>
                                                   NUMBER OF COMMON SHARES
        IDENTITY OF PERSON OR GROUP                         OWNED               PERCENTAGE
---------------------------------------------      -----------------------      ----------
<S>                                                <C>                          <C>
Adolf H. Lundin                                           6,500,000                7.4%
Directors and Officers as a group (8 persons)             1,073,300                1.2%
</TABLE>

None of the Company's major shareholders have different voting rights than other
holders of common shares of the Company.

As far as it is known to the Company, the Company is not directly or indirectly
owned or controlled by another corporation(s), any foreign government, or by any
other natural or legal person(s).

As of November 30, 2005, the number of holders of record of shares in the United
States was 48 holdings of 14,636,200 shares or 16.7% of the Company's
outstanding common stock. Certain of these shares were held by brokers or other
nominees. As a result, the number of holders of record or registered holder in
the United States is not representative of the number of beneficial holders or
of the residence of beneficial holders.

There are no arrangements, known to the Company, the operation of which may at a
subsequent date result in a change in control of the Company.

B. RELATED PARTY TRANSACTIONS

Ron F. Hochstein, Lukas H. Lundin, John H. Craig, William A. Rand, Brian D.
Edgar and Eira M. Thomas are also directors and officers of other natural
resource companies and, consequently, there exists the possibility for such
directors and officers to be in a position of conflict relating to any future
transactions or relationships between the Company or common third parties.
However, the Company is unaware of any such pending or existing conflicts
between these parties. Any decision made by any of such directors and officers
involving the Company are made in accordance with their duties and obligations
to deal fairly and in good faith with the Company and such other companies. In
addition, each of the directors of the Company discloses and refrains from
voting on any matter in which such director may have a conflict of interest.

                                     - 63 -
<PAGE>

None of the present directors, senior officers or principal shareholders of the
Company and no associate or affiliate of any of them has any material interest
in any transaction of the Company or in any proposed transaction which has
materially affected or will materially affect the Company except as described
herein.

During 2005, the Company incurred legal fees of $77,302 with a law firm of which
a partner is a director of the Company. Legal fees incurred with this law firm
were $169,026 for the year ended September 30, 2004 and $45,847 for the year
ended September 30, 2003.

During the year ended September 30, 2005, the Company incurred management and
administrative service fees of $168,799 with a company owned by the Chairman of
the Company, which provides investor relations, office premises, secretarial and
other services in Vancouver at a rate of Cdn $18,000 per month plus expenses.
Management and administrative service fees incurred with this company was
$136,335 for the fiscal year ended September 30, 2004 and $90,000 for the fiscal
year ended September 30, 2003. Amounts due to this company were $70,328 as of
September 30, 2005 and nil as of September 30, 2004.

During 2005, the Company provided mine reclamation management and engineering
support services of $80,337 on a cost plus basis to a company with common
directors. Engineering fees invoiced were $421,182 for the year ended September
30, 2004 and $135,017 for the year ended September 30, 2003. At September 30,
2005, an amount of $80,337 was due from this company and $64,801 as of September
30, 2004.

During 2005, the Company entered into an agreement with Fortress to provide
executive and administrative services and charged an aggregate $20,921 for such
services. The executive services are billed on an hourly basis plus
out-of-pocket expenses while the administrative services are at the rate of Cdn
$6,400 per month. At September 30, 2005, an amount of $28,696 was due from
Fortress relating to this agreement.

C. INTERESTS OF EXPERTS AND COUNSEL

Not Applicable.

ITEM 8. FINANCIAL INFORMATION

A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements of the Company are attached hereto as
pages F-1 through F-29 and incorporated herein by reference.

EXPORT SALES

The amount of export sales does not constitute a significant portion of the
Company's total sales volume.

LEGAL PROCEEDINGS

Under the NRC's Alternate Feed Guidance, the Mill is required to obtain a
specific license amendment allowing for the processing of each new alternate
feed material. See "Item 4. Information on the Company Alternate Feed
Processing."

Some of the Company's alternate feed license amendments have been challenged in
the past by the State of Utah, a commercial disposal company and other parties.
As of December 19, 2005, the Company's White Mesa Mill has been granted fourteen
license amendments for processing alternate feeds out of fourteen requests, and
the Company has successfully defended all challenges to date. In fact, in
February 2000 the NRC rendered a decision, upholding an amendment to the
Company's NRC license that allowed the Company to process the Ashland 2 FUSRAP
materials. This decision by the five NRC Commissioners reaffirmed an earlier
ruling by the Atomic Safety and Licensing Board, and resolved in the Company's
favor the dispute at that time with the State of Utah over the types of
materials that can be processed at the Mill. As a result of this ruling, it is
clear that a broad range of alternate feed materials can be processed at the
Mill in accordance with applicable health and safety regulations. This decision
resolved the dispute with the State of Utah in 2000.

                                      -64-

<PAGE>

The Company intends to continue to defend its positions and the validity of its
license amendments and proposed license amendments. If the Company does not
ultimately prevail in any such actions and any appeals therefrom, the Company's
ability to process certain alternate feeds, in certain circumstances, may be
adversely affected since license amendments are required for each alternate feed
transaction.

During a sampling event at the White Mesa Mill in May 1999, the Company
discovered unusually high levels of chloroform in one monitoring well which
monitors the water in the perched zone, and is located cross-gradient from the
Mill's tailings impoundments. Investigations by independent experts retained by
the Company indicate that the source of the chloroform is not from Mill
operations or from the Mill's tailings cells. Rather the source appears to be
from a temporary laboratory facility that was located at the Mill site prior to
construction and operation of the Mill, and that disposed of laboratory wastes
into a State of Utah inspected and approved disposal leach field, and/or septic
tank drainfields that serviced both laboratory operations and sanitary sewage
prior to construction of the Mill's tailings cells. Further investigations are
ongoing. On August 23, 1999, while acknowledging that this contamination does
not threaten groundwater resources in the regional aquifer, because the aquifer
is separated from the perched zone by some 1,000 feet of low-permeability rocks,
the State of Utah issued a Corrective Action Order requiring the Company to
investigate the source and extent of chloroform contamination and, if necessary,
to develop a corrective action plan to address the chloroform contamination. The
Company is performing investigations and taking actions in accordance with the
Corrective Action Order. Interim measures have been instituted in order to
contain the contamination and to pump contaminated groundwater into the Mill's
tailings cells. A final corrective action plan has not yet been developed.
Although investigations to date indicate that this contamination appears to be
contained in a manageable area, the scope and costs of remediation have not yet
been determined and could be significant.

In the first quarter of fiscal 2004, the Company received a demand and threat of
pursuit of litigation in respect of alleged preferential payments by a former
customer, in the amount of approximately $1.2 million, that were paid pursuant
to certain contracts with the Company. The former customer filed for bankruptcy
under Chapter 11 of the U.S. Bankruptcy Code in January 2002. That company
subsequently sold substantially all of its assets to The Shaw Group, Inc.
("Shaw"), who was believed to have assumed the contracts in question and has
subsequently performed the contracts with the Company. In May 2004 the Company
received a formal Complaint in the bankruptcy proceeding seeking the recovery of
approximately $1.7 million as an alleged preferential payment. However, as a
result of a settlement between the former customer and Shaw, this Complaint
against the Company was dismissed in September 2005, without any liability to
the Company, and this matter is now closed.

DIVIDEND POLICY

To date, the Company has not paid any dividends on its outstanding Common Shares
and has no current intention to declare dividends on its Common Shares in the
foreseeable future. Any decision to pay dividends on its Common Shares in the
future will be dependent upon the financial requirements of the Company to
finance future growth, the financial condition of the Company and other factors
which the board of directors of the Company may consider appropriate in the
circumstances.

B. SIGNIFICANT CHANGES

There have been no significant changes in the business or affairs or financial
condition of the Company since September 30, 2005, the date of the annual
financial statements incorporated into this Form 20-F, except as otherwise
disclosed in this Form 20-F.

ITEM 9. THE OFFER AND LISTING

A. OFFER AND LISTING DETAILS

See "Markets" below.

B. PLAN OF DISTRIBUTION

Not applicable.

                                      -65-

<PAGE>

C. MARKETS

The common shares of the Company are currently listed on The Toronto Stock
Exchange in Canada. The Company's common shares commenced trading on The Toronto
Stock Exchange on May 16, 1997. The following table sets forth the high and low
market prices and the volume of the common shares traded on The Toronto Stock
Exchange during the periods indicated:

                               TRADING INFORMATION

<TABLE>
<CAPTION>
              PERIOD                       HIGH         LOW        VOLUME
----------------------------------        -------      ------    ----------
                                          (Cdn $)      (Cdn $)
<S>                                       <C>          <C>       <C>
October 1, 2000-September 30, 2001         0.40         0.20     11,342,300
October 1, 2001-September 30, 2002         0.50         0.25      9,883,580
October 1, 2002-September 30, 2003         0.75         0.25     29,388,200
October 1, 2003-September 30, 2004         5.15         0.50     92,514,000
October 1, 2004-September 30, 2005         8.15         3.34     32,962,524
October-December 2003                      1.76         0.50     28,288,600
January-March 2004                         3.30         1.35     23,977,900
April-June 2004                            2.94         1.51     11,762,000
July-September 2004                        5.15         2.43     28,575,600
October-December 2004                      4.80         3.34     22,735,600
January-March 2005                         6.39         3.81     33,767,100
April-June 2005                            5.78         3.93     23,806,000
July-September 2005                        8.15         5.22     30,514,100
June 2005                                  5.74         5.10      7,294,800
July 2005                                  6.75         5.22      8,981,300
August 2005                                7.88         6.09      9,754,100
September 2005                             8.15         7.03     12,976,500
October 2005                               7.75         5.39      8,869,900
November 2005                              6.49         5.52      9,771,200
December 1 to December 19, 2005            6.52         5.92      5,336,400
</TABLE>

CURRENCY TRANSLATION

As the Company's stock is traded in Canadian dollars, the following table sets
forth the exchange rates for one Canadian dollar expressed in terms of one U.S.
dollar for the past five fiscal years and the calendar quarters ended 12/31/04,
3/31/05, 6/30/05 and 9/30/05:

                              EXCHANGE RATES-ANNUAL

<TABLE>
<CAPTION>
YEAR     AVERAGE      LOW - HIGH       SEPTEMBER 30
----     -------    ---------------    ------------
<S>      <C>        <C>                <C>
2001      0.6461    0.6227 - 0.6714       0.6341
2002      0.6361    0.6175 - 0.6656       0.6336
2003      0.6853    0.6252 - 0.7512       0.7391
2004      0.7551    0.7138 - 0.7856       0.7876
2005      0.8177    0.7857 - 0.8601       0.8601
</TABLE>

                            EXCHANGE RATES-QUARTERLY

<TABLE>
<CAPTION>
CALENDAR QUARTER ENDED  AVERAGE      LOW-HIGH        LAST DAY OF QUARTER
----------------------  -------   ---------------    -------------------
<S>                     <C>       <C>                <C>
       12/31/04          0.8199   0.7857 - 0.8504           0.8319
       03/31/05          0.8158   0.7962 - 0.8331           0.8267
       06/30/05          0.8039   0.7876 - 0.8230           0.8161
       09/30/05          0.8324   0.8041 - 0.8601           0.8601
</TABLE>

The rate of exchange for the conversion of United States dollars into Canadian
dollars on December 19, 2005 was $0.8552 (Cdn.$1.00 = U.S.$0.8552).

                                      -66-

<PAGE>

ITEM 10. ADDITIONAL INFORMATION

A. SHARE CAPITAL

Not applicable.

B. MEMORANDUM AND ARTICLES OF ASSOCIATION

OBJECTS AND PURPOSES OF THE COMPANY

The Company was incorporated by Articles of Amalgamation under the Ontario
Business Corporations Act (the "OBCA") on May 9, 1997, under Incorporation
Number 1236943.

Section 15 of the OBCA provides that a corporation incorporated under the OBCA
has the capacity and the rights, powers and privileges of a natural person.
Neither the Articles of Amalgamation nor the By-Laws of the Company contain any
further objects or purposes or restrict the Company from carrying on any
business or from exercising any of its powers.

INTERESTED DIRECTORS

Section 3.18 of the Company's By-Laws provides that a director or officer who is
a party to, or who is a director or officer of or has a material interest in any
person who is a party to, a material contract or transaction or proposed
material contract or transaction with the Company shall disclose in writing to
the Company or request to have entered in the minutes of the meetings of the
directors the nature and extent of his interest at the time and in the manner
provided by the OBCA. Any such contract or transaction or proposed contract or
transaction shall be referred to the Board or shareholders for approval even if
such contract is one that in the ordinary course of the Company's business would
not require approval by the Board or shareholders, and a director interested in
a contract so referred to the Board shall not vote on any resolution to approve
the same except as permitted by the OBCA. Section 132(5) of the OBCA provides
that such a director shall not vote on any resolution to approve the contract or
transaction unless the contract or transaction is:

      -     An arrangement by way of security for money lent to or obligations
            undertaken by the director for the benefit of the Company or an
            affiliate;

      -     One relating primarily to his or her remuneration as a director,
            officer, employee or agent of the Company or an affiliate;

      -     One for indemnity or insurance under Section 136 of the OBCA; or

      -     One with an affiliate.

There is no requirement in the OBCA or in the Company's Articles of Amalgamation
or By-Laws restricting the directors from voting compensation to themselves or
any members of their body, whether in the absence of an independent quorum or
otherwise.

BORROWING POWERS

Article 10 of the Articles of Amalgamation of the Company provides that the
Board may from time to time, without authorization of the shareholders, in such
amounts and on such terms, as it deems expedient:

      -     Borrow money upon the credit of the Company;

      -     Issue, re-issue, sell or pledge debt obligations of the Company;

      -     Subject to the provisions of the OBCA, give a guarantee on behalf of
            the Company to secure performance of an obligation of any person;
            and

      -     Mortgage, hypothecate, pledge or otherwise create a security
            interest in all or any property of the Company owned or subsequently
            acquired, to secure any obligation of the Company.

Article 10 also provides that the Board may from time to time delegate to a
director, a committee of directors or an officer of the Company any or all of
the powers conferred on the Board as set out above, to such extent and in such
manner as the Board shall determine at the time of such delegation.

As these borrowing powers are contained in the Articles of Amalgamation, any
changes to the borrowing powers would require a special resolution of two-thirds
of the shareholders of the Company.

                                      -67-

<PAGE>

MANDATORY REQUIREMENT AND SHARE QUALIFICATION FOR DIRECTORS

There is no requirement for retirement of directors under an age limit
requirement, and there is no number of shares required for a director's
qualification.

ATTRIBUTES OF COMMON SHARES

The following is a summary of the principal attributes of the Company's Common
Shares:

      -     VOTING RIGHTS. The holders of the Common Shares are entitled to
            receive notice of, attend and vote at any meeting of the
            shareholders of the Company. The Common Shares carry one vote per
            share. There are no cumulative voting rights, and directors do not
            stand for re-election at staggered intervals.

      -     DIVIDENDS. The holders of common Shares are entitled to receive on a
            pro-rata basis such dividends as may be declared by the Board, out
            of funds legally available therefor. Any dividend unclaimed after a
            period of six years from the date on which the same has been
            declared to be payable shall be forfeited and shall revert to the
            Company.

      -     PROFITS. Each Common Share is entitled to share pro-rata in any
            profits of the Company to the extent they are distributed either
            through the declaration of dividends or otherwise distributed to
            shareholders, or on a winding up or liquidation.

      -     RIGHTS ON DISSOLUTION. In the event of the liquidation, dissolution
            or winding up of the Company, the holders of the Common Shares will
            be entitled to receive on a pro-rata basis all of the assets of the
            Company remaining after payment of all the Company's liabilities.

      -     PRE-EMPTIVE, CONVERSION AND OTHER RIGHTS. No pre-emptive,
            redemption, sinking fund or conversion rights are attached to the
            Common Shares, and the Common Shares, when fully paid, will not be
            liable to further call or assessment. No other class of shares may
            be created without the approval of the holders of Common Shares.
            There are no provisions discriminating against any existing or
            prospective holder of Common Shares as a result of such shareholder
            owning a substantial number of shares.

The rights of holders of Common Shares may only be changed by a special
resolution of holders of two-thirds of the issued and outstanding Common Shares,
in accordance with the requirements of the OBCA.

ANNUAL AND SPECIAL MEETINGS

The annual meeting of shareholders shall be held at such time in each year as
the Board, the Chairman of the Board (if any) or the President may from time to
time determine, for the purpose of considering the financial statements and
reports required by the OBCA to be placed before the annual meeting, electing
directors, appointing an auditor and for the transaction of such other business
as may properly be brought before the meeting. The Board, the Chairman of the
Board (if any) or the President shall have the power to call a special meeting
of shareholders at any time. In addition, Section 105 of the OBCA provides that
in certain circumstances the holders of not less than 5 percent of the issued
shares of a corporation that carry the right to vote at a meeting sought to be
held may requisition the directors to call a meeting of shareholders for the
purposes stated in the requisition.

The only persons entitled to be present at a meeting of shareholders are those
entitled to vote thereat, the directors and the auditor of the Company and
others who, although not entitled to vote are entitled or required under any
provision of the OBCA or the Articles of Amalgamation or By-Laws of the Company
to be present at the meeting. Any other person may be admitted only on the
invitation of the chairman of the meeting or with the consent of the meeting.

LIMITATIONS ON THE RIGHT TO OWN SECURITIES

There are no limitations on the rights to own securities, including the rights
of non-resident or foreign shareholders to hold or exercise voting rights on the
securities imposed by foreign law or by the charter or other constituent
document of the Company, except as discussed under "Exchange Controls" below.

                                      -68-

<PAGE>

CHANGES IN CONTROL

There are no provisions in the Company's Articles of Amalgamation or By-Laws
that would have an effect of delaying, deferring or preventing a change in
control of the Company and that would operate only with respect to a merger,
acquisition or corporate restructuring involving the Company (or any of its
subsidiaries).

DISCLOSURE OF OWNERSHIP

There are no provisions in the Company's Articles of Amalgamation or By-Laws
governing the ownership threshold above which shareholder ownership must be
disclosed. However, as discussed under "Exchange Controls" below, non-Canadians
may be required in certain circumstances to report their ownership interests in
the Company. In addition, the Ontario Securities Act requires disclosure by any
person acquiring or holding 10 percent or more of the outstanding Common Shares
of the Company.

C. MATERIAL CONTRACTS

The Company has not entered into any material contracts, other than in the
ordinary course of business during the previous two years, other than the
following contract:

      -     Agreement dated March 1, 2004 between Fortress and the Company
            pursuant to which the Company agreed to sell to Fortress the
            Company's precious and base metals properties.

D. EXCHANGE CONTROLS

Canada has no system of exchange controls. There are no foreign exchange
restrictions on the export or import of capital, including the availability of
cash and cash equivalents for use by the Company group, or on the remittance of
dividends, interest, or other payments to non-resident holders of the Company's
securities, apart from usual withholding taxes payable at rates fixed by Treaty.

The Company is subject to the Investment Canada Act (the "ICA"). Under the ICA,
the acquisition of "control" of certain "businesses" by "non-Canadians" is
subject to either notification or review, by the Investment Review Division of
Industry Canada (or the Department of Canadian Heritage, with respect to
cultural businesses and businesses that relate to Canada's cultural heritage or
national identity), and where review is required, will not be allowed unless
they are found likely to be of "net benefit to Canada". The term "control" is
defined by the ICA as any one or more non-Canadian persons acquiring all or
substantially all of the assets used in the Canadian business, or acquisition of
the voting shares of a Canadian corporation carrying on the Canadian business or
the acquisition of the voting interests of an entity controlling the Canadian
corporation. The acquisition of the majority of the outstanding shares or the
acquisition of less than a majority but 1/3 or more of the voting shares unless
it can be shown in fact that the purchaser will not control the Canadian
company, shall be deemed to be "control" under the ICA.

Where an investor acquiring control of a Canadian business is resident of a
World Trade Organization ("WTO") country, including Americans, the investment is
generally reviewable only if it involves the direct acquisition of a Canadian
business with assets, and as of December 19, 2005, of Cdn $250 million or more
(this figure is adjusted annually to reflect inflation). Indirect acquisitions
by WTO investors are not reviewable, unless the Canadian business acquired is
engaged in activities in any of the sensitive areas discussed below, in which
case lower thresholds for review apply.

Special thresholds apply to acquisitions of Canadian businesses engaged in
certain sensitive areas, namely uranium production, financial services,
transportation or cultural businesses. Where the Canadian business participates
in any of these sensitive areas, the investment is subject to review where its
assets are valued at over Cdn $5 million (for direct acquisitions) and Cdn $50
million (for indirect acquisitions). In addition, where certain requirements of
ICA's regulations are met and a cabinet order is issued to the effect that the
Canadian business relates to Canada's cultural heritage or national identity,
review is possible, at the discretion of the Minister of Canadian Heritage,
regardless of asset values.

If an investment is reviewable, an application for review, in the form
prescribed by the ICA's regulations, is normally required to be filed with the
Investment Review Division of Industry Canada or the Department of Canadian
Heritage, as applicable, prior to the investment taking place and the investment
may not be consummated until the review has been completed. However, the ICA
provides for the Minister of Industry or of Canadian

                                      -69-

<PAGE>

Heritage, as applicable, to permit an investment to be consummated prior to
completion of review if he is satisfied that delay would cause undue hardship to
the acquirer or jeopardize the operation of the Canadian business that is being
acquired. An application in this regard is filed with the applicable Minister,
together with any other information or written undertakings given by the
acquirer and any representation submitted to the applicable department by a
province that is likely to be significantly affected by the investment.

The Minister determines whether the investment is likely to be of net benefit to
Canada, taking into account the information provided and having regard to
factors of assessment, as set out in the ICA, where they are relevant. Some of
the factors to be considered are the effect of the investment on the level and
nature of economic activity in Canada, including the effect on employment, on
resource processing on the utilization of parts, components and services
produced in Canada, and on exports from Canada. Additional factors of assessment
include: (i) the degree and significance of participation by Canadians in the
Canadian business and in any industry in Canada of which it forms a part; (ii)
the effect of the investment on productivity, industrial efficiency,
technological development, product innovation and product variety in Canada;
(iii) the effect of the investment on competition within any industry or
industries in Canada; (iv) the compatibility of the investment with national
industrial, economic and cultural policies taking into consideration industrial,
economic and cultural policy objectives enunciated by the government or
legislature of any province likely to be significantly affected by the
investment; and (v) the contribution of the investment to Canada's ability to
compete in world markets.

If an acquisition of control of a Canadian business by a non-Canadian is not
reviewable, the ICA requires that the non-Canadian investor provide notice of
the acquisition, in the form prescribed, within 30 days after its completion.

There are no limitations under Canadian law on the right of nonresident or
foreign owners to hold or vote the common stock of the Company.

E. TAXATION

The following paragraphs set forth United States and Canadian income tax
considerations about the ownership of shares of the Company, as of December 19,
2005. There may be relevant state, provincial or local income tax
considerations, which are not discussed.

                  UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a discussion of possible United States federal income tax
consequences, under current law as of December 19, 2005, applicable to a U.S.
Holder (as defined below) of shares of the Company. This discussion does not
address consequences peculiar to persons subject to special provisions of
federal income tax law, such as those described below as excluded from the
definition of a U.S. Holder. In addition, this discussion does not cover any
state, local or foreign tax consequences. (See "Taxation - - Certain Canadian
Federal Tax Considerations" below.)

The following discussion is based upon the sections of the Internal Revenue Code
of 1986, as amended (the "Code"), Internal Revenue Service ("IRS") rulings,
published administrative positions of the IRS and court decisions that are
applicable as of December 19, 2005, any or all of which could be materially and
adversely changed, possibly on a retroactive basis, at any time. This discussion
does not consider the potential effects, both adverse and beneficial, of any
recently proposed legislation which, if enacted, could be applied, possibly on a
retroactive basis, at any time. Accordingly, holders and prospective holders of
shares of the Company are urged to consult their own tax advisors about the
state, and local tax consequences of purchasing, owning and disposing of shares
of the Company.

U.S. HOLDERS

As used herein, a "U.S. Holder" means a holder of shares of the Company who is a
citizen or individual resident of the United States, a corporation or
partnership created or organized in or under the laws of the United States or of
any political subdivision thereof or a trust whose income is taxable in the
United States irrespective of source. This summary does not address the tax
consequences to, and U.S. Holder does not include persons subject to specific
provisions of federal income tax law, such as tax-exempt organizations,
qualified retirement plans, individual retirement accounts and other
tax-deferred accounts, financial institutions, insurance companies, real estate
investment trusts, regulated investment companies, broker-dealers, non-resident
alien individuals, persons or entities that have a "functional currency" other
than the U.S. dollar, shareholders who hold shares as part of a straddle,
hedging or a conversion transaction, and shareholders who acquired their stock
through the exercise of employee stock options or otherwise as compensation for
services. This summary is limited to U.S. Holders who own shares

                                      -70-

<PAGE>

as capital assets. This summary does not address the consequences to a person or
entity holding an interest in a shareholder or the consequences to a person of
the ownership exercise or disposition of any options, warrants or other rights
to acquire shares.

DISTRIBUTIONS ON SHARES OF THE COMPANY

U.S. Holders receiving dividend distributions (including constructive dividends)
with respect to shares of the Company are required to include in gross income
for United States federal income tax purposes the gross amount of such
distributions equal to the U.S. dollar value of such dividends on the date of
receipt (based on the exchange rate on such date) to the extent that the Company
has current or accumulated earnings and profits, without reduction for any
Canadian income tax withheld from such distributions. Such Canadian tax withheld
may be credited, subject to certain limitations, against the U.S. Holder's
United States federal income tax liability or, alternatively, may be deducted in
computing the U.S. Holder's United States federal taxable income, but in the
case of an individual only applies to those who itemize deductions. (See
discussion that is more detailed at "Foreign Tax Credit" below.) To the extent
that distributions exceed current or accumulated earnings and profits of the
Company, they will be treated first as a return of capital up to the U.S.
Holders' adjusted basis in the shares and thereafter as gain from the sale or
exchange of the shares. Preferential tax rates for long-term capital gains are
applicable to a U.S. Holder which is an individual, estate or trust. There are
currently no preferential tax rates for long-term capital gains for a U.S.
Holder, which is a corporation.

In the case of foreign currency received as a dividend that is not converted by
the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have
a tax basis in the foreign currency equal to its U.S. dollar value on the date
of receipt. Any gain or loss recognized upon a subsequent sale or other
disposition of the foreign currency, including an exchange for U.S. dollars,
will be ordinary income or loss.

For tax years beginning after December 31, 2002 and before January 1, 2009,
dividends received by U.S. Holders that are individuals, estates or trusts from
"qualified foreign corporations," as defined in Section 1(h)(11) of the Code,
generally are taxed at the same preferential tax rates applicable to long-term
capital gains. Although not free from doubt, it appears that the Company would
be a "qualified foreign corporation," as defined in Section 1(h)(11) of the Code
pursuant to the Canada - U.S. income tax treaty as long as the Company is not a
passive foreign investment company ("PFIC") (discussed below). A corporation
that is properly described as a PFIC, Foreign Personal Holding Company
(discussed below) or a Foreign Investment Company (discussed below) with respect
to a specific US Holder for its taxable year during which it pays a dividend, or
for its immediately preceding taxable year, will not be treated as a "qualifying
foreign corporation" and dividends received by U.S Holders that are individuals,
estates or trust generally will be subject to U.S. federal income tax at
ordinary income tax rates (and not at the preferential tax rates applicable to
long-term capital gains).

Dividends paid on the shares of the Company will not generally be eligible for
the dividends received deduction provided to corporations receiving dividends
from certain United States corporations. A U.S. Holder which is a corporation
may, under certain circumstances, be entitled to a 70% deduction of the United
States source portion of dividends received from the Company (unless the Company
qualifies as a "passive foreign investment company," as defined below) if such
U.S. Holder owns shares representing at least 10% of the voting power and value
of the Company. The availability of this deduction is subject to several complex
limitations, which are beyond the scope of this discussion.

FOREIGN TAX CREDIT

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax
with respect to the ownership of shares of the Company may be entitled, at the
option of the U.S. Holder, to either a deduction or a tax credit for such
foreign tax paid or withheld. Generally, it will be more advantageous to claim a
credit because a credit reduces United States federal income taxes on a
dollar-for-dollar basis, while a deduction merely reduces the taxpayer's income
subject to tax. This election is made on a year-by-year basis and applies to all
foreign taxes paid by (or withheld from) the U.S. Holder during that year. There
are significant and complex limitations which apply to the credit, among which
is the general limitation that the credit cannot exceed the proportionate share
of the U.S. Holder's United States income tax liability that the U.S. Holder's
foreign source income bears to his or its worldwide taxable income. In the
determination of the application of this limitation, the various items of income
and deduction must be classified into foreign and domestic sources. Complex
rules govern this classification process. In addition, this limitation is
calculated separately based on nine specific classes of income including
passive, high withholding tax interest, financial services and general
limitation income. Effective for tax years beginning after December 31, 2006,
the nine foreign tax credit baskets will be reduced to two: "passive" and

                                      -71-

<PAGE>

"general." Dividends distributed by the Company will generally constitute
"passive income." The availability of the foreign tax credit and the application
of the limitations on the credit are fact specific, and holders and prospective
holders of shares of the Company should consult their own tax advisors regarding
their individual circumstances.

DISPOSITION OF SHARES OF THE COMPANY

A U.S. Holder will recognize gain or loss upon the sale of shares of the Company
equal to the difference, if any, between (i) the amount of cash plus the fair
market value of any property received, and (ii) the shareholder's tax basis in
the shares of the Company. This gain or loss will be capital gain or loss if the
shares are a capital asset in the hands of the U.S. Holder, which will be a
short-term or long-term capital gain or loss depending upon the holding period
of the U.S. Holder. Gains and losses are netted and combined according to
special rules in arriving at the overall capital gain or loss for a particular
tax year. Deductions for net capital losses are subject to significant
limitations. For U.S. Holders who are individuals, any unused portion of such
net capital loss may be carried over to be used in later tax years until such
net capital loss is thereby exhausted. For U.S. Holders that are corporations
(other than corporations subject to Subchapter S of the Code), an unused net
capital loss may be carried back three years from the loss year and carried
forward five years from the loss year to be offset against capital gains until
such net capital loss is thereby exhausted.

OTHER CONSIDERATIONS

In the following circumstances, the above sections of this discussion may not
describe the United States federal income tax consequences resulting from the
holding and disposition of shares:

PASSIVE FOREIGN INVESTMENT COMPANY

As a foreign corporation with U.S. Holders, the Company could potentially be
treated as a passive foreign investment company ("PFIC"), as defined in section
1297 of the Code, depending upon the percentage of the Company's income which is
passive, or the percentage of the Company's assets which is producing passive
income. U.S. Holders owning shares of a PFIC are subject to an additional tax
and to an interest charge based on the value of deferral of tax for the period
during which the shares of the PFIC are owned, in addition to treatment of gain
realized on the disposition of shares of the PFIC as ordinary income rather than
capital gain. However, if the U.S. Holder makes a timely election to treat a
PFIC as a qualified electing fund ("QEF") with respect to such shareholders
interest therein, the above-described rules generally will not apply. Instead,
the electing U.S. Holder would include annually in his gross income his pro rata
share of the PFIC's ordinary earnings and net capital gain regardless of whether
such income or gain was actually distributed. A U.S. Holder of a QEF can,
however, elect to defer the payment of United States federal income tax on such
income not currently received subject to an interest charge on the deferred tax.
Alternatively, a U.S. Holder may elect to "mark to market" his or her shares in
the Company at the end of each year as set forth in Section 1296 of the Code.
Special rules apply to U.S. Holders who own their interests in a PFIC through
intermediate entities or persons.

The Company believes that it was not a PFIC for its fiscal year ended September
30, 2005. If in a subsequent year the Company concludes that it is a PFIC, it
intends to make information available to enable an U.S. Holder to make a QEF
election in that year. There can be no assurance that the Company's
determination concerning its PFIC status will not be challenged by the IRS, or
that it will be able to satisfy record keeping requirements which will be
imposed on QEF's.

CONTROLLED FOREIGN CORPORATION

If more than 50% of the voting power of all classes of stock or the total value
of the stock of the Company is owned, directly or indirectly, by citizens or
residents of the United States, United States domestic partnerships and
corporations or estates or trusts other than foreign estates or trusts, each of
whom own 10% or more of the total combined voting power of all classes of stock
of the Company ("United States shareholder"), the Company could be treated as a
"controlled foreign corporation" under Subpart F of the Code. This
classification would effect many complex results including the required
inclusion by such United States shareholders in income of their pro-rata shares
of "Subpart F income" (as specially defined by the Code) of the Company. In
addition, under Section 1248 of the Code, gain from the sale or exchange of
stock by a holder of shares of the Company who is or was a United States
shareholder at any time during the five year period ending with the sale or
exchange is treated as ordinary dividend income to the extent of earnings and
profits of the Company attributable to the stock sold or exchanged.

                                      -72-

<PAGE>

Because of the complexity of subpart F and because it is not clear that Subpart
F would apply to the holders of shares of the Company, a more detailed review of
these rules is outside of the scope of this discussion.

FOREIGN PERSONAL HOLDING COMPANY

If at any time during a taxable year a) more than 50% of the total voting power
or the total value of outstanding shares issued by the Company are owned,
directly or indirectly, by five or fewer individuals who are citizens or
residents of the U.S.; and b) 60% (or 50% in certain cases) or more of the
Company's gross income for such year is "foreign personal holding company
income" as defined in Section 553 of the Code (e.g. dividends, interest,
royalties, certain gains from the sale of stock and securities, and certain
gains from commodities transactions), the Company may be treated as a "Foreign
Personal Holding Company" ("FPHC"). In that event, U.S. Holders of the Company's
common shares would be required to include in gross income for such year their
allocable portions of such "foreign personal holding company income" to the
extent the company does not actually distribute such income.

The FPHC rules described above have been repealed with respect to taxable years
of the Company that begin after December 31, 2004 and to taxable years of U.S.
Holders of Common shares with or within which such taxable year of the Company
ends.

The Company does not believe that it currently qualifies as a FPHC. However,
there can be no assurance that the Company would not be considered a FPHC by the
IRS for the current taxable year.

FOREIGN INVESTMENT COMPANY

If a) 50% or more of the total voting power or the total value of the Company's
outstanding shares is owned, directly or indirectly, by citizens or residents of
the U.S., U.S. partnerships or corporations, or U.S. estates or trusts (as
defined by Code Section 7701(a)(30)), and b) the Company is found to be engaged
primarily in the business of investing, reinvesting, or trading in securities,
commodities, or any interest therein, the Company may be treated as a "Foreign
Investment Company" ("FIC") as defined in Section 1246 of the Code, causing all
or part of any gain realized by a U.S. Holder selling or exchanging the
Company's common shares to be treated as ordinary income rather than capital
gain.

The FIC rules described above have been repealed with respect to taxable years
of the Company that begin after December 31, 2004 and to taxable years of the
U.S. Holders of Common Shares with or within which such taxable year of the
Company ends.

The Company does not believe that it currently qualifies as a FIC. However,
there can be no assurance that the Company would not be considered a FIC by the
IRS for the current taxable year.

               CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The summary below, as of December 19, 2005, is restricted to the case of a
holder (a "Holder") of one or more common shares who for the purposes of the
Income Tax Act (Canada) (the "Act") is a non-resident of Canada, holds his
common shares as capital property and deals at arm's length with the Company.

DIVIDENDS

A Holder will be subject to Canadian withholding tax ("Part XIII Tax") equal to
25%, or such lower rate as may be available under an applicable tax treaty, of
the gross amount of any dividend paid or deemed to be paid on his common shares.
Under the Canada-U.S. Income Tax Convention (1980) (the "Treaty") the rate of
Part XIII Tax applicable to a dividend on common shares paid to a Holder who is
a resident of the United States is generally reduced to 15% of the gross amount
of the dividend or to 5% if the Holder is a company that beneficially owns at
least 10% of the voting stock of the Company. The Company will be required to
withhold the applicable amount of Part XIII Tax from each dividend so paid and
remit the withheld amount directly to the Receiver General of Canada for the
account of the Holder.

DISPOSITION OF COMMON SHARES

A Holder who disposes of a common share, including by deemed disposition on
death, will not be subject to Canadian tax on any capital gain (or capital loss)
thereby realized unless the common share constituted "taxable

                                      -73-

<PAGE>

Canadian property" as defined by the Act. Generally, a common share will not
constitute taxable Canadian property of a Holder unless he held the common share
as capital property used by him carrying on a business (other than an insurance
business) in Canada, or he or persons with whom he did not deal at arm's length
alone or together held options to acquire, at any time within the five years
preceding the disposition, 25% or more of the shares of any class of the capital
stock of the Company.

A Holder who is a resident of the United States and who realizes a capital gain
on a disposition of a common share that was taxable Canadian property will
nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax
thereon unless (a) more than 50% of the value of the common share is derived
from, or for an interest in, Canadian real property, including Canadian mineral
resource properties, (b) the common share formed part of the business property
of a permanent establishment that the Holder has or had in Canada within the 12
months preceding the disposition, or (c) the Holder (i) was a resident of Canada
at any time within the ten years immediately, and for a total of 120 months
during the 20 years, preceding the disposition, and (ii) owned the common share
when he ceased to be resident in Canada.

A Holder who is subject to Canadian tax in respect of a capital gain realized on
a disposition of a common share must include one half of the capital gain
(taxable capital gain) in computing his taxable income earned in Canada. The
Holder may, subject to certain limitations specified in the Act, deduct one half
of any capital loss (allowable capital loss), arising on disposition of taxable
Canadian property from taxable capital gains realized in the year of disposition
in respect to taxable Canadian property. To the extent the capital loss is not
deducted, it may be deducted from one half of taxable capital gains realized in
any of the three preceding years or any subsequent year.

F. DIVIDENDS AND PAYING AGENTS

Not applicable.

G. STATEMENT BY EXPERTS

Not applicable.

H. DOCUMENTS ON DISPLAY

The documents concerning the Company which are referred to in this Form 20-F may
be inspected during regular business hours at the offices of the Company's
subsidiary, International Uranium (USA) Corporation, at Suite 950, 1050 17th
Street, Denver, Colorado, 80265.

I. SUBSIDIARY INFORMATION

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

FOREIGN CURRENCY EXCHANGE RATE SENSITIVITY

The Company's functional currency is the U.S. dollar. Its activities are
executed using the U.S. dollar, the Canadian dollar and Mongolian Tugrik;
however, it is not subject to significant operational exposures due to
fluctuations in those currencies.

The Common shares of the Company are currently only listed on The Toronto Stock
Exchange in Canada and thus, the shares are purchased and sold in Canadian
dollars. Therefore, refer to Item 9 for more information relating to the
Company's share price information and the tables relating to the U.S./Canadian
dollar currency translations.

The Company has not entered into any agreements or purchased any instruments to
hedge any possible currency risks at this time.

                                      -74-

<PAGE>

INTEREST RATE SENSITIVITY

The Company currently has no significant long-term or short-term debt requiring
interest payments. Thus, the Company has not entered into any agreement or
purchased any instrument to hedge against possible interest rate risks at this
time.

The Company's interest earning investments are primarily short-term, or can be
held to maturity, and thus, any reductions in carrying values due to future
interest rate declines are believed to be immaterial. However, as the Company
has a significant cash or near-cash position, which is invested in such
instruments, reductions in interest rates will reduce the interest income from
these investments.

COMMODITY PRICE SENSITIVITY

The Company can be subject to price risk due to changes in the market value of
uranium and vanadium regarding its future sales revenues and carrying values
relating to its finished goods, ore stockpiles and property holdings.

The Company has entered into future long-term contracts for uranium sales in the
past, thereby reducing its exposure to changes in uranium prices. However, the
Company has sold all of its uranium inventory and uranium supply contracts at
this time and has written off all of its uranium properties. As a result, only
future uranium production, which at this time is expected to be from alternate
feed materials, and, if commodity prices continue to rise, possibly from
production from uranium mining properties, will be subject to uranium price
fluctuations. To the extent that any such future uranium production is expected
to constitute a significant portion of the Company's revenues, the Company will
consider the possibility of entering into future sales contracts for all or some
of such future production.

The Company's finished goods inventories are recorded at the lower of cost or
net realizable value as of September 30, 2005, and had some finished goods
inventories of vanadium product.

The Company has not entered into any future vanadium sales contracts at this
time, and therefore its revenue and profits from vanadium sales are subject to
future price changes.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

                                     PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

There have been no defaults, dividend arrearages or delinquencies.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
PROCEEDS

There have been no modifications to securities of any class of the Company.

ITEM 15. CONTROLS AND PROCEDURES

(a)   The President and Chief Executive Officer and the Chief Financial Officer
      of the Company have reviewed the Company's disclosure controls and
      procedures (as defined in 17 CFR 240.13a-15(e), and the effectiveness
      thereof, based on an evaluation conducted on December 12, 2005, and have
      concluded that such controls and procedures are effective and are adequate
      to support the certificates given by such officers in this document.

(b)   Not Applicable.

(c)   Not Applicable.

(d)   There has been no change in the Company's internal control over financial
      reporting that occurred during the fiscal year ending September 30, 2005
      that has materially affected, or is reasonably likely to materially
      affect, the Company's internal control over financial reporting.

ITEM 16. [RESERVED]

                                      -75-

<PAGE>

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

The Company's Board of Directors has determined that Mr. William A. Rand, a
member of the Company's Audit Committee is an audit committee financial expert,
within the meaning of item 16A(b) of Form 20-F. Mr. Rand is also independent
within the meaning of United States and Canadian securities regulations.

Mr. Rand is a retired corporate and securities lawyer and mining executive, with
a commerce degree with a major in accounting, and has sat on a number of boards
and audit committees of similar public resource-based companies for over 25
years. Through this education and experience, Mr. Rand has experience overseeing
and assessing the performance of companies and public accountants with respect
to the preparation, auditing and evaluation of financial statements, and has:
(1) an understanding of generally accepted accounting principles and financial
statements; (2) the ability to assess the general application of such principles
in connection with the accounting for estimates, accruals and reserves; (3)
experience analyzing and evaluating financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to
the breadth and complexity of issues that can reasonably be expected to be
raised by the Company's financial statements; (4) an understanding of internal
controls over financial reporting; and (5) an understanding of audit committee
functions.

ITEM 16B. CODE OF ETHICS

The Company has adopted a code of ethics that applies to the Company's
directors, officers and employees, including the executive officer, principal
financial officer, principal accounting officer or controller, persons
performing similar functions and other officers, directors and employees of the
Company. This code of ethics is filed as an exhibit to this Form 20-F and is
also available on the Company's website at www.intluranium.com.

The code of ethics was adopted effective February 12, 2004, and amended
effective August 12, 2005.

The Code of Ethics was amended on August 12, 2005 in order to comply with the
requirements of National Policy 58-201, promulgated by the Canadian Securities
Administrators, in addition to the requirements of the provisions of Section 406
of the Sarbanes-Oxley Act of 2002. The nature of the amendments can be briefly
described as follows:

      -     The Code was extended to apply to all directors, officers and
            employees of the Company;

      -     Activities that present an actual or potential conflict of interest
            were separated into: (a) those activities that require prior
            notification to the Chair of the Audit committee, and which may only
            proceed if the director, officer or employee does not improperly
            benefit, directly or indirectly, from his or her status as director,
            officer or employee of the Company or from any decision or action by
            the Company that he or she is in a position to influence; and (b)
            those activities that are prohibited outright, such as using Company
            assets for other business or personal endeavors;

      -     Provisions were added to the Code to address or expand upon: insider
            trading; confidentiality of corporate information; fair dealing with
            the Company's security holders, customers, suppliers, competitors
            and employees; and the maintenance of records; and,

      -     The Code was amended to provide that concerns or questions about
            violations of the Code may be reported to either the Corporate
            Secretary or the Chair of the Audit Committee, rather than directly
            to the Audit Committee, and that the Corporate Secretary or Chair of
            the Audit Committee, as the case may be, is required to investigate
            any complaints and report on such investigation to the Audit
            Committee.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

<TABLE>
<CAPTION>
Fiscal Year Ending   Audit Fees       Audit-Related Fees        Tax Fees          All other Fees
------------------   ----------       ------------------        --------          --------------
<S>                  <C>              <C>                      <C>                <C>
9/30/05                $68,805              $17,202            $28,891(1)               Nil
9/30/04                $81,137              $13,911            $49,594(1)               Nil
</TABLE>

(1)   Tax fees consist of fees for assisting the Company in preparing and filing
      U.S. and Canadian income tax returns.

The Company's audit committee policy provides "All auditing services and
non-audit services provided to the Corporation by the Corporation's auditors
shall, to the extent and in the manner required by applicable law or regulation,
be pre-approved by the Audit Committee of the Corporation. In no circumstances
shall the Corporation's auditors provide any non-audit services to the
Corporation that are prohibited by applicable law or regulation."

                                      -76-

<PAGE>

The following sets forth the percentage of services described above that were
approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X:

Audit Related Fees: 100%
Tax Fees:           100%
All Other Fees:     not applicable

ITEM 16D. EXEMPTION FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PERSONS

There have been no purchases of the Company's common stock by the Company or
affiliated purchasers during the period covered by this report.

                                    PART III

ITEM 17. FINANCIAL STATEMENTS

See Pages F-1 through F-29 incorporated herein by reference.

ITEM 18. FINANCIAL STATEMENTS

Not applicable.

ITEM 19. FINANCIAL STATEMENTS AND EXHIBITS

a)    The following consolidated statements, together with the report of
      PricewaterhouseCoopers LLP thereon, are filed as part of this 20-F:

<TABLE>
<CAPTION>
                                                                        Page
                                                                        ----
<S>                                                                     <C>
Auditors' Report to the Shareholders...............................      F-1
Consolidated Balance Sheets at September 30, 2005 and 2004.........      F-2
Consolidated Statements of Operations
    For the Years Ended September 30, 2005, 2004 and 2003..........      F-3
Consolidated Statements of Deficit
    For the Years Ended September 30, 2005, 2004 and 2003..........      F-4
Consolidated Statements of Cash Flows
    For the Years Ended September 30, 2005, 2004 and 2003..........      F-5
Notes to the Consolidated Financial Statements.....................      F-6
</TABLE>

      All other schedules are omitted because they are not applicable or because
      the required information is contained in the Consolidated Financial
      Statements or Notes thereto.

b)    Documents filed as exhibits to this Annual Report:

<TABLE>
<S>                                                                      <C>
Index to Exhibits                                                        F-30
Exhibit 4  Company's Material Contracts                                  F-31
Exhibit 8  Company's Corporate Structure Chart                           F-39
Exhibit 11 Code of Ethics for Directors, Officers and Employees          F-40
Exhibit 12 302 Certification                                             F-43
Exhibit 13 906 Certification                                             F-45
Exhibit 15 International Uranium Corporation Audit Committee Charter     F-47
</TABLE>

                                      -77-

<PAGE>

                                   SIGNATURES

The Company hereby certifies that it meets all of the requirements for filing on
Form 20-F and has duly caused and authorized the undersigned to sign this Annual
Report on its behalf.

INTERNATIONAL URANIUM CORPORATION

By: /s/ Ron F. Hochstein
    -------------------------------------------------------
    Ron F. Hochstein, President and Chief Executive Officer

Dated: December 19, 2005

                                      -78-

<PAGE>

AUDITORS' REPORT
TO THE SHAREHOLDERS OF
INTERNATIONAL URANIUM CORPORATION

We have audited the consolidated balance sheets of International Uranium
Corporation as at September 30, 2005 and 2004 and the consolidated statements of
operations, deficit and cash flows for the years ended September 30, 2005, 2004
and 2003. 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 audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards and the standards of the Public Company Accounting Oversight Board
(United States). 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 consolidated financial statements present fairly, in all
material respects, the financial position of the company as at September 30,
2005 and 2004 and the results of its operations and its cash flows for the years
ended September 30, 2005, 2004 and 2003 in accordance with Canadian generally
accepted accounting principles.

/s/ Pricewaterhouse Cooper LLP

CHARTERED ACCOUNTANTS
Vancouver, B.C., Canada
December 9, 2005

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCE

In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when there are
changes in accounting principles that have a material effect on the
comparability of the company's financial statements, such as the change
described in note 3 to the financial statements. Our report to the shareholders
dated December 9, 2005 is expressed in accordance with Canadian reporting
standards which do not require a reference to such a change in accounting
principles in the auditors' report when the change is properly accounted for and
adequately disclosed in the financial statements.

/s/ Pricewaterhouse Cooper LLP

CHARTERED ACCOUNTANTS
Vancouver, B.C., Canada
December 9, 2005

                                       F-1

<PAGE>

INTERNATIONAL URANIUM CORPORATION
Consolidated Balance Sheets
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                                               September 30,
                                                                           2005            2004
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
ASSETS
CURRENT
  Cash and cash equivalents                                            $  6,111,119    $ 12,044,955
  Short-term investments                                                          -       1,089,960
  Trade and other receivables                                               565,989       1,630,591
  Inventories (Note 4)                                                    3,323,645       1,189,391
  Prepaid expenses and other                                                125,204         408,038
                                                                       ------------    ------------

                                                                         10,125,957      16,362,935
Long-term investments (Notes 5 & 6)                                       4,938,055         892,221
Plant and equipment, net (Note 7)                                         3,217,702       2,786,570
Mineral properties (Notes 8 & 9)                                         13,412,885       6,171,263
Intangible asset, net (Note 10)                                             625,000         687,500
Restricted investments (Note 11)                                         12,881,972      12,487,066
                                                                       ------------    ------------

                                                                       $ 45,201,571    $ 39,387,555
                                                                       ============    ============

LIABILITIES
CURRENT
  Accounts payable and accrued liabilities                             $  2,092,479    $    879,994
  Notes payable                                                              16,557          15,479
  Deferred revenue                                                        3,772,647               -
                                                                       ------------    ------------

                                                                          5,881,683         895,473
Notes payable, net of current portion                                        19,016          35,573
Reclamation obligations (Note 12)                                        12,934,880      12,603,595
Deferred revenue, net of current portion                                          -       3,556,592
Future income tax liability (Note 17)                                     1,460,897               -
Other long-term liability                                                    99,593          99,593
Minority interest (Note 6)                                                        -       1,664,247
                                                                       ------------    ------------

                                                                         20,396,069      18,855,073
                                                                       ------------    ------------

SHAREHOLDERS' EQUITY
Share capital (Note 14)
 Authorized: Unlimited number of common shares without par value
 Issued and outstanding: 81,569,066 shares (2004: 79,635,066 shares)     56,145,784      50,305,480
Contributed surplus (Notes 15 & 16)                                       1,803,277         224,718
Deficit                                                                 (33,143,559)    (29,997,716)
                                                                       ------------    ------------

                                                                         24,805,502      20,532,482
                                                                       ------------    ------------

                                                                       $ 45,201,571    $ 39,387,555
                                                                       ============    ============
</TABLE>

Commitments and contingencies (Note 20)
Subsequent events (Note 22)

ON BEHALF OF THE BOARD OF DIRECTORS:

/s/ Ron F. Hochstein                    /s/ Lukas H. Lundin
----------------------------------      -----------------------------------
Ron F. Hochstein                        Lukas H. Lundin

         See accompanying notes to the consolidated financial statements

                                       F-2

<PAGE>

INTERNATIONAL URANIUM CORPORATION
Consolidated Statements of Operations
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                           Years Ended September 30,
                                                     2005            2004            2003
                                                 ------------    ------------    ------------
<S>                                              <C>             <C>             <C>
REVENUES

Vanadium                                         $          -    $  1,582,628    $          -
Process milling                                        50,479         420,646      12,415,001
Engineering services (Note 13)                         80,337         421,182         135,017
                                                 ------------    ------------    ------------

                                                      130,816       2,424,456      12,550,018
                                                 ------------    ------------    ------------

EXPENSES

Vanadium cost of sales                                      -         706,274               -
Process milling expenditures                        1,438,844         139,793       4,671,199
Mill stand-by expenditures                          1,037,995       2,330,554         738,730
Bad debts                                              64,801               -               -
General exploration                                    98,088          55,503         209,253
Selling, general and administrative                 4,537,574       3,443,013       2,655,341
Write-down of mineral property (Note 6)             1,869,790               -         118,081
                                                 ------------    ------------    ------------

                                                    9,047,092       6,675,137       8,392,604
                                                 ------------    ------------    ------------

Earnings (loss) from operations                    (8,916,276)     (4,250,681)      4,157,414

Net interest and other income                         699,549         533,158         494,383
Gain (loss) on sale of short-term investments       2,938,678         (38,046)        579,926
Gain on disposal of other assets                            -               -          79,000
Gain on foreign exchange                              559,600         242,059          11,826
Gain on sale of land and equipment                    100,450          58,930         210,603
Loss on sale of restricted investments                (63,444)              -               -
Equity in loss of Fortress Minerals Corp.            (678,953)              -               -
Dilution gain                                       2,098,322         548,549               -
Minority interest                                     916,687         134,219               -
                                                 ------------    ------------    ------------

Earnings (loss) before income taxes                (2,345,387)     (2,771,812)      5,533,152

Income tax recovery (expense)                         (26,801)        585,133               -
                                                 ------------    ------------    ------------

Net earnings (loss) for the year                 $ (2,372,188)   $ (2,186,679)   $  5,533,152
                                                 ============    ============    ============

Earnings (loss) per share:
  Basic                                          $      (0.03)   $      (0.03)   $       0.08
  Diluted                                        $      (0.03)   $      (0.03)   $       0.08
                                                 ============    ============    ============

Weighted-average number of shares outstanding:
  Basic                                            80,575,343      76,306,520      67,011,765
  Diluted                                          80,575,343      76,306,520      67,634,897
                                                 ============    ============    ============
</TABLE>

         See accompanying notes to the consolidated financial statements

                                       F-3

<PAGE>

INTERNATIONAL URANIUM CORPORATION
Consolidated Statements of Deficit
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                             Years Ended September 30,
                                                        2005            2004            2003
                                                    ------------    ------------    ------------
<S>                                                 <C>             <C>             <C>
Deficit, beginning of year as previously reported   $(29,997,716)   $(27,811,037)   $(33,344,189)

Retroactive effect of change in accounting policy
 for stock-based compensation (Note 3)                  (773,655)              -               -
                                                    ------------    ------------    ------------

Deficit, beginning of year as restated               (30,771,371)    (27,811,037)    (33,344,189)

Net earnings (loss) for the year                      (2,372,188)     (2,186,679)      5,533,152
                                                    ------------    ------------    ------------

Deficit, end of year                                $(33,143,559)   $(29,997,716)   $(27,811,037)
                                                    ============    ============    ============
</TABLE>

         See accompanying notes to the consolidated financial statements

                                       F-4

<PAGE>

INTERNATIONAL URANIUM CORPORATION
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
                                                                  Years Ended September 30,
                                                             2005            2004            2003
                                                         ------------    ------------    ------------
<S>                                                      <C>             <C>             <C>
CASH PROVIDED BY (USED IN):
OPERATING ACTIVITIES
Net earnings (loss) for the year                         $ (2,372,188)   $ (2,186,679)   $  5,533,152
Items not affecting cash:
  Amortization                                                 62,500          62,500               -
  Depreciation                                                486,405         480,554         617,554
  Stock-based compensation                                    948,420         224,718               -
  Write-down of mineral properties                          1,869,790               -         118,081
  Loss (gain) on sale of short-term investments            (2,938,678)              -        (579,926)
  Gain on disposal of other assets                                  -               -         (79,000)
  Gain on sale of land and equipment                         (100,450)        (58,930)       (210,603)
  Loss on sale of restricted investments                       63,444               -               -
  Bad debts                                                    64,801               -               -
  Equity in loss of Fortress Minerals Corp.                   678,953               -               -
  Dilution gain                                            (2,098,322)       (548,549)              -
  Minority interest                                          (916,687)       (134,219)              -
  Income tax expense (recovery)                                26,801        (585,133)              -
Changes in non-cash working capital items:
  Decrease (increase) in trade and other receivables          999,801        (742,190)       (733,188)
  Decrease (increase) in due from Urizon Joint Venture              -         451,152        (451,152)
  Decrease (increase) in inventories                       (2,134,254)        571,977         (40,416)
  Decrease (increase) in other current assets                 282,834         (25,550)        (14,053)
  Increase (decrease) in accounts payable and
   accrued liabilities                                        115,484         (74,014)        183,428
Increase in reclamation obligations                           331,285         282,612               -
Increase (decrease) in deferred revenue                       216,055       1,397,654      (8,740,256)
                                                         ------------    ------------    ------------

Net cash used in operating activities                      (4,414,006)       (884,097)     (4,396,379)
                                                         ------------    ------------    ------------

INVESTING ACTIVITIES
Proceeds from sale of short-term investments                4,028,638               -       3,559,403
Purchase of portfolio investments                          (1,259,378)       (892,221)       (996,675)
Proceeds from (investment in) Fortress Minerals Corp.         273,910         977,094               -
Purchase of plant and equipment                              (917,537)       (441,824)        (74,616)
Proceeds from sale of surplus land and equipment              100,450          64,139         230,100
Expenditures on mineral properties                         (9,264,765)     (4,186,908)     (1,356,166)
Purchase of intangible asset                                        -               -        (750,000)
Decrease (increase) in restricted investments                (458,350)       (380,119)        536,392
                                                         ------------    ------------    ------------

Net cash provided by (used in) investing activities        (7,497,032)     (4,859,839)      1,148,438
                                                         ------------    ------------    ------------

FINANCING ACTIVITIES
Fortress Minerals Corp. private placement                           -       1,209,204               -
Settlement of other asset                                           -               -        (280,000)
Decrease in notes payable                                     (15,479)        (14,472)        (12,686)
Issuance of common shares for:
  Private placements                                        5,574,316      12,408,969               -
  Exercise of stock options                                   418,365         546,111         468,924
                                                         ------------    ------------    ------------

Net cash provided by financing activities                   5,977,202      14,149,812         176,238
                                                         ------------    ------------    ------------

Net increase (decrease) in cash and cash equivalents       (5,933,836)      8,405,876      (3,071,703)
Cash and cash equivalents, beginning of year               12,044,955       3,639,079       6,710,782
                                                         ------------    ------------    ------------

Cash and cash equivalents, end of year                   $  6,111,119    $ 12,044,955    $  3,639,079
                                                         ============    ============    ============
</TABLE>

Supplemental cash flow information (Note 19)

         See accompanying notes to the consolidated financial statements

                                       F-5
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

1.    NATURE OF OPERATIONS AND INCORPORATION

      International Uranium Corporation ("IUC") is incorporated under the
      Business Corporations Act (Ontario). IUC and its subsidiary companies and
      joint ventures (collectively, the "Company") are engaged in uranium
      exploration in the Athabasca Basin region of Saskatchewan, Canada and in
      Mongolia. The Company is also in the business of recycling uranium-bearing
      waste materials, referred to as "alternate feed materials," for the
      recovery of uranium, alone or in combination with other metals, at the
      Company's White Mesa Mill (the "Mill"). The Company sells uranium
      recovered from alternate feed processing and conventional mine production
      at the Mill, as well as any vanadium and other metals produced as a
      co-product. In addition, the Company owns several uranium and
      uranium/vanadium mines in the United States ("U.S.") that have been shut
      down since 1999, and is evaluating the re-commencement of mining
      operations given increases in the market prices of uranium and vanadium.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      These financial statements are prepared in U.S. dollars, unless otherwise
      stated, in accordance with generally accepted accounting principles
      ("GAAP") in Canada. Differences between Canadian GAAP and those generally
      accepted accounting principles and practices in the United States ("U.S.
      GAAP") that would have a significant impact on these financial statements
      are disclosed in Note 24. The principal accounting policies under Canadian
      GAAP followed by the Company are as follows:

      (a)   Principles of Consolidation

            The consolidated financial statements include the accounts of IUC's
            wholly-owned subsidiaries, International Uranium Holdings
            Corporation, International Uranium (Bermuda I) Ltd., International
            Uranium Company (Mongolia) Ltd., and International Uranium (USA)
            Corporation, and on a proportionate consolidation basis, IUC's 50%
            interest in Urizon Recovery Systems, LLC. The Company's interest in
            the Gurvan Saihan Joint Venture is accounted for on a consolidated
            basis since the Company exercises control. All significant
            intercompany balances and transactions have been eliminated on
            consolidation.

            These financial statements also include the accounts of Fortress
            Minerals Corp. on a consolidated basis for the periods from June 23,
            2004 to September 30, 2004 and from October 1, 2004 to April 29,
            2005. For the period from April 30, 2005 to September 30, 2005, the
            equity method has been applied (Note 6).

            Effective October 1, 2004, the Company prospectively adopted
            Canadian Institute of Chartered Accountants ("CICA") Accounting
            Guideline 15 ("AcG 15") "Consolidation of Variable Interest
            Entities" which expands upon existing accounting guidance in CICA
            Handbook Section 1590: ("Section 1590") addressing the circumstances
            under which a company should consolidate another entity in its
            financial statements. Under Section 1590, a company generally
            consolidates another entity when it controls the entity through a
            majority voting interest. AcG 15 provides further guidance when the
            entity is a variable interest entity ("VIE"), defined as an entity
            that, by design, does not have sufficient equity at risk to finance
            its activities without additional subordinated financial support.
            Under AcG 15, the "primary beneficiary" of the VIE, and not
            necessarily the shareholder holding a majority voting interest,
            should consolidate the VIE. The implementation of AcG 15 did not
            impact the Company's 2005 consolidated financial statements.

                                      F-6
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      (b)   Use of Estimates

            The presentation of consolidated financial statements in conformity
            with Canadian GAAP requires the Company's management to make
            estimates and assumptions that affect the amounts reported in these
            financial statements and related notes. The Company regularly
            reviews the estimates and assumptions that affect the consolidated
            financial statements, and actual results may be materially different
            from these estimates. Significant estimates made by management
            include the determination of impairment of plant and equipment and
            capitalized mineral property costs, the amount of the Mill and
            mineral reclamation obligations, the useful life of plant and
            equipment including the Mill and intangible assets, and the
            variables used in determining stock based compensation.

      (c)   Impairment of Long-Lived Assets

            Effective October 1, 2003, the Company prospectively adopted CICA
            Handbook Section 3063: "Impairment of Long-Lived Assets" ("Section
            3063") which established standards for the recognition, measurement
            and disclosure of impairment of long-lived assets including plant
            and equipment and capitalized mineral property costs. No impairment
            under Section 3063 was recognized for 2005 and 2004.

            Long-lived assets are tested for recoverability whenever events or
            changes in circumstances indicate that the related carrying amounts
            may not be recoverable. The amount of the impairment loss is
            determined as the excess of the carrying value of the asset over its
            fair value and is charged to the results of operations.

      (d)   Asset Retirement Obligations

            Effective October 1, 2002, the Company retroactively adopted CICA
            Handbook Section 3110: "Asset Retirement Obligations" ("Section
            3110") which established standards for the recognition, measurement
            and disclosure of liabilities for asset retirement obligations and
            the associated asset retirement costs. The implementation of Section
            3110 did not have a material effect on the Company's 2005, 2004 and
            2003 consolidated financial statements.

            Asset retirement obligations refer to the recognition of any
            statutory, contractual or other legal obligation, related to the
            retirement of tangible long-lived assets when such obligations are
            incurred, if a reasonable estimate of fair value can be determined.
            These obligations are measured initially at fair value and the
            resulting costs are capitalized as part of the carrying value of the
            related assets. In subsequent periods, the liability is adjusted for
            the accretion of the discount and any changes in the amount or
            timing of the underlying future cash flows. These costs are
            amortized to the results of operations over the life of the asset.

      (e)   Foreign Currency Translation

            The Company's primary currency of measurement and reporting is the
            U.S. dollar, its functional currency. Monetary assets and
            liabilities denominated in currencies other than the U.S. dollar are
            translated at the exchange rate in effect at the balance sheet date.
            Non-monetary assets and liabilities denominated in currencies other
            than the U.S. dollar are translated at the exchange rate in effect
            at the transaction date. Revenues and expenses denominated in
            currencies other than the U.S. dollar are translated at the average
            rate in effect during the period, with the exception of depreciation
            and amortization which are translated at historical rates. Gains and
            losses on translation are recorded in the results of operations for
            the period.

                                      F-7
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      (f)   Income Taxes

            Income taxes are accounted for using the asset and liability method.
            Under this method, future income tax assets and liabilities are
            recognized based on differences between the financial statement
            carrying values of the existing assets and liabilities and their
            respective income tax bases (temporary differences). Future income
            tax assets and liabilities are measured using enacted or
            substantively enacted tax rates expected to apply to taxable income
            during the years in which temporary differences are expected to be
            recovered or settled. The effect on future income tax assets and
            liabilities of a change in tax rates is included in the results of
            operations during the period in which the change is substantively
            enacted. Future income tax assets recognized are limited to the
            amount that is "more likely than not" to be realized.

      (g)   Flow-Through Common Shares

            The Company's Canadian exploration activities are financed primarily
            through the issuance of flow-through common shares whereby the tax
            benefits of the eligible exploration expenditures incurred under
            this arrangement are renounced to the subscribers. In accordance
            with Emerging Issues Committee Abstract No. 146: "Flow-Through
            Shares" applicable for flow-through financings initiated after March
            19, 2004, the foregone tax benefits to the Company are recognized by
            reducing the proceeds received from these financings by the tax
            effects of the renunciation to the subscribers.

      (h)   Cash and Cash Equivalents

            Cash and cash equivalents consist of cash on deposit and
            highly-liquid, short-term money market instruments which, on
            acquisition, have terms to maturity of three months or less.

      (i)   Inventories

            In-process inventories include the costs of direct labor, chemical
            reagents and certain mill overhead expenditures. In-process
            inventories, which consist of partially processed alternate feed
            material, uranium and vanadium-bearing ores and uranium and vanadium
            concentrates, are valued at the lower of cost and net realizable
            value using the first-in, first-out method. Parts and supplies are
            valued at the lower of weighted-average cost and replacement cost.

      (j)   Long-Term Investments

            Portfolio investments over which the Company does not exercise
            significant influence are accounted for using the cost method.
            Impairments in value, other than those that are temporary in nature,
            are charged to the results of operations.

            Investments in affiliates over which the Company exercises
            significant influence are accounted for using the equity method,
            whereby the investment is initially recorded at cost and is adjusted
            to recognize the Company's share of earnings or losses, reduced by
            dividends and distributions received.

      (k)   Plant and Equipment

            Plant and equipment are recorded at cost. Plant and equipment are
            depreciated on a straight-line basis over their estimated useful
            lives of three to fifteen years. Plant and equipment placed on
            stand-by are depreciated over their remaining lives while those held
            for resale are recorded at the lower of cost and net realizable
            value. Gains or losses from normal sales or retirements of assets
            are included in other income or expense.

                                      F-8
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      (l)   Mineral Properties

            Acquisition and exploration expenditures incurred for mineral
            properties, less recoveries in the pre-production stage, are
            capitalized until such time these properties are put into commercial
            production, sold or abandoned or become impaired. General
            exploration expenditures are charged to the results of operations in
            the period incurred. Upon commencement of production, capitalized
            mineral property costs will be charged to the results of operations
            over the estimated life of the mine in accordance with the
            unit-of-production method. Capitalized mineral property costs
            relating to properties that are impaired are written down to their
            fair value in the period the impairment occurs.

            Capitalized mineral property costs represent expenditures incurred
            and capitalized as of the balance sheet date and do not necessarily
            reflect present or future values.

      (m)   Joint Ventures

            The Company holds a significant portion of its mineral property
            interests through joint venture agreements. Joint ventures over
            which the Company has joint control are accounted for using the
            proportionate consolidation method. Under this method, the Company's
            proportionate share of joint venture assets, liabilities, revenues
            and expenses is included in the accounts.

      (n)   Intangible Assets

            Intangible assets consist of technological licenses held in the
            Urizon Joint Venture (Notes 9 and 10) and are being amortized over
            the estimated useful life of 12 years.

      (o)   Revenue Recognition

            Revenues from vanadium sales are recorded in the period that title
            passes to the customer along with the risks and rewards of
            ownership. Revenues from process milling are recognized as material
            is processed, in accordance with the specifics of the applicable
            processing agreement. In general, the Company collects a recycling
            fee for receipt of the material and/or receives the proceeds from
            the sale of any uranium or vanadium produced. Revenues from
            engineering services are recognized as the services are provided in
            accordance with customer agreements.

            Revenues are recognized only to the extent they are reasonably
            considered to be collectible. Deferred revenues represent processing
            proceeds received on delivery of materials but in advance of the
            required processing activity.

      (p)   Stock-Based Compensation

            Effective October 1, 2004, the Company retroactively adopted,
            without restatement, the amended standards of CICA Handbook Section
            3870: "Stock-Based Compensation and Other Stock-Based Payments"
            ("Section 3870") which established standards for the recognition,
            measurement and disclosure of stock-based compensation and other
            stock-based payments made in exchange for goods and services.
            Section 3870 requires a fair value-based method of accounting for
            stock options granted to employees, including directors, and to
            non-employees (Note 3).

                                      F-9
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      (q)   Earnings (Loss) per Share

            Basic earnings (loss) per share is computed by dividing net income
            (loss) for the period by the weighted-average number of common
            shares outstanding for the period. The Company follows the "treasury
            stock" method in the calculation of diluted earnings per share.
            Under this method, the calculation of diluted earnings per share
            assumes that the proceeds to be received from the exercise of "in
            the money" stock options are applied to repurchase common shares at
            the average market price for the period. The calculation of diluted
            loss per share does not make this assumption as the result would be
            anti-dilutive.

      (r)   New Accounting Standards

            In January 2005, the CICA issued the following new accounting
            standards, effective October 1, 2006:

            CICA Handbook Section 1530: "Comprehensive Income" establishes
            standards for reporting comprehensive income, defined as a change in
            value of net assets that is not due to owner activities, by
            introducing a new requirement to temporarily present certain gains
            and losses outside of net income. The adoption of this new standard
            by the Company is not expected to have a material impact.

            CICA Handbook Section 3251: "Equity" establishes standards for the
            presentation of equity and changes in equity during the reporting
            period. The adoption of this new standard by the Company is not
            expected to have a material impact.

            CICA Handbook Section 3855: "Financial Instruments - Recognition and
            Measurement" establishes standards for the recognition,
            classification and measurement of financial instruments including
            the presentation of any resulting gains and losses. Assets
            classified as available-for-sale securities will have revaluation
            gains and losses included in other comprehensive income until these
            assets are no longer included on the balance sheet. At September 30,
            2005, the Company had certain long-term investments that would be
            classified as available-for-sale securities under this new standard,
            and any unrealized gains and losses would be included in
            comprehensive income.

3.    CHANGE IN ACCOUNTING POLICY

      Effective October 1, 2004, the Company adopted the amended standards of
      the CICA Section 3870: "Stock-Based Compensation and Other Stock-Based
      Payments" ("Section 3870"). Section 3870 establishes standards for the
      recognition, measurement and disclosure of stock-based compensation and
      other stock-based payments made in exchange for goods and services. It
      requires a fair value-based method of accounting for stock options granted
      to employees, including directors, and to non-employees. Prior to October
      1, 2004, the application of the fair value-method of accounting was
      limited to stock options granted to non-employees. The intrinsic
      value-based method of accounting was applied to stock options granted to
      employees which did not result in additional stock-based compensation
      expense as the exercise price was equal to the market price on the grant
      date. Pro forma disclosure of net income (loss) and earnings (loss) per
      share had the fair value-method been applied to stock options granted to
      employees is required.

      The Company has adopted the amendments to Section 3870 on a retroactive
      basis without restatement of prior periods. As a result, a cumulative
      adjustment of $773,655 to opening deficit effective October 1, 2004 has
      been reported separately on the consolidated statements of deficit. This
      adjustment represents the fair value of stock options granted to employees
      of $737,904 during 2004 and $35,751 during 2003.

                                      F-10
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

4.    INVENTORIES

<TABLE>
<CAPTION>
                                                September 30,
                                           2005               2004
                                     ----------------   ----------------
<S>                                  <C>                <C>
Vanadium concentrates                $        144,854   $        144,854
Work-in-process                             1,897,510            202,414
Parts and supplies                          1,281,281            842,123
                                     ----------------   ----------------

                                     $      3,323,645   $      1,189,391
                                     ================   ================
</TABLE>

5.    LONG-TERM INVESTMENTS

<TABLE>
<CAPTION>
                                                                    September 30,
                                                               2005               2004
                                                         ----------------   ----------------
<S>                                                      <C>                <C>
Portfolio investments                                    $      2,151,599   $        892,221
Investment in Fortress Minerals Corp. (Note 6)                  2,786,456                  -
                                                         ----------------   ----------------

                                                         $      4,938,055   $        892,221
                                                         ================   ================
</TABLE>

      At September 30, 2005, portfolio investments consist of common shares of
      four publicly-traded companies acquired by the Company at a cost of
      $2,151,599, with an aggregate market value of $7,105,564. During 2005, the
      Company acquired additional equity interests at a cost of $1,259,378. At
      September 30, 2005, the Company held share purchase warrants having an
      aggregate fair value of $2,319,940 to purchase additional equity interests
      for two of these companies.

      During 2004, the Company acquired portfolio investments consisting of
      common shares of two publicly-traded companies at a cost of $892,221. At
      September 30, 2004, the aggregate market value of the portfolio
      investments was $4,096,568.

6.    INVESTMENT IN FORTRESS MINERALS CORP.

      On June 23, 2004, the Company sold its Mongolian precious and base metals
      exploration properties to Fortress Minerals Corp. ("Fortress"), a company
      incorporated in Canada and listed for trading on the TSX Venture Exchange.
      In exchange, the Company received 28,000,000 common shares of Fortress,
      representing 63.14% of the then issued and outstanding common shares of
      Fortress, and $656,580 in cash for reimbursement of costs incurred on the
      exploration properties for the period from the date of agreement to the
      actual transfer date. The net book value of the assets and liabilities
      transferred was $3,088,201.

      In accordance with Emerging Issues Committee Abstract No. 124: "Definition
      of a Business", this transaction was accounted for as an acquisition of
      assets and no gain or loss has been recognized. The assets and liabilities
      assumed consist of the following:

                                      F-11
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

6.    INVESTMENT IN FORTRESS MINERALS CORP. (continued)

<TABLE>
<CAPTION>
                                                             June 23,
                                                               2004
                                                         ----------------
<S>                                                      <C>
Cash received from Fortress                              $        656,580
Cash and cash equivalents                                         320,514
Other current assets                                               55,363
Plant and equipment, net                                            5,271
Mineral properties                                              3,295,574
                                                         ----------------

                                                                4,333,302
                                                         ----------------

Accounts payable and accrued liabilities                          107,290
Minority interest                                               1,137,811
                                                         ----------------

                                                                1,245,101
                                                         ----------------

Net assets assumed                                       $      3,088,201
                                                         ================
</TABLE>

      On September 1, 2004, the Company acquired through a private placement a
      further 732,500 units of Fortress at a price of Cdn $0.40 for a total cost
      of $220,069 (Cdn $293,000). Each unit consisted of one common share and
      one-half of one share purchase warrant, each whole warrant entitling the
      Company to purchase an additional common share at a price of Cdn $0.50
      until September 1, 2005 and thereafter at a price of Cdn $0.60 until
      expiry on September 1, 2006.

      At September 30, 2004, the Company had an ownership interest in Fortress
      that exceeded 50% and exercised control. Accordingly, the Company's
      consolidated balance sheet and results of operations for 2004 include the
      accounts of Fortress on a consolidated basis with recognition of the
      minority interests' share of net assets and results of operations.

      On April 30, 2005, as a result of Fortress issuing additional common
      shares to third parties, the Company's ownership interest in Fortress was
      diluted to below 50% at which point the Company began to apply the equity
      method to account for the Company's investment in Fortress. At April 30,
      2005, the Company had a 49.26% ownership interest in Fortress.

      At September 30, 2005, the Company held 28,732,500 common shares of
      Fortress, representing 44.39% of the issued and outstanding common shares
      of Fortress, and a share purchase warrant to acquire an additional 366,250
      common shares of Fortress at a price of Cdn $0.60 per share until expiry
      on September 1, 2006.

                                      F-12
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

7.    PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
                                                    September 30, 2005
                                                       Accumulated
                                      Cost             Depreciation     Net Book Value
                                ----------------    ------------------ ----------------
<S>                             <C>                 <C>                <C>
Mill buildings and equipment    $      8,024,738    $      5,303,575   $      2,721,163
Other machinery and equipment          1,227,841             731,302            496,539
                                ----------------    ----------------   ----------------

                                $      9,252,579    $      6,034,877   $      3,217,702
                                ================    ================   ================
</TABLE>

<TABLE>
<CAPTION>
                                                    September 30, 2004
                                                       Accumulated
                                      Cost             Depreciation     Net Book Value
                                ----------------    ------------------ ----------------
<S>                             <C>                 <C>                <C>
Mill buildings and equipment    $      7,303,851    $      4,938,585   $      2,365,266
Other machinery and equipment          1,102,124             680,820            421,304
                                ----------------    ----------------   ----------------

                                $      8,405,975    $      5,619,405   $      2,786,570
                                ================    ================   ================
</TABLE>

      Mill buildings and equipment consist of the Company's White Mesa Mill
      located near Blanding, Utah. At September 30, 2005 and 2004, other
      machinery and equipment include held for resale assets with an aggregate
      net book value (being the estimated net realizable value) of $337,499 and
      $349,969, respectively.

8.    MINERAL PROPERTIES

      At September 30, 2005, mineral properties are comprised of exploration
      properties located in Canada and Mongolia, and uranium/vanadium mines in
      the United States. Capitalized mineral property costs relating to the U.S.
      mines, shut down in 1999, were written-off and charged to the results of
      operations during that year. The Company's mineral property interests are
      held directly or through option agreements, and a significant portion are
      subject to or pending joint venture arrangements. A summary of mineral
      properties for 2005 and 2004 is presented below:

<TABLE>
<CAPTION>
                                                                   Year Ended September 30, 2005
                                                       Beginning                                   Ending
                                                        Balance            Expenditures            Balance
                                                   ----------------    --------------------   ----------------
<S>                                                <C>                 <C>                    <C>
Canadian uranium properties:
  Moore Lake (Note 9)                              $      1,779,392    $      4,939,687       $      6,719,079
  Other                                                     529,786           2,068,174              2,597,960
Mongolian uranium properties:
  Gurvan Saihan Joint Venture (Note 9)                       35,198             948,706                983,904
  Other                                                      17,878             631,992                649,870
U.S. uranium properties                                           -           2,462,072              2,462,072
Mongolian precious/base metal properties (Note 6)         3,809,009          (3,809,009)(1)                  -
                                                   ----------------    ----------------       ----------------

                                                   $      6,171,263    $      7,241,622       $     13,412,885
                                                   ================    ================       ================
</TABLE>

(1)   At September 30, 2005, the accounts of Fortress were no longer reported on
      a consolidated basis; therefore, its Mongolian precious/base metal
      properties were excluded from mineral properties as reported on the
      Company's consolidated balance sheet.

                                      F-13
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

8.    MINERAL PROPERTIES (continued)

<TABLE>
<CAPTION>
                                                                  Year Ended September 30, 2004
                                                       Beginning                               Ending
                                                        Balance          Expenditures          Balance
                                                   ----------------    ----------------   ----------------
<S>                                                <C>                 <C>                <C>
Canadian uranium properties:
  Moore Lake (Note 9)                              $              -    $      1,779,392   $      1,779,392
  Other                                                                         529,786            529,786
Mongolian uranium properties:
  Gurvan Saihan Joint Venture (Note 9)                            -              35,198             35,198
  Other                                                           -              17,878             17,878
Mongolian precious/base metal properties (Note 6)         1,776,982           2,032,027          3,809,009
                                                   ----------------    ----------------   ----------------

                                                   $      1,776,982    $      4,394,281   $      6,171,263
                                                   ================    ================   ================
</TABLE>

9.    JOINT VENTURES

      a)    Moore Lake

            During 2005, the Company exercised its option to acquire a 75%
            interest in the Moore Lake Property, subject to a 2.5% net smelter
            return royalty, from JNR Resources Inc. ("JNR"). The Moore Lake
            Property is located in the Athabasca Basin of Saskatchewan. Pursuant
            to the exercise terms under the option agreement, the Company
            incurred a minimum Cdn $4,000,000 in exploration expenditures and
            purchased common shares of JNR for $317,458 (Cdn $400,000). At
            September 30, 2005, expenditures incurred on the Moore Lake Property
            totaled $6,719,079. The Company and JNR are formalizing the terms of
            a 75/25 joint venture agreement.

      b)    Urizon Joint Venture

            During 2003, the Company entered into a 50/50 joint venture with
            Nuclear Fuel Services, Inc. ("NFS") to pursue an alternate feed
            program for the Mill. This joint venture is carried out through
            Urizon Recovery Systems, LLC ("Urizon"). NFS contributed its
            technology license to the joint venture while the Company
            contributed $1,500,000 in cash together with its technology license.
            Pursuant to the Urizon operating agreement, each joint venture party
            must provide and charge for services as specified therein. Depending
            upon the type of services provided by the joint venture parties,
            Urizon reimburses for such services either currently when charged or
            in the future out of available distributable cash after certain
            profit and funding conditions have been satisfied.

            The results of Urizon have been included in the Company's
            consolidated financial statements on a proportionate consolidation
            basis. The Company's 50% share of Urizon's balance sheet and results
            of operations is presented below:

<TABLE>
<CAPTION>
                                              September 30,
                                            2005         2004
                                       ------------- ------------
<S>                                    <C>           <C>
Current assets                         $     20,588  $    20,588
Intangible asset (Note 10)                  625,000      687,500
Current liabilities                           3,620            -
Long-term debt                               99,593       99,593

Operating loss                              (66,120)     (64,224)
Cash flows from operating activities              -            -
                                       ============  ===========
</TABLE>

                                      F-14
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

9.    JOINT VENTURES (continued)

            The joint venture has no cash flows arising from investing or
            financing activities.

      c)    Gurvan Saihan Joint Venture

            During 1994, the Company acquired a 70% interest in and became the
            managing partner of the Gurvan Saihan Joint Venture in Mongolia. The
            results of the Gurvan Saihan Joint Venture have been included in
            these financial statements on a consolidated basis since the Company
            exercises control.

10.   INTANGIBLE ASSET

<TABLE>
<CAPTION>
                                              September 30, 2005
                                                 Accumulated
                                 Cost            Amortization     Net Book Value
                          ----------------    ------------------ ----------------
<S>                       <C>                 <C>                <C>
Intangible asset          $        750,000    $        125,000   $        625,000
                          ================    ================   ================
</TABLE>

<TABLE>
<CAPTION>
                                              September 30, 2004
                                                 Accumulated
                                Cost             Amortization     Net Book Value
                          ----------------    ------------------ ----------------
<S>                       <C>                 <C>                <C>
Intangible asset          $        750,000    $         62,500   $        687,500
                          ================    ================   ================
</TABLE>

      The intangible asset consists of intellectual property and represents the
      Company's 50% interest in Urizon's technology license (Note 9).

11.   RESTRICTED INVESTMENTS

      The Company has cash and cash equivalents and fixed-income securities on
      deposit to collateralize its reclamation and certain other obligations
      (Note 12).

<TABLE>
<CAPTION>
                                          September 30,
                                    2005               2004
                              ----------------   ----------------
<S>                           <C>                <C>
Cash and cash equivalents     $      2,573,336   $      1,883,073
Fixed income securities             10,308,636         10,603,993
                              ----------------   ----------------

                              $     12,881,972   $     12,487,066
                              ================   ================
</TABLE>

12.   RECLAMATION OBLIGATIONS

      The Company's asset retirement obligations consist of estimated future
      decommissioning and reclamation costs of the Mill and mining properties,
      and have been determined based on engineering estimates of the costs of
      reclamation, in accordance with legal and regulatory requirements. These
      cost estimates are reviewed periodically by applicable regulatory
      authorities. In the case of the Mill, the cost estimates are reviewed
      annually by the State of Utah Department of Environmental Quality, and
      adjusted by the Company to reflect the estimated costs of reclamation.

                                      F-15
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

12.   RECLAMATION OBLIGATIONS (continued)

<TABLE>
<CAPTION>
                                                                September 30,
                                                          2005              2004
                                                   ----------------   ----------------
<S>                                                <C>                <C>
Reclamation obligations, beginning of year         $     12,603,595   $     12,320,983
Additions to liabilities                                    331,285            282,612
                                                   ----------------   ----------------

Reclamation obligations, beginning of year         $     12,934,880   $     12,603,595
                                                   ================   ================
</TABLE>

      Applicable regulations require the Company to estimate reclamation costs
      on an undiscounted basis under the assumption that the reclamation would
      be performed at any time by a third party contractor. Management estimates
      that, once a decision is made to commence reclamation activities,
      substantially all of the reclamation activities could be completed in
      approximately 24-30 months. Since September 30, 2004, the Mill's
      reclamation estimate and bonding requirement increased from $10,618,895 to
      $10,950,180. There have been no changes to the reclamation cost estimate
      of $1,984,700 for the Company's mining properties, however the mine
      bonding requirements increased by $482,502 to $1,499,260 during 2005.
      Elements of uncertainty in estimating decommissioning and reclamation
      costs include potential changes in regulatory requirements,
      decommissioning and reclamation alternatives. Actual costs may be
      materially different from those estimated.

      The Company has posted bonds (collateralized by cash and cash equivalents
      and fixed income securities) in favor of the State of Utah and the
      applicable state regulatory agencies in Colorado and Arizona as partial
      collateral for these liabilities and has deposited fixed income securities
      on account of these obligations (Note 11).

13.   RELATED PARTY TRANSACTIONS

      During 2005, the Company incurred legal fees of $77,302 (2004: $169,026;
      2003: $45,847) with a law firm of which a partner is a director of the
      Company.

      During 2005, the Company incurred management and administrative service
      fees of $168,799 (2004: $136,335; 2003: $90,000) with a company owned by
      the Chairman of the Company which provides investor relations, office
      premises, secretarial and other services in Vancouver at a rate of Cdn
      $18,000 per month plus expenses. At September 30, 2005, an amount of
      $70,238 (September 30, 2004: Nil) was due to this company.

      During 2005, the Company provided mine reclamation management and
      engineering support services of $80,337 (2004: $421,182; 2003: $135,017)
      on a cost plus basis to a company with common directors. At September 30,
      2005, an amount of $80,337 (September 30, 2004: $64,801) was due from this
      company.

      During 2005, the Company entered into an agreement with Fortress to
      provide executive and administrative services and charged an aggregate
      $20,921 for such services. The executive services are billed on an hourly
      basis plus out-of-pocket expenses while the administrative services are at
      the rate of Cdn $6,400 per month. At September 30, 2005, an amount of
      $28,696 was due from Fortress relating to this agreement.

                                      F-16
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

14.   SHARE CAPITAL

      a)    Authorized: Unlimited number of common shares without par value

      b)    Issued and Outstanding:

<TABLE>
<CAPTION>
                                                                          Number of
                                                                        Common Shares         Amount
                                                                        -------------   ------------------
<S>                                                                     <C>             <C>
Balance at September 30, 2002                                            65,735,066     $      37,466,609
                                                                         ----------     -----------------

Issued for cash:
  Exercise of stock options                                               3,235,000               468,924
                                                                         ----------     -----------------

Balance at September 30, 2003                                            68,970,066     $      37,935,533
                                                                         ----------     -----------------

Issued for cash:
  Private placements, net of issue costs of $476,941 (c)                  6,700,000             7,069,531
  Flow-through private placements, net of issue costs of $152,578 (c)     3,250,000             5,339,438
  Exercise of stock options                                                 715,000               546,111
Renunciation effects of flow-through private placements                           -              (585,133)
                                                                         ----------     -----------------

                                                                         10,665,000            12,369,947
                                                                         ----------     -----------------

Balance at September 30, 2004                                            79,635,066     $      50,305,480
                                                                         ----------     -----------------

Issued for cash:
  Flow-through private placement, net of issue costs of $227,470 (c)      1,000,000             5,574,316
  Exercise of stock options                                                 787,000               418,365
Issued for mineral property acquisition (d)                                 147,000               906,722
Fair value of stock options exercised                                             -               374,997
Renunciation effects of flow-through private placements                           -            (1,434,096)
                                                                         ----------     -----------------

                                                                          1,934,000             5,840,304
                                                                         ----------     -----------------

Balance at September 30, 2005                                            81,569,066     $      56,145,784
                                                                         ==========     =================
</TABLE>

      c)    Private Placements (Note 22)

            In March 2005, the Company completed a private placement of
            1,000,000 flow-through common shares at a price of Cdn $7.00 per
            share for gross proceeds of Cdn $7,000,000 ($5,801,786). Share issue
            costs of $227,470 were incurred, comprised of $224,097 for finders'
            fees and $3,373 for related expenses, resulting in net proceeds of
            $5,574,316 from the private placement. These funds are restricted to
            eligible Canadian exploration expenditures which will be renounced
            to the subscribers in February 2006.

            In November 2003 and September 2004, the Company completed private
            placements of 3,250,000 flow-through common shares at prices of Cdn
            $1.10 and Cdn $4.00 per share for gross proceeds of Cdn $7,200,000
            ($5,492,016). Share issue costs of $152,578 were incurred for
            finders' fees resulting in net proceeds of $5,339,438 from the
            private placements. These funds are restricted to eligible Canadian
            exploration expenditures.

                                      F-17
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

14.   SHARE CAPITAL (continued)

            In December 2003, the Company completed a private placement of
            6,700,000 common shares at a price of Cdn $1.50 per share for gross
            proceeds of Cdn $10,050,000 ($7,656,090). Share issue costs of
            $586,559 were incurred, comprised of $476,941 for finders' fees and
            $109,618 for related expenses, resulting in net proceeds of
            $7,069,531 from the private placement.

      d)    Mineral Property

            In September 2005, the Company issued 147,000 common shares at a
            price of Cdn $7.35 per share for a total value of Cdn $1,080,450
            ($906,722) as part of the acquisition of a U.S. uranium property
            (Note 8).

15.   STOCK OPTIONS

      At September 30, 2005, the Company had a stock-based compensation plan
      reserving for issuance a maximum of 10,700,000 common shares of the
      Company, as amended periodically by shareholder approval (the "Plan"). At
      the last annual general meeting held on March 22, 2005, the shareholders
      of the Company approved an amendment of the Plan to increase the maximum
      number of common shares reserved for issuance from 6,700,000 to 10,700,000
      common shares, as well as other amendments required to align the Plan with
      new regulatory requirements. At September 30, 2005, the Company had
      remaining 3,890,000 common shares available for issuance under the Plan.

      The purpose of the Plan is to attract, retain and motivate directors,
      officers, key employees and consultants of the Company and to advance the
      interests of the Company by providing eligible persons with the
      opportunity to acquire an increased proprietary interest in the Company.
      Under the Plan, all stock options, including vesting provisions, if any,
      are granted at the discretion of the Company's board of directors. The
      term of any stock option granted may not exceed ten years and the exercise
      price may not be lower than the closing price of the Company's shares on
      the last trading day immediately preceding the date of grant. In general,
      stock options granted under the Plan have a term of three years and have
      no vesting provisions.

      A continuity summary of the stock options granted under the Plan is
      presented below:

<TABLE>
<CAPTION>
                                                        Years Ended September 30,
                                       2005                        2004                        2003
                              -----------------------   -------------------------    -----------------------
                                           Weighted-                   Weighted-                  Weighted-
                                            Average                    Average                     Average
                                           Exercise                    Exercise                    Exercise
                               Number of   Price per      Number of    Price per      Number of   Price per
                                 Common      Share          Common       Share         Common       Share
                                 Shares     (Cdn $)         Shares      (Cdn $)        Shares      (Cdn $)
                              ----------- -----------     ----------  ----------     ----------- -----------
<S>                           <C>         <C>             <C>         <C>            <C>         <C>
Balance, beginning of year     1,940,000  $      0.85       670,000   $     0.32      4,055,000  $      0.25

Granted                          710,000         5.28     1,985,000         1.08        250,000         0.31
Exercised                       (787,000)        0.65      (715,000)        1.01     (3,235,000)        0.20
Expired                                -                          -                    (400,000)        0.57
                               ---------  -----------     ---------   ----------     ----------  -----------

Balance, end of year           1,863,000  $      2.62     1,940,000   $     0.85        670,000  $      0.32
                               =========  ===========     =========   ==========     ==========  ===========
</TABLE>

                                      F-18
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

15.   STOCK OPTIONS (continued)

      A summary of stock options outstanding and exercisable at September 30,
      2005 is presented below:

<TABLE>
<CAPTION>
                                               Weighted-
                                                Average           Average
                      Range of Exercise     Exercise Price       Remaining
  Number of            Prices per Share        per Share      Contractual Life
Common Shares              (Cdn $)              (Cdn $)           (Years)
-------------         -----------------     --------------    ----------------
<S>                   <C>                   <C>               <C>
   1,163,000               $1.01                 $1.01             1.16
     610,000           $4.27 to $5.28            $4.97             2.46
      90,000               $7.53                 $7.53             2.94
   ---------                                     -----             ----

   1,863,000                                     $2.62             1.67
   =========                                     =====             ====
</TABLE>

      Outstanding options expire between November 2006 and September 2008.

      The fair value of each option granted is estimated on the date of grant
      using the Black-Scholes option pricing model with the following
      weighted-average assumptions:

<TABLE>
<CAPTION>
                                               Years Ended September 30,
                                     2005                2004                2003
                                    -------            -------             -------
<S>                                 <C>                <C>                 <C>
Risk-free interest rate               2.90%              2.81%               4.04%
Expected stock price volatility         87%                93%                 65%
Expected life                       2 years            3 years             3 years
Expected dividend yield                  -                  -                   -

Weighted-average fair value per
 share under options granted        $ 1.66             $ 0.48              $ 0.14
                                    ======             ======              ======
</TABLE>

      For 2005, stock-based compensation expense of $1,179,901 (2004: $224,718;
      2003: Nil) was recorded by the Company, of which $948,420 (2004: $224,718;
      2003: Nil) is included in selling, general and administrative expense and
      $231,481 (2004: Nil; 2003: Nil) is included in capitalized mineral
      property expenditures.

      For 2005, the fair value-based method of accounting was applied to stock
      options granted to employees, including directors, and non-employees. For
      2004 and 2003, the weighted-average information above includes the effects
      of the cumulative adjustment of $773,655 to opening deficit effective
      October 1, 2004 reported separately on the consolidated statements of
      deficit. This adjustment represents the fair value of stock options
      granted to employees of $737,904 during 2004 and $35,751 during 2003.

      Pro forma disclosure of net income (loss) and earnings (loss) per share
      had the fair value-method been applied to stock options granted to
      employees during 2004 and 2003 is presented below:

                                      F-19
<PAGE>

INTERNATIONAL URANIUM CORPORATION
Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

15. STOCK OPTIONS (continued)

<TABLE>
<CAPTION>

                                                                  Years Ended September 30,
                                                                    2004              2003
                                                               --------------    --------------
<S>                                                            <C>               <C>
Net income (loss), as reported                                 $   (2,186,679)   $    5,533,152
Additional stock-based compensation expense                          (737,904)          (35,751)
                                                               --------------    --------------
Net income (loss), pro forma                                   $   (2,924,583)   $    5,497,401
                                                               ==============    ==============

Basic and diluted earnings (loss) per share:
  As reported                                                         ($0.03)            $0.08
  Pro forma                                                           ($0.04)            $0.08
                                                               ==============    ==============
</TABLE>

   Refer to Note 3

16. CONTRIBUTED SURPLUS

   A continuity summary of contributed surplus is presented below:

<TABLE>
<CAPTION>

                                                                           Years Ended September 30,
                                                                   2005              2004             2003
                                                               --------------    --------------   --------------
<S>                                                            <C>               <C>              <C>
Balance, beginning of year                                     $      224,718    $            -   $            -

Retroactive effect of change in accounting policy
 for stock-based compensation (Note 3)                                773,655                 -                -
Stock-based compensation expense as
 a result of stock options granted                                  1,179,901           224,718                -
Value of stock options assigned to share
 capital upon exercise of stock options                              (374,997)                -                -
                                                               --------------    --------------   --------------
      Balance, end of year                                     $    1,803,277    $      224,718   $            -
                                                               ==============    ==============   ==============
</TABLE>

17. INCOME TAXES

<TABLE>
<CAPTION>
                                                                                September 30,
                                                                   2005              2004             2003
                                                               --------------    --------------   --------------
<S>                                                            <C>               <C>              <C>
Combined basic tax rate                                                    40%               40%              40%

Income (loss) from operations                                  $   (2,345,387)   $   (2,186,679)  $    5,533,152
                                                               ==============    ==============   ==============

Income tax recovery at combined basic tax rate                       (938,155)         (874,672)       2,213,261
Change in valuation allowance                                        (529,622)           28,793       (2,448,966)
Other                                                               1,494,578           260,746          235,705
                                                               --------------    --------------   --------------

Tax expense (recovery) per consolidated
financial statements                                           $       26,801    $     (585,133)  $            -
                                                               ==============    ==============   ==============
</TABLE>

The tax effects of temporary differences resulting in future income tax assets
and future income tax liabilities are presented below:

                                      F-20
<PAGE>

INTERNATIONAL URANIUM CORPORATION
Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

17. INCOME TAXES (continued)

<TABLE>
<CAPTION>

                                                                                 September 30,
                                                                     2005            2004              2003
                                                               --------------    --------------   --------------
<S>                                                            <C>               <C>              <C>
Future income tax assets:
  Tax losses and other tax pools carried forward               $    5,122,449    $    5,412,595   $    5,283,133
  Inventory                                                                 -           382,169          382,169
  U.S. mineral properties                                           1,757,728         1,224,421        1,124,872
  Deferred revenue                                                  1,559,059         1,442,637          863,575
                                                               --------------    --------------   --------------

                                                                    8,439,236         8,461,822        7,653,749

Future income tax liability:
  Plant and equipment                                              (1,308,147)       (1,994,567)      (1,215,287)
  Canadian mineral properties                                      (2,062,236)                -                -
  Reclamation and other                                              (591,672)                -                -
                                                               --------------    --------------   --------------

                                                                    4,477,181         6,467,255        6,438,462
Valuation allowance                                                (5,938,078)       (6,467,255)      (6,438,462)
                                                               --------------    --------------   --------------
Net future income tax assets (liabilities)                     $   (1,460,897)   $            -   $            -
                                                               ==============    ==============   ==============
</TABLE>

Management believes that sufficient uncertainty exists regarding the realization
of certain future income tax assets and that a valuation allowance is required.

At September 30, 2005, the Company had the following non-capital loss
carry-forwards available for tax purposes:

<TABLE>
<CAPTION>
Country                                                                              Amount           Expiry
-------------                                                                    --------------   --------------
<S>                                                                              <C>              <C>
Canada                                                                           $    1,582,252        2007-2014
United States                                                                        10,765,000        2018-2024
                                                                                 ==============   ==============
</TABLE>

                                      F-21
<PAGE>

INTERNATIONAL URANIUM CORPORATION
Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

18. SEGMENTED INFORMATION

   a) Geographic Information

<TABLE>
<CAPTION>
                                                                           Years Ended September 30,
                                                                   2005               2004             2003
                                                               --------------    --------------   --------------
<S>                                                            <C>               <C>              <C>
Revenue:
  United States                                                $      130,816    $    2,424,456   $   12,550,018
                                                               ==============    ==============   ==============

Net income (loss):
  Canada                                                       $   (1,885,528)   $     (105,756)  $     (174,372)
  United States                                                      (378,944)       (2,446,602)       6,065,195
  Mongolia                                                           (107,716)          365,679         (357,671)
                                                               --------------    --------------   --------------
                                                               $   (2,372,188)   $   (2,186,679)  $    5,533,152
                                                               ==============    ==============   ==============

Total assets:
  Canada                                                       $   20,883,541    $   13,288,701   $      465,510
  United States                                                    22,784,085        20,769,794       23,047,594
  Mongolia                                                          1,533,945         5,329,060        2,103,148
                                                               --------------    --------------   --------------
                                                               $   45,201,571    $   39,387,555   $   25,616,252
                                                               ==============    ==============   ==============
</TABLE>

   b) Major Customers

   The Company's business is such that, at any given time, it sells its uranium
   and vanadium concentrates to and enters into process milling arrangements
   with a relatively small number of customers. During 2005, a process milling
   customer accounted for approximately 33% of total revenues. During 2004, a
   vanadium customer accounted for approximately 65% of total revenues. During
   2003, a process milling customer accounted for approximately 89% of total
   revenues. Accounts receivable from any individual customer will exceed 10% of
   total accounts receivable on a regular basis.

19. SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                                                September 30,
                                                                    2005              2004            2003
                                                               --------------    --------------   --------------
<S>                                                            <C>               <C>              <C>
Non-cash investing and financing activities:
 Issuance of common shares for mineral property                $      906,722    $            -   $            -

Cash received for interest                                            676,206           528,730          491,157
                                                               ==============    ==============   ==============
</TABLE>

                                      F-22
<PAGE>


INTERNATIONAL URANIUM CORPORATION
Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

20. COMMITMENTS AND CONTINGENCIES

   In the first quarter of fiscal 2004, the Company received a demand and threat
   of pursuit of litigation in respect of alleged preferential payments by a
   former customer, in the amount of approximately $1.2 million, that were paid
   pursuant to certain contracts with the Company. The former customer filed for
   bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in January 2002. That
   company subsequently sold substantially all of its assets to The Shaw Group,
   Inc. ("Shaw"), which was believed to have assumed the contracts in question
   and has subsequently performed the contracts with the Company. In May 2004,
   the Company received a formal complaint in the bankruptcy proceeding seeking
   the recovery of approximately $1.7 million as an alleged preferential
   payment. The Company answered the complaint, disputing the claim, asserting
   among other defenses that there is no liability on account that the Company's
   contract was assumed and assigned to Shaw and as a result, there is no
   preference liability. As a result of a settlement between the former customer
   and Shaw, the formal complaint against the Company was dismissed in September
   2005 without payment and without any liability to the Company. This matter is
   now closed.

   The Company has detected some chloroform contamination at the Mill site that
   appeared to have resulted from the operation of a temporary laboratory
   facility that was located at the site prior to and during the construction of
   the Mill facility, and septic drain fields that were used for laboratory and
   sanitary wastes prior to construction of the Mill's tailings cells. In April
   2003, the Company commenced an interim remedial program of pumping the
   chloroform-contaminated water from the groundwater to the Mill's tailings
   cells. This will enable the Company to begin clean up of the contaminated
   areas and to take a further step towards resolution of this outstanding
   issue. Although the investigations to date indicate that this contamination
   appears to be contained in a manageable area, the scope and costs of final
   remediation have not yet been determined and could be significant.

   The Company is required to comply with environmental protection laws and
   regulations and permitting requirements, and anticipates that it will be
   required to continue to do so in the future. Although the Company believes
   that its operations are in compliance, in all material respects, with all
   relevant permits, licenses and regulations involving worker health and safety
   as well as the environment, the historical trend toward stricter
   environmental regulation may continue. The uranium industry is subject to not
   only the worker health and safety and environmental risks associated with all
   mining businesses, but also to additional risks uniquely associated with
   uranium mining and milling. The possibility of more stringent regulations
   exists in the area of worker health and safety, the disposition of wastes,
   the decommissioning and reclamation of mining and milling sites, and other
   environmental matters, each of which could have a material adverse effect on
   the costs of reclamation or the viability of the operations.

   The Company has committed to payments under operating leases for the rental
   of office space and office equipment for both the Denver and Saskatoon
   offices which expire from May 31, 2008 to July 31, 2010. The future minimum
   lease payments are as follows:

<TABLE>
<CAPTION>
Fiscal Year
-----------
<S>                                                            <C>
2006                                                           $      102,890
2007                                                                  139,589
2008                                                                   93,297
2009                                                                   42,564
2010                                                                   32,235
                                                               ==============
</TABLE>

                                      F-23
<PAGE>

INTERNATIONAL URANIUM CORPORATION
Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

21. Financial Instruments

   a) Credit Risk

      Financial instruments that potentially subject the Company to a
      concentration of credit risk consist of cash and cash equivalents,
      accounts receivable, amounts due from the Urizon Joint Venture, and
      restricted fixed income securities. The Company deposits cash and cash
      equivalents with financial institutions it believes to be creditworthy,
      principally in money market funds, which may at certain times, exceed
      federally insured levels. The Company's restricted investments consist of
      investments in U.S. government bonds, commercial paper and high-grade
      corporate bonds with maturities extending beyond 90 days. The Company's
      accounts receivable are derived from customers primarily located in the
      United States. The Company performs ongoing credit evaluation of its
      customers' financial condition and, in most cases, requires no collateral
      from its customers. The Company will maintain an allowance for doubtful
      accounts receivable in those cases where the expected collectability of
      accounts receivable is in question.

   b) Fair Values

      The fair values of cash and cash equivalents, trade and other receivables
      and accounts payable and accrued liabilities approximate their carrying
      values because of the short-term nature of these instruments.

      The fair value of the Company's portfolio investments will fluctuate with
      market prices. At September 30, 2005, the market value of these securities
      exceeded the book value by $4,953,965 (September 30, 2004: $3,204,347).
      The fair values of the Company's restricted investments in cash and cash
      equivalents, U.S. government bonds, commercial paper and corporate bonds
      approximate carrying values.

22. SUBSEQUENT EVENTS

   On October 14, 2005, the Company completed a private placement of 6,000,000
   common shares at a price of Cdn $7.50 per share for gross proceeds of Cdn
   $45,000,000 ($38,010,648).

   On November 25, 2005, the Company announced a private placement of 850,000
   flow-through common shares at a price of Cdn $7.75 per share for gross
   proceeds of Cdn $6,587,500.

   Subsequent to September 30, 2005, the Company received certain uranium ore
   under a toll milling agreement whereby the Company will earn a total of
   $1,365,000 in two equal instalments. In November 2005, the Company issued the
   first invoice for $682,500.

23. COMPARATIVE FIGURES

   Certain comparative figures have been reclassified to conform to the current
   year's presentation.

24. MATERIAL DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING
    PRINCIPLES

   The consolidated financial statements have been prepared in accordance with
   Canadian GAAP which differ in certain material respects from those principles
   and practices that the Company would have followed had its consolidated
   financial statements been prepared in accordance with U.S. GAAP.

   a) Cash and Cash Equivalents

      U.S. GAAP requires that funds raised through the issuance of flow -
      through shares be shown as restricted cash and not be considered to be a
      component of cash and cash equivalents. In addition, the restricted cash
      would be excluded from cash and cash equivalents in the statement of cash
      flows and shown as a financing activity.

                                      F-24
<PAGE>

INTERNATIONAL URANIUM CORPORATION
Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

24. MATERIAL DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING
    PRINCIPLES (continued)

   b) Short and Long-Term Investments

      Under Canadian GAAP, investments in available-for-sale securities are
      carried at the lower of cost and estimated fair market value. Under U.S.
      GAAP, securities that are available-for-sale are recorded at fair value
      and unrealized gains or losses are excluded from earnings and recorded as
      other comprehensive income, a separate component of shareholders' equity.

   c) Plant and Equipment

      Under Canadian GAAP, the Company's surplus assets held for resale were
      depreciated to an amount less than net realizable value. Under U.S. GAAP,
      assets held for resale are recorded at the lower of cost or net realizable
      value and are not depreciated.

   d) Mineral Properties

      Under Canadian GAAP, the Company capitalizes mineral property exploration
      expenditures as disclosed in Note 2(l). Under U.S. GAAP, all exploration
      costs incurred before a commercially mineable deposit is established must
      be expensed as incurred. For 2005, the equity in loss of Fortress Minerals
      Corp. of $678,953 increased by $1,995,099 as a result of expensing all
      capitalized mineral property expenditures incurred by Fortress.

   e) Joint Ventures

      Under Canadian GAAP, investments in jointly-controlled entities can be
      accounted for using the proportionate consolidation method. Under U.S.
      GAAP, investments in incorporated joint ventures are accounted for using
      the equity method. Under an accommodation of the SEC, the accounting for
      joint ventures need not be reconciled from Canadian to U.S. GAAP. These
      differences affect only the display and classification of financial
      statement items excluding shareholders' equity and net income.

   f) Goodwill

      Under Canadian GAAP, the Company's formation in 1997 through an
      amalgamation of IUC with Thornbury Capital Corporation ("Thornbury") has
      been accounted for as an acquisition of Thornbury resulting in the
      recording of goodwill. Under U.S. GAAP, the transaction has been accounted
      for as a recapitalization whereby the net monetary assets of Thornbury
      would be recorded at fair value, except that no goodwill or other
      intangibles would be recorded. The goodwill recorded under Canadian GAAP
      has been subsequently written off. As a result, the deficit and share
      capital of the Company are both reduced under U.S. GAAP.

   g) Liabilities

      Under U.S. GAAP, the sale of flow-through shares results in a liability
      being recognized for the excess of the purchase price paid by the
      investors over the fair value of common shares without the flow-through
      feature. The fair value of the shares is recorded as equity. When the tax
      deductibility of the expenditures is renounced, the liability is reversed
      and a future income tax liability is recorded for the amount of the
      benefits renounced to third parties, resulting in an income tax expense.

   h) Subsidiaries

      Under Canadian GAAP, gains on dilution of interests in a subsidiary are
      recognized in income in the period in which they occur. Under U.S. GAAP,
      the gain on dilution is not recognized if it results from the sale of
      securities by a subsidiary in the exploration stage and instead is
      accounted for as a capital transaction.

                                      F-25
<PAGE>

INTERNATIONAL URANIUM CORPORATION
Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

24. MATERIAL DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (continued)

   i) Stock-Based Compensation

      Under Canadian GAAP, the Company retroactively adopted, without
      restatement, amended standards requiring a fair value-based method of
      accounting for stock options granted to employees, including directors,
      and non-employees effective October 1, 2004. Under U.S. GAAP, the Company
      may continue to measure stock options granted to employees using the
      intrinsic value-based method whereby stock-based compensation is measured
      as the excess of the market price on the grant date over the exercise
      price. In order to remain consistent with the adoption under Canadian
      GAAP, the Company has elected under U.S. GAAP to retroactively adopt the
      fair value-based method of accounting for stock options granted to
      employees. Under U.S. GAAP, such retroactive adoption requires restatement
      of prior periods.

   Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                                                        September 30,
                                                                   2005               2004
                                                               --------------    --------------
<S>                                                            <C>               <C>
Cash and cash equivalents:
   Under Canadian GAAP                                         $    6,111,119    $   12,044,955
   Restricted cash from flow-through financings (a)                (4,127,758)       (3,840,231)
                                                               --------------    --------------
   Under U.S. GAAP                                                  1,983,361         8,204,724
                                                               ==============    ==============

Restricted cash:
   Under Canadian GAAP                                         $            -    $            -
   Restricted cash from flow-through financings (a)                 4,127,758         3,840,231
                                                               --------------    --------------
   Under U.S. GAAP                                                  4,127,758         3,840,231
                                                               ==============    ==============

Short-term investments:
   Under Canadian GAAP                                         $            -    $    1,089,960
   Unrealized gain on available-for-sale securities (b)                     -         1,699,059
                                                               --------------    --------------
   Under U.S. GAAP                                             $            -    $    2,789,019
                                                               ==============    ==============

Long-term investments:
   Under Canadian GAAP                                         $    4,938,055    $      892,221
   Unrealized gain on available-for-sale securities (b)             7,273,905         3,204,347
   Additional equity in loss of Fortress Minerals Corp. (d)        (1,995,099)                -
                                                               --------------    --------------
Under U.S. GAAP                                                $   10,216,861    $    4,096,568
                                                               ==============    ==============

Plant and equipment, net
   Under Canadian GAAP                                         $    3,217,702    $    2,786,570
   Accumulated depreciation of assets held for resale (c)             301,444           332,482
                                                               --------------    --------------
   Under U.S. GAAP                                             $    3,519,146    $    3,119,052
                                                               ==============    ==============
</TABLE>

                                      F-26
<PAGE>


INTERNATIONAL URANIUM CORPORATION
Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

24. MATERIAL DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES (continued)

Consolidated Balance Sheets (continued)

<TABLE>
<S>                                                            <C>               <C>
Mineral properties:
   Under Canadian GAAP                                         $   13,412,885    $    6,171,263
   Mineral property costs expensed as incurred (d)                (13,412,885)       (6,171,263)
                                                               --------------    --------------
   Under U.S. GAAP                                             $            -    $            -
                                                               ==============    ==============

Other liability:
   Under Canadian GAAP                                         $            -    $            -
   Effects of flow-through financings (g)                           1,369,522                 -
                                                               --------------    --------------
   Under U.S. GAAP                                             $    1,369,522    $            -
                                                               ==============    ==============

Share capital:
   Under Canadian GAAP                                         $   56,145,784    $   50,305,480
   Effects of 1997 amalgamation (f)                                  (615,970)         (615,970)
   Effects of flow-through financings (g)                             335,923           271,349
                                                               --------------    --------------
   Under U.S. GAAP                                             $   55,865,737    $   49,960,859
                                                               ==============    ==============

Additional paid-in capital:
   Under Canadian GAAP                                         $            -    $            -
   Adjust dilution gain from subsidiary interests (h)               2,646,871           548,549
                                                               --------------    --------------
   Under U.S. GAAP                                             $    2,646,871    $      548,549
                                                               ==============    ==============

Contributed surplus:
   Under Canadian GAAP                                         $    1,803,277    $      224,718
   Retroactive adoption relating to stock-based
      compensation (i)                                                      -           773,655
                                                               --------------    --------------
Under U.S. GAAP                                                $    1,803,277    $      998,373
                                                               ==============    ==============

Deficit:
   Under Canadian GAAP                                         $  (33,143,559)   $  (29,997,716)
   Accumulated depreciation of assets held for resale (c)             301,444           332,482
   Mineral property costs expensed as incurred (d)                (13,412,885)       (6,171,263)
   Additional equity in loss of Fortress Minerals Corp. (d)        (1,995,099)                -
   Effects of 1997 amalgamation (f)                                   615,970           615,970
   Effects of flow-through financings (g)                          (1,705,445)         (271,349)
   Adjust dilution gain from subsidiary interests (h)              (2,646,871)         (548,549)
   Retroactive adoption relating to stock-based
        compensation (i)                                                     -         (773,655)
                                                               --------------    --------------
   Under U.S. GAAP                                             $  (51,986,445)   $  (36,814,080)
                                                               ==============    ==============

Accumulated other comprehensive income:
   Under Canadian GAAP                                         $            -    $            -
   Unrealized gain on available-for-sale securities (b)             7,273,905         4,903,406
                                                               --------------    --------------
   Under U.S. GAAP                                             $    7,273,905    $    4,903,406
                                                               ==============    ==============
</TABLE>

                                      F-27
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

24.   MATERIAL DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED
      ACCOUNTING PRINCIPLES (continued)

      Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                                   September 30,
                                                         2005           2004           2003
                                                    ------------    -----------    -----------
<S>                                                 <C>             <C>            <C>
Net earnings (loss) for the year, under
 Canadian GAAP                                      $ (2,372,188)   $(2,186,679)   $ 5,533,152
  Depreciation of assets held for resale (c)             (31,038)      (100,293)       209,541
  Mineral property costs expensed as incurred (d)     (7,241,622)    (4,394,281)    (1,238,085)
  Additional equity in loss of Fortress
   Minerals Corp. (d)                                 (1,995,099)             -              -
  Effects of flow-through financings (g)              (1,434,096)      (271,349)             -
  Adjust dilution gain from subsidiary interests
   (h)                                                (2,098,322)      (548,549)             -

  Retroactive adoption relating to stock-based
   compensation (i)                                            -       (737,904)       (35,751)
                                                    ------------    -----------    -----------

Net earnings (loss) for the year, under U.S. GAAP    (15,172,365)    (8,239,055)     4,468,857

Unrealized gain on available-for-sale securities
 (b)                                                   2,370,499      3,974,131        929,275
                                                    ------------    -----------    -----------

Comprehensive earning (loss) under U.S. GAAP        $(12,801,866)   $(4,264,924)   $ 5,398,132
                                                    ============    ===========    ===========

Basic and diluted net earnings (loss) per
 share under U.S. GAAP                              $      (0.19)   $     (0.11)   $      0.07
                                                    ============    ===========    ===========
</TABLE>

Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                        September 30,
                                                          2005              2004          2003
                                                        ------------   ------------    -----------
<S>                                                     <C>            <C>             <C>
Net cash used in operating activities:
  Under Canadian GAAP                                  $ (4,414,006)   $   (884,097)   $(4,396,379)
  Mineral property costs expensed as incurred (d)        (9,264,765)     (4,186,908)    (1,356,166)
                                                        ------------   ------------    -----------

  Under U.S. GAAP                                      $(13,678,771)   $ (5,071,005)   $(5,752,545)
                                                       ============    ============    ===========

Net cash provided by (used in) investing activities:
  Under Canadian GAAP                                  $ (7,497,032)   $ (4,859,839)   $ 1,148,438
  Mineral property costs expensed as incurred (d)         9,264,765       4,186,908      1,356,166
                                                        ------------   ------------    -----------

  Under U.S. GAAP                                      $  1,767,733    $   (672,931)   $ 2,504,604
                                                       ============    ============    ===========

Net cash provided by (used in) financing activities:
  Under Canadian GAAP                                  $  5,977,202    $ 14,149,812    $   176,238
  Restricted cash from flow-through financings (a)       (4,127,758)     (3,840,231)             -
                                                        ------------   ------------    -----------

  Under U.S. GAAP                                      $  1,849,444    $ 10,309,581    $   176,238
                                                       ============    ============    ===========
</TABLE>

                                      F-28
<PAGE>

INTERNATIONAL URANIUM CORPORATION

Notes to the Consolidated Financial Statements
Years Ended September 30, 2005, 2004 and 2003
(Expressed in U.S. Dollars, Unless Otherwise Noted)

24.   MATERIAL DIFFERENCES BETWEEN CANADIAN AND U.S. GENERALLY ACCEPTED
      ACCOUNTING PRINCIPLES (continued)

      New Accounting Standards

      a)    The Emerging Issues Task Force ("EITF") issued EITF 04-02 effective
            for reporting periods beginning after April 29, 2004 which concludes
            that mineral rights acquired in a business combination should be
            accounted for as tangible rather than intangible assets and
            disclosed as a separate component of property, plant and equipment.
            EITF 04-03 did not have a material impact on the reconciliation of
            the Company's consolidated financial statements with U.S. GAAP; and

      b)    EITF 04-03 effective for reporting periods beginning after March 31,
            2004 addresses the impact of value beyond proven and probable
            reserves and the effects of anticipated fluctuations in the future
            market price of minerals in determining (i) the allocation of the
            purchase price of a business combination to mining assets, and (ii)
            testing mining assets for impairment. EITF 04-03 did not have a
            material impact on the reconciliation of the Company's consolidated
            financial statements with U.S. GAAP.

                                      F-29
<PAGE>

                                INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit Number    Description
--------------    -----------
<S>               <C>
4                 Company's Material Contracts

8                 Company's Corporate Structure Chart

11                Code of Ethics for the Directors, Officers and Employees

12                302 Certification

13                906 Certification

15                International Uranium Corporation Audit Committee Charter
</TABLE>

                                      F-30