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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

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

For the fiscal year ended December 31, 2007 OR

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

For the transition period
from                 
to

Commission file number: 001-32974



URANERZ ENERGY
CORPORATION(Exact Name of Registrant as Specified in its
Charter)

|Nevada                                                               | 98-0365605                          
|-------------------------------------------------------------------- | ------------------------------------
|(State of other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)

|Suite 1410  800 West Pender Street      |           
|---------------------------------------- | ----------
|Vancouver, British Columbia, Canada      | V6C 2V6   
|(Address of Principal Executive Offices) | (Zip Code)

(604) 689-1659(Registrants Telephone Number,
including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

|Title of Each Class        | Name of Each Exchange on Which Registered
|-------------------------- | -----------------------------------------
|Common Stock, No Par Value | American Stock Exchange                  

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None

Indicate by check mark if the registrant is a well-known seasoned
  issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file
  reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]

Indicate by checkmark whether the registrant (1) 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
registrant 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 checkmark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrants knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to the Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated
  filer, an accelerated filer, or a non-accelerated filer. See definition of Accelerated
  filer and large accelerated filer in Rule 12b-2 of the Exchange Act (Check
  one):
  Large Accelerated Filer [ ]           Accelerated
  Filer [X]          Non-Accelerated
  Filer [ ]          Smaller
  Reporting Company[ ]

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Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently
completed second fiscal quarter: $159,000,000

The number of shares of the Registrants Common Stock
outstanding as of March 13, 2008 was 45,340,187.

2

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TABLE OF CONTENTS

|CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
      STATEMENTS                                                                      | 1 
|------------------------------------------------------------------------------------------------------------------------------------ | --
|PART I                                                                                                                               | 2 
|ITEM 1. DESCRIPTION OF BUSINESS                                                                                                      | 2 
|ITEM 1A. RISK FACTORS AND UNCERTAINTIES                                                                                              | 4 
|ITEM 1B. UNRESOLVED STAFF COMMENTS                                                                                                   | 12
|ITEM 2. DESCRIPTION OF PROPERTIES                                                                                                    | 13
|ITEM 3. LEGAL PROCEEDINGS                                                                                                            | 34
|ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
      SECURITY HOLDERS                                                                    | 35
|PART II                                                                                                                              | 36
|ITEM 5. MARKET FOR THE REGISTRANTS COMMON
      EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES | 36
|ITEM 6. SELECTED FINANCIAL DATA                                                                                                      | 44
|ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF
      FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                  | 46
|ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK                                                            | 54
|ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA                                                                            | 55
|ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                                   | 56
|ITEM 9A. CONTROLS AND PROCEDURES                                                                                                     | 56
|ITEM 9B. OTHER INFORMATION                                                                                                           | 57
|PART III                                                                                                                             | 58
|ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
      GOVERNANCE                                                                | 58
|ITEM 11. EXECUTIVE COMPENSATION                                                                                                      | 66
|ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                        | 74
|ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS AND DIRECTOR INDEPENDENCE                                              | 76
|ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                                                                      | 77
|PART IV                                                                                                                              | 78
|ITEM 15. EXHIBITS AND FINANCIAL STATEMENT
      SCHEDULES                                                                            | 78
|GLOSSARY OF TECHNICAL TERMS                                                                                                          | 82
|SIGNATURES                                                                                                                           | 83

1

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS

This Annual Report on Form 10-K and the exhibits attached hereto
  contain “forward-looking statements” within the meaning of the Private
  Securities Litigation Reform Act of 1995. Such forward looking statements concern
  the Company’s anticipated results and developments in the Company’s
  operations in future periods, planned exploration and, if warranted, development
  of its properties, plans related to its business and other matters that may
  occur in the future. These statements relate to analyses and other information
  that are based on forecasts of future results, estimates of amounts not yet
  determinable and assumptions of management.

Any statements that express or involve discussions with respect
to predictions, expectations, beliefs, plans, projections, objectives,
assumptions or future events or performance (often, but not always, using words
or phrases such as expects or does not expect, is expected, anticipates
or does not anticipate, plans, estimates or intends, or stating that
certain actions, events or results may, could, would, might or will be
taken, occur or be achieved) are not statements of historical fact and may be
forward-looking statements. Forward-looking statements are subject to a variety
of known and unknown risks, uncertainties and other factors which could cause
actual events or results to differ from those expressed or implied by the
forward-looking statements, including, without limitation:

- risks related to our limited operating history;
- risks related to the probability that our properties contain reserves;
- risks related to our past losses and expected losses in the near future;
- risks related to our need for qualified personnel for exploring for, starting
      and operation a mine;
- risks related to our lack of known reserves;
- risks related to the fluctuation of uranium prices;
- risks related to environmental laws and regulations;
- risks related to using our in-situ recovery mining process;
- risks related to exploration and, if warranted, development of our properties;
- risks related to some of our officers having other commitments for their
      time and attention;
- risks related to our ability to make property payment obligations;
- risks related to doing business in Mongolia;
- risks related to the competitive nature of the mining industry; and
- risks related to our securities.

This list is not exhaustive of the factors that may affect our
forward-looking statements. Some of the important risks and uncertainties that
could affect forward-looking statements are described further under the sections
titled Risk Factors and Uncertainties, Description of the Business and
Managements Discussion and Analysis of this Annual Report. Should one or more
of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
believed, estimated or expected. We caution readers not to place undue reliance
on any such forward-looking statements, which speak only as of the date made. We
disclaim any obligation subsequently to revise any forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect
the occurrence of anticipated or unanticipated events.

We qualify all the forward-looking statements contained in
this Annual Report by the foregoing cautionary statements.

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

Corporate Background

Uranerz Energy Corporation (“Uranerz” or the “Company”)
  was incorporated under the laws of the State of Nevada on May 26, 1999. On July
  5, 2005, we changed our name from Carleton Ventures Corp. to Uranerz Energy
  Corporation. Our executive offices are located at Suite 1410 - 800 West Pender
  Street, Vancouver, British Columbia Canada V6C 2V6. The telephone number for
  our executive offices is (604) 689-1659. Our operations office is located at
  1701 East "E" Street, P.O. Box 50850, Casper, Wyoming 82605-0850.
  The telephone number for the operations office is (307) 265-8900.

Our common stock is traded on the American Stock Exchange and
  the Toronto Stock Exchange under the symbol URZ and on the Frankfurt
  Exchange under the symbol U9E.

History

Uranerz was relatively inactive from 1999 until 2005 when it
acquired mineral prospecting permits in Saskatchewan, mineral licenses in
Mongolia and mining claims and leases in Wyoming. Exploration commenced in 2005
and has continued through 2006 and 2007 while additional mineral properties were
acquired and exploration drilling was initiated in Wyoming. We have increased
our personnel and operational consultants to move some of our Wyoming properties
into the mine planning and permitting stage; activities which continue.

Our Business

We are an exploration stage company engaged in the acquisition,
exploration and if warranted, development of uranium properties. We have an
interest in the properties described below.

We own or control interests in properties in Wyoming, USA; Saskatchewan,
  Canada; and Mongolia. We have entered into joint venture agreements for each
  of our Saskatchewan and Mongolia properties whereby the joint venture partner
  for each property can earn an ownership interest in the property in exchange
  for exploration and, if warranted, development expenditure commitments and/or
  cash and equity consideration. We have also joint ventured our uranium projects
  in the Great Divide Basin area of Wyoming, and plan to maintain, explore or,
  if warranted, develop our projects in the Powder River Basin area of Wyoming.
  We anticipate that our joint venture partners will conduct exploration of our
  Wyoming Great Divide Basin, Saskatchewan and Mongolian mineral properties.

We are an exploration stage company. Because of the long lead
times for environmental permitting of mining operations in North America, we
have started collecting environmental baseline data on two of our properties in
the Powder River Basin area of Wyoming that we feel have the potential, based on
data in our possession, of being developed into commercial in-situ recovery
uranium mines.

As of January 9, 2006, we own one subsidiary which is a
Mongolian limited liability company with the name Rolling Hills Resources, LLC.
Our Mongolian exploration licenses are held in the name of our subsidiary
company.

Recent Corporate Developments

The following significant corporate developments occurred
during our fiscal year ended December 31, 2007:

| | 1. | Throughout the fiscal year, we issued 4,481,749 shares of
      our common stock upon the exercise of outstanding share purchase warrants
      for gross cash proceeds of $8,316,678;
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                       
| | 2. | We issued 182,000 common shares upon the exercise of
      stock options for gross cash proceeds of $288,100;                                                                         
| |    |                                                                                                                                                                                       
| | 3. | On August 27, 2008, our shares of common stock began
        trading on the Toronto Stock Exchange under the symbol “URZ”;                                                            

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| | 4. | In September 2007 we concluded an agreement to acquire an
      undivided 81% interest in approximately 82,141 acres of property in the
      central Powder River Basin of Wyoming, USA and formed the Arkose Mining
      Venture pursuant to which we will be the operator. The properties acquired
      are in the area of our Nichols Ranch and Hank projects. The transaction
      closed in January 2008. For more details of the acquisition and the
      properties see the discussion below under the section heading Description
      of Properties  Wyoming Properties  NAMMCO Acquisition;
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 5. | We added experienced professionals to our management
        team including: Kurtis Brown as Senior Vice-President of Exploration,
        Douglas Hirschman as Vice President of Lands and Sonya Reiss as Vice President,
        Corporate Affairs and Corporate Secretary; and                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 6. | We submitted applications to the U.S. Nuclear Regulatory
      Commission and the Land Quality Division of the Wyoming Department of
      Environmental Quality for licenses and permits to construct and operate
      in-situ recovery uranium facilities on our Nichols Ranch and Hank projects
      located in the central Powder River Basin of Wyoming. For more details of
      our permitting plans see the discussion below under the section heading
      Description of Properties  Wyoming Properties  Environmental
      Permitting.                                                     

Competition

We compete with other mining and exploration companies in
connection with the acquisition of mineral properties. There is competition for
the limited number of uranium acquisition opportunities, some of which is with
other companies having substantially greater financial resources than we do. As
a result, we may have difficulty acquiring attractive exploration properties and
staking claims related to our properties.

Employees

Currently we have five full time employees, four full time
operational consultants and six part time operational consultants. We operate in
established mining areas, which we believe have sufficient available personnel
for our business plans.

Available Information

Detailed information about us is contained in our annual
reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports on
Form 8-K, proxy statements and other reports, and amendments to those reports,
that we file with or furnish to the SEC. These reports are available free of
charge at our website, www.uranerz.com, as soon as reasonably practicable
after we electronically file such reports with or furnish such reports to the
SEC. However, our website and any contents thereof should not be considered to
be incorporated by reference into this document. We will furnish copies of such
reports free of charge upon written request to our Investor Relations
department. You can contact our Investor Relations department at:

Uranerz Energy Corporation Investor Relations Suite
1410  800 West Pender Street Vancouver, BC, Canada V6C 2V6

Additionally, our corporate governance guidelines, code of
ethics and the charters of each of our Board of Directors committees are
available on our website. We will furnish copies of such information free of
charge upon written request to our Investor Relations department.

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ITEM 1A. RISK FACTORS AND UNCERTAINTIES

Readers should carefully consider the risks and uncertainties
described below before deciding whether to invest in shares of our common stock.

Our failure to successfully address the risks and uncertainties
described below would have a material adverse effect on our business, financial
condition and/or results of operations, and the trading price of our common
stock may decline and investors may lose all or part of their investment. We
cannot assure you that we will successfully address these risks or other unknown
risks that may affect our business.

Risks Related to Our Business

Our future performance is difficult to evaluate because
we have a limited operating history.

We were incorporated in 1999 and we began to implement our
current business strategy in the uranium industry in the beginning of 2005. Our
operating cash flow needs have been financed primarily through issuances of our
common stock. As a result, we have little historical financial and operating
information available to help you evaluate our performance or an investment in
our common stock and warrants.

Because the probability of an individual prospect ever
having reserves is remote, our properties may not contain any reserves, and any
funds spent on exploration may be lost.

We have no uranium producing properties and have never generated
  any revenue from our operations. Because the probability of an individual prospect
  ever having reserves is remote, our properties may not contain any reserves,
  and any funds spent on exploration may be lost. Notwithstanding our disclosures
  to Canadian authorities under National Instrument 43-101, we do not know with
  certainty that economically recoverable uranium exists on any of our properties.
  We may never discover uranium in commercially exploitable quantities and any
  identified deposit may never qualify as a commercially mineable (or viable)
  reserve. We will continue to attempt to acquire the surface and mineral rights
  on lands that we think are geologically favorable or where we have historical
  information in our possession that indicates uranium mineralization might be
  present.

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. Our uranium 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
operations. Our operations 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 we 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 we cannot insure or against which we 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 our future earnings and
competitive position and, potentially our financial viability.

We have a limited operating history and have losses which
we expect to continue into the future. As a result, we may have to suspend or
cease exploration activities.

We were incorporated in 1999 and are engaged in the business of
mineral exploration. We have not realized any revenue from our operations. We
have a relatively limited exploration history upon which an evaluation of our
future success or failure can be made. Our net loss since inception through
December 31, 2007 is $25,896,798, an amount which includes stock based
compensation of $13,030,491 and mineral property expenditures of $8,684,649. Our
ability to achieve and maintain profitability and positive cash flow is
dependent upon:

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| | * | our ability to locate a profitable mineral
    property;
| | - | --------------------------------------------------------
| | * | our ability to generate revenues;                       
| | * | our ability to reduce exploration
costs.                

Based upon current plans, we expect to incur operating losses
in future periods. This will happen because there are expenses associated with
the research and exploration of our mineral properties plus development costs to
produce saleable product. We may not guarantee we will be successful in
generating revenues in the future. Failure to generate revenues may cause us to
go out of business.

Because some of our officers and directors do not have
technical training or experience in exploring for, starting, and operating a
mine, we may have to hire qualified personnel. If we cant locate qualified
personnel, we may have to suspend or cease exploration activity which may result
in the loss of your investment.

Some, but not all, of our officers and directors do have experience
  with exploring for, starting, and operating a mine. Because some of our officers
  and directors are inexperienced with exploring Some, but not all, of our officers
  and directors do have experience with exploring for, starting, and operating
  a mine. Because some of our officers and directors are inexperienced with exploring
  for, starting, and operating a mine, we may have to hire qualified persons to
  perform surveying, exploration, and excavation of our property. Some of our
  officers and directors have no direct training or experience in these areas
  and as a result may not be fully aware of many of the specific requirements
  related to working within the industry. Their decisions and choices would typically
  take into account standard engineering or managerial approaches mineral exploration
  companies commonly use. However, our exploration activities, earnings and ultimate
  financial success could suffer irreparable harm due to certain of management’s
  decisions. As a result we may have to suspend or cease exploration activities,
  or any future warranted development activities, which would likely result in
  the loss of your investment.

We have no known reserves. Without reserves we may not be
able to generate income and if we cannot generate income we will have to cease
exploration activities which result in the loss your investment.

We have no known reserves. Without reserves, we may not be able
  to generate income and if we cannot generate income we will have to cease exploration
  activities which would likely result in the loss of your investment. We have
  attempted to acquire the surface and mineral rights on lands that we think are
  geologically favorable or where we have historical information in our possession
  that indicates uranium mineralization might be present. It is not known with
  certainty that economically recoverable uranium exists on any of our properties.

Even in the event commercial quantities of uranium are discovered,
  the mining properties might not be brought into a state of commercial production.
  Estimates of mineral reserves are inherently imprecise and depend to some extent
  on statistical inferences drawn from limited methods, which may prove unreliable.
  Fluctuations in the market prices of uranium may render reserves and deposits
  containing relatively low grades of uranium uneconomic. 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 us not receiving an adequate return on our invested
  capital.

Our future profitability will be dependent on Uranium
Prices

Because a significant portion of our anticipated revenues are
  expected to be derived from the sale of uranium, our net earnings, if any, can
  be affected by the long- and short-term market price of U3O8. Uranium prices
  are subject to fluctuation. The price of uranium has been and will continue
  to be affected by numerous factors beyond our 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. Spot prices for
  U3O8 were at $20.00 per pound U3O8 in December 2004, and then, to $35.25 per
  pound in December 2005 and $72.00 per pound in December 2006. During 2007 the
  spot price reached a high of $138.00 per pound. The U.S. monthly spot price
  of U3O8 was approximately $90.00 per pound in December 2007.

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***Our operations are subject to environmental regulation
  and environmental risks.***

We are required to comply with applicable environmental protection
  laws and regulations and permitting requirements, and we anticipate that we
  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.
  We also are required to comply with environmental protection laws in Mongolia
  and Canada. We are required to comply with the Atomic Energy Act, as amended
  by UMTRCA, by applying for and maintaining an operating license from the State
  of Wyoming. Uranium 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. We intend to utilize specific
  employees and consultants in order to comply with and maintain our compliance
  with the above laws and regulations.

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 in-situ sites, and other environmental
matters, each of which could have a material adverse effect on the costs or the
viability of a particular project. We cannot predict what environmental
legislation, regulation or policy will be enacted or adopted in the future or
how future laws and regulations will be administered or interpreted. The recent
trend in environmental legislation and regulation, generally, is toward stricter
standards and this trend is likely to continue in the future. This recent trend
includes, without limitation, laws and regulations relating to air and water
quality, mine reclamation, waste handling and disposal, the protection of
certain species and the preservation of certain lands. These regulations may
require the acquisition of permits or other authorizations for certain
activities. These laws and regulations may also limit or prohibit activities on
certain lands. Compliance with more stringent laws and regulations, as well as
potentially more vigorous enforcement policies or stricter interpretation of
existing laws, may necessitate significant capital outlays, may materially
affect our results of operations and business, or may cause material changes or
delays in our intended activities.

Our operations may require additional analysis in the future
including environmental and social impact and other related studies. Certain
activities require the submission and approval of environmental impact
assessments. Environmental assessments of proposed projects carry a heightened
degree of responsibility for companies and directors, officers, and employees.
There can be no assurance that we will be able to obtain or maintain all
necessary permits that may be required to continue its operation or its
exploration of its properties or, if feasible, to commence development,
construction or operation of mining facilities at such properties on terms which
enable operations to be conducted at economically justifiable costs.

*We intend to extract uranium from our properties using
  the in-situ recovery mining process which may not be successful.*

We intend to extract uranium from our properties using in-situ
  recovery mining, which is suitable for extraction of certain types of uranium
  deposits. This process requires in-situ recovery mining equipment and trained
  personnel. Competition and unforeseen limited sources of supplies in the industry
  could result in occasional spot shortages of supplies, and certain equipment
  such as drilling rigs and other equipment that we might need to conduct exploration
  and, if warranted, development. We will attempt to locate additional products,
  equipment and materials as needed. If we cannot find the products and equipment
  we need, we will have to suspend our exploration and, if warranted, development
  plans until we do find the products and equipment we need.

We face risks related to exploration and development, if
warranted, on our properties.

Our level of profitability, if any, in future years will depend
to a great degree on uranium prices and whether any of our exploration stage
properties can be brought into production. The exploration for and development
of mineral deposits involves significant risks. It is impossible to ensure that
the current and future exploration programs and/or feasibility studies on our
existing properties will establish reserves. Whether an uranium ore body will be

6

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commercially viable depends on a number of factors, including,
but not limited to: the particular attributes of the deposit, such as size,
grade and proximity to infrastructure; uranium prices, which cannot be predicted
and which have been highly volatile in the past; mining, processing and
transportation costs; perceived levels of political risk and the willingness of
lenders and investors to provide project financing; labor costs and possible
labor strikes; and governmental regulations, including, without limitation,
regulations relating to prices, taxes, royalties, land tenure, land use,
importing and exporting materials, foreign exchange, environmental protection,
employment, worker safety, transportation, and reclamation and closure
obligations.

We are subject to the risks normally encountered in the mining
industry, such as:

- unusual or unexpected geological formations;
- fires, floods, earthquakes, volcanic eruptions, and other natural
  disasters;
- power outages and water shortages;
- cave-ins, land slides, and other similar mining hazards;
- labor disruptions and labor disputes;
- inability to obtain suitable or adequate machinery, equipment, or labor;
- liability for pollution or other hazards; and
- other known and unknown risks involved in the operation of mines and the
  conduct of exploration.

The development of mineral properties is affected by many
factors, including, but not limited to: the cost of operations, variations in
the grade of ore, fluctuations in metal markets, costs of extraction and
processing equipment, availability of equipment and labor, labor costs and
possible labor strikes, and government regulations, including without
limitation, regulations relating to taxes, royalties, allowable production,
importing and exporting of minerals, foreign exchange, employment, worker
safety, transportation, and environmental protection. Depending on the price of
uranium, we may determine that it is impractical to commence, or, if commenced,
continue, commercial production. Such a decision would negatively affect our
profits and may affect the value of your investment.

Because we may be unable to meet property payment
obligations or be able to acquire necessary mining licenses, we may lose
interests in our exploration properties.

The agreements pursuant to which we acquired our interests in
some of our properties provide that we must make a series of cash payments over
certain time periods, expend certain minimum amounts on the exploration of the
properties or contribute our share of ongoing expenditures. If we fail to make
such payments or expenditures in a timely fashion, we may lose our interest in
those properties. Further, even if we do complete exploration activities, we may
not be able to obtain the necessary licenses to conduct mining operations on the
properties, and thus would realize no benefit from our exploration activities on
the properties.

Because mineral exploration and development activities
are inherently risky, we may be exposed to environmental liabilities. If such an
event were to occur it may result in a loss of your investment.

The business of mineral exploration and extraction involves a
high degree of risk. Few properties that are explored are ultimately developed
into production. At present, none of our properties has a known body of
commercial ore. Unusual or unexpected formations, formation pressures, fires,
power outages, labor disruptions, flooding, explosions and the inability to
obtain suitable or adequate machinery, equipment or labor are other risks
involved in extraction operations and the conduct of exploration programs.
Although we intend to carry liability insurance with respect to our mineral
exploration operations, we may become subject to liability for damage to life
and property, environmental damage, cave-ins or hazards against which we cannot
insure or against which we may elect not to insure. There are also physical
risks to the exploration personnel working in the rugged terrain of Mongolia,
often in poor climate conditions. Previous mining operations may have caused
environmental damage at certain of our properties. It may be difficult or
impossible to assess the extent to which such damage was caused by us or by the
activities of previous operators, in which case, any indemnities and exemptions
from liability may be ineffective. If any of our properties is found to have
commercial quantities of ore, we would be subject to additional risks respecting
any development and production activities. Most exploration projects do not
result in the discovery of commercially mineable deposits of ore.

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*Because we have not put a mineral deposit into production
  before, we may have to acquire outside expertise. If we are unable to acquire
  such expertise we may be unable to put our properties into production and you
  may lose your investment.*

The board of directors includes six individuals that have
technical or financial experience in placing mining projects into production.
However, we will be dependent upon using the services of appropriately
experienced personnel or entering into agreements with other major resource
companies that can provide such expertise. There can be no assurance that we
will have available to us the necessary expertise when and if we place mineral
deposit properties into production.

*Because certain of our mineral interests are in Mongolia,
  you will be exposed to political risk. Such political risk could result in us
  losing value of our properties in Mongolia. If this occurs you could lose your
  investment.*

Some of our mineral interests are in Mongolia and may be
affected by varying degrees of political instability and the policies of other
nations in respect of these countries. These risks and uncertainties include
military repression, political and labor unrest, extreme fluctuations in
currency exchange rates, high rates of inflation, terrorism, hostage taking and
expropriation. A small portion of our mineral interests are currently located in
Mongolia. Our mining, exploration and development activities may be affected by
changes in government, political instability and the nature of various
government regulations relating to the mining industry, including but not
limited to, environmental regulation, labor regulations, worker health and
safety regulations, and royalties, taxes, import and export laws and
regulations. Any changes in regulations or shifts in political conditions are
beyond our control and may adversely affect our business and/or holdings.
Operations may be affected in varying degrees by government regulations with
respect to restrictions on production, price controls, export controls, income
taxes, expropriation of property, environmental legislation, imposition of new,
high government royalties and ownership interests, and safety factors. Our
operations in Mongolia entail significant governmental, economic, social,
medical and other risk factors common to all developing countries.

*Because our Mongolian subsidiary company may require certain
  approvals to advance our operations we are at risk of not receiving such approvals.
  If we don’t receive the necessary approvals we may lose our Mongolian
  property interests resulting in a loss of your investment.*

While we are authorized to explore for uranium on our Mongolian
  projects, we may be required to obtain further approvals from regulatory authorities
  in Mongolia in order to conduct mining operations. There is no assurance that
  such approvals would be granted by the Mongolian authorities at all or on terms
  favorable to the continued operations. The laws of Mongolia are ambiguous, inconsistently
  applied and subject to reinterpretation or change. While we believe that we
  will be properly established and that we have taken the steps necessary to obtain
  our interest in these projects, there can be no guarantee that such steps will
  be sufficient to preserve our interests in these projects.

The mining industry is highly competitive.

The business of the acquisition, exploration, and development
of uranium properties is intensely competitive. We will be required to compete,
in the future, directly with other corporations that may have better access to
potential uranium resources, more developed infrastructure, more available
capital, better access to necessary financing, and more knowledgeable and
available employees than us. We may encounter competition in acquiring uranium
properties, hiring mining professionals, obtaining mining resources, such as
manpower, drill rigs, and other mining equipment. Such competitors could outbid
us for potential projects or produce minerals at lower costs. Increased
competition could also affect our ability to attract necessary capital funding
or acquire suitable producing properties or prospects for uranium exploration in
the future.

Risks Related to Corporate and Financial Structure

We are dependent upon key management
employees.

The success of our operations will depend upon numerous
factors, many of which are beyond our control, including (i) our ability to
enter into strategic alliances through a combination of one or more joint
ventures, mergers or acquisition transactions; and (ii) our ability to attract
and retain additional key personnel in sales, marketing, technical support and
finance. We currently depend upon our management employees to seek out and form
strategic

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alliances and find and retain additional employees. There can
be no assurance of success with any or all of these factors on which our
operations will depend. We have relied and may continue to rely, upon
consultants and others for operating expertise.

Our growth will require new personnel, which we will be
required to recruit, hire, train and retain

We expect significant growth in the number of our employees if
we determine that a mine at any of our properties is commercially feasible, we
are able to raise sufficient funding and we elect to develop the property. This
growth will place substantial demands on us and our management. Our ability to
assimilate new personnel will be critical to our performance. We will be
required to recruit additional personnel and to train, motivate and manage
employees. We will also have to adopt and implement new systems in all aspects
of our operations. This will be particularly critical in the event we decide not
to use contract miners at any of our properties. We have no assurance that we
will be able to recruit the personnel required to execute our programs or to
manage these changes successfully.

New legislation, including the Sarbanes-Oxley Act of
2002, may make it difficult for us to retain or attract officers and
directors.

We may be unable to attract and retain qualified officers,
directors and members of board committees required to provide for our effective
management as a result of the recent and currently proposed changes in the rules
and regulations which govern publicly-held companies. Sarbanes-Oxley Act of 2002
has resulted in a series of rules and regulations by the Securities and Exchange
Commission that increase responsibilities and liabilities of directors and
executive officers. The perceived increased personal risk associated with these
recent changes may deter qualified individuals from accepting these roles.

While we believe we have adequate internal control over
financial reporting, we are required to evaluate our internal controls under
Section 404 of the Sarbanes-Oxley Act of 2002. Any adverse results from such
evaluation could result in a loss of investor confidence in our financial
reports and have an adverse effect on the price of our shares of common
stock.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002,
beginning with our annual report on Form 10-K for the fiscal year ended December
31, 2007, we are required to furnish a report by management on our internal
control over financial reporting. Such report will contain among other matters,
an assessment of the effectiveness of our internal control over financial
reporting, including a statement as to whether or not our internal control over
financial reporting is effective. This annual assessment must include disclosure
of any material weaknesses in our internal control over financial reporting
identified by our management. Beginning with our annual report on Form 10-K for
the fiscal year ended December 31, 2007, such report also contains a statement
that our auditors have issued an attestation report on our managements
assessment of such internal controls. Public Company Accounting Oversight Board
Auditing Standard No. 2 provides the professional standards and related
performance guidance for auditors to attest to, and report on, our managements
assessment of the effectiveness of internal control over financial reporting
under Section 404.

While we believe our internal control over financial reporting
is effective, we find that compiling the system and processing documentation and
performing the evaluation needed to comply with Section 404 is both costly and
challenging. We cannot be certain that we will be able to complete our
evaluation, testing and any required remediation in a timely fashion. During the
evaluation and testing process, if we identify one or more material weaknesses
in our internal control over financial reporting, we will be unable to assert
that such internal control is effective. If we are unable to assert that our
internal control over financial reporting is effective as of December 31, 2008
(or if, as at December 31, 2008, our auditors are unable to attest that our
managements report is fairly stated or they are unable to express an opinion on
the effectiveness of our internal controls), we could lose investor confidence
in the accuracy and completeness of our financial reports, which would have a
material adverse effect on our stock price.

Failure to comply with the new rules may make it more difficult
for us to obtain certain types of insurance, including director and officer
liability insurance, and we may be forced to accept reduced policy limits and
coverage and/or incur substantially higher costs to obtain the same or similar
coverage. The impact of these events could also make it

9

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more difficult for us to attract and retain qualified persons
to serve on our board of directors, on committees of our board of directors, or
as executive officers.

Stock market price and volume volatility

The market for our common shares may be highly volatile for reasons
  both related to the performance of the Company or events pertaining to the industry
  (i.e., mineral price fluctuation/high production costs/accidents) as well as
  factors unrelated to the Company or its industry. In particular, market demand
  for uranium fluctuates from one business cycle to the next, resulting in change
  of demand for the mineral and an attendant change in the price for the mineral.
  Our common shares can be expected to be subject to volatility in both price
  and volume arising from market expectations, announcements and press releases
  regarding our business, and changes in estimates and evaluations by securities
  analysts or other events or factors. In recent years, the securities markets
  in the United States have experienced a high level of price and volume volatility,
  and the market price of securities of many companies, particularly small-capitalization
  companies, have experienced wide fluctuations that have not necessarily been
  related to the operations, performances, underlying asset values, or prospects
  of such companies. For these reasons, the price of our common shares can also
  be expected to be subject to volatility resulting from purely market forces
  over which we will have no control.

Dilution through the granting of options

Because the success of the Company is highly dependent upon its
  respective employees, we may in the future grant to some or all of our key employees,
  directors and consultants options to purchase our common shares as non-cash
  incentives. Those options may be granted at exercise prices equal to market
  prices at times when the public market is depressed. To the extent that significant
  numbers of such options may be granted and exercised, the interests of the other
  stockholders of the Company may be diluted.

You may lose your entire investment in our
shares.

An investment in our common stock is highly speculative and may
result in the loss of your entire investment. Only investors who are experienced
investors in high risk investments and who can afford to lose their entire
investment should consider an investment in us.

*In the event that your investment in our shares is for
  the purpose of deriving dividend income or in expectation of an increase in
  market price of our shares from the declaration and payment of dividends, your
  investment may be compromised because we do not intend to pay dividends.*

We have never paid a dividend to our shareholders, and we
intend to retain our cash for the continued development of our business. We do
not intend to pay cash dividends on our common stock in the foreseeable future.
As a result, your return on investment will be solely determined by your ability
to sell your shares in a secondary market.

We depend on our ability to successfully access the
capital and financial markets. Any inability to access the capital or financial
markets may limit our ability to execute our business plan or pursue investments
that we may rely on for future growth.

We rely on access to long-term capital markets as a source of
  liquidity for capital and operating requirements. If we are not able to access
  financial markets at competitive rates, our ability to implement our business
  plan and strategy may be affected. Certain market disruptions may increase our
  cost of borrowing or affect our ability to access one or more financial markets.
  Such market disruptions could result from:

- adverse economic conditions;
- adverse general capital market conditions;
- poor performance and health of the uranium industry in general;

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- bankruptcy or financial distress of unrelated uranium companies or marketers;
- significant decrease in the demand for uranium;
- adverse regulatory actions that affect our exploration and development
  plans; and
- terrorist attacks on our potential customers.

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ITEM 1B. UNRESOLVED STAFF COMMENTS

We do not have any unresolved comments from the SEC staff
regarding our periodic or current reports under the Securities Exchange Act of
1934, as amended.

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ITEM 2. DESCRIPTION OF PROPERTIES

We currently have properties that are prospective for uranium
mineralization located in Wyoming USA, Saskatchewan Canada, Mongolia and Texas
USA.

Property
    LocationState Mineral Leases, Federal Mining Claims and
      Private (Fee) Mineral including Joint Venture on certain land
      areas
    Powder River Basin, Wyoming, USAState Mineral Leases, and Federal Mining Claims
      (option and joint venture agreement in place)
    Great Divide Basin, Wyoming, USACochrane River Property (option and joint venture
      agreement in place)
    Saskatchewan, CanadaEight Exploration Licenses (option and joint venture
      agreement in place)
    MongoliaPrivate (Fee) Mineral Leases
    Texas, USA


Our plan of operations is to carry out exploration of our Wyoming
  Powder River Basin properties while our joint venture partners will be responsible
  for carrying out exploration of our Wyoming Great Divide Basin, Saskatchewan,
  and Mongolia properties. Most of our exploration programs are preliminary in
  nature in that their completion may not result in a determination that our properties
  contain commercially exploitable quantities of uranium mineralization.

Our exploration program in the Wyoming Powder River Basin will
  be directed by our management and will be supervised by Mr. George Hartman,
  our vice-president of mining and chief operating officer. We will engage contractors
  to carry out our exploration programs under Mr. Hartman’s supervision.
  Contractors that we plan to engage include project geologists, drilling companies
  and geophysical logging companies, each according to the specific exploration
  program on each property. Exploration of our Wyoming Great Divide Basin, Saskatchewan
  and Mongolian mineral properties will be undertaken by our partners, Black Range
  Minerals, Triex Minerals Corporation and Bluerock Resources Ltd., respectively.

Our management will make determinations as to whether to proceed
  with the additional exploration of our Wyoming Powder River Basin mineral properties
  based on the results of the preliminary exploration that we undertake. In completing
  these determinations, we will make an assessment as to whether the results of
  the exploration are sufficiently positive for us to proceed with more advanced
  exploration. On our Wyoming Great Divide Basin, Saskatchewan and Mongolian mineral
  properties, our partners are committed to certain minimum exploration expenditures
  over the earn-in period. The management of Black Range, Triex Minerals and Bluerock
  Resources will be responsible for overseeing the exploration in Wyoming Great
  Divide Basin, Saskatchewan and Mongolia, respectively. Triex and Bluerock are
  required to submit reports to us on the results of their exploration efforts
  in Canada and Mongolia.

Wyoming Properties

We have several projects in the Great Divide and Powder River
  Basins of Wyoming. We plan to maintain, explore and, if warranted, develop our
  projects in the Powder River Basin area of Wyoming. We have joint ventured our
  uranium projects in the Great Divide Basin area of Wyoming. Each of these projects
  comprises several federal mining claims, state mineral leases, or private fee
  mineral properties. In some cases the projects will comprise a

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combination of state leases and private or federal mining claims.
  Our projects located in the Powder River Basin area of Wyoming include the Nichols
  Ranch, East Nichols, North Nichols, Hank, Doughstick, West North Butte, Collins
  Draw, Verna Ann, Niles Ranch, Willow Creek, C-Line, North Rolling Pin, Reno
  Creek North, and Reno Creek South and the Arkose Mining Venture (which acquisition
  closed subsequent to year-end). Within a seven mile radius of the Nichols Ranch
  project we hold mineral rights which are planned for future advancement as part
  of the Nichols Ranch ISR Project. This project area is referred to as the “Powder
  River ISR Complex”, and includes the Nichols Ranch, East Nichols, North
  Nichols, Hank, Doughstick, West North Butte, Collins Draw, Willow Creek, C-Line,
  and North Rolling Pin. We have recently closed on a purchase and sales agreement
  to acquire an undivided eighty-one percent interest in a Wyoming general partnership’s
  interest in mineral properties located in the central Powder River Basin. This
  interest consists of approximately 82,200 acres and is located adjacent to the
  100% owned Uranerz properties to the East, South and West. This acquisition
  closed on January 15, 2008. Upon completion of this acquisition we control approximately
  115,000 acres in the Powder River Basin area.

Our Wyoming properties are located near Casper, Wyoming as
shown in the map below.



A  Powder River Basin

B  Great Divide Basin

See discussion under section heading Location and Access
below.

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Location map of our Powder River Basin properties (scale: each
block represents 36 square miles) properties:



Our Wyoming mineral properties are undeveloped and do not
contain any open-pit or underground mines. There is no plant or mining equipment
located on our Wyoming mineral properties.

*Location and Access; Proximity to Population Centers and
  Transport*

The Powder River Basin area is located approximately 50 miles
  southwest of Gillette, Wyoming and 100 miles north of Casper, Wyoming. The area
  is accessed from State Highway 50 from the east or State Highway 387 from the
  south, and various internal gravel surface county and private roads. Casper
  is on Interstate 25, approximately one hour by air from either Denver, Colorado
  or Salt Lake City, Utah.

Our Powder River Basin properties are located in portions of
  Campbell and Johnson Counties, Wyoming, U.S.A., and are approximately 60 air
  miles northeast of Casper, Wyoming. The Powder River Basin properties cover
  lands in various sections in the Townships 41 to 44 North and Ranges 74 to 78
  West.

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The center of our properties (centered east-west) is approximately
  eight miles west of the junction of Wyoming Highways 50 and 387. The eastern
  edge of the site is only about one mile west of the junction of Wyoming Highways
  50 and 387. The properties are accessible via two-wheel drive on existing county
  and/or private gravel and dirt roads. Accessibility for drilling at this time
  appears acceptable with the exception of very wet or snowy ground surface conditions.
  Road development and improvements may be required at a later time in order to
  support future development, if warranted, of well fields and processing facilities.

Geology

It is believed that our Powder River Basin properties contain
  alteration-reduction trends hosted in Eocene age channel sands. Alteration-reduction
  trends in the Pumpkin Buttes Mining District are typically composed of multiple,
  stacked roll front deposits that often contain associated uranium mineralization.
  The potential target mineral resources within the Powder River Basin properties
  are believed to be alteration-reduction trends hosted in the Eocene age channel
  sands that lie at depths of approximately 300 to 1100 feet from the surface.
  Uranium mineralization within and adjacent to the Powder River Basin properties
  are found in the Eocene Wasatch Formation (Wasatch). The Wasatch is a fluvial
  deposit composed of arkosic sandstones that are typically 25% or more feldspar
  grains and indicates a source rock where chemical weathering was not extreme
  and the sediments have not been transported far. The coarse grain size and relatively
  good sorting of this sediment implies water transportation, probably in a braided
  river system. The Wasatch formation is interlayed with sandstones, claystones,
  siltstones, carbonaceous shale, and thin coal seams that overlies the Paleocene
  Fort Union Formation, another fluvial sedimentary unit.

We have been engaged in recent exploration efforts on our 100%
  owned Powder River Basin properties, and have obtained data from the related
  drill results. For the Arkose Mining Venture properties, the available data
  includes publicly available drill results from approximately 1,250 coal bed
  methane (CBM) exploration/production wells with data both within and immediately
  adjacent to the Powder River Basin properties. Also available for all of the
  Powder River Basin properties owned or controlled by us were published and unpublished
  mineral trend projections, mineral resource summaries and historic and current
  mineral resource reports developed by us or other operators from these properties
  or adjacent mineral properties, as applicable.

Ownership Interest

Through a combination of claim staking and purchasing we now
  own or control properties covered by a total of approximately 5,663 federal
  lode mining claims on federal and private surface lands in the state of Wyoming
  where the mineral rights are owned by the federal government. In general, the
  claim staking is either in the Powder River Basin or the northern Great Divide
  Basin. The individual mining claims we have staked have been recorded with the
  county and federal governments. It is our objective to purchase or lease additional
  mineral claims and fee minerals directly from current private owners during
  the next twelve months, although there is no assurance that any acquisitions
  will be completed. We have acquired the rights to other federal mining claims
  in the Powder River Basin from private individuals.

Mineralized Areas and Existing Mine Workings

The Powder River Basin properties encompasses over approximately
  115,000 acres, and potential target mineralized zones are expected to occur
  throughout the properties. The potential target mineralization within the Powder
  River Basin properties are believed to be alteration-reduction trends hosted
  in the Eocene age channel sands that lie at depths of approximately 300 to 1,100
  feet from the surface. Roll front deposits of uranium mineralized material are
  anticipated to occur within these properties. There are no pre-existing mineral
  processing facilities or related tailings ponds or waste deposits on the Powder
  River Basin properties.

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*Royalties and Encumbrances on our Powder River Basin Properties*

1,218 unpatented lode mining claims on our Powder River Basin
  properties have an overriding royalty interest burden of 0.25%. This overriding
  royalty interest is based on production of uranium on said claims. Royalties
  on some of the other unpatented lode mining claims are variable and can range
  from a flat 4% on uranium production to a sliding scale of 2-10% with different
  intermediate break points with the 10% rate applying to prices of $100 per pound
  of uranium and greater. All of the unpatented lode claims have annual filing
  requirements ($125 per claim) with the Bureau of Land Management to be paid
  on or before September 1 of each year.

Royalties under the fee mineral leases are variable and can
range from a flat 4% on uranium production to a sliding scale of 2-10% with
different intermediate break points with the 10% rate applying to prices of $100
per pound of uranium and greater.

Topography, Elevation and Vegetation

The Powder River Basin properties are located within the Wyoming
  Basin physiographic province in the central portion of the Powder River Basin,
  within the Pumpkin Buttes Mining District. The Pumpkin Buttes are a series of
  small buttes rising several hundred feet above the surrounding plains. Portions
  of the Powder River Basin properties are located east, west and south of these
  buttes. The cap rock on top of the buttes are erosional remnants of the Tertiary
  White River Formation that is believed to have overlain the majority of the
  Powder River Basin. The volcanic tuffs in the White River Formation have been
  cited as the source of uranium in this basin.

There are numerous ephemeral drainages within the area. A small
  portion of the Powder River Basin properties located in the south east falls
  within the Cheyenne River Drainage Basin. A small area in the eastern portion
  of the Powder River Basin properties falls within the Belle Fourche River Drainage
  Basin. The majority of the Powder River Basin properties is within the Powder
  River Drainage Basin.

The area in which the Powder River Basin properties is located
is a low lying plain, and elevations range from approximately 4390 feet (1440
meters) in the northwest to approximately 5,450 feet (1,790 meters) in the south
east. Historically and currently the land is used for livestock and wildlife
grazing. Vegetation is characteristically sagebrush grassland with some pines on
elevated terrain and some deciduous trees within drainages.

Climate

The climate is semi-arid and receives an annual precipitation
of approximately 9.4 inches, the most falling in the form of late autumnal to
early spring snows. The summer months are usually hot, dry and clear except for
infrequent heavy rains. Cold, wind and snow/blizzards can make winter
exploration work in this area difficult but not impossible. The weather may
limit the time periods for capital construction but should not have any
significant adverse impacts on the operation of an ISR facility.

*Surface Rigths, Local Resources and Properties Infrastructure*

The area has surface rights under applicable laws that allow
  for exploration disturbance, road construction and facility sitting. The claimant
  must first notify the surface owner of its intention to locate unpatented lode
  claims on the owner’s surface and then try and reach an agreement with
  the surface owner to pay for damages caused by the claimant’s operations.
  Provided an agreement can not be reached the claimant may post a bond with the
  Bureau of Land Management to cover the amount of the damages caused by the claimant’s
  operations. We are currently negotiating with various surface owners to enter
  into surface agreements covering the certain of the unpatented lode claims discussed
  herein.

Infrastructure at the site of the Powder River Basin properties
  is dominantly related to local oil, gas, and CBM exploration and development.
  Mineralized locations will affect future siting of well fields and processing
  facilities. Generally, the proximity of the Powder River Basin properties to
  paved roads will be beneficial with respect to transportation of equipment,
  supplies, personnel and product to and from the properties. Power transmission
  lines are located on or near parts of the Powder River Basin properties. Based
  upon discussions with the local electrical service provider, overhead power
  is currently committed but additional power for future projects can be made
  available. Water is available from wells developed at facility locations (potable)
  and water for ISR operations, if warranted, will come from the operation itself,
  i.e. the extracted groundwater. Therefore, the basic infrastructure

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(power, water and transportation) necessary to support an ISR
  mining operation are located within reasonable proximity of the Powder River
  Basin properties.

Personnel required for exploration, construction and operation
at the Powder River Basin properties are expected to come from Gillette, Wright,
Buffalo and Casper, Wyoming.

Typical ISR mining operations also require a disposal well for
limited quantities of fluids that cannot be returned to the production aquifers.
Commonly oil and gas wells within aquifers that have been or can be condemned
for public use, are utilized for such purposes. Oil and gas wells, both
abandoned and producing are located in the immediate vicinity of the
properties.

Exploration History - Nichols Ranch ISR Uranium Project

The Nichols Ranch property was originally part of a large
exploration area encompassing Townships 33 through 50 North of Ranges 69 through
79 West, on the 6th principle meridian. In 1966, Mountain West Mines
Inc. (MWM -now Excalibur Industries) began a successful drilling exploration
program in this area. In 1967, MWM entered into an agreement with
Cleveland-Cliffs Iron Company (CCI) for further exploration and option if
suitable resources were found. CCI exercised its option in 1976 with plans to
begin underground mining operations in the vicinity of North Butte,
approximately 6 and one-half miles northeast of Nichols Ranch. Changing economic
conditions and the development of in-situ mining technology ended much of CCIs
interest in the area. By the late 1980s they began selling select properties or
allowing them to revert back to the federal government.

Between 1968 and 1980 CCI drilled 117 holes and installed 3 water
  wells on the Nichols Ranch property. Texas Eastern Nuclear Inc. in 1985 completed
  limited drilling and exploration on the property and in early 1990s Rio Algom
  Co. also completed limited drilling in the area. In December 2005, we purchased
  the Nichols Ranch claims group as part of a six-property agreement to option
  from Excalibur Industries. We then expanded the properties by staking additional
  claims in the immediate and surrounding areas. In 2007 we had a technical report
  prepared to independently address the geology and uranium mineralization within
  our mineral holdings known as the Nichols Ranch ISR Uranium Project. This technical
  report was prepared in accordance with Canadian National Instrument 43-101 requirements.

Present Condition of Property - Nichols Ranch ISR Uranium
Project

There are no pre-existing mineral processing facilities or related
  wastes on the property. In order to conduct exploratory drilling of the property,
  we were required to obtain permits (License to Explore) from the State of Wyoming
  Department of Environmental Quality, Land Quality Division, (WDEQ/LQD) and mine
  development, if warranted, would require a number of permits depending on the
  type and extent of development, one major permit being the mining permit issued
  by the WDEQ/LQD. Mineral recovery and processing for uranium would require a
  source materials license from the US Nuclear Regulatory Commission (USNRC).

Infrastructure at the site is dominantly related to local oil,
  gas, and CBM exploration and development. The site is located only 10 miles
  north of Wyoming Highway 387, and 12 miles west of the junction of Wyoming Highway
  50. The proximity of the site to paved roads will be beneficial with respect
  to transportation of equipment, supplies, personnel and products to and from
  the site. Cleveland Cliffs Iron Company established 3 water supply/monitoring
  wells on site to support its exploration activities in the 1970s and 1980s.
  Electrical power and natural gas transmission lines are located within or immediately
  adjacent to the site. Thus, the basic infrastructure necessary to support an
  ISR mining operation, power, water and transportation, is located within reasonable
  proximity of the site. Typical ISR mining operations also require a disposal
  well for limited quantities of fluids that cannot be returned to the production
  aquifers. Commonly oil and gas wells within aquifers that have been or can be
  condemned for public use are utilized for such purposes. Oil and gas wells,
  both abandoned and producing, are located in the immediate vicinity of the site
  and nearby ISL operations such as Areva’s Christensen Ranch and Irigaray
  Mines have disposal wells.

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Adjacent Properties

At year-end 2007, within a 7 miles radius of Nichols Ranch we
  hold mineral rights to over 13,500 acres which are planned for future advancement
  as part of the advancement of the Nichols Ranch ISR Project. These lands are
  within the historic Pumpkin Buttes Mining District and have the potential for
  mineralization in the Wasatch Formation. The following table summarizes our
  land holding in the vicinity of Nichols Ranch.

Property
    Township
    Range
    No.
      Claims
    ~
      AcreageDoughstick
    T43N
    R76W
    53
    1060Collins Draw
    T42/43N
    R76W
    58
    1160State Lease
    T43N
    R76W
    NA
    640North Rolling Pin
    T43N
    R76W
    40
    800Hank
    T43N
    R75W
    38
    760C-Line
    T43N
    R75W
    40
    800Willow Creek
    T44N
    R76W
    11
    220West North Butte
    T44N
    R76/75W
    145
    2900East Nichols
    T43N
    R76W
    116
    2320North Nichols
    T43/44N
    R76W
    143
    2860TOTAL
    
    
    644
    13,520


Environmental Permitting

Mine planning for both the Hank and Nichols Ranch properties
continue with no anticipated problems.

Because of the long lead times for environmental permitting of
  mining operations in North America, we have filed applications to the State
  of Wyoming and the US Nuclear Regulatory Commission for permits to conduct ISR
  mining of uranium for the Nichols Ranch and Hank properties, located in the
  Pumpkin Buttes Mining District of the Powder River Basin in Johnson and Campbell
  counties of Wyoming. Although we are conducting pre-feasibility studies, we
  have not at this stage completed any comprehensive feasibility studies on these
  properties demonstrating that development of the properties is commercially
  warranted. Proceeding with these advanced activities prior to completing detailed
  feasibility analysis adds risk to our plan of operations and we may incur costs
  which might not otherwise have been incurred.

Approval of the environmental permit applications is expected
  to allow us to proceed with commercial advancement of the two properties leading
  to production of yellowcake using the ISR method of uranium mining should it
  be determined that development is warranted. It is currently contemplated that
  the main production facility would be located at the Nichols Ranch property,
  and the Hank property would have a satellite facility providing uranium-loaded
  resin or enriched eluate to the main facility.

19

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The primary regulatory approvals for an ISR uranium mine come
  from the WDEQ at the state level, and from the USNRC at the federal level. The
  WDEQ issues a Permit to Mine, and the USNRC issues a Source Material License.
  It is anticipated that the NRC will complete a Generic Environmental Impact
  Statement prior to the approval of new uranium ISR production activities. Both
  the state and federal agencies look at all environmental aspects of a proposed
  ISR mine including reclamation of the land surface following mining operations,
  and restoration of impacted ground water. Work place safety and the safety of
  the public are also closely monitored by regulatory agencies. Posting of a reclamation
  bond by the mine operator with the regulatory agencies in an amount to cover
  the total estimated cost of reclamation by a third party is also a requirement
  of the law. The reclamation bond must be a "hard" bond which means
  it must be either cash, certificate of deposit, letter of credit or some other
  similar type of financial instrument.

We have engaged TRC Mariah Associates based in Laramie, Wyoming
  as the prime contractor for performing the several environmental baseline studies.
  Hydro Engineering from Casper, Wyoming has been engaged to perform the necessary
  aquifer pump tests, and prepare the hydrology section of the environmental permit
  applications. Environmental surveys such as vegetation, soils, wildlife, cultural
  resources, radiation and water quality have been completed. Reports were prepared
  and incorporated into our applications which were submitted to the WDEQ and
  NRC in the last quarter of 2007.

NAMMCO Acquisition

On September 19, 2007 we signed a Purchase and Sale Agreement
  with NAMMCO, a Wyoming general partnership, and associated individuals named
  therein (collectively, the “NAMMCO Group”) to acquire an undivided
  eighty-one percent (81%) interest in the NAMMCO Group’s mineral properties
  located in the central Powder River Basin of Wyoming, USA and to enter into
  a joint venture agreement with the NAMMCO Group pursuant to which we will be
  operator of these properties.

Under the terms of the Purchase and Sale Agreement, we paid a
  total of $5,000,000 in cash and issued to the NAMMCO Group a total of 5,750,000
  shares of our common stock to acquire the 81% interest in the NAMMCO properties.
  The agreement was subject to a due diligence period in our favor, ending on
  December 31, 2007 and to the concurrent signing of a mining joint venture agreement
  between the parties. The NAMMCO acquisition closed January 15, 2008 and a joint
  venture was formed, the Arkose Mining Venture (“Arkose Mining Venture”).
  As operator of the joint venture, our plan is to pursue an aggressive exploration
  program to determine the presence of uranium mineralization suitable for extraction
  by using the ISR mining method.

The Arkose Property is located in portions of Campbell and
Johnson Counties, Wyoming, U.S.A., and is approximately 60 air miles northeast
of Casper, Wyoming. The Arkose Property falls between Latitudes and Longitudes
of approximately 106' 10 and 105' 48 West and 43' 47 and 43' 31 North,
respectively. The Arkose Property covers lands in various sections in the
Townships 41 to 44 North and Ranges 74 to 78 West.

The Arkose Property consists of unpatented lode mining claims,
  fee mineral leases, and state mineral leases. The land surface of the Arkose
  Property consists of private, federal and state lands. There are 4,226 unpatented
  lode mining claims within the Arkose Property which comprise approximately 69,137
  acres; and 65 fee mineral leases nd 3 state leases which comprise approximately
  13,073 net acres. The NAMMCO properties have significantly expanded our mineral
  property holdings in the Powder River Basin area, which currently consist of
  approximately 32,701 acres (13,233 hectares). Uranerz now controls a total of
  approximately 114,911 acres (46,503 hectares, or approximately 179 square miles)
  of mineral properties in the Powder River Basin.

Ownership History of the Arkose Property

The following is a brief description of what is known about
ownership history of the Arkose Property and the properties in the larger
exploration area of which the Arkose Property was historically a part.

The NAMMCO Group commenced acquiring rights to the properties
  comprising the Arkose Property in 2005, and continued to do so through 2006
  and 2007. On January 15, 2008, we completed an acquisition of an undivided eighty-one
  percent interest in the Arkose Property and formed the Arkose Mining Venture
  with United Nuclear LLC, a company wholly owned by the NAMMCO Group.

The Arkose Property was originally part of a large exploration
area encompassing Townships 33 through 50 North of Ranges 69 through 79 West, on
the 6th principle meridian. In 1966, Mountain West Mines Inc. (MWM  now

20

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Excalibur Industries) began a successful drilling exploration
program in a portion of this area. In 1967, MWM entered into an agreement with
Cleveland-Cliffs Iron Company (CCI) for further exploration and option if
suitable resources were found. CCI exercised its option in 1976 with plans to
begin underground mining operations in the vicinity of North Butte, within
approximately 3 to 15 miles of the Arkose Property. Changing economic conditions
and the development of ISR mining technology ended much of CCIs interest in the
area.

In addition to CCI, other uranium exploration companies during
  the last forty years have controlled property either within or near the Arkose
  Property area. These included Kerr McGee, Conoco, Texaco, American Nuclear,
  and Tennessee Valley Authority. Areva NC (Cogema Resources Inc.) and Cameco
  Resources Inc. (a subsidiary of Cameco Corporation) have retained portions of
  their original land positions in the area. The mining claims and leases originally
  controlled by most of these companies were let go over the years due to market
  conditions. These property abandonments continued into 2004.

Exploration and Development Work Undertaken

The Arkose Mining Venture has commenced uranium exploration on
  the Arkose Property in March 2008. Exploration for uranium on the Arkose Property
  has been performed as historic uranium exploration by previous operators. In
  addition, and not for the purpose of uranium exploration, CBM exploration/production
  well development has been performed on the Arkose Property thus providing direct
  and indirect evidence of uranium mineralization via publicly available gamma
  log data.

It is estimated that over 4,000 historic uranium exploration
holes may have been drilled within the Arkose Property. This exploration was
conducted by numerous exploration companies from the 1960s through the 1990s.
Although this historic exploration data are known to exist, obtaining
information on all but a handful (<50) of specific drill hole data, such as
gamma, resistivity, and lithology logs, has not been possible to date.

The CBM exploration/production wells were drilled by numerous
companies for development of coal bed methane resources in the area. A total of
approximately 1,250 CBM exploration/production wells have been drilled on or
immediately adjacent to the Arkose Property. Most of this drilling was completed
from 1,200 to 2,000 feet deep and is on-going. CBM exploration/production wells
and their associated gamma logs are all drilled and logged through the uranium
mineralization-bearing sand horizons.

The Arkose Property is located within the Pumpkin Buttes Mining
  District, which was the first commercial uranium production district in Wyoming.
  Uranium was first discovered in the Pumpkin Buttes in 1951. Intermittent production
  from some 55 small mines through 1967 produced 36,737 tons of ore containing
  208,143 pounds of uranium. This early mining focused on shallow oxidized ores
  exploited by small open pit mines. The ore was generally transported to the
  Atomic Energy Commission buying station in Edgemont, South Dakota. Modern mining
  in the district has focused on deeper reduced ores. Areva’s Christensen
  Ranch and Irigaray ISR uranium mining areas and processing facilities are located
  within the Pumpkin Buttes Mining District, approximately 10 and 16 air miles,
  respectively, from the Arkose Property. These mines have completed successful
  ISR mining and aquifer restoration in the Wasatch formation.

Other Powder River Basin Projects

Through a combination of claim staking, purchasing, and leasing
we also have several projects within the Powder River Basin but outside of the
Powder River ISR Complex. These include the Verna Ann, Niles Ranch, Reno Creek
North, and Reno Creek South projects. In general, these projects are located in
sandstone basins of Cretaceous or Tertiary age with known uranium
mineralization. However, due to our focused approach to the Powder River ISR
potential, we have not yet initiated exploration work on these projects.

Planned Exploration - Powder River Basin

We have completed sufficient exploration in the Nichols Ranch
  area in order to focus on mine planning and permitting. Nonetheless, in 2008,
  we will continue a modest drilling program in this area to expand our knowledge
  of uranium potential for mining. The majority of our exploration in 2008 will
  be on the recently acquired Arkose Property described above. For more details
  on our exploration plans and expenditures please see the disclosure below under
  the section heading “Description of Properties – 2008 Exploration
  Plans”.

21

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Great Divide/Red Desert Properties

On June 7, 2006, we entered into an agreement with Black Range
Minerals Limited (Black Range) on two of our exploration projects located
within the Red Desert area of southwest Wyoming. This formal agreement followed
a strategic alliance agreement entered into between us and Black Range on May
18, 2006.

Under the terms of the agreement, we and Black Range agreed to
form a joint venture to conduct further exploration and to develop the
properties under the following conditions:

Stage 1

Under the terms of the joint venture Black Range shall have the
right to earn a 50% equity interest in the joint venture by managing and meeting
the first $750,000 in exploration expenditures on the projects, at no cost to
us, including land holding costs such as maintenance fees, lease costs etc.

Black Range is obliged to spend at least $100,000 per year on
exploration on the projects and to spend the first $750,000 on exploration
within three (3) years of inception of the joint venture agreement. Once Black
Range has spent $750,000 on the projects, our equity interest in the joint
venture shall reduce to 50% and Black Ranges equity interest shall increase to
50%.

Stage 2

On completion of the first phase of the exploration program,
should we elect not to contribute to the costs of the second phase of
expenditure on a pro-rata basis, then Black Range shall have the right to earn a
further 1% interest in the joint venture for every $25,000 spent on the projects
to a maximum interest in the joint venture of 70% (by spending $500,000). On
completion of the first phase of the exploration program, should Black Range
elect not to contribute to the cost of the second phase of expenditure on a
pro-rata basis, then we shall have the right to earn a further 1% interest in
the joint venture for every $25,000 spent on the Projects, to a maximum interest
in the joint venture of 70% (by spending $500,000).

Stage 3

On completion of the second phase of expenditure, should we
elect not to contribute to all further expenditure on a pro-rata basis, then
Black Range shall have the right to earn a further 1% interest in the joint
venture for every $25,000 spent on the Projects to a maximum interest in the
joint venture of 100% (by spending $750,000). We would be awarded a 6% royalty
for our contribution up to that point.

On completion of the second phase of expenditure, should Black
Range elect not to contribute to all further expenditure on a pro-rata basis,
then we shall have the right to earn a further 1% interest in the joint venture
for every $25,000 spent on the projects to a maximum interest in the joint
venture of 100% (by spending $750,000). Black Range would be awarded a 6%
royalty for their contribution up to that point.

As at December 31, 2007 Black Range has completed drilling at
both locations in the Great Divide Basin with 32 holes drilled on the Eagle
property in 2006 and 42 holes drilled on the Cyclone Rim property during 2007.
Geologic study is continuing on these drill results. Accordingly, they have met
the minimum expenditure requirements and are continuing phase one of the joint
venture.

Saskatchewan  Cochrane River Property

The Saskatchewan property extends to the northeast of the northern
  portion of Wollaston Lake. The closest community is the Village of Wollaston
  Lake which is located 50 km to the south. This community is served by a year-round
  scheduled air link to the cities of Saskatoon and Prince Albert in central Saskatchewan.
  A winter road (during January, February and March) links the Wollaston Lake
  community with Provincial Highway 905 (and the provincial road network) on the
  west side of Wollaston Lake.

22

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There is presently no road access to the Cochrane River
property. Numerous lakes within the property can be accessed by float- and
ski-equipped light aircraft which are available for charter at Points North
Landing (75 km to the southwest) and at the Town of La Ronge (400 km to the
south-southwest).

Property Location Map



Ownership Interest

Our Saskatchewan property, called the Cochrane River property
originally consisted of two Mineral Prospecting Permits (MPP 1237 and MPP 1238)
with a combined total areal extent of 67,480 hectares (166,747 acres). The
property is located in northern Saskatchewan. Ubex Capital Inc. (Ubex) filed
an application with Saskatchewan Industry and Resources (SIR) to acquire the
permits on 31st January, 2005, and certificates confirming title were
subsequently issued by SIR on 4th March, 2005. The permits were
registered in the name of Ubex Capital Inc. with 100% unencumbered ownership.

Permit application fees which were submitted by Ubex, payable
to SIR, were as follows:

For each permit, a refundable deposit of $15,000, and a
recording fee of $0.15 per hectare.

The legal description of the permits consists of a listing of
corner coordinates (NAD 27), as follows:

Permit MPP 1237

| | 1. | 102< 47' 19.68" W 58< 45 00 N
| | -- | -------------------------------
| |    |                                
| | 2. | 102< 34 58.80 W58< 4030 N  
| |    |                                
| | 3. | 102< 52 08.40 W 58< 30 00 N
| |    |                                
| | 4. | 103< 00 00 W 58< 30 00
N   

23

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|                | 5. | 103< 00' 00" W 58< 39' 19.08" N   
|--------------- | -- | ----------------------------------
|                |    |                                   
|Permit MPP 1238
|               
|                | 1. | 102< 47' 19.68" W 58< 45' 00" N   
|                |    |                                   
|                | 2. | 102< 34' 58.80" W 58< 40' 30" N   
|                |    |                                   
|                | 3. | 102< 25' 01.20" W58< 46' 16.32" N 
|                |    |                                   
|                | 4. | 102< 27' 52.20" W 58< 47' 44.88" N
|                |    |                                   
|                | 5. | 102< 15' 34.20" W58< 54' 11.16" N 
|                |    |                                   
|                | 6. | 102< 17' 14.28" W 58< 55' 02.64" N
|                |    |                                   
|                | 7. | 102< 34' 00" W 58< 49' 55.56" N   
|                |    |                                   
|                | 8. | 102< 40' 22.08" W58< 48' 05.94" N 

Title to MPP1237 and MPP 1238 has been sold to us by Ubex. We
have entered into a mineral property purchase agreement with Ubex dated April
26th, 2005, to acquire an undivided 100% right, title and interest in
the two mineral exploration properties. The agreement is subject to Ubex
retaining a 2% royalty. Total consideration for this acquisition consists of a
cash payment in the amount of $40,756.95 Canadian dollars (Cdn$), which is
Ubexs cost of acquisition of the two permits. The sale of the properties to us
has been completed.

Ubex Capital Inc. is 100% owned by Dennis Higgs, one of our
directors. Ubex will retain a royalty of 2% on the property and will split the
royalty with Darcy Higgs, Dennis Higgs brother.

On October 20, 2005, an amendment to this agreement was signed
that allows us the one time right exercisable for 90 days following completion
of a bankable feasibility study to buy up to one half (50.0%) of Ubexs royalty
interest (i.e. an amount equal to 1% Royalty) for Cdn$1,000,000, leaving Ubex to
retain not less than a 1% Royalty.

Saskatchewan mineral dispositions including permits are
administered by SIR on behalf of the Crown of Canada in accordance with The
Mineral Disposition Regulations, 1986. The holder of a permit is granted the
exclusive right to explore for minerals (though not to extract, recover or
produce minerals except for testing and scientific purposes) within the permit
outline. A permit is valid for a period of two years and may not be renewed.
While in compliance with the requirements of the regulations, a permit holder is
entitled to convert any portion of a permit to mineral claims which may be held
indefinitely. The two-year life on the permits ended on January 31, 2007. In
late January and early February, 2007, a total of seven claims were staked
within the boundaries of MPP 1237 and 1238, for a total of 28,012 hectares. The
new claims have been recorded with the Saskatchewan mine recorder office in la
Ronge, and they now are posted on the government website. The staked area
covered the most interesting area of interest as interpreted from the DIGHEM V
survey, as well as areas of anomalous lake sediment chemistry. A claim holder
may subsequently convert his claim into a mineral lease which allows for
commercial extraction of minerals.

History of Operations

On November 4, 2005, we signed an agreement to joint venture
our Cochrane River property located in northern Saskatchewan, Canada, with Triex
Minerals Corporation. Triex can earn a 60% interest in the Cochrane River
property by making payments to us of Cdn$75,000 and spending Cdn$1,500,000 on
the property by October 1, 2008. After completing the 60% earn-in phase, Triex
can elect to earn an additional 10% interest in the project by spending an
additional Cdn$1,500,000 by November 1, 2009. Several phases of exploration work
have been

24

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conducted by our joint venture partner (Triex) on the Cochrane
River property. No mineralized material is known to exist.

Present Condition of the Property and Proposed
Exploration Program

Our Saskatchewan mineral properties are undeveloped and do not
contain any open-pit or underground mines. There is no plant or equipment
located on our Saskatchewan mineral properties.

Since we have signed an agreement to joint venture our Cochrane
River property with Triex, Triex is the operator of the exploration programs for
this joint venture. Any exploration undertaken by Triex will be at its expense
under the terms of the joint venture agreement. There is no assurance that Triex
will make the cash payments or undertake the full amount of the exploration
expenditures necessary for it to earn an interest in our Saskatchewan
properties.

By January 2006 Triex had completed a detailed airborne
geophysics survey on the Cochrane River properties. Fugro Airborne Surveys
completed helicopter-borne geophysical surveys over four grids on the Cochrane
River property for a total of 1,949 line kilometers. All the grids were flown at
100 meter line spacing to produce high resolution data. The grid areas covered
major boundary zones on regional airborne magnetic maps, and on the location of
known mineral occurrences, geochemical anomalies and previously defined
conductors.

A follow-up ground exploration program commenced in August,
2006, to focus on grid-based and lakeshore prospecting and geological mapping,
as well completing an extensive lake sediment survey facilitated by a Bell 206
helicopter equipped with floats. Recent advances in the understanding and
modeling of the structural geometries of basement-hosted uranium deposits in the
Athabasca Basin, such as Millennium, Sue C and Eagle Point, were applied to
advance targets. Additional geophysical and remotely sensed data sets have been
acquired from the public and private domain and integrated into the existing
project GIS database in order to facilitate a detailed lineament analysis and
integrated structural study which is focused on the potential for structurally
controlled uranium deposits.

Ground-based resistively surveys were completed which follows
up on key targets identified from helicopter-borne DIGHEM V geophysical surveys
(EM and magnetic) flown in January 2006.

During September, 2006, a program consisting of a lake sediment
sample program covering both of our permits MPP 1237 and 1238 as well as some
prospecting and mapping designed primarily as a ground truth of the 2006 DIGHEM
V airborne magnetic/EM survey. A total of 390 lake sediment samples were taken.
The approximate density of sampling was 1 per 1.5 sq. km.

From mid-November, 2006 until mid-February, 2007 a pole-dipole
array D.C. resistively survey was conducted on the Cochrane River project. Work
on Cochrane River focused on MPP 1238, in an area that overlapped with a portion
of the 2006 DIGHEM V survey. 14.8 line-km of grid was established but only 5.9
line-km of geophysics survey was covered on the grid on MPP 1238. The survey was
cut short because the harsh winter conditions and extreme frozen ground affected
the production rate of the survey.

The target on the Cochrane River property is structurally
controlled, basement-hosted deposits at or near surface. It is planned that the
structural models prepared for Eagle Point and other deposits in the eastern
Athabasca Basin over the past 5 years will be incorporated into the program.
Conductors were the focus of exploration in the 1970s. Triex plans to build on
that work, not repeat it, by prioritizing targets related to conductors based on
their structural setting.

A total of seven claims have now been staked within the boundaries
  of our mineral prospecting permits MPP 1237 and 1238, for a total of 28,012
  hectares. These claims have been recorded with the Saskatchewan mine recorder
  office in la Ronge. A claim holder may subsequently convert its claim into a
  mineral lease which allows for commercial extraction of minerals.

The focus of the 2007 summer program was to complete
property-scale geological mapping of outcrops, and systematic geochemical
sampling of boulders and glacial till. The objective was to refine targets for
first-pass drill-testing in 2008. Because outcrop is sparse in the region
(<10% over the property), analyses are mostly for boulders and till. A total
of 270 man-days were spent collecting:

25

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- 65 outcrop samples
- 28 boulder samples
- 513 soil samples from glacial till

All samples were sent to Geolanalytical Laboratories of the
Saskatchewan Research Council in Saskatoon.

The total cost for the 2007 summer program was approximately
$580,000.

Total cumulative expenditures by Triex on the Cochrane River
  property to October 4, 2007 are $1.23 million. A cumulative $1.5 million was
  to be spent on the property by May 1, 2008, for Triex to earn its first option
  of 60% interest in the property (the “First Option”). Although work
  on this property has progressed well (more or less continuously since 2005),
  and although the May 2008 deadline is still several months away, it was anticipated
  that it would be difficult to meet the deadline. Turnaround of geochemical data
  from SRC was slow and data from the summer program that are required to properly
  evaluate, rate, and rank drill targets was not available to properly plan the
  drill program. Second, processing of permit applications by the Saskatchewan
  government is slow, with a two to four month time frame. As such, that made
  a winter program in 2008 untenable and the May 1st option deadline unrealistic.

Triex requested a five month extension to the original May
1st, 2008 deadline for the First Option. That would allow Triex until
October 1st, 2008, to properly compile and interpret data, formulate
targets, and obtain the necessary permits in time to successfully complete a
summer drill program next year. We agreed to this extension on October 10,
2007.

Geology

The property is underlain by highly deformed Paleoproterozoic
Wollaston Group metasediments and Archean age granites which form part of a 60
km wide, northeast trending fold-thrust belt known as the Wollaston Domain. The
Cochrane River property is located within the western portion of the Wollaston
Domain where the metasediments contain abundant graphitic horizons.

The Athabasca Basin, which extends for some 425 km east-west x
220 km north-south, hosts several world class uranium deposits (McArthur River,
Cigar Lake, Key Lake, and others). These deposits occur at and around the
contact between western Wollaston Group metasediments and overlying Athabasca
Group sandstone units and are generally termed unconformity-type deposits.
Although much of the uranium ore is generally hosted by the overlying Athabasca
Group sandstones, significant uranium mineralization commonly extends vertically
beneath into the Wollaston Group rocks. This is particularly evident at the
McArthur River deposit, where the majority of the uranium ore and the highest
grades of mineralization occur in the underlying basement rocks.

The Athabasca Basin, which extends for some 425 km east-west
  x 220 km north-south, hosts several world class uranium deposits (McArthur River,
  Cigar Lake, Key Lake, and others). These deposits occur at and around the contact
  between western Wollaston Group metasediments and overlying Athabasca Group
  sandstone units and are generally termed unconformity-type deposits. Although
  much of the uranium mineralization is generally hosted by the overlying Athabasca
  Group sandstones, significant uranium mineralization commonly extends vertically
  beneath into the Wollaston Group rocks. This is particularly evident at the
  McArthur River deposit, where the majority of the uranium and the highest grades
  of mineralization occur in the underlying basement rocks.

Faults, particularly the common northeast-oriented strike slip
faults of this region, tend to be localized within the soft, graphitic horizons
of the Wollaston Group sediments, particularly where adjacent to relatively
rigid basement units such as Archean granites. Fault movements, particularly
strike-slip movements, enhance the electrical conductivity of graphitic horizons
by aligning the graphite grains and promoting electrical continuity. Reactivated
basement faults also provide enhanced fluid permeability in the basement which
facilitates fluid flow and mixing which are thought to be key components in the
formation of the uranium deposits of the Athabasca Basin region. Thus, faults
and particularly graphitic conductors are commonly sought as exploration targets
for uranium mineralization. Graphitic conductor horizons which are in close
proximity to Archean granite bodies are thought to be particularly favorable.

26

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Mongolia

Location and Access

Our eight exploration licenses in Mongolia are spread out
across the country into four regional areas that we call the North Gobi Project,
the East Gobi Tamtsag Project, the Central Gobi Project, and the West Central
Highland Project. A tabulation of the eight licenses is presented below that
includes location coordinates. Generally speaking, access to all eight licenses
is by vehicles departing from the capital city of Ulaan Baatar. Roads, except in
the immediate vicinity of Ulaan Baatar, are unimproved dirt/gravel and often
just two tracks. Four wheel drive vehicles are the standard means of travel by
western field crews on the Mongolian road system. Access to the capital city of
Ulaan Baatar from outside of the country is by commercial air.

Table of Mongolian Licenses

No.
    License No
    Name Of license
    Coordinates
    
    Aimag* and (Province)
    Soum Area (Hectares)1
    8560X
    Ulaankhushu u (Khavtsal)
    109 01 20 10911 20 109 11 20 109 01
      20
    45 34 10 45 34 10 45 27 30 45 27 30
    DG (Airag)
    160912
    10166X
    Ovor bel
    116 01 00 116 19 00 116 19 00 116
      01 00
    47 20 10 47 20 10 46 50 30 46 50 30
    DO Matad
    1245273
    10167X
    Tasarkhai
    115 30 00 116 00 00 116 00 00 115
      30 00
    47 00 00 47 00 00 46 54 00 46 54 00
    DO Matad
    423254
    10165X
    Khudgiin us
    109 20 00 109 29 50 109 29 50 109
      20 00
    45 42 40 45 42 40 45 40 00 45 40 00
    DG Airag
    63085
    10168X
    Khartolgoi
    105 05 00 105 25 00 105 25 00 105
      05 00
    45 00 00 45 00 00 44 51 30 44 51 30
    DU Khuld, Delger
      khangai
    414306
    10169X
    Chuluut
    105 55 00 106 08 00 106 08 00 106
      05 40 106 05 40 106 08 00 106 08 00 105 55 00
    45 00 00 45 00 00 44 58 50 44 58 50
      44 56 40 44 56 40 44 47 00 44 47 00
    DU Khuld, Olziit
    39987


27

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7
    10241X
    Chuluut
    100 27 00 100 30 00 100 30 00
      100 36 00 100 36 00 100 27 00
    48 17 00 48 17 0048 17 10
      48 17 10 48 11 30 48 11 30
    AROndorTariat
    ulaan,115898
    10315X
    Tolgod
    109 00 00 109 05 20 109 05 20
      109 00 00
    45 54 00 45 54 00 45 52 00 45
      52 00
    DGDalanjargalan
    2558


DG - Dornogobi, DU - Dundgobi, AR - Arkhangai, DO  Dornod

28

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Location Map of the Uranerz Mongolian Exploration Licenses



Khavtsal Location Map



29

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The Khavtsal property (license no. 8560X), our most advanced
exploration property in Mongolia, is 321 kilometers south-southeast of Ulaan
Baatar, the capital city of Mongolia in the Dornogovi province and Armag sub
province. The approximate geographic center of the property is at 45(32'42" and
109(07'08'. Access to the property is by surfaced and undeveloped roads that
head southerly from Ulaan Baatar. These roads parallel the main railway between
Ulaan Baatar and southern Mongolia. The property is 30 kilometers south from the
station Khar Armag along this railway.

License numbers 10168X and 10169X are located 108km southwest
and 80km southwest respectively from the city of Mandalgobi in the Dungovi
province of Mongolia. Access is by primary improved and secondary roads.

License numbers 10165X and 10315X are located 108km southeast
from the city of Sumber in the Dornogovi province of Mongolia. Access is
provided by primary and secondary roads that parallel the central Mongolia
railway between the capital of Ulaan Baatar and the border with China to the
south.

License number 10241X is within an area known as Chuluut,
approximately 102km northwest of the city of Tsetserleg in the province of
Arhangav of Mongolia.

License numbers 10167X and 10166X are located 139km and 145km
southeast respectively southeast of Choibalsan. Access is by primary and
secondary roads.

Ownership Interest

We signed a letter agreement to option and joint venture our
eight Mongolian exploration licenses to Bluerock Resources Ltd. (Bluerock).
Under the terms of the agreement, we have granted to Bluerock the option to
acquire an undivided 70% interest in the properties for payments totaling
150,000 common shares of Bluerock, $120,000 in cash and by incurring exploration
expenditures in the amount of $1,500,000 on the properties by October 18,
2009.

We have retained the right to acquire a 21% interest in the
joint venture, by paying to Bluerock an amount calculated in relation to the
quantity of U3O8 within the Mongolian properties, as determined by a feasibility
study. For measured mineral resources, we would pay a price of $0.42 per pound
of U3O8; for indicated mineral resources, we would pay a price of $0.26 per
pound of U3O8.

The defined terms, “measured mineral resources,”
  “indicated mineral resources,” and “inferred mineral resources”
  used in this quarterly report have the meanings set forth in National Instrument
  43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”),
  which provides guidelines for use of the terms “mineral resource”
  and “mineral reserve” which are Canadian mining terms defined in
  accordance with the guidelines set out in the Canadian Institute of Mining,
  Metallurgy and Petroleum (the “CIM”) Standards on Mineral Resources
  and Mineral Reserves Definitions and guidelines adopted by the CIM. The definitions
  of proven and probable reserves used in NI 43-101 differ from the definitions
  in the United States Securities and Exchange Commission’s Industry Guide
  7. In the United States, a mineral reserve is defined as a part of a mineral
  deposit, which could be economically and legally extracted or produced at the
  time the reserve determination is made by virtue of a bankable feasibility study.
  Accordingly, descriptions of mineral deposits in accordance with NI 43-101 may
  not be comparable to similar information made public by other U.S. companies
  under the United States federal securities laws and the rules and regulations
  thereunder.

Similar terms allow for us to acquire back a 21% interest in
the joint venture if a gold deposit is discovered, based on a back-in price of
$5.25 per ounce of measured gold resources and $3.15 per ounce of indicated gold
resources.

History of Operations

Our Mongolian mineral properties are undeveloped and do not
contain any open-pit or underground mines. There is no plant or mining equipment
located on our Mongolian mineral properties.

All of our license areas have prospective characteristics that
indicate favorability for hosting sediment-hosted, near-surface uranium deposits
including a proximity to known sandstone-hosted uranium occurrences as
identified by Russian-Mongolian survey work, radiometric anomalies and/or
favorable geology. The licenses fall within areas surface mapped as or inferred
to contain Upper Jurassic to Lower Cretaceous sedimentary sequences, and
generally occur within basins framed by uplands comprised of crystalline rocks
likely to provide a source for secondary

30

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transport of uranium into the basin by groundwater flow. These
geologic setting in Mongolia have demonstrated uranium deposit potential by
comparison to known deposit occurrences. Similar geologic settings in China, the
Commonwealth of Independent States including Russia, countries surrounding
Mongolia, have demonstrated economic uranium production as well.

Since July 2006, Bluerock employees and contractors have
prospected five of the eight license areas and conducted additional research
relating to the Khavtsal permit 8560X (in Ulaanbaatar and Irkutsk). Bluerock has
provided a brief description below of exploration results for each license
area.

Bluerocks staff in Mongolia reviewed the results of its 2006
exploration efforts and has developed a program for 2007 that includes some
follow-up geophysical work, but focused primarily on drill testing to expand the
knowledge related to historical uranium information and to delineate uranium
anomalies discovered last year. Additional information on the 2007 drilling
program is discussed in the following sections.

Recent Exploration Activity

In 2007 Bluerock started drilling on our Ulaan Nuur uranium projects
  in Mongolia. The drilling program focused on three separate licenses located
  south of Ulaanbaatar in the Ulaan Nuur Depression. Based on Phase I geological
  data and discussions with on site geologists, Bluerock increased the planned
  metres of drilling from 3,000 metres to 4,000 metres.

Khavtsal

Drilling on the Khavtsal License focused on expanding the known
uranium mineralization to the north and south of the historic Khavtsal
mineralization. Geophysical surveys, completed in the first phase of the 2007
program, defined deeper basinal targets and interpreted fault structures that
present newly defined targets for the expansion program.

Tolgod

Drilling on the Tolgod License focused on untested basinal
targets associated with radiometric anomalies in both geophysical surveys and
ground water studies.

Khudgiin Us

Drilling on the Khudgiin Us License was designed to locate the
northern extension of known uranium mineralization in the Ulaan Nuur historic
uranium anomaly. Results of 2007 geophysical surveys completed by Bluerock were
incorporated into the drill planning for the project to ensure full coverage of
the basinal targets.

Following the completion of the Khudgiin Us program the drill
rigs and camp were moved to our Central Gobi uranium projects and the
continuation of Bluerocks 2007 Mongolian JV uranium exploration program.

Samples from the 2007 Mongolian drilling programs were prepared
and analyzed by Activation Laboratories, (Actlabs) of Ancaster Ontario, at their
lab in Ulaanbaatar, Mongolia. Rock preparation consisted of crushing and
pulverizing to 85% passing 75 micron mesh. Uranium results were analyzed by XRF.
All samples of interest, plus 10% of the remainder were shipped to Canada by
Actlabs, for ICP-MS verification at their Ancaster facility.

On October 11, 2007 Bluerock announced drilling and trenching
results from the 2007 exploration programs on our Ulaan Nuur Basin uranium
projects in Mongolia, as follows. The drilling programs were focused on three
separate licenses, the Khavtsal, Khudgiin Us and Tolgod, all of which are
located south of Ulaanbaatar in the Ulaan Nuur Basin.

Assay results defined anomalous uranium mineralization in drill
holes and trenches on the Khavtsal license.

Additionally, the 2007 Khavtsal drilling program identified
substantial thicknesses of coal with 18 of the 30 drill holes returning
intervals greater than 1 metre of coal. 10 of these drill holes intersected
greater than 10 metres total thicknesses of coal. Drill hole KH07-19 returned a
26 metre thick coal horizon within a 46 metre inter-bedded section of coal, sand
and clay. These newly discovered coal intervals have been identified over a
one-by-three kilometre area and are open to extension to the north and south. As
the drill program was designed to identify and

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measure uranium mineralization, the drill technique, sampling
and logging was not optimized to define coal resources. Bluerock reports that it
is planning a focused drill program to define the quality and continuity of
these coal seams.

Uranium Exploration Results

Khavtsal

Assay results from the drilling program on the Khavtsal
property have demonstrated continuity between two known, near surface, uranium
occurrences and more importantly, indicated that uranium mineralization does
extend to depth within the basin. Bluerock's geologists interpret the defined
uranium anomalies as related to reduction (redox) fronts in the hosting
sandstone's lignite horizons. This may indicate the presence of a large tonnage
roll-front type deposit in the area; a program is being designed to explore this
potential. Bluerock crews drilled 30 Reverse Circulation holes (2,938 total
metres) on the Khavtsal property in 2007, with an averaged depth of 100 metres.
Khavtsal had received a limited amount of uranium exploration work during the
1980s by a Soviet/Mongolian JV. The Soviets outlined two zones of near surface,
lignite hosted uranium and a preliminary (non N.I. 43-101 compliant) resource
was calculated at that time.

Concurrent with the drilling program, Bluerock crews excavated
12 trenches on the Khavtsal license designed to confirm and test near surface
uranium mineralization as defined from the 1980s vintage Soviet uranium
exploration programs. Trenches averaged 2 metres in width and 3 metres in depth.

All trenches expanded upon and/or confirmed the reported
uranium mineralization. Trench TR07-01 established an interpreted continuity
between two historical uranium showings.

All drill and trench results from the 2007 Khavtsal exploration
program are being integrated with historic Soviet data by Company staff.

Khudgiin Us

Nine widely spaced RC holes (904 total metres) were drilled on
the Khudgiin Us license. The drill program was designed to locate the northern
extension of known uranium mineralization in the Ulaan Nuur historic uranium
anomaly and integrated both surface mapping and the spring 2006 Bluerock
geophysical surveys. While favorable sedimentary horizons were encountered, they
were generally thin and relatively un-mineralized with assay values ranging from
trace to 47 ppm U over 0.3 metres.

Tolgod

Four RC drill holes (159 total metres) were completed on the
Tolgod concession and designed to target sedimentary hosted uranium
mineralization. The basin was found to be shallower than postulated,
constraining its potential to host a significant deposit. No significant assay
were returned from this program

Central Gobi

Bluerock's 2007 Mongolia uranium exploration projects remained
active with reverse circulation diamond drilling combined with a trenching
program on the Central Gobi Project. A report on this program is pending.

Assaying and Analysis

Gamma log probing was carried out by G&DS Co. Ltd., (a
third party contractor), who has a long record of third party geophysical
surveying for TSX listed companies. The downhole logging system, manufactured by
Mount Sopris Instrument Company, included a motorized winch based MXA-1000 unit,
MGX II and Matrix data interface consoles and two downhole probes, a 2PGA-1000
(Natural Gamma, SP, Single Point Resistance) and 2PEA-1000 (Normal Resistivity).
The 2PGA-1000 probe was calibrated at the company's Grand Junction, Colorado
calibration facilities on February 2007. Drill cutting check samples were
collected and assayed by XRF to verify results and disequilibrium issues.

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Drill and trenching samples from the 2007 exploration programs
were prepared and analyzed by Activation Laboratories, (Actlabs) of Ancaster
Ontario, at their lab in Ulaanbaatar, Mongolia. Rock preparation consisted of
crushing and pulverizing to 85% passing 75 micron mesh. Uranium results were
analyzed by XRF. Drilling samples were collected as chips from each 1 meter run.
Chips were gamma probed with a hand held scintillometer by Company staff and
samples collected on all intervals with greater than 120 CPS. Trenching samples
were collected from vertical channels through the stratigraphic (flat lying)
target horizons. All samples of interest, plus 10% of the remainder are shipped
to Canada by Actlabs, for ICP-MS verification at their Ancaster facility.

2008 Exploration Plans

Our Optionee Bluerock Resources is preparing a strategic
assessment of our Mongolian properties for 2008 that is based on the results of
the 2007 program. We will review this analysis when received and move towards
adopting an ownership strategy that is mutually agreeable to both companies.
Options include further exploration or divestiture.

Texas

On July 16, 2007 we announced the completion of an initial
leasing program of approximately 8,000 acres in the State of Texas. Based on
geologic reports and more than 90 historic drill holes, these 8,000 acres are
believed to cover a northeast-southwest uranium mineralization trend.

We made the decision to widen our operations into the State of
Texas given the possibility of in-situ recovery mining as evidenced by the
existence of at least two successful uranium mines currently operating in that
State.

Geologic study has been completed on the historic data we
obtained from third parties. Initial drilling programs have been designed using
this analysis to evaluate the presence of the uranium mineralization and to
select targets within the area. Field work is planned to commence in Q2 of 2008.
This is planned to test the presence of the uranium indicated in historic data.
The field work may also include coring and industry standard extraction testing
procedures of the anomalous zones to characterize the host sand for suitability
of in situ recovery.

The Texas project is presently not considered a material
property and will not be considered a material property until more data and
information on the project can be obtained.

Mineral property expenditures – all properties

Our plan of operations is to explore for uranium on our Wyoming
  Powder River Basin and Texas properties while our joint venture partners are
  primarily responsible for carrying out exploration of our Wyoming Great Divide
  Basin, Saskatchewan, and Mongolia properties. All of our projects are at the
  exploration stage and there can be no assurance that a commercially viable mineral
  deposit, or reserve, exists on any of our properties until appropriate exploratory
  work is done and a comprehensive evaluation based on such work concludes legal
  and economic feasibility. Further exploration will be required before a final
  evaluation as to the economic and legal feasibility of mining of any of our
  properties is determined. There is no assurance that further exploration will
  result in a final evaluation that a commercially viable mineral deposit exists
  on any of our mineral properties. We anticipate that we will require additional
  financing in order to pursue full exploration of these projects. We do not have
  sufficient financing to undertake full exploration and, if warranted, development
  of our mineral claims at present and there is no assurance that we will be able
  to obtain the necessary financing. Because of the long lead times for environmental
  permitting of mining operations in North America, we have collected environmental
  baseline data and filed the environmental permitting applications on two of
  our properties in Powder River Basin area of Wyoming that we feel may have the
  potential, based on data in our possession, of being developed into commercial
  in-situ recovery uranium mines. However, we have not at this stage completed
  any comprehensive feasibility studies on these properties demonstrating that
  development of any of the properties is commercially warranted. Proceeding with
  these advanced activities prior to completing detailed feasibility analysis
  adds risk to our plan of operations and we may incur costs which might not otherwise
  have been incurred. Our cash expenditures in 2008, excluding property acquisitions,
  are estimated to be $11.5 million, as follows:

|Wyoming                                 |   |           |  |  |   |            | 
|--------------------------------------- | - | --------- |  |  | - | ---------- | 
|Exploration                             |   |           |  |  |   |            | 
|Wholly owned properties                | $ | 1,100,000 |  |  |   |            | 
|Arkose
      properties                 | $ | 5,200,000 |  |  | $ | 6,300,000  | 
|Environmental                           |   |           |  |  | $ | 800,000    | 
|Production and well planning            |   |           |  |  | $ | 300,000    | 
|Texas exploration                       |   |           |  |  | $ | 300,000    | 
|General and Administrative expenditures |   |           |  |  | $ | 3,800,000  | 
|                                        |   |           |  |  |   |            | 
|Total                                   |   |           |  |  | $ | 11,500,000 | 

These estimates are subject to change.

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ITEM 3. LEGAL PROCEEDINGS

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS

No matters were submitted to a vote of our security holders
during the fourth quarter ended December 31, 2007.

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PART II

**ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY,
  RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES**

**Market Information**

Our common stock began trading on the American Stock Exchange
on August 10, 2006 under the symbol "URZ", and previously, since May 6, 2004, on
the Over the Counter Bulletin Board (OTCBB) under the symbol "URNZ", formerly
known as "CVTU". The American Stock Exchange has launched trading in options
(derivatives: puts and calls) on our common stock. The options are quoted with
position limits of 2,500,000 shares and strike prices of 2 1⁄2 - 5  7 1⁄2 - 10. The
specialist is Jane Street Specialist. The Chicago Board Options Exchange began
trading in options (derivatives: puts and calls) on our common stock on April
12, 2007. Our common stock also trades, since August 2007, on the Toronto Stock
Exchange under the symbol URZ and on the Frankfurt Exchange under the symbol
U9E.

The following table shows the high and low sales price or bid
price for our common shares for the calendar quarters indicated, as reported by
the American Stock Exchange, www.amex.com, and Bloomberg for the OTCBB, as
applicable.

Period
    
    High
    
    
    Low2007Fourth Quarter
    $
    4.73
    
    $
    2.53Third Quarter
    $
    5.14
    
    $
    2.69Second Quarter
    $
    7.65
    
    $
    5.01First Quarter
    $
    5.69
    
    $
    2.952006Fourth Quarter
    $
    4.80
    
    $
    1.33Third Quarter(1)
    $
    3.25
    
    $
    2.00Second Quarter
    $
    3.22
    
    $
    1.70First Quarter
    $
    2.69
    
    $
    1.122005Fourth Quarter
    $
    1.36
    
    $
    0.84Third Quarter
    $
    1.79
    
    $
    0.55Second Quarter
    $
    1.05
    
    $
    0.50First Quarter
    $
    1.20
    
    $
    0.51


(1) Our common stock began trading on the American Stock
Exchange on August 10, 2006.

As of March 13, 2007 the closing bid quotation for our common
stock was $2.40 per share as quoted by the AMEX.

As of March 13, 2007, we had 45,340,187 shares of common stock
  issued and outstanding, held by approximately 8,000 registered shareholders.
  Many shares are registered through intermediaries, making the precise number
  of shareholders difficult to obtain.

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Dividend Policy

We anticipate that we will retain any earnings to support
operations and to finance the growth and development of our business. Therefore,
we do not expect to pay cash dividends in the foreseeable future. Any further
determination to pay cash dividends will be at the discretion of our board of
directors and will be dependent on the financial condition, operating results,
capital requirements and other factors that our board deems relevant. We have
never declared a dividend.

There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada Revised Statutes,
however, do prohibit us from declaring dividends where, after giving effect to
the distribution of the dividend:

| | 1. | We would not be able to pay our debts as they become due
      in the usual course of business; or                                                                                                                                          
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                             
| | 2. | Our total assets would be less than the sum of our total
      liabilities plus the amount that would be needed to satisfy the rights of
      shareholders who have preferential rights superior to those receiving the
      distribution.

We have never paid cash dividends on our capital stock. We
currently intend to retain any profits we earn to finance the growth and
development of our business. We do not anticipate paying any cash dividends in
the foreseeable future.

Repurchase of Securities

During 2007, neither the Company nor any affiliate of the
Company repurchased common shares of the Company registered under Section 12 of
the Securities Exchange Act of 1934, as amended.

Equity Compensation Plan Information

As at December 31, 2007, we had one equity compensation plan
under which our common shares have been authorized for issuance to our officers,
directors, employees and consultants, namely our 2005 Stock Option Plan. Our
2005 Stock Option Plan has been approved by our shareholders.

The following summary information is presented for our 2005
Stock Option Plan as of December 31, 2007.

Number of Securities to be
      Issued Upon Exercise of Outstanding Options
    Weighted Average Exercise Price
      of Outstanding Options,
    Number of Securities Remaining
      Available for Future Issuance Under Equity
      Compensation Plans (Excluding Securities Reflected
      in Column (a)Plan Category
    (a)
    (b)
    (c)Equity Compensation Plans Approved By Security
      Holders
    4,283,000
    $2.00
    5,395,360Equity Compensation Plans Not Approved By Security
      Holders
    Not Applicable
    Not Applicable
    Not Applicable


37

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2005 Stock Option Plan Information

The following is a summary of important Stock Option Plan provisions.
  It is not a comprehensive discussion of all of the terms and conditions of the
  Stock Option Plan. The information provided below may be modified or altered
  by some provisions in the Stock Option Plan. Readers are advised to review the
  full text of the Stock Option Plan to fully understand all terms and conditions
  of the Stock Option Plan.

Purpose

The purpose of the Stock Option Plan is to advance the best
interests of the Company by providing additional incentive to those persons who
have a substantial responsibility for its management, affairs, and growth by
increasing their proprietary interest in the success of the Company, thereby
encouraging them to maintain their relationships with the Company. Further, the
availability and offering of Stock Options under the Plan supports and increases
the Company's ability to attract, engage and retain individuals of exceptional
talent upon whom, in large measure, the sustained progress growth and
profitability of the Company for the shareholders depends.

Persons Eligible

Any employee, director, general partner, officer, attorney,
accountant, consultant or advisor providing services to the Company or any
parent, affiliate, or subsidiary of the Company is eligible to be designated a
participant in the Stock Option Plan. However, stock option grants may only be
granted to full- or part-time employees, officers, or directors of the Company
or one of its subsidiaries.

Administration

The Company’s Compensation Committee administers the Stock
  Option Plan, or such other committee as the Board may assign administrative
  responsibility in the best interests of the Company. The administering committee
  (the “Committee”) has the power to: (i) designate Stock Option Plan
  participants; (ii) grant stock options; (iii) establish rules and regulations
  for the administration of the Stock Option Plan; (iv) determine the amount,
  price, type and timing of each stock option grant; (v) cancel any stock option
  awarded under the Stock Option Plan, under certain circumstances; (vi) correct
  defects in the Plan or in any granted stock option; and (vii) make any other
  determination or take any other action that the Committee deems necessary or
  desirable to the administration of the Stock Option Plan.

Shares Available under the Stock Option Plan

The total number of shares of the Company available for grants
of stock options under the Stock Option Plan shall be 10,000,000 Common Shares,
subject to adjustment as herein provided, which shares may be either authorized
but un-issued or reacquired Common Shares of the Company. If a stock option or
portion thereof shall expire or terminate for any reason without having been
exercised in full, the un-purchased shares covered by such nonqualified stock
option shall be available for future grants of stock options under the Stock
Option Plan. Shares issuable upon exercise of stock options have been registered
under the U.S. Securities Act of 1933, as amended, pursuant to the Companys
Registration Statement on Form S-8, filed with the Securities and Exchange
Commission on November 21, 2005.

Terms and Conditions of Stock Options

Stock options may be granted to any person who is performing or
who has been engaged to perform services of special importance to management in
the operation, development and growth of the Company. The Committee has the sole
power to set the option price of granted stock options. All stock options
granted under the Stock Option Plan must be granted within ten years of the date
the plan was adopted and all granted stock options must be exercised within ten
years of the date of grant. The Committee may grant stock options which vest in
installment periods and may modify such periods to accelerate vesting. Stock
options are evidenced by a form stock option agreement.

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Exercise of Stock Options

The exercise of vested stock options is made upon written
notice to the Company of intent to exercise and payment of the exercise price.
The exercise price may be paid (i) in cash, cashiers check, certified check,
bank draft or money order, or (ii) at the discretion of the Committee, by
delivery of fully paid nonassesable common shares of the Company, valued at the
fair market value for such shares, determined by the average of the high and low
sales price of the Companys common shares on the date of exercise.

Transfer of Stock Options

Except by will, the laws of descent and distribution, or with
the written consent of the Committee, no right or interest in any stock option
granted under the Stock Option Plan is assignable or transferable, and no right
or interest of any optionee is liable for, or subject to, any lien, obligation
or liability of the optionee. Upon petition to, and thereafter with the written
consent of the Committee, an optionee may assign or transfer all or a portion of
the optionee's rights and interest in any stock option granted under the Stock
Option Plan. Stock options are exercisable during the optionee's lifetime only
by the optionee or assignees, or the duly appointed legal representative of an
incompetent optionee, including following an assignment consented to by the
Committee.

Adjustments to Stock Options

In the event that the outstanding common shares of the Company
are changed into or exchanged for a different number or kinds of shares or other
securities of the Company by reason of merger, consolidation, other
reorganization, recapitalization, reclassification, combination of shares, stock
split-up or stock dividend:

- Prompt, proportionate, equitable, lawful and adequate adjustment shall be
  made of the aggregate number and kind of shares subject to stock options which
  may be granted under the Stock Option Plan, such that the optionee shall have
  the right to purchase such common shares as may be issued in exchange for the
  common shares purchasable on exercise of the nonqualified stock option had
  such merger, consolidation, other reorganization, recapitalization,
  reclassification, combination of shares, stock split-up or stock dividend not
  taken place;
- Rights under unexercised stock options or portions thereof granted prior to
  any such change, both as to the number or kind of shares and the exercise
  price per share, will be adjusted appropriately, provided that such
  adjustments will be made without change in the total exercise price applicable
  to the unexercised portion of such nonqualified stock options but by an
  adjustment in the price for each share covered by such nonqualified stock
  option; or
- Upon any dissolution or liquidation of the Company or any merger or
  combination in which the Company is not a surviving corporation, each
  outstanding stock option granted hereunder shall terminate, but the optionee
  shall have the right, immediately prior to such dissolution, liquidation,
  merger or combination, to exercise his nonqualified stock option in whole or
  in part, to the extent that it shall not have been exercised, without regard
  to any installment exercise provisions in such nonqualified stock option.

Also, upon the occurrence of any person acquiring more than 20%
of the common shares of the Company through a tender offer, exchange offer, or
otherwise, upon a change in control of the Company or upon the sale of
substantially all the assets of the Company, any optionee who is also a Company
insider will be entitled to receive cash for their nonqualified stock options
equal to the final offer price per share paid in the offer or similar event, or
in the case of a change in control or sale of assets, the aggregate fair market
value of the shares.

Amendment of the Plan

The Board of Directors may at any time suspend or terminate the
Plan, in whole or in part or amend it from time to time as appropriate in the
best interests of the Company. No amendment will, without the consent of the
optionee, affect previously granted stock options.

39

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Recent Sales of Unregistered Securities

On January 15, 2008:

The Company completed an acquisition of an undivided 81% interest
  in the NAMMCO mineral properties, covering over approximately 82,000 acres (33,000
  hectares) in the Pumpkin Buttes uranium mining district of the central Powder
  River Basin of Wyoming, U.S.A. (the “NAMMCO Properties”) pursuant
  to a purchase and sale agreement with mining venture previously announced on
  September 19, 2007 between the Company and the NAMMCO Group. With this acquisition,
  the Company has effectively tripled its property position in the Powder River
  Basin and now controls a total of approximately 115,000 acres (46,500 hectares,
  or approximately 170 square miles) of mineral properties in the area. Pursuant
  to the Purchase and Sale Agreement, the total purchase price paid by the Company
  to acquire its 81% interest in the NAMMCO Properties was cash in the amount
  of U.S. $5,000,000 and 5,750,000 shares of the Company common stock issued to
  the NAMMCO Group (the “Uranerz Consideration Shares”).

In connection with its acquisition of its 81% interest in the
  NAMMCO Properties, the Company has entered into a joint venture agreement dated
  as of January 15, 2008 (the “Venture Agreement”) with United Nuclear,
  LLC (“United Nuclear”), a limited liability company wholly owned
  by the NAMMCO Group and their designee under the Purchase and Sale Agreement
  (as amended). Under the Venture Agreement, the parties agree that United Nuclear
  will hold (and contribute to) its nineteen percent (19%) working interest in
  the joint venture, and the Company will operate and be the manager of the joint
  venture under the name “Arkose Mining Venture”. Effective as of
  January 14, 2008, the Purchase and Sale Agreement was amended to reflect the
  formation of United Nuclear to serve as a vehicle pursuant to which the NAMMCO
  Group would enter into the Venture Agreement.

The Uranerz Consideration Shares issued to the NAMMCO Group were
  not registered under the Securities Act, or the laws of any state, and are subject
  to resale restrictions and may not be offered or sold in the United States absent
  registration or an applicable exemption from the registration requirements.
  The Uranerz Consideration Shares were placed pursuant to exemptions from registration
  requirements of the Securities Act provided by Section 506 of Regulation D of
  the Securities Act and/or Section 4(2) of the Securities Act. Pursuant to the
  Purchase and Sale Agreement, the Company granted the NAMMCO Group registration
  rights relating to the Uranerz Consideration Shares; and, in connection therewith,
  the Company is obligated to prepare and file or cause to be prepared and filed
  with the United States Securities and Exchange Commission, no later than one
  hundred and twenty (120) days after the issuance of the Uranerz Consideration
  Shares, a registration statement under the Securities Act on appropriate form
  registering the resale, from time to time, of such shares by the NAMMCO Group.

In connection with the issuance of the Uranerz Consideration
  Shares to the NAMMCO Sellers, the NAMMCO Group entered into a voting agreement
  with the Company dated as of January 15, 2008 pursuant to which each of such
  sellers granted the Company’s management or the Company’s appointed
  agent the right to vote fifty percent (50%) of their outstanding and currently
  held Uranerz Consideration Shares, whether held directly or indirectly by such
  sellers, for a period of three (3) years following the date of the issuance
  of the Uranerz Consideration Shares.

On February 1, 2007:

|1. | The Company issued 50,000 share purchase warrants to a
      consultant, exercisable at $3.69 per share on or before February 1, 2008.
      The warrants were issued in a private transaction not involving a public
      offering pursuant to Section 4(2) of the Securities Act of 1933, as
      amended (the Securities Act).
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the period ended March 31, 2007, the Company issued
4,481,749 shares of common stock pursuant to the exercise of common share
purchase warrants for proceeds of $8,316,678. All warrants (i) were exercised
by, and the underlying common shares issued to, or for the account or benefit
of, Non-U.S. Persons (as that term is defined in Rule 902 of Regulation S
under the Securities Act) outside the United States in off-shore transactions
(as that term is defined in Rule 902 of Regulation S under the Securities Act)
that are exempt from the registration requirements of the Securities Act
pursuant to Rule 903 of Regulation S under the Securities Act or (ii) were
exercised pursuant to Rule 506 of Regulation D of the Securities Act on the
basis that each investor is an accredited investor as defined under Rule
501(a) of Regulation D of the Securities Act of 1933, as amended. Each investor
represented to us their intent to acquire the securities for investment purposes
for their own account. No general solicitation or general advertising was
undertaken in connection with the offering. All securities issued were endorsed
with a restrictive

40

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legend confirming that the securities could not be resold
without registration under the Securities Act or an applicable exemption from
the registration requirements of the Securities Act.

We completed the following sales of securities without
registration pursuant to the Securities Act of 1933 (the Securities Act)
during the year ended December 31, 2006:

On March 3, 2006:

|1. | We completed a private placement with twenty-three (23)
      investors of 2,755,000 Units at a price of $1.00 per Unit for total
      proceeds of $2,755,000 pursuant to Rule 506 of Regulation D of the
      Securities Act. We paid a commission equal to 7 1⁄2 % of a portion of the
      funds raised in connection with the completion of the offering. The sales
      were completed pursuant to Rule 506 of Regulation D of the Securities Act
      on the basis that each investor is an accredited investor as defined
      under Rule 501(a) of Regulation D of the Securities Act of 1933, as
      amended. Each investor represented to us their intent to acquire the
      securities for investment purposes for their own account. No general
      solicitation or general advertising was undertaken in connection with the
      offering. All securities issued were endorsed with a restrictive legend
      confirming that the securities could not be resold without registration
      under the Securities Act or an applicable exemption from the registration
      requirements of the Securities Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | We completed a private placement with one hundred and ten
      (110) investors of 4,490,000 Units at a price of $1.00 per Unit for total
      proceeds of $4,490,000 pursuant to Rule 903 of Regulation S of the
      Securities Act. We paid a commission equal to 7 1⁄2 % of a portion of the
      funds raised in connection with the completion of the offering. We
      completed the offering of the Units pursuant to Rule 903 of Regulation S
      of the Securities Act on the basis that the sale of the Units was
      completed in an offshore transaction, as defined in Rule 902(h) of
      Regulation S. We did not engage in any directed selling efforts, as
      defined in Regulation S, in the United States in connection with the sale
      of the Units. The investors represented to us that the investors were not
      U.S. persons, as defined in Regulation S, and were not acquiring the Units
      for the account or benefit of a U.S. person. The subscription agreements
      executed between us and the investors included statements that the
      securities had not been registered pursuant to the Securities Act and that
      the securities may not be offered or sold in the United States unless the
      securities are registered under the Securities Act or pursuant to an
      exemption from the Securities Act. The investors agreed by execution of
      the subscription agreement for the Units: (i) to resell the securities
      purchased only in accordance with the provisions of Regulation S, pursuant
      to registration under the Securities Act or pursuant to an exemption from
      registration under the Securities Act; (ii) that we are required to refuse
      to register any sale of the securities purchased unless the transfer is in
      accordance with the provisions of Regulation S, pursuant to registration
      under the Securities Act or pursuant to an exemption from registration
      under the Securities Act; and (iii) not to engage in hedging transactions
      with regards to the securities purchased unless in compliance with the
      Securities Act. All securities issued were endorsed with a restrictive
      legend confirming that the securities had been issued pursuant to
      Regulation S of the Securities Act and could not be resold without
      registration under the Securities Act or an applicable exemption from the
      registration requirements of the Securities Act. In aggregate we issued a
      total of 7,245,000 shares and 3,622,000 warrants, with each warrant
      entitling the holder to purchase one additional share of our common stock
      for a period of two years at an exercise price of $1.75 per share until
      March 3, 2007, and at an exercise price of $2.50 per share until March 3,
      2008. In aggregate we have paid total commissions in cash of $88,660 and
      185,750 units. We filed a resale registration statement on Form SB-2 to
      register the shares of common stock issuable or issued to the investors
      for resale. The registration statement was declared effective on January
      18, 2007 (SEC No. 333  139537).

On May 19, 2006:

|1. | We completed a private placement with four (4) investors
      of 720,000 Units at a price of $1.75 per Unit for total proceeds of
      $1,260,000 pursuant to Rule 506 of Regulation D of the Securities Act. We
      paid a commission equal to up to 8% on a portion of the funds raised in
      connection with the completion of the offering. The sales were completed
      pursuant to Rule 506 of Regulation D of the Securities Act on the basis
      that each investor is an accredited investor, as defined under Rule
      501(a) of Regulation D of the Securities Act. Each investor represented to
      us their intent to acquire the securities for investment purposes of their
      own account. No general solicitation or general advertising was undertaken
      in connection with the offering. All securities issued were endorsed with
      a restrictive legend confirming that the securities could not be resold
      without registration under the Securities Act or an applicable exemption
      from the requirements of the Securities Act.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41

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|2. | We completed a private placement with thirty-six (36)
      investors of 1,422,200 Units at a price of $1.75 per Unit for total
      proceeds of $2,488,850 pursuant to Rule 903 of Regulation S of the
      Securities Act. We paid a commission equal to up to 8% on some of the
      funds raised in connection with the completion of the offering. We
      completed the offering of the Units pursuant to Rule 903 of Regulation S
      of the Securities Act on the basis that the sale of the Units was
      completed in an offshore transaction, as defined in Rule 902(h) of
      Regulation S. We did not engage in any directed selling efforts, as
      defined in Regulation S, in the United States in connection with the sale
      of the Units. The investors represented to us that the investors were not
      U.S. persons, as defined in Regulation S, and were not acquiring the Units
      for the account or benefit of a U.S. person. The subscription agreements
      executed between us and the investors included statements that the
      securities had not been registered pursuant to the Securities Act and that
      the securities may not be offered or sold in the United States unless the
      securities are registered under the Securities Act or pursuant to an
      exemption from the Securities Act. The investors agreed by execution of
      the subscription agreements for the Units: (i) to resell the securities
      purchased only in accordance with the provisions of Regulation S, pursuant
      to registration under the Securities Act or pursuant to an exemption from
      registration under the Securities Act; (ii) that we are required to refuse
      to register any sale of the securities purchased unless the transfer is in
      accordance with the provisions of Regulation S, pursuant to registration
      under the Securities Act or pursuant to an exemption from registration
      under the Securities Act; and (iii) not to engage in hedging transactions
      with regards to the securities purchased unless in compliance with the
      Securities Act. All securities issued were endorsed with a restrictive
      legend confirming that the securities had been issued pursuant to
      Regulation S of the Securities Act and could not be resold without
      registration under the Securities Act or an applicable exemption from the
      registration requirements of the Securities Act.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | We issued a total of 2,142,200 Shares and 1,071,100
      Warrants, with each Warrant entitling the holder to purchase one
      additional share of our common stock for a period of one year at an
      exercise price of $2.25 per Share until May 19, 2007. We paid a portion of
      commission in units in the amount of 52,266 units. In aggregate we issued
      a total of 2,194,466 common shares and 1,097,233 warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | We filed a resale registration statement on Form SB-2
        to register the shares of common stock issuable or issued to the investors
        for resale. The registration statement was declared effective on January
        18, 2007 (SEC No. 333 – 139537), was amended June 29, 2007 and again
        declared effective on July 13, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

April 15, 2005 Private Placement Financing

|1. | We completed a private placement financing in April, 2005
      for gross proceeds of $695,950. The private placement financing was
      comprised of an aggregate of 6,959,500 shares at a price of $0.10 per
      share to an aggregate of 21 purchasers. The sales were completed pursuant
      to Rule 506 of Regulation D of the Securities Act on the basis that each
      investor is an accredited investor, as defined under Rule 501(a) of
      Regulation D of the Securities Act. Each investor represented to us their
      intent to acquire the securities for investment purposes of their own
      account. No general solicitation or general advertising was undertaken in
      connection with the offering. All securities issued were endorsed with a
      restrictive legend confirming that the securities could not be resold
      without registration under the Securities Act or an applicable exemption
      from the requirements of the Securities Act.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

October 17, 2005 Private Placement Financing

|1. | We completed a private placement financing in October,
      2005 for gross proceeds of $2,098,000. The private placement financing was
      comprised of an aggregate of 5,245,000 units at a price of $0.40 per unit
      to an aggregate of 81 purchasers. Each unit was comprised of one share of
      our common stock and one-half share purchase warrant. Each full warrant
      entitles the holder to purchase one additional share of our common stock
      at an exercise price of $0.60 per share for a period of one year from the
      date of issue. The sales were completed pursuant to Rule 506 of Regulation
      D of the Securities Act on the basis that each investor is an accredited
      investor, as defined under Rule 501(a) of Regulation D of the Securities
      Act. Each investor represented to us their intent to acquire the
      securities for investment purposes of their own account. No general
      solicitation or general advertising was undertaken in connection with the
      offering. All securities issued were endorsed with a restrictive legend
      confirming that the securities could not be resold without registration
      under the Securities Act or an applicable exemption from the requirements
      of the Securities Act.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

42

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November 17, 2005 Private Placement Financing

|1. | We completed a private placement financing in November,
      2005 for gross proceeds of $70,000. The private placement financing was
      comprised of an aggregate of 175,000 units at a price of $0.40 per unit to
      an aggregate of 2 purchasers. Each unit was comprised of one share of our
      common stock and one-half share purchase warrant. Each full warrant
      entitles the holder to purchase one additional share of our common stock
      at an exercise price of $0.60 per share for a period of one year from the
      date of issue. The sales were completed pursuant to Rule 506 of Regulation
      D of the Securities Act on the basis that each investor is an accredited
      investor, as defined under Rule 501(a) of Regulation D of the Securities
      Act. Each investor represented to us their intent to acquire the
      securities for investment purposes of their own account. No general
      solicitation or general advertising was undertaken in connection with the
      offering. All securities issued were endorsed with a restrictive legend
      confirming that the securities could not be resold without registration
      under the Securities Act or an applicable exemption from the requirements
      of the Securities Act.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

43

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ITEM 6. SELECTED FINANCIAL DATA

Selected financial data about Uranerz for the last five years
is set forth in the table below. You should read the data in the table in
conjunction with the consolidated financial statements and related notes set
forth in Item 8, Financial Statements and Supplementary Data.

|Dollars and shares in thousands, except per share |   |        |  |  |        |  |  |        |   |  |       |   |  |       |  
|------------------------------------------------- | - | ------ |  |  | ------ |  |  | ------ | - |  | ----- | - |  | ----- | -
|amounts                                           |   | 2007   |  |  | 2006   |  |  | 2005   |   |  | 2004  |   |  | 2003  |  
|Operating expenses                                |   |        |  |  |        |  |  |        |   |  |       |   |  |       |  
|Depreciation                                      |   | 57     |  |  | 15     |  |  | 1      |   |  | -     |   |  | -     |  
|Foreign exchange                                  | $ | 24     |  |  | 1      |  |  | 4      |   |  | -     |   |  | -     |  
|General and
      administrative                  | $ | 7,863  |  |  | 5,879  |  |  | 4,482  |   |  | 18    |   |  | 24    |  
|Impairment loss on mineral properties             | $ | -      |  |  | -      |  |  | 315    |   |  | -     |   |  | -     |  
|Mineral exploration                               | $ | 7,008  |  |  | 1,232  |  |  | 89     |   |  | 2     |   |  | 3     |  
|Total
      operating expenses                    | $ | 14,951 |  |  | 7,127  |  |  | 4,891  |   |  | 20    |   |  | 27    |  
|Gain on sale on investment
      securities       | $ | -      |  |  | 79     |  |  | -      |   |  | -     |   |  | -     |  
|Interest income                                   | $ | 710    |  |  | 411    |  |  | -      |   |  | -     |   |  | -     |  
|Loss on settlement of debt                        | $ | -      |  |  | -      |  |  | (132   | ) |  | -     |   |  | -)    |  
|Mineral property options received                 | $ | 44     |  |  | 87     |  |  | 21     |   |  | -     |   |  | -     |  
|Net loss for the year                             |   | 14,197 |  |  | 6,549  |  |  | 5,002  |   |  | 20    |   |  | 27    |  
|                                                  |   |        |  |  |        |  |  |        |   |  |       |   |  |       |  
|Common stock data                                 |   |        |  |  |        |  |  |        |   |  |       |   |  |       |  
|Weighted average shares outstanding               |   | 38,438 |  |  | 29,738 |  |  | 12,995 |   |  | 5,640 |   |  | 5,617 |  
|Net loss per share  basic and diluted            | $ | 0.37   |  |  | 0.22   |  |  | 0.38   |   |  | -     |   |  | -     |  
|Total shares
      outstanding at December 31     |   | 39,224 |  |  | 34,560 |  |  | 21,995 |   |  | 5,640 |   |  | 5,640 |  
|Balance sheet data at December 31                 |   |        |  |  |        |  |  |        |   |  |       |   |  |       |  
|Total assets                                      | $ | 12,216 |  |  | 12,492 |  |  | 1.978  |   |  | 7     |   |  | -     |  
|Property, plant and equipment  net               | $ | 406    |  |  | 123    |  |  | 9      |   |  | -     |   |  | -     |  
|Working capital                                   | $ | 11,114 |  |  | 11,980 |  |  | 1,776  |   |  | (58   | ) |  | (38   | )
|Total debt                                        | $ | 52     |  |  | -      |  |  | -      |   |  | -     |   |  | -     |  
|Common
      shareholders equity                 | $ | 11,518 |  |  | 12,113 |  |  | 1,785  |   |  | (58   | ) |  | (38   | )
|Cash flow data                                    |   |        |  |  |        |  |  |        |   |  |       |   |  |       |  
|Net cash used for operating activities            | $ | 9,259  |  |  | 1,692  |  |  | 581    |   |  | 3     |   |  | 8     |  

44

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|Net cash used for investing activities          | $ | 281   |  |  | 472    |  |  | 326   |  |  | -  |  |  | -  | 
|----------------------------------------------- | - | ----- |  |  | ------ |  |  | ----- |  |  | -- |  |  | -- | 
|Net cash provided
      by financing activities | $ | 8,590 |  |  | 12,532 |  |  | 2,824 |  |  | 11 |  |  | 18 | 

45

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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Overview

We are an exploration stage company engaged in the acquisition,
exploration and, if warranted, development of uranium properties. We own
interests in properties in Wyoming and Texas, USA; Saskatchewan, Canada; and
Mongolia. We are principally focused on the exploration of our projects in the
Powder River Basin area of Wyoming. We have entered into joint venture
agreements for each of our Saskatchewan and Mongolia properties whereby the
joint venture partner for each project can earn an ownership interest in the
property in exchange for exploration and development expenditure commitments
and/or cash and equity consideration. We have also joint ventured our uranium
projects in the Great Divide Basin area of Wyoming. Our joint venture partners
have conducted exploration of our Wyoming Great Divide Basin, Saskatchewan and
Mongolian mineral properties and we anticipate this will continue. We plan to
maintain, explore and, if warranted, develop our projects in the Powder River
Basin area of Wyoming. We plan to commence exploration on our Texas project in
2008.

Because of the long lead times for environmental permitting of
mining operations in North America, we have collected environmental baseline
data on two of our properties in the Powder River Basin area of Wyoming that we
feel may have the potential, based on data in our possession, of being developed
into commercial in-situ recovery uranium mines. These permit applications were
filed in December of 2007.

In support of our goals for 2007, we focused our efforts on the
following five key operating priorities.

Exploration in Wyoming

Mine permitting

Acquisition of properties with uranium potential

Investor relations

Organization and staffing

Results of Operations

Twelve-month period ended December 31, 2007 compared to
twelve-month period ended December 31, 2006

Revenue

We have not earned any revenues to date and we anticipate that
we will not generate any revenues during the twelve month period following the
date of this report.

Operating Expenses and Other Expenses (Income)

We incurred total operating expenses of $14,951,402 for the twelve-month
  period ended December 31, 2007, as compared to $7,126,992 for the corresponding
  period in 2006. The increase of operating expenses in the amount of $7,824,410
  (110%) was primarily attributable to increased spending of $5,776,188 on acquiring
  and exploring mineral properties in Wyoming as described in detail in Item 2
  of this Annual Report on Form 10-K. Our general and administrative expenses
  consisted primarily of stock based compensation, payroll, consulting, investor
  relations and general overhead which increased $1,983,747 or 33% over 2006 reflecting
  our growth in corporate affairs, investor relations (including listing on the
  Toronto Stock Exchange) and Casper operations.

Our interest expense for the twelve-month period ended December
  31, 2007 was imputed on an interest free loan as $3,692 (2006 – nil).
  We earned $710,226 of interest income for the twelve-month period ended December
  31, 2007 as compared to $411,462 for the corresponding period in 2006. This
  income resulted from short term investments. Net loss for the twelve-month period
  ended December 31, 2007 was $14,197,366, as compared to $6,548,901 for the corresponding
  period in 2006, an increase of $7,648,645 (117%).

As we anticipated, our exploration expenses continued to increase
  throughout the 2007 fiscal year in comparison with 2006 as a result of our planned
  exploration activities and as a result of payments required to maintain our
  interests in our mineral properties. In addition, as we anticipated, general
  and administrative expenses continued to increase as we complied with our obligations
  to many stockholders as a reporting company under the Securities Exchange Act
  of 1934, listed on the American Stock Exchange. As anticipated, we did not earn
  any revenues during the 2007 fiscal year as we were engaged in exploration and
  the permitting of our mineral properties.

46

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Cash Used in Operating Activities

Net cash used in operating activities was $9,258,752 for the
twelve-month period ended December 31, 2007, compared to $1,691,781 for the
corresponding period in 2006. The increase in net cash used in operations
reflects the growth of our operations, including an increase of $5,776,188 for
mineral related expenditures.

Cash Used in Investing Activities

We invested $281,306 in equipment and reclamation bonds in the
twelve- month period ended December 31, 2007, compared to $471,727 for mineral
properties and operating assets in the corresponding period in 2006.

Cash Provided by Financing Activities

Net cash provided by financing activities amounted to
$8,589,966 for the twelve-month period ended December 31, 2007, primarily from
private placements of common stock, compared to $12,531,835 for the
corresponding period in 2006. We received an additional $202,500 from the
exercise of stock options in January 2008.

Twelve-month period ended December 31, 2006 compared to
twelve-month period ended December 31, 2005

Revenue

We have not earned any revenues to date and we anticipate that
we will not generate any revenues during the twelve month period following the
date of this report.

Operating Expenses and Other Expenses (Income)

We incurred total operating expenses of $7,126,992 for the
twelve-month period ended December 31, 2006, as compared to $4,891,392 for the
corresponding period in 2005. The increase of operating expenses in the amount
of $2,235,600 (46%) was primarily attributable to increased spending on
acquiring and exploring mineral properties in Wyoming as described in detail in
Item 2 of this Annual Report on Form 10-KSB. The impairment loss on mineral
properties of $449,952, an increase of 43% over 2005 is attributable to our
acquisition of mineral properties that were initially capitalized and then, in
the absence of a bankable feasibility report, are recorded as fully impaired.
Our general and administrative expenses consisted primarily of stock based
compensation, payroll, consulting, investor relations and general overhead which
increased $1,396,886 or 31% over 2005 reflecting our growth in corporate affairs
and Casper operations.

We had no interest expense for the twelve-month period ended
December 31, 2006. We earned $411,462 of interest income for the twelve-month
period ended December 31, 2006 as compared to none for the corresponding period
in 2005. This income resulted from short term investments. Net loss for the
twelve-month period ended December 31, 2006 was $6,548,901, as compared to
$5,002,225 for the corresponding period in 2005, an increase of $1,546,676
(31%).

We anticipate that our exploration expenses will continue to
increase throughout the 2007 fiscal year in comparison with 2006 as a result of
our planned exploration activities and as a result of payments required to
maintain our interests in our mineral properties. In addition, we anticipate
continued increased general and administrative expenses as we comply with our
obligations to many stockholders as a reporting company under the Securities
Exchange Act of 1934, listed on the American Stock Exchange. We anticipate that
we will not earn any revenues during the current fiscal year or in the near
future as we are presently engaged in exploration and the permitting of our
mineral properties.

47

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Cash Used in Operating Activities

Net cash used in operating activities was $1,691,781 for the
twelve-month period ended December 31, 2006, compared to $580,559 for the
corresponding period in 2005. The increase in net cash used in operations
reflects the growth of our operations, including an increase of $827,950 for
mineral related expenditures.

Cash Used in Investing Activities

We invested $578,308 in mineral properties and operating assets
the twelve- month period ended December 31, 2006, compared to $325,628 for the
corresponding period in 2005. Proceeds from sale of investment securities were
$116,629 in 2006, none in 2005.

Cash Provided by Financing Activities

Net cash provided by financing activities amounted to
$12,531,835 for the twelve-month period ended December 31, 2006, primarily from
private placements of common stock, compared to $2,823,738 for the corresponding
period in 2005.

Assets and Liabilities

We had total assets of $12,216,146 at December 31, 2007
compared to $12,491,996 at December 31, 2006, primarily cash accumulated from
the sale of shares. Property and Equipment was $406,288 compared to $123,236 at
December 31, 2006. Our liabilities were $697,855 compared to $378,809 at
December 31, 2006. Liabilities include due to related parties of` $471,115 (2006
- $200,047) and long term debt of $52,146 (2006  nil).

Liquidity and Capital Resources

Our operations are primarily financed by proceeds from issuances
  of common stock. Our cash position at December 31, 2007 was $11,343,737 compared
  to $12,293,890 as of December 31, 2006. We had working capital of $11,114,149
  as of December 31, 2007, compared to working capital of $11,989,951 as of December
  31, 2006.

Financings

During the year ended December 31, 2007, the Company:

| | 1. | Issued 4,481,749 shares of common stock upon the exercise
      of share purchase warrants for cash proceeds of $8,316,678.
| | -- | ---------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                            
| | 2. | Issued 182,000 common shares upon the exercise of stock
      options for cash proceeds of $288,100.                       

During the year ended December 31, 2006, the Company:

| | 1. | Issued 2,700,000 shares of common stock upon the exercise
      of share purchase warrants for cash proceeds of $1,777,250.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 2. | Completed a private placement of 2,142,200 units at a
      price of $1.75 per unit for gross proceeds of $3,748,850 and net proceeds
      of $3,607,397. Each unit is comprised of one share of the Company's common
      stock and one-half of one share purchase warrant. Each whole warrant
      entitles the holder to purchase one additional share of the Company's
      common stock until May 19, 2007, at an exercise price of $2.25 per share.
      A commission was payable, a portion of which was paid in units in the
      amount of 52,266 units. In aggregate the Company issued a total of
      2,194,466 shares of common stock and 1,097,233 warrants.
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 3. | Issued 8,640 common shares upon the exercise of stock
      options for $8,858 offsetting amounts relating to consulting services
      rendered.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | 4. | Issued 131,000 common shares upon the exercise of stock
      options to settle $121,148 of debt owing to a director. A loss on
      settlement of debt of $100,509 was recorded.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

48

---

| | 5. | Issued 100,000 shares of common stock for consulting
      services with a fair value of $91,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | 6. | Completed a private placement consisting of 7,245,000
      units at $1.00 per unit for proceeds of $7,147,186 net of issue costs and
      commissions. Each unit consists of one share of common stock and one-half
      share purchase warrant. The Company issued 7,245,000 shares of common
      stock and 3,622,500 warrants. Each full warrant entitles the holder to
      purchase one additional share of common stock for a period of two years at
      an exercise price of $1.75 per share until March 3, 2007, and at an
      exercise price of $2.50 per share until March 3, 2008. The Company issued
      186,232 units for commissions pertaining to this private
  placement.

During the year ended December 31, 2005, the Company:

| | 1. | Issued 175,000 units at $0.40 per unit for net proceeds
      of $65,800. The Company paid commission expenses of $4,200. Each unit
      consisted of one share of common stock and one half warrant. Each full
      warrant entitles the investor to purchase one additional share at an
      exercise price of $0.60 per share on or before November 17,
2006.               
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                   
| | 2. | Issued 200,000 common shares at a fair value of $212,000
      to settle a debt of $80,000 owing to a company for public and investor
      relations services, resulting in a loss on debt settlement of
    $132,000.                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                   
| | 3. | Issued 5,245,000 units at $0.40 per unit for net proceeds
      of $2,059,124. The Company paid commission expenses of $38,876. Each unit
      consisted of one share of common stock and one half warrant. Each full
      warrant entitles the investor to purchase one additional share at an
      exercise price of $0.60 per share for one year from the date of
    issue.
| |    |                                                                                                                                                                                                                                                                                                                                                                                   
| | 4. | Issued 3,775,000 shares of common stock at $0.001 per
      share as compensation to directors, officers and members of the Companys
      Advisory Board. The Company received cash proceeds of $3,775 and the
      Company recorded stock-based compensation of $3,808,975.                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                   
| | 5. | Issued 6,959,500 shares of common stock at $0.10 per
      share for proceeds of $695,039, net of offering costs of $911.                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                   
| | 6. | Completed a private placement financing for gross
      proceeds of $695,950. The private placement financing was comprised of an
      aggregate of 6,959,500 shares at a price of $0.10 per
  share.                                                                                                                                                                            

Capital Requirements

Our cash position of 11,343,737 at December 31, 2007, plus an
estimated $450,000 from the exercise of warrants and options provide
approximately $11.8 million for future operations. We estimate that our cash
expenditures for operations over the next twelve months will be approximately
$11,500,000 as outlined below. Property acquisitions, including those committed
at December 31, 2007 and operations beyond 2008 will be financed through one or
more equity issues. We intend to focus most of our exploration efforts in
Wyoming.

Our plan of operation for the next twelve months is to continue
with exploration of our expanded Wyoming Powder River Basin properties while our
joint venture partners carry out exploration activities in Saskatchewan,
Mongolia and the Wyoming Great Divide Basin area under the terms of the joint
venture agreements. Our planned geological exploration programs are described in
Item 2 of this Report. Our planned cash operating expenditures for the year
ending December 31, 2007 for corporate expenses, exploration on our Wyoming
mineral properties and general and administrative expenses are summarized as
follow:

Category
    Planned Expenditures Over the Next Twelve
      Months (US$)Exploration
    $6,300,000Environmental, production and well planning
    $1,100,000


49

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General and
      Administrative expenses
    $3,800,000TOTAL
    $11,500,000


In addition to our planned operating expenditures, we anticipate
  spending approximately $7 million for acquisition of identified properties,
  including the NAMMCO acquisition completed in January, 2008, which included
  $5 million in cash as part of the purchase price. We may make additional significant
  investments as opportunities arise. Our exploration and, if warranted, development
  plans will be continually evaluated and modified as exploration and environmental
  results become available. Modifications to our plans will be based on many factors,
  including: results of exploration, assessment of data, weather conditions, exploration
  costs, the price of uranium and available capital. Further, the extent of our
  operations and investment programs that we undertake will be dependent upon
  the amount of financing available to us.

During the twelve-month period following the date of this
annual report, we anticipate that we will not generate any revenues. We
anticipate that additional funding to carry out all our 2008 plans will be in
the form of equity financing from the sale of our common stock.

Future Financings

We require additional financing to carry out our full program
of exploration and property acquisitions during 2008. We plan to complete
additional sales of our common stock in order to raise the funds necessary to
pursue our plan of operations and to fund our working capital. Issuances of
additional shares will result in dilution to our existing shareholders. There is
no assurance that we will be successful in completing any financings. Failure to
obtain additional financing on a timely basis would require a reduced plan of
operations and acquisitions.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

Critical Accounting Policies

The preparation of financial statements in conformity with
generally accepted accounting principles requires our management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Our management routinely makes judgments and estimates about the effects of
matters that are inherently uncertain.

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
disclosed in Note 2 to the audited financial statements included in this Annual
Report.

Mineral Property Costs

The Company is primarily engaged in the acquisition, exploration
  and, if warranted, development of mineral properties. Mineral property acquisition
  costs are capitalized in accordance with EITF 04-2 “Whether Mineral Rights
  Are Tangible or Intangible Assets” when management has determined that
  probable future benefits consisting of a contribution to future cash inflows
  have been identified and adequate financial resources are available or are expected
  to be available as required to meet the terms of property acquisition and budgeted
  exploration and development expenditures. Mineral property acquisition costs
  are expensed as incurred if the criteria for capitalization are not met. In
  the event that a mineral property is acquired through the issuance of the Company’s
  shares, the mineral property will be recorded at the fair value of the respective
  property or the fair value of common shares, whichever is more readily determinable.

50

---

When mineral properties are acquired under option agreements
with future acquisition payments to be made at the sole discretion of the
Company, those future payments, whether in cash or shares, are recorded only
when the Company has made or is obliged to make the payment or issue the shares.
When it has been determined that a mineral property can be economically
developed as a result of establishing proven and probable reserves and pre
feasibility, the costs incurred to develop such property are capitalized.

During the year ended December 31, 2007, mineral property
expenditures totaling $7,008,396 (2006 - $1,232,208; 2005 - $404,258) were
expensed and the Company received mineral property option payments of $43,810
(2006 -$87,500; 2005 - $21,167).

Stock-based Compensation

The Company records stock based compensation in accordance with
SFAS 123(R), Share-Based Payments, which requires the measurement and
recognition of compensation expense, based on estimated fair values, for all
share-based awards, made to employees and directors, including stock options.

SFAS 123(R) requires companies to estimate the fair value of
share-based awards on the date of grant using an option-pricing model. The
Company uses the Black-Scholes option-pricing model as its method of determining
fair value. This model is affected by the Companys stock price as well as
assumptions regarding a number of subjective variables. These subjective
variables include, but are not limited to, the Companys expected stock price
volatility over the term of the awards, and actual and projected employee stock
option exercise behaviors. The value of the portion of the award that is
ultimately expected to vest is recognized as an expense in the consolidated
statement of operations over the vesting period.

No tax benefits were attributed to stock-based compensation
expense because a full valuation allowance was maintained for all net deferred
tax assets.

Accounting Developments

In December 2007, the Financial Accounting Standards Board
(FASB) issued SFAS No. 141R, Business Combinations. This statement
replaces SFAS 141 and defines the acquirer in a business combination as the
entity that obtains control of one or more businesses in a business combination
and establishes the acquisition date as the date that the acquirer achieves
control. SFAS 141R requires an acquirer to recognize the assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at the
acquisition date, measured at their fair values as of that date. SFAS 141R also
requires the acquirer to recognize contingent consideration at the acquisition
date, measured at its fair value at that date. This statement is effective for
fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008 and earlier adoption is prohibited. The adoption of this
statement is not expected to have a material effect on the Company's
consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements Liabilities
an Amendment of ARB No. 51. This statement amends ARB 51 to establish
accounting and reporting standards for the Noncontrolling interest in a
subsidiary and for the deconsolidation of a subsidiary. This statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008 and earlier adoption is prohibited. The
adoption of this statement is not expected to have a material effect on the
Company's consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair
Value Option for Financial Assets and Financial Liabilities  Including an
Amendment of FASB Statement No. 115. This statement permits entities to
choose to measure many financial instruments and certain other items at fair
value. Most of the provisions of SFAS No. 159 apply only to entities that elect
the fair value option. However, the amendment to SFAS No. 115 Accounting for
Certain Investments in Debt and Equity Securities applies to all entities
with available-for-sale and trading securities. SFAS No. 159 is effective as of
the beginning of an entitys first fiscal year that begins after November 15,
2007. Early adoption is permitted as of the beginning of a fiscal year that
begins on or before November 15, 2007, provided the entity also elects to apply
the provision of SFAS No. 157, Fair Value Measurements. The adoption of
this statement is not expected to have a material effect on the Company's
consolidated financial statements.

51

---

In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements. The objective of SFAS No. 157 is to increase consistency and
comparability in fair value measurements and to expand disclosures about fair
value measurements. SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS No. 157 applies under other
accounting pronouncements that require or permit fair value measurements and
does not require any new fair value measurements. The provisions of SFAS No. 157
are effective for fair value measurements made in fiscal years beginning after
November 15, 2007. The adoption of this statement is not expected to have a
material effect on the Company's consolidated financial statements.

In September 2006, the SEC issued Staff Accounting Bulletin
(SAB) No. 108, Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements. SAB No. 108
addresses how the effects of prior year uncorrected misstatements should be
considered when quantifying misstatements in current year financial statements.
SAB No. 108 requires companies to quantify misstatements using a balance sheet
and income statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative and
qualitative factors. SAB No. 108 is effective for fiscal years ending after
November 15, 2006. The adoption this statement did not have a material effect on
the Company's consolidated financial statements.

In September 2006, the FASB issued SFAS No. 158, Employers
Accounting for Defined Benefit Pension and Other Postretirement Plans  an
amendment of FASB Statements No. 87, 88, 106, and 132(R). This statement
requires employers to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income of a business entity or changes in unrestricted net assets
of a not-for-profit organization. This statement also requires an employer to
measure the funded status of a plan as of the date of its year-end statement of
financial position, with limited exceptions. The provisions of SFAS No. 158 are
effective for employers with publicly traded equity securities as of the end of
the fiscal year ending after December 15, 2006. The adoption of this statement
did not have a material effect on the Company's consolidated financial
statements.

In June 2006, the FASB issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statements No. 109 (FIN 48). FIN 48 clarifies the accounting for
uncertainty in income taxes by prescribing a two-step method of first evaluating
whether a tax position has met a more likely than not recognition threshold and
second, measuring that tax position to determine the amount of benefit to be
recognized in the financial statements. FIN 48 provides guidance on the
presentation of such positions within a classified statement of financial
position as well as on derecognition, interest and penalties, accounting in
interim periods, disclosure, and transition. FIN 48 is effective for fiscal
years beginning after December 15, 2006. The adoption of this statement did not
have a material effect on the Company's consolidated financial statements.

In March 2006, the FASB issued SFAS No. 156, "Accounting for
Servicing of Financial Assets, an amendment of FASB Statement No. 140,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities". This statement requires all separately recognized servicing
assets and servicing liabilities be initially measured at fair value, if
practicable, and permits for subsequent measurement using either fair value
measurement with changes in fair value reflected in earnings or the amortization
and impairment requirements of Statement No. 140. The subsequent measurement of
separately recognized servicing assets and servicing liabilities at fair value
eliminates the necessity for entities that manage the risks inherent in
servicing assets and servicing liabilities with derivatives to qualify for hedge
accounting treatment and eliminates the characterization of declines in fair
value as impairments or direct write-downs. SFAS No. 156 is effective for an
entity's first fiscal year beginning after September 15, 2006. The adoption of
this statement did not have a material effect on the Company's consolidated
financial statements.

In February 2006, the FASB issued SFAS No. 155, "Accounting
for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133
and 140", to simplify and make more consistent the accounting for certain
financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for
Derivative Instruments and Hedging

52

---

Activities"; to permit fair value re-measurement for any
hybrid financial instrument with an embedded derivative that otherwise would
require bifurcation, provided that the whole instrument is accounted for on a
fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the
Impairment or Disposal of Long-Lived Assets", to allow a qualifying
special-purpose entity to hold a derivative financial instrument that pertains
to a beneficial interest other than another derivative financial instrument.
SFAS No. 155 applies to all financial instruments acquired or issued after the
beginning of an entity's first fiscal year that begins after September 15, 2006,
with earlier application allowed. The adoption of this statement did not have a
material effect on the Company's consolidated financial statements.

Contractual Obligations

As of the fiscal year ended December 31, 2007, we had no
significant contractual obligations extending beyond 2008.

We have no material long-term debt, capital lease, operating
lease or purchase obligations.

53

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

We are not exposed to risks associated with commodity prices,
interest rates and credit. Commodity price risk is defined as the potential loss
that we may incur as a result of changes in the fair value of uranium. Interest
rate risk results from our debt and equity instruments that we issue to provide
financing and liquidity for our business. Credit risk would arise from the
extension of credit throughout all aspects of our business but is not yet
significant.

54

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



55

---

|Uranerz Energy Corporation    
|------------------------------
|(An Exploration Stage Company)
|                              
|December 31, 2007             

|                                                              | Index
|------------------------------------------------------------- | -----
|                                                              |      
|Report of Independent Registered
      Public Accounting Firm | F1  
|Consolidated Balance Sheets                                   | F2  
|Consolidated Statements
      of Operations                   | F3  
|Consolidated Statements of Cash Flows                         | F4  
|Consolidated Statements
      of Stockholders Equity         | F5  
|Notes to the Consolidated Financial Statements                | F7  

---



Report of Independent Registered Public Accounting Firm

To the Directors and Stockholders 
  Uranerz Energy Corporation
  (An Exploration Stage Company)

We have audited the accompanying consolidated balance sheets
  of Uranerz Energy Corporation as of December 31, 2007 and 2006, and the related
  consolidated statements of operations, cash flows and stockholders' equity for
  each of the years in the three year period ended December 31, 2007 and accumulated
  from May 26, 1999 (Date of Inception) to December 31, 2007. 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 the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audits to obtain reasonable assurance about 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. We believe that our audits provide
  a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Uranerz Energy Corporation as of December 31, 2007 and 2006, and the results
  of its operations and its cash flows for each of the years in the three year
  period ended December 31, 2007 and accumulated from May 26, 1999 (Date of Inception)
  to December 31, 2007, in conformity with accounting principles generally accepted
  in the United States.

We also have audited, in accordance with the standards of the
  Public Company Accounting Oversight Board (United States), Uranerz Energy Corporations
  internal control over financial reporting as of December 31, 2007, based on
  criteria established in Internal Control-Integrated Framework issued by the
  Committee of Sponsoring Organizations of the Treadway Commission and our report
  dated March 14, 2008 expressed an unqualified opinion thereon.

/s/ MANNING ELLIOTT LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

March 14, 2008

F-1

---

|Uranerz Energy Corporation    
|------------------------------
|(An Exploration Stage Company)
|Consolidated Balance Sheets   
|(Expressed in US dollars)     

|                                                                       |  | December 31, |   |  | December 31, |  
|---------------------------------------------------------------------- |  | ------------ | - |  | ------------ | -
|                                                                       |  | 2007         |   |  | 2006         |  
|                                                                       |  | $            |   |  | $            |  
|ASSETS                                                                 |  |              |   |  |              |  
|Current Assets                                                         |  |              |   |  |              |  
|Cash                                                                   |  | 11,343,737   |   |  | 12,293,890   |  
|Amounts receivable                                                     |  | 92,444       |   |  |             |  
|Prepaid expenses and deposits                                          |  | 323,677      |   |  | 64,870       |  
|Total Current Assets                                                   |  | 11,759,858   |   |  | 12,358,760   |  
|Mineral Property Reclamation Bonds (Note 4
      (l))                  |  | 50,000       |   |  | 10,000       |  
|Property and Equipment
      (Note 3)                                  |  | 406,288      |   |  | 123,236      |  
|Total Assets                                                           |  | 12,216,146   |   |  | 12,491,996   |  
|                                                                       |  |              |   |  |              |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                   |  |              |   |  |              |  
|Current Liabilities                                                    |  |              |   |  |              |  
|Accounts payable                                                       |  | 138,188      |   |  | 169,688      |  
|Accrued liabilities                                                    |  | 4,950        |   |  | 9,074        |  
|Due to related parties (Note 7)                                        |  | 471,115      |   |  | 200,047      |  
|Current
      portion of loan payable (Note 6)                         |  | 31,456       |   |  |             |  
|Total Current Liabilities                                              |  | 645,709      |   |  | 378,809      |  
|Loan Payable (Note
      6)                                            |  | 52,146       |   |  |             |  
|Total Liabilities                                                      |  | 697,855      |   |  | 378,809      |  
|Commitments and Contingencies (Notes 1, 4, and 11)                     |  |              |   |  |              |  
|Subsequent Events (Note 13)                                            |  |              |   |  |              |  
|Stockholders Equity                                                   |  |              |   |  |              |  
|Preferred Stock, 10,000,000 shares authorized,
      $0.001 par value; |  |              |   |  |              |  
|Nil shares issued and outstanding                                      |  |             |   |  |             |  
|Common Stock, 100,000,000 shares authorized,
      $0.001 par value;   |  |              |   |  |              |  
|39,224,087 and 34,560,338 shares issued and outstanding, respectively  |  | 39,224       |   |  | 34,560       |  
|Additional Paid-in Capital                                             |  | 37,375,384   |   |  | 23,777,517   |  
|Accumulated Other Comprehensive Income                                 |  | 481          |   |  | 542          |  
|Deficit Accumulated During the Exploration Stage                       |  | (25,896,798  | ) |  | (11,699,432  | )
|Total Stockholders
      Equity                                       |  | 11,518,291   |   |  | 12,113,187   |  
|Total Liabilities and Stockholders Equity                             |  | 12,216,146   |   |  | 12,491,996   |  

(The accompanying notes are an integral part of these consolidated
  financial statements)

F-2

---

|Uranerz Energy Corporation           
|-------------------------------------
|(An Exploration Stage Company)       
|Consolidated Statements of Operations
|(Expressed in US dollars)            

|                                                |  | Accumulated From    |   |  |             |   |  |              |   |  |            |  
|----------------------------------------------- |  | ------------------- | - |  | ----------- | - |  | ------------ | - |  | ---------- | -
|                                                |  | May 26, 1999        |   |  |             |   |  |              |   |  |            |  
|                                                |  | (Date of Inception) |   |  |             |   |  | Years Ended  |   |  |            |  
|                                                |  | to December 31,     |   |  |             |   |  | December 31, |   |  |            |  
|                                                |  | 2007                |   |  | 2007        |   |  | 2006         |   |  | 2005       |  
|                                                |  | $                   |   |  | $           |   |  | $            |   |  | $          |  
|                                                |  |                     |   |  |             |   |  |              |   |  |            |  
|Revenue                                         |  |                    |   |  |            |   |  |             |   |  |           |  
|Expenses                                        |  |                     |   |  |             |   |  |              |   |  |            |  
|Depreciation                                    |  | 72,274              |   |  | 56,669      |   |  | 14,398       |   |  | 1,207      |  
|Foreign exchange                                |  | 28,732              |   |  | 23,571      |   |  | 1,367        |   |  | 3,794      |  
|General and administrative
      (Note 7)       |  | 18,332,437          |   |  | 7,862,766   |   |  | 5,879,019    |   |  | 4,482,133  |  
|Mineral property expenditures                   |  | 8,684,649           |   |  | 7,008,396   |   |  | 1,232,208    |   |  | 404,258    |  
|Total Operating Expenses                        |  | 27,118,092          |   |  | 14,951,402  |   |  | 7,126,992    |   |  | 4,891,392  |  
|Operating Loss                                  |  | (27,118,092         | ) |  | (14,951,402 | ) |  | (7,126,992   | ) |  | (4,891,392 | )
|Other Income (Expense)                          |  |                     |   |  |             |   |  |              |   |  |            |  
|Gain on sale of investment securities           |  | 79,129              |   |  |            |   |  | 79,129       |   |  |           |  
|Interest income                                 |  | 1,121,688           |   |  | 710,226     |   |  | 411,462      |   |  |           |  
|Loss on settlement of debt                      |  | (132,000            | ) |  |            |   |  |             |   |  | (132,000   | )
|Mineral property option payments
      received |  | 152,477             |   |  | 43,810      |   |  | 87,500       |   |  | 21,167     |  
|Total Other Income
      (Expense)              |  | 1,221,294           |   |  | 754,036     |   |  | 578,091      |   |  | (110,833   | )
|Net Loss                                        |  | (25,896,798         | ) |  | (14,197,366 | ) |  | (6,548,901   | ) |  | (5,002,225 | )
|Other Comprehensive Income (Loss)               |  |                     |   |  |             |   |  |              |   |  |            |  
|Foreign currency translation adjustment         |  | 481                 |   |  | (61         | ) |  | 542          |   |  |           |  
|Comprehensive Loss                              |  | (25,896,317         | ) |  | (14,197,427 | ) |  | (6,548,359   | ) |  | (5,002,225 | )
|Net Loss Per Share  Basic and Diluted          |  |                     |   |  | (0.37       | ) |  | (0.22        | ) |  | (0.38      | )
|Weighted Average Shares
      Outstanding       |  |                     |   |  | 38,438,000  |   |  | 29,738,000   |   |  | 12,995,000 |  

(The accompanying notes are an integral part of these consolidated
  financial statements)

F-3

---

|Uranerz Energy Corporation           
|-------------------------------------
|(An Exploration Stage Company)       
|Consolidated Statements of Cash Flows
|(Expressed in US dollars)            

|                                                     |  | Accumulated From  |   |  |             |   |  |              |   |  |            |  
|---------------------------------------------------- |  | ----------------- | - |  | ----------- | - |  | ------------ | - |  | ---------- | -
|                                                     |  | May 26, 1999(Date |   |  |             |   |  |              |   |  |            |  
|                                                     |  | of Inception)     |   |  |             |   |  | Year Ended   |   |  |            |  
|                                                     |  | to December 31,   |   |  |             |   |  | December 31, |   |  |            |  
|                                                     |  | 2007              |   |  | 2007        |   |  | 2006         |   |  | 2005       |  
|                                                     |  | $                 |   |  | $           |   |  | $            |   |  | $          |  
|Operating Activities                                 |  |                   |   |  |             |   |  |              |   |  |            |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Net loss                                             |  | (25,896,798       | ) |  | (14,197,366 | ) |  | (6,548,901   | ) |  | (5,002,225 | )
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Adjustments to reconcile
      net loss to cash used |  |                   |   |  |             |   |  |              |   |  |            |  
|in operating activities:                             |  |                   |   |  |             |   |  |              |   |  |            |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Depreciation                                         |  | 72,273            |   |  | 56,668      |   |  | 14,398       |   |  | 1,207      |  
|Gain
      on sale of investment securities          |  | (79,129           | ) |  |            |   |  | (79,129      | ) |  |           |  
|Impairment loss on
      mineral properties          |  | 790,147           |   |  |            |   |  | 449,952      |   |  | 315,143    |  
|Loss
      on settlement of debt                     |  | 132,000           |   |  |            |   |  |             |   |  | 132,000    |  
|Mineral property option
      payment received       |  | (37,500           | ) |  |            |   |  | (37,500      | ) |  |           |  
|Stock-based
      compensation                       |  | 13,030,491        |   |  | 4,991,491   |   |  | 4,215,025    |   |  | 3,808,975  |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Changes in operating assets
      and liabilities:   |  |                   |   |  |             |   |  |              |   |  |            |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Prepaid
      expenses and deposits                  |  | (317,440          | ) |  | (252,570    | ) |  | (44,184      | ) |  | (20,686    | )
|Amounts receivable                                   |  | (92,419           | ) |  | (92,419     | ) |  |             |   |  |           |  
|Accounts
      payable and accrued liabilities       |  | 273,810           |   |  | (35,624     | ) |  | 137,657      |   |  | 115,508    |  
|Due to related parties                               |  | 539,623           |   |  | 271,068     |   |  | 200,901      |   |  | 69,519     |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Net Cash Used in Operating
      Activities          |  | (11,584,942       | ) |  | (9,258,752  | ) |  | (1,691,781   | ) |  | (580,559   | )
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Investing Activities                                 |  |                   |   |  |             |   |  |              |   |  |            |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Acquisition of mineral properties                    |  | (790,147          | ) |  |            |   |  | (449,952     | ) |  | (315,143   | )
|Reclamation bonds                                    |  | (50,000           | ) |  | (40,000     | ) |  | (10,000      | ) |  |           |  
|Acquisition of subsidiary, net cash paid             |  | (48               | ) |  |            |   |  | (48          | ) |  |           |  
|Proceeds from sale of investment
      securities    |  | 116,629           |   |  |            |   |  | 116,629      |   |  |           |  
|Purchase
      of property and equipment             |  | (380,147          | ) |  | (241,306    | ) |  | (128,356     | ) |  | (10,485    | )
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Net Cash Used In Investing
      Activities          |  | (1,103,713        | ) |  | (281,306    | ) |  | (471,727     | ) |  | (325,628   | )
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Financing Activities                                 |  |                   |   |  |             |   |  |              |   |  |            |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Repayment of loan payable                            |  | (14,812           | ) |  | (14,812     | ) |  |             |   |  |           |  
|Advances to related party                            |  | 10,700            |   |  |            |   |  |             |   |  |           |  
|Proceeds from issuance of common stock               |  | 24,319,276        |   |  | 8,604,778   |   |  | 12,771,100   |   |  | 2,867,725  |  
|Share issuance costs                                 |  | (283,253          | ) |  |            |   |  | (239,265     | ) |  | (43,987    | )
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Net Cash Provided By Financing Activities            |  | 24,031,911        |   |  | 8,589,966   |   |  | 12,531,835   |   |  | 2,823,738  |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Effect of Exchange Rate Changes on Cash              |  | 481               |   |  | (61         | ) |  | 542          |   |  |           |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Increase In Cash                                     |  | 11,343,737        |   |  | (950,153    | ) |  | 10,368,869   |   |  | 1,917,551  |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Cash - Beginning of Period                           |  |                  |   |  | 12,293,890  |   |  | 1,925,021    |   |  | 7,470      |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Cash - End of Period                                 |  | 11,343,737        |   |  | 11,343,737  |   |  | 12,293,890   |   |  | 1,925,021  |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Non-cash Investing and Financing Activities          |  |                   |   |  |             |   |  |              |   |  |            |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Investment securities received
      as a mineral    |  |                   |   |  |             |   |  |              |   |  |            |  
|property option payment                              |  | 37,500            |   |  |            |   |  | 37,500       |   |  |           |  
|Purchase of equipment with
      loan payable        |  | 98,414            |   |  | 98,414      |   |  |             |   |  |           |  
|Common stock issued to settle debt                   |  | 341,830           |   |  |            |   |  | 129,830      |   |  | 212,000    |  
|Common stock issued for mineral property
      costs |  | 15,000            |   |  |            |   |  |             |   |  |           |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Supplemental Disclosures                             |  |                   |   |  |             |   |  |              |   |  |            |  
|                                                     |  |                   |   |  |             |   |  |              |   |  |            |  
|Interest paid                                        |  | 3,692             |   |  | 3,692       |   |  |             |   |  |           |  
|Income
      taxes paid                              |  |                  |   |  |            |   |  |             |   |  |           |  

(The accompanying notes are an integral part of these consolidated
  financial statements)

F-4

---

|Uranerz Energy Corporation                                                     
|-------------------------------------------------------------------------------
|(An Exploration Stage Company)                                                 
|Consolidated Statements of Stockholders Equity (Deficit)                      
|For the Period from May 26, 1999 (Date of Inception) to December
      31, 2007
|(Expressed in US dollars)                                                      

|                                         |  |              |  |  |         |  |  |               |   |  |             |  |  | Deficit     |   |  |            |  
|---------------------------------------- |  | ------------ |  |  | ------- |  |  | ------------- | - |  | ----------- |  |  | ----------- | - |  | ---------- | -
|                                         |  |              |  |  |         |  |  |               |   |  | Accumulated |  |  | Accumulated |   |  |            |  
|                                         |  |              |  |  |         |  |  | Additional    |   |  | Other       |  |  | During the  |   |  |            |  
|                                         |  | Common Stock |  |  | Paid-in |  |  | Comprehensive |   |  | Exploration |  |  |             |  
|                                         |  | Shares       |  |  | Amount  |  |  | Capital       |   |  | Income      |  |  | Stage       |   |  | Total      |  
|                                         |  | #            |  |  | $       |  |  | $             |   |  | $           |  |  | $           |   |  | $          |  
|Balance, May 26, 1999 (Date of           |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|inception)                               |  |             |  |  |        |  |  |              |   |  |            |  |  |            |   |  |           |  
|Net loss for the period                  |  |             |  |  |        |  |  |              |   |  |            |  |  | (2,465      | ) |  | (2,465     | )
|Balance, December 31, 1999               |  |             |  |  |        |  |  |              |   |  |            |  |  | (2,465      | ) |  | (2,465     | )
|Net loss for the year                    |  |             |  |  |        |  |  |              |   |  |            |  |  | -           |   |  | -          |  
|Balance, December 31, 2000               |  |             |  |  |        |  |  |              |   |  |            |  |  | (2,465      | ) |  | (2,465     | )
|Shares issued for cash at $0.001         |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|per share                                |  | 1,500,000    |  |  | 1,500   |  |  |              |   |  |            |  |  |            |   |  | 1,500      |  
|Shares issued for cash at $0.01 per      |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|share                                    |  | 2,500,000    |  |  | 2,500   |  |  | 22,500        |   |  |            |  |  |            |   |  | 25,000     |  
|Shares issued to acquire                 |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|mineral property interest at $0.01       |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|per share                                |  | 1,500,000    |  |  | 1,500   |  |  | 13,500        |   |  |            |  |  |            |   |  | 15,000     |  
|Shares issued for cash at $0.35 per      |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|share                                    |  | 90,500       |  |  | 91      |  |  | 31,584        |   |  |            |  |  |            |   |  | 31,675     |  
|Net loss for the year                    |  | -            |  |  |        |  |  |              |   |  |            |  |  | (47,158     | ) |  | (47,158    | )
|Balance, December 31, 2001               |  | 5,590,500    |  |  | 5,591   |  |  | 67,584        |   |  |            |  |  | (49,623     | ) |  | 23,552     |  
|Shares issued for cash at $0.35 per      |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|share                                    |  | 50,000       |  |  | 50      |  |  | 17,450        |   |  |            |  |  |            |   |  | 17,500     |  
|Net loss for the year                    |  |             |  |  |        |  |  |              |   |  |            |  |  | (51,671     | ) |  | (51,671    | )
|Balance, December 31, 2002               |  | 5,640,500    |  |  | 5,641   |  |  | 85,034        |   |  |            |  |  | (101,294    | ) |  | (10,619    | )
|Net loss for the year                    |  |             |  |  |        |  |  |              |   |  |            |  |  | (26,916     | ) |  | (26,916    | )
|Balance, December 31, 2003               |  | 5,640,500    |  |  | 5,641   |  |  | 85,034        |   |  |            |  |  | (128,210    | ) |  | (37,535    | )
|Net loss for the year                    |  |             |  |  |        |  |  | -             |   |  |            |  |  | (20,096     | ) |  | (20,096    | )
|Balance, December 31, 2004               |  | 5,640,500    |  |  | 5,641   |  |  | 85,034        |   |  |            |  |  | (148,306    | ) |  | (57,631    | )
|Shares issued for cash at $0.10 per      |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|share                                    |  | 6,959,500    |  |  | 6,959   |  |  | 688,991       |   |  |            |  |  |            |   |  | 695,950    |  
|Shares issued for cash at $0.40 per      |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|unit                                     |  | 5,420,000    |  |  | 5,420   |  |  | 2,162,580     |   |  |            |  |  |            |   |  | 2,168,000  |  
|Share issuance costs                     |  |             |  |  |        |  |  | (43,987       | ) |  |            |  |  |            |   |  | (43,987    | )
|Shares issued to settle debt             |  | 200,000      |  |  | 200     |  |  | 211,800       |   |  |            |  |  |            |   |  | 212,000    |  
|Shares issued for compensation to        |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|related parties at a fair value
      of |  |              |  |  |         |  |  |               |   |  |             |  |  |             |   |  |            |  
|$1.01 per share                          |  | 3,775,000    |  |  | 3,775   |  |  | 3,808,975     |   |  |            |  |  |            |   |  | 3,812,750  |  
|Net loss for the year                    |  |             |  |  |        |  |  |              |   |  |            |  |  | (5,002,225  | ) |  | (5,002,225 | )
|Balance, December
      31, 2005         |  | 21,995,000   |  |  | 21,995  |  |  | 6,913,393     |   |  |            |  |  | (5,150,531  | ) |  | 1,784,857  |  

(The accompanying notes are an integral part of these consolidated
  financial statements)

F-5

---

|Uranerz Energy Corporation                                                     
|-------------------------------------------------------------------------------
|(An Exploration Stage Company)                                                 
|Consolidated Statements of Stockholders Equity (Deficit)                      
|For the Period from May 26, 1999 (Date of Inception) to December
      31, 2007
|(Expressed in US dollars)                                                      

|                                    |  |              |  |  |         |  |  |            |   |  |               |   |  | Deficit     |   |  |             |  
|----------------------------------- |  | ------------ |  |  | ------- |  |  | ---------- | - |  | ------------- | - |  | ----------- | - |  | ----------- | -
|                                    |  |              |  |  |         |  |  |            |   |  |               |   |  | Accumulated |   |  |             |  
|                                    |  |              |  |  |         |  |  | Additional |   |  | Accumulated   |   |  | During the  |   |  |             |  
|                                    |  | Common Stock |  |  | Paid-in |  |  | Other      |   |  | Exploration   |   |  |             |  
|                                    |  | Shares       |  |  | Amount  |  |  | Capital    |   |  | Comprehensive |   |  | Stage       |   |  | Total       |  
|                                    |  | #            |  |  | $       |  |  | $          |   |  | Income        |   |  | $           |   |  | $           |  
|                                    |  |              |  |  |         |  |  |            |   |  | $             |   |  |             |   |  |             |  
|Balance, December 31, 2005          |  | 21,995,000   |  |  | 21,995  |  |  | 6,913,393  |   |  |              |   |  | (5,150,531  | ) |  | 1,784,857   |  
|Shares issued for cash at $1.00 per |  |              |  |  |         |  |  |            |   |  |               |   |  |             |   |  |             |  
|share                               |  | 7,245,000    |  |  | 7,245   |  |  | 7,237,755  |   |  |              |   |  |            |   |  | 7,245,000   |  
|Shares issued for cash at $1.75 per |  |              |  |  |         |  |  |            |   |  |               |   |  |             |   |  |             |  
|share                               |  | 2,142,200    |  |  | 2,142   |  |  | 3,746,708  |   |  |              |   |  |            |   |  | 3,748,850   |  
|Share issuance costs                |  |             |  |  |        |  |  | (516,964   | ) |  |              |   |  |            |   |  | (516,964    | )
|Shares issued for finders fees      |  | 238,498      |  |  | 238     |  |  | 277,460    |   |  |              |   |  |            |   |  | 277,698     |  
|Shares issued upon the exercise of  |  |              |  |  |         |  |  |            |   |  |               |   |  |             |   |  |             |  
|warrants                            |  | 2,700,000    |  |  | 2,700   |  |  | 1,774,550  |   |  |              |   |  |            |   |  | 1,777,250   |  
|Shares issued for services at $0.91 |  |              |  |  |         |  |  |            |   |  |               |   |  |             |   |  |             |  
|per share                           |  | 100,000      |  |  | 100     |  |  | 90,900     |   |  |              |   |  |            |   |  | 91,000      |  
|Shares and options issued to settle |  |              |  |  |         |  |  |            |   |  |               |   |  |             |   |  |             |  
|debt                                |  | 139,640      |  |  | 140     |  |  | 129,690    |   |  |              |   |  |            |   |  | 129,830     |  
|Fair value of stock options granted |  |             |  |  |        |  |  | 4,124,025  |   |  |              |   |  |            |   |  | 4,124,025   |  
|Other comprehensive income          |  |             |  |  |        |  |  |           |   |  | 542           |   |  |            |   |  | 542         |  
|Net loss for the year               |  |             |  |  |        |  |  |           |   |  |              |   |  | (6,548,901  | ) |  | (6,548,901  | )
|Balance, December 31, 2006          |  | 34,560,338   |  |  | 34,560  |  |  | 23,777,517 |   |  | 542           |   |  | (11,699,432 | ) |  | 12,113,187  |  
|Shares issued upon the exercise of  |  |              |  |  |         |  |  |            |   |  |               |   |  |             |   |  |             |  
|warrants                            |  | 4,481,749    |  |  | 4,482   |  |  | 8,312,196  |   |  |              |   |  |            |   |  | 8,316,678   |  
|Shares issued upon the exercise of  |  |              |  |  |         |  |  |            |   |  |               |   |  |             |   |  |             |  
|options                             |  | 182,000      |  |  | 182     |  |  | 287,918    |   |  |              |   |  |            |   |  | 288,100     |  
|Fair value of stock options granted |  |             |  |  |        |  |  | 4,997,753  |   |  |              |   |  |            |   |  | 4,997,753   |  
|Other comprehensive income (loss)   |  |             |  |  |        |  |  |           |   |  | (61           | ) |  |            |   |  | (61         | )
|Net loss for the year               |  |             |  |  |        |  |  |           |   |  |              |   |  | (14,197,366 | ) |  | (14,197,366 | )
|Balance, December 31, 2007          |  | 39,224,087   |  |  | 39,224  |  |  | 37,375,384 |   |  | 481           |   |  | (25,896,798 | ) |  | 11,518,291  |  

(The accompanying notes are an integral part of these consolidated
  financial statements)

F-6

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated Financial Statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|1. | Nature of Operations and Continuance of Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Uranerz Energy Corporation (the Company)
        was incorporated in the State of Nevada, U.S.A. on May 26, 1999. Effective
        July 5, 2005, the Company changed its name from Carleton Ventures Corp.
        to Uranerz Energy Corporation. The Company has acquired mineral property
        interests in Canada, Mongolia, and the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company is an Exploration Stage Company,
        as defined by Statement of Financial Accounting Standard (SFAS)
        No.7 Accounting and Reporting by Development Stage Enterprises.
        The Companys principal business is the acquisition and exploitation
        of uranium and mineral resources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company has not generated any revenue
        since inception and has never paid any dividends and is unlikely to pay
        dividends or generate earnings in the immediate or foreseeable future.
        As at December 31, 2007, the Company has working capital of $11,114,149.
        Although existing cash resources and a planned equity issue are currently
        expected to provide sufficient funds through the upcoming fiscal year,
        the capital expenditures required to achieve planned principal operations
        may be substantial. The continuation of the Company as a going concern
        for a period longer than the upcoming fiscal year is dependent upon the
        ability of the Company to obtain necessary equity financing to continue
        operations and to determine the existence, discovery and successful exploitation
        of economically recoverable reserves in its resource properties, confirmation
        of the Companys interests in the underlying properties, and the
        attainment of profitable operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F-7

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | f)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | g)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | h)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | i)                                                            
|   |                                                               
|   |                                                               

F-8

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | j)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | k)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | l)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | m)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | n)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   | o)                                                            
|   |                                                               
|   |                                                               

F-9

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | p)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   | q)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               

F-10

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|2. | Summary of Significant Accounting Policies
        (continued)
|-- | --------------------------------------------------------------
|   |                                                               
|   | q)                                                            
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               
|   |                                                               

|3. | Property and Equipment
|-- | ----------------------

| |                                |  |         |  |  |              |  |  | December 31, |  |  | December 31, | 
| | ------------------------------ |  | ------- |  |  | ------------ |  |  | ------------ |  |  | ------------ | 
| |                                |  |         |  |  |              |  |  | 2007         |  |  | 2006         | 
| |                                |  |         |  |  | Accumulated  |  |  | Net Carrying |  |  | Net Carrying | 
| |                                |  | Cost    |  |  | Depreciation |  |  | Value        |  |  | Value        | 
| |                                |  | $       |  |  | $            |  |  | $            |  |  | $            | 
| |                                |  |         |  |  |              |  |  |              |  |  |              | 
| | Computers and office equipment |  | 129,390 |  |  | 27,870       |  |  | 101,520      |  |  | 47,411       | 
| | Field equipment                |  | 349,172 |  |  | 44,404       |  |  | 304,768      |  |  | 75,825       | 
| |                                |  | 478,562 |  |  | 72,274       |  |  | 406,288      |  |  | 123,236      | 

|4. | Mineral Properties
|-- | ------------------
|   |                   
|   | a)                

F-11

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|4. | Mineral Properties (continued)
|-- | ------------------------------
|   |                               
|   | b)                            
|   |                               
|   | c)                            
|   |                               
|   | d)                            
|   |                               
|   | e)                            
|   |                               
|   | f)                            
|   |                               
|   | g)                            
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   |                               
|   | h)                            
|   |                               
|   |                               
|   |                               
|   |                               

F-12

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|4. | Mineral Properties (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | j)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | k)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | l)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | m)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | Acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | On January 1, 2006, the Company acquired 100%
        of the outstanding shares of Rolling Hills Resources LLC (Rolling
        Hills), a Mongolian company, in exchange for the forgiveness of
        $13,220 of notes payable to the Company and $900 cash. Rolling Hills was
        incorporated on September 22, 2005, is in the business of mineral exploration,
        and owns title to several mineral licenses. This acquisition has been
        accounted for using the purchase method and the consolidated financial
        statements include the results of operations for this business from the
        date of acquisition. As this acquisition has not had a significant effect
        on net loss or net loss per share no proforma information has been disclosed.
        In accordance with SFAS No. 141 Business Combinations,
        the Company allocated the purchase price to the tangible and intangible
        assets acquired and liabilities assumed based on their fair values at
        the acquisition date.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Allocation of the purchase price was as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |                          |  | $      | 
| | ------------------------ |  | ------ | 
| | Cash                     |  | 852    | 
| | Mineral properties       |  | 13,268 | 
| | Total consideration paid |  | 14,120 | 

|6. | Loan Payable
|-- | ------------

| | `                                                                |  | December 31, |   |  | December 31, | 
| | ---------------------------------------------------------------- |  | ------------ | - |  | ------------ | 
| |                                                                  |  | 2007         |   |  | 2006         | 
| |                                                                  |  | $            |   |  | $            | 
| | Loan payable to vendor, interest at 8% per
      annum, maturing |  |              |   |  |              | 
| | June 2010, and secured by field equipment                        |  | 83,602       |   |  | -            | 
| |                                                                  |  |              |   |  |              | 
| | Less current portion:                                            |  | (31,456      | ) |  | -            | 
| |                                                                  |  |              |   |  |              | 
| |                                                                  |  | 52,146       |   |  | -            | 

F-13

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|6. | Loan Payable (continued)                                                                                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                            
|   | During the year ended December 31, 2007, the Company
        acquired field equipment totaling $98,414. Consideration was a secured
        loan in the amount of $98,414. The Company made repayments on the loan
        payable of $14,812 and $3,692 of interest payments. Principal repayments
        for the next three fiscal years are as follows:

$2008
      
      31,4562009
      
      34,0672010
      
      18,07983,602


|7. | Related Party Transactions / Balances
|-- | -------------------------------------
|   |                                      
|   | a)                                   
|   |                                      
|   | b)                                   
|   |                                      
|   | c)                                   
|   |                                      
|   | d)                                   
|   |                                      
|   | e)                                   
|   |                                      
|   | f)                                   
|   |                                      
|   | g)                                   
|   |                                      
|   | h)                                   

F-14

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|8. | Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Stock transactions for the year ended December
        31, 2007:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Stock transactions for the year ended December
        31, 2006:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | d)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | e)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | g)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | h)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | j)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|9. | Stock Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On November 7, 2005, the Company adopted a
        Stock Option Plan under which the Company is authorized to grant options
        to acquire up to a total of 10,000,000 shares of common stock. The Company
        did not grant any stock options during the year ended December 31, 2005.                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | On January 6, 2006, the Company granted stock
        options to directors to acquire 1,725,000 common shares at an exercise
        price of $0.75 per share exercisable to January 6, 2011. The fair value
        for options granted was estimated at the date of grant using the Black-Scholes
        option-pricing model and the weighted average fair value of stock options
        granted was $1.38. During the year ended December 31, 2006, the Company
        recorded stock- based compensation for the vested options of $2,383,950
        as general and administrative expense.

F-15

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|9. | Stock Based Compensation (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On January 6, 2006, the Company granted stock options
        to consultants to acquire 270,000 common shares at an exercise price of
        $0.75 per share exercisable to January 6, 2011. The fair value for options
        granted was estimated at the date of grant using the Black-Scholes option-pricing
        model and the weighted average fair value of stock options granted, was
        $1.38. During the year ended December 31, 2006, the Company recorded stock-
        based compensation for the vested options of $373,140 as general and administrative
        expense.                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On May 23, 2006, the Company granted stock options to
        directors and consultants to acquire 550,000 common shares at an exercise
        price of $1.96 per share exercisable until May 23, 2011. The fair value
        for options granted was estimated at the date of grant using the Black-Scholes
        option-pricing model and the weighted average fair value of stock options
        granted was $2.05. During the year ended December 31, 2006, the Company
        recorded stock-based compensation for the vested options of $1,126,012
        as general and administrative expense.                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | During the year ended December 31, 2006, the Company
        granted stock options to a director to acquire 131,000 common shares at
        exercise prices of $0.51 to $2.65 per share exercisable for 5 years to
        settle $121,148 of debt. The fair value for options granted was estimated
        at the date of grant using the Black-Scholes option-pricing model and
        the weighted average fair value of stock options granted was $1.74. The
        exercise price was subsequently offset against amounts owing to the director.
        During the year ended December 31, 2006, the Company recorded stock-based
        compensation of $227,625 as general and administrative expense.       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | During the year ended December 31, 2006, the Company
        granted stock options to a consultant to acquire 8,640 common shares at
        exercise prices ranging from $0.01 to $2.65 per share exercisable for
        5 years to settle $8,682 of debt. The exercise price was subsequently
        offset against amount owing to the consultant. The fair value of options
        granted was estimated at the date of grant using the Black-Scholes option-pricing
        model and the weighted average fair value of stock options granted was
        $1.54. During the year ended December 31, 2006, the Company recorded stock-based
        compensation of $13,298 as general and administrative expense.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In January, 2007 the Company granted stock options to
        directors, officers, employees and consultants to acquire 1,470,000 common
        shares at an exercise price of $3.20 per share exercisable to January
        26, 2012 and recorded stock-based compensation for the vested options
        of $4,290,000 as general and administrative expense.                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In February 2007, the Company granted stock options
        to employees and consultants to acquire 300,000 common shares at exercise
        prices of $3.45 to $3.69 per share exercisable for 5 years and recorded
        stock-based compensation for the vested options of $452,369 as general
        and administrative expense.                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In July, 2007 the Company granted stock options to a
        consultant to acquire 50,000 common shares at an exercise price of $4.73
        per share exercisable to July 9, 2012 and recorded stock-based compensation
        for the vested options of $52,129 as general and administrative expense.                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | In August, 2007 the Company granted stock options to
        a consultant to acquire 100,000 common shares at an exercise price of
        $2.71 per share exercisable to August 20, 2012 and recorded stock-based
        compensation for the vested options of $128,115 as general and administrative
        expense.                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The fair value for stock options granted was estimated
        at the date of grant using the Black-Scholes option-pricing model and
        the weighted average fair value of stock options granted during the years
        ended December 31, 2007 and 2006 were $2.97 and $1.54 per share, respectively.
        The weighted average assumptions used are as follows:                                                                                                                                                                                                                                                                                                                                               

| |                                 |  |              |  |  | Years Ended  |  |  |              | 
| | ------------------------------- |  | ------------ |  |  | ------------ |  |  | ------------ | 
| |                                 |  | December 31, |  |  | December 31, |  |  | December 31, | 
| |                                 |  | 2007         |  |  | 2006         |  |  | 2005         | 
| |                                 |  |              |  |  |              |  |  |              | 
| | Expected dividend yield         |  | 0%           |  |  | 0%           |  |  | -            | 
| | Risk-free interest rate         |  | 4.7%         |  |  | 4.4%         |  |  | -            | 
| | Expected volatility             |  | 168%         |  |  | 250%         |  |  | -            | 
| | Expected option life (in years) |  | 3.1          |  |  | 2.5          |  |  | -            | 

The total intrinsic value of stock options
  exercised during the year ended December 31, 2007 was $592,730 (2006 - $383,522).

F-16

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|9. | Stock Based Compensation (continued)                                                 
|-- | -------------------------------------------------------------------------------------
|   |                                                                                      
|   | The following table summarizes the continuity of the
        Companys stock options:

| |                                |  |           |   |  |          |  |  | Weighted-    |  |  |           | 
| | ------------------------------ |  | --------- | - |  | -------- |  |  | ------------ |  |  | --------- | 
| |                                |  |           |   |  | Weighted |  |  | Average      |  |  |           | 
| |                                |  | Number    |   |  | Average  |  |  | Remaining    |  |  | Aggregate | 
| |                                |  | of        |   |  | Exercise |  |  | Contractual  |  |  | Intrinsic | 
| |                                |  | Options   |   |  | Price    |  |  | Term (years) |  |  | Value     | 
| |                                |  |           |   |  | $        |  |  |              |  |  | $         | 
| |                                |  |           |   |  |          |  |  |              |  |  |           | 
| | Outstanding, December 31, 2005 |  | -         |   |  | -        |  |  |              |  |  |           | 
| |                                |  |           |   |  |          |  |  |              |  |  |           | 
| | Granted                        |  | 2,684,640 |   |  | 1.01     |  |  |              |  |  |           | 
| | Exercised                      |  | (139,640  | ) |  | 0.93     |  |  |              |  |  |           | 
| |                                |  |           |   |  |          |  |  |              |  |  |           | 
| | Outstanding, December 31, 2006 |  | 2,545,000 |   |  | 1.01     |  |  |              |  |  |           | 
| |                                |  |           |   |  |          |  |  |              |  |  |           | 
| | Granted                        |  | 1,920,000 |   |  | 3.26     |  |  |              |  |  |           | 
| | Exercised                      |  | (182,000  | ) |  | 1.58     |  |  |              |  |  |           | 
| |                                |  |           |   |  |          |  |  |              |  |  |           | 
| | Outstanding, December 31, 2007 |  | 4,283,000 |   |  | 2.00     |  |  | 3.59         |  |  | 3,874,750 | 
| |                                |  |           |   |  |          |  |  |              |  |  |           | 
| | Exercisable, December 31, 2007 |  | 3,958,000 |   |  | 1.87     |  |  | 3.50         |  |  | 3,874,750 | 

A summary of the status of the Companys
  non-vested shares as of December 31, 2007, and changes during the years ended
  December 31, 2007, is presented below:

| |                                       |  |            |   |  | Weighted   | 
| | ------------------------------------- |  | ---------- | - |  | ---------- | 
| |                                       |  |            |   |  | Average    | 
| |                                       |  | Number of  |   |  | Grant Date | 
| | Non-vested shares                     |  | Shares     |   |  | Fair Value | 
| |                                       |  |            |   |  | $          | 
| |                                       |  |            |   |  |            | 
| | Non-vested at January 1, 2007         |  | -          |   |  | -          | 
| |                                       |  |            |   |  |            | 
| | Granted                               |  | 1,920,000  |   |  | 2.97       | 
| | Vested                                |  | (1,595,000 | ) |  | 2.95       | 
| |                                       |  |            |   |  |            | 
| | Non-vested at December
      31, 2007 |  | 325,000    |   |  | 3.14       | 

As at December 31, 2007, there was $771,587
  (2006  $nil) of total unrecognized compensation cost related to non-vested
  stock option agreements. That cost is expected to be recognized over a weighted
  average period of 1.11 years. As at December 31, 2007, the Company can issue
  a further 5,395,360 stock options as part of the Stock Option Plan.

|10. | Stock Purchase Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On February 1, 2007, the Company issued 50,000 share
        purchase warrants to a consultant, exercisable at $3.69 per share on or
        before February 1, 2008. The fair value of warrants issued was estimated
        at the date of grant to be $75,140 using the Black-Scholes option-pricing
        model assuming an expected life of 1 year, a risk-free rate of 4.86%,
        an expected volatility of 103% and no expected dividends. The fair value
        of these share purchase warrants was approximately $1.50 per share. During
        the year ended December 31, 2007, the Company recognized stock-based compensation
        of $75,140, of which $68,878 was charged to operations as general and
        administrative expense, and the balance of $6,262 was recorded as prepaid
        expense, to be amortized over the remaining term of the agreement.

F-17

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|10. | Stock Purchase Warrants (continued)                                                                 
|--- | ----------------------------------------------------------------------------------------------------
|    |                                                                                                     
|    | A summary of the changes in the Companys common
        share purchase warrants is presented below:

| |                            |  |            |   |  | Weighted | 
| | -------------------------- |  | ---------- | - |  | -------- | 
| |                            |  |            |   |  | Average  | 
| |                            |  |            |   |  | Exercise | 
| |                            |  | Number     |   |  | Price    | 
| |                            |  |            |   |  | $        | 
| | Balance, December 31, 2004 |  | -          |   |  | -        | 
| | Issued                     |  | 2,710,000  |   |  | 0.60     | 
| | Balance, December 31, 2005 |  | 2,710,000  |   |  | 1.86     | 
| | Issued                     |  | 4,812,849  |   |  | 1.86     | 
| | Exercised                  |  | (2,700,000 | ) |  | 0.66     | 
| | Expired                    |  | (125,000   | ) |  | 0.60     | 
| | Balance, December 31, 2006 |  | 4,697,849  |   |  | 1.86     | 
| | Issued                     |  | 50,000     |   |  | 3.69     | 
| | Expired                    |  | (100,000   | ) |  | 2.25     | 
| | Exercised                  |  | (4,481,749 | ) |  | 1.86     | 
| | Balance December 31, 2007  |  | 166,100    |   |  | 2.86     | 

As at the December 31, 2007, the following
  common share purchase warrants were outstanding:

| | Number of |  | Exercise |  |  |                  |  | 
| | --------- |  | -------- |  |  | ---------------- |  | 
| | Warrants  |  | Price    |  |  | Expiry Date      |  | 
| |           |  | $        |  |  |                  |  | 
| | 50,000    |  | 3.69     |  |  | February 1, 2008 |  | 
| | 116,100   |  | 2.50     |  |  | March 3, 2008    |  | 
| |           |  |          |  |  |                  |  | 
| | 166,100   |  |          |  |  |                  |  | 

|11. | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The Company has adopted the provisions of
        SFAS 109, “Accounting for Income Taxes”. Pursuant to SFAS
        109 the Company is required to compute tax asset benefits for net operating
        losses carried forward. The potential benefit of net operating losses
        have not been recognized in the financial statements because the Company
        cannot be assured that it is more likely than not that it will utilize
        the net operating losses carried forward in future years. The Company
        has $12,104,000, of net operating losses to carryforward which are available
        to offset taxable income in future years which expire through fiscal 2027.
        For the years ended December 31, 2007, 2006 and 2005 the valuation allowance
        established against the deferred tax assets increased by $3,222,060, $660,496
        and $307,340, respectively.

F-18

---

|Uranerz Energy Corporation                    
|----------------------------------------------
|(An Exploration Stage Company)                
|Notes to the Consolidated financial statements
|December 31, 2007                             
|(Expressed in US dollars)                     

|12. | Income Taxes (continued)                                                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                  
|    | The components of the net deferred tax asset at December
        31, 2007, 2006, and 2005, the statutory tax rate, the effective tax rate,
        and the amount of the valuation allowance are indicated below:

| |                                     |  | December 31, |   |  | December 31, |   |  | December 31, |  
| | ----------------------------------- |  | ------------ | - |  | ------------ | - |  | ------------ | -
| |                                     |  | 2007         |   |  | 2006         |   |  | 2005         |  
| |                                     |  | $            |   |  | $            |   |  | $            |  
| |                                     |  |              |   |  |              |   |  |              |  
| | Loss before taxes                   |  | (14,197,366  | ) |  | (6,548,901   | ) |  | (5,002,225   | )
| | Statutory rate                      |  | 35%          |   |  | 35%          |   |  | 35%          |  
| |                                     |  |              |   |  |              |   |  |              |  
| | Computed expected tax (recovery)    |  | (4,969,080   | ) |  | (2,292,120   | ) |  | (1,1750,780  | )
| | Stock-based compensation            |  | 1,747,020    |   |  | 1,475,259    |   |  | 1,333,140    |  
| | Impairment in mineral properties    |  | -            |   |  | 156,360      |   |  | 110,300      |  
| | Change
      in valuation allowance |  | 3,222,060    |   |  | 660,496      |   |  | 307,340      |  
| |                                     |  |              |   |  |              |   |  |              |  
| | Reported
      income taxes         |  |             |   |  |             |   |  |             |  

| |                                  |  | December 31, |   |  | December 31, |   |  | December 31, |  
| | -------------------------------- |  | ------------ | - |  | ------------ | - |  | ------------ | -
| |                                  |  | 2007         |   |  | 2006         |   |  | 2005         |  
| |                                  |  | $            |   |  | $            |   |  | $            |  
| |                                  |  |              |   |  |              |   |  |              |  
| | Deferred tax asset               |  |              |   |  |              |   |  |              |  
| | - Net operating losses           |  | 4,364,060    |   |  | 1,014,500    |   |  | 354,000      |  
| | -
      Less valuation allowance |  | (4,364,060   | ) |  | (1,014,500   | ) |  | (354,000     | )
| |                                  |  |              |   |  |              |   |  |              |  
| | Net deferred tax asset           |  |             |   |  |             |   |  |             |  

The Company has incurred operating losses
  of approximately $12,468,750 which, if unutilized, will expire through to 2027.
  Future tax benefits, which may arise as a result of these losses, have not been
  recognized in these financial statements, and have been offset by a valuation
  allowance. The following table lists the fiscal year in which the loss was incurred
  and the expiration date of the loss.

| |      |  | Net        |  |  | Expiration | 
| | ---- |  | ---------- |  |  | ---------- | 
| |      |  | Loss       |  |  | Date       | 
| |      |  | $          |  |  |            | 
| | 1999 |  | 2,470      |  |  | 2019       | 
| | 2000 |  |           |  |  | 2020       | 
| | 2001 |  | 32,160     |  |  | 2021       | 
| | 2002 |  | 51,670     |  |  | 2022       | 
| | 2003 |  | 26,920     |  |  | 2023       | 
| | 2004 |  | 20,100     |  |  | 2024       | 
| | 2005 |  | 878,110    |  |  | 2025       | 
| | 2006 |  | 1,887,120  |  |  | 2026       | 
| | 2007 |  | 9,205,880  |  |  | 2027       | 
| |      |  |            |  |  |            | 
| |      |  | 12,104,430 |  |  |            | 

|13. | Subsequent Events
|--- | -----------------
|    |                  
|    | a)               
|    |                  
|    | b)               
|    |                  
|    | c)               

F-19

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

At the end of the period covered by this Annual Report of Form
10-K for the fiscal year ended December 31, 2007, an evaluation was carried out
under the supervision of and with the participation of the Companys management,
including the Chief Executive Officer (CEO) and Chief Financial Officer
(CFO), of the effectiveness of the design and operations of the Companys
disclosure controls and procedures (as defined in Rule 13a  15(e) and Rule 15d
 15(e) under the Exchange Act). Based on that evaluation the CEO and the CFO
have concluded that as of the end of the period covered by this report, the
Companys disclosure controls and procedures were adequately designed and
effective in ensuring that: (i) information required to be disclosed by the
Company in reports that it files or submits to the Securities and Exchange
Commission under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in applicable rules and forms and
(ii) material information required to be disclosed in our reports filed under
the Exchange Act is accumulated and communicated to our management, including
our CEO and CFO, as appropriate, to allow for accurate and timely decisions
regarding required disclosure.

Internal Control Over Financial Reporting

Managements Report on Internal Control Over Financial
Reporting

The Company's management is responsible for establishing and
  maintaining adequate internal control over financial reporting as defined in
  Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over
  financial reporting is a process designed to provide reasonable assurance regarding
  the reliability of financial reporting and the preparation and fair presentation
  of financial statements for external purposes in accordance with generally accepted
  accounting principles.

Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Management conducted an evaluation of the design and operation
of the Companys internal control over financial reporting as of December 31,
2007, based on the criteria set forth in Internal Control  Integrated
Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission. This evaluation included review of the documentation of
controls, evaluation of the design effectiveness of controls, testing of the
operating effectiveness of controls and a conclusion on this evaluation. Based
on this evaluation, management has concluded that the Companys internal control
over financial reporting was effective as of December 31, 2007 and no material
weaknesses were discovered.

The Companys independent registered public accounting firm,
Manning Elliot LLP, has issued an attestation report on the Companys internal
control over financial reporting.

Attestation Report of the Independent Registered Public
  Accounting Firm





Report of Independent Registered Public Accounting Firm

To the Directors and Stockholders 
  Uranerz Energy Corporation 
  (An Exploration Stage Company)

We have audited Uranerz Energy Corporations internal control
  over financial reporting as of December 31, 2007, based on criteria established
  in Internal Control  Integrated Framework issued by the Committee of Sponsoring
  Organizations of the Treadway Commission (the COSO criteria). Uranerz Energy
  Corporations management is responsible for maintaining effective internal
  control over financial reporting, and for its assessment of the effectiveness
  of internal control over financial reporting included in the accompanying Managements
  Report on Internal Control Over Financial Reporting. Our responsibility is to
  express an opinion on the Companys internal control over financial reporting
  based on our audit.

We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  effective internal control over financial reporting was maintained in all material
  respects. Our audit included obtaining an understanding of internal control
  over financial reporting, assessing the risk that a material weakness exists,
  testing and evaluating the design and operating effectiveness of internal control
  based on the assessed risk, and performing such other procedures as we considered
  necessary in the circumstances. We believe that our audit provides a reasonable
  basis for our opinion.

A companys internal control over financial reporting is
  a process designed to provide reasonable assurance regarding the reliability
  of financial reporting and the preparation of financial statements for external
  purposes in accordance with generally accepted accounting principles. A companys
  internal control over financial reporting includes those policies and procedures
  that (1) pertain to the maintenance of records that, in reasonable detail, accurately
  and fairly reflect the transactions and dispositions of the assets of the company;
  (2) provide reasonable assurance that transactions are recorded as necessary
  to permit preparation of financial statements in accordance with generally accepted
  accounting principles, and that receipts and expenditures of the company are
  being made only in accordance with authorizations of management and directors
  of the company; and (3) provide reasonable assurance regarding prevention or
  timely detection of unauthorized acquisition, use, or disposition of the companys
  assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial
  reporting may not prevent or detect misstatements. Also, projections of any
  evaluation of effectiveness to future periods are subject to the risk that controls
  may become inadequate because of changes in conditions, or that the degree of
  compliance with the policies or procedures may deteriorate.

In our opinion, Uranerz Energy Corporation maintained, in all
  material respects, effective internal control over financial reporting as of
  December 31, 2007, based on the COSO criteria.

We also have audited, in accordance with the standards of the
  Public Company Accounting Oversight Board (United States), the accompanying
  consolidated balance sheets of Uranerz Energy Corporation as of December 31,
  2007 and 2006, and the related consolidated statements of operations, cash flows,
  and stockholders equity for each of the years in the three year period ended
  December 31, 2007 and accumulated from May 26, 1999 (Date of Inception) to December
  31, 2007 and our report dated March 14, 2008 expressed an unqualified opinion
  thereon.

/s/ MANNING ELLIOTT LLP

CHARTERED ACCOUNTANTS

Vancouver, Canada

March 14, 2008

Changes in Internal Control over Financial
Reporting

There were no changes in our internal control over financial
  reporting identified in connection with the above-referenced evaluation by management
  of the effectiveness of our internal control over financial reporting that occurred
  during the fourth quarter ended December 31, 2007, that have materially affected,
  or are reasonably likely to materially affect, our internal control over financial
  reporting.

56

---

ITEM 9B. OTHER INFORMATION.

None

57

---

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE

The following table sets forth certain information with respect
to our current directors, executive officers and key employees. The term for
each director expires at our next annual meeting or until his or her successor
is appointed. The ages of the directors, executive officers and key employees
are shown as of December 31, 2007.

|                      |                                                                      |                                                                                        | Director/Officer |    
|--------------------- | -------------------------------------------------------------------- | -------------------------------------------------------------------------------------- | ---------------- | ---
|Name                  | Current Office with Company                                          | **Principal Occupation**                                                               | Since            | Age
|Glenn Catchpole       | President and Chief
      Executive Officer; Director                | President and Chief Executive
      Officer, Uranerz Energy Corporation                | March 1, 2005    | 64 
|George Hartman        | Executive Vice-President and Chief
      Operating Officer; Director | Executive Vice-President and Chief
      Operating Officer, Uranerz Energy Corporation | May 9, 2005      | 68 
|Dennis Higgs          | Chairman                                                             | Chairman Uranerz Energy
      Corporation                                              | May 26, 1999     | 50 
|Paul Saxton*          | Director                                                             | President of Lincoln Gold Corporation                                                  | October 26, 2004 | 61 
|Dr. Gerhard Kirchner* | Director                                                             | Chairman, Mindoro Resources
      Limited                                              | March 13, 2005   | 78 
|Peter Bell*           | Director                                                             | President of Ezon Healthcare Corporation                                               | May 10, 2006     | 73 
|Arnold J. Dyck*       | Director                                                             | Self-Employed, General
      Contractor                                                | May 23, 2006     | 67 
|Richard Holmes*       | Director                                                             | Secretary, Treasurer PhosMex Corporation                                               | May 23, 2006     | 66 
|Benjamin Leboe        | Chief Financial Officer                                              | Chief Financial Officer of
      Uranerz Energy Corporation                            | May 23, 2006     | 62 
|Kurtis Brown          | Senior Vice-President, Exploration                                   | Senior Vice-President, Exploration of
      Uranerz Energy Corporation                 | March 8, 2007    | 57 
|Douglas Hirschman     | Vice President, Lands                                                | Vice President, Lands of
      Uranerz Energy Corporation                              | December 6, 2007 | 55 
|Sonya Reiss           | Vice President and Corporate Secretary                               | Vice President and Corporate Secretary,
      Uranerz Energy Corporation               | December 6, 2007 | 37 

* - Indicates that the director is independent in accordance
with the American Stock Exchange Company Guide.

The following is a description of the business background of
the directors and executive officers of Uranerz Energy Corporation.

Mr. Glenn Catchpole was appointed to the Board and
became our President on March 1, 2005. Mr. Catchpole is a licensed engineer who
holds an M.S. in civil engineering from Colorado State University. He has been
active in the uranium solution mining industry since 1978, holding various
positions including well field engineer, project manager, general manager and
managing director of several uranium solution mining operations.

In 1988 Mr. Catchpole joined Uranerz U.S.A., Inc. and Uranerz
Exploration and Mining Ltd. and became Director of Regulatory Affairs,
Environmental Engineering and Solution Mining. Mr. Catchpoles responsibilities
included the monitoring and oversight of the environmental and regulatory
aspects of two large uranium mines in Canada and the operational aspects of one
uranium solution mine in the United States. In 1996 Mr. Catchpole was appointed
General Manager and Managing Director of the Inkai uranium solution mining
project located in the Republic of Kazakhstan (Central Asia). In 1998 Cameco
Corporation acquired Uranerz U.S.A. Inc., and Mr. Catchpole continued his post
with the Inkai project. Mr. Catchpole spent six years taking the Inkai project
from acquisition

58

---

through feasibility study, joint venture formulation,
government licensing, environmental permitting, design, construction and first
phase start-up.

Following his departure from Cameco in 2002, Mr. Catchpole has
been an independent consulting engineer providing project management to the oil
and gas, mining, and construction industries from 2002 until joining our company
in March 2005.

Mr. George Hartmanwas appointed to the Board of
Directors and the role of Vice-President, Mining on May 9, 2005. He has
thirty-seven years experience in developing green field projects into mining
production companies including both metals and industrial mineral projects. He
has an M. S. degree in Mineral Economics (Colorado School of Mines) and a B. S.
in Chemical Engineering (University of Denver). Four process patents have been
granted in his name. His experience includes thirteen years managing several
in-situ recovery uranium mines from green field exploration sites through
commercial production.

For the past fourteen years Mr. Hartman was General Manager for
Fort Cady Minerals Corporation where he had complete responsibility for solution
mining and process development, permitting, design, procurement, construction,
production and property management. Property management included federal mining
claims and private leases for a large deposit of borate mineral. He managed the
project from test stage through construction and operation of a demonstration
production facility. He was also involved with product marketing.

From 1982 to 1989 Mr. Hartman was General Manager, In Situ Leach
  Projects, for Uranerz USA. During this period he managed the interests of all
  in situ uranium projects which Uranerz USA owned including Ruth, Crow Butte,
  and North Butte. Under his management, Uranerz served as the contract operator
  for the successful test solution mining of the Christenson Ranch uranium property
  now owned by Areva NC. He was on the Uranerz acquisition team that studied potential
  uranium and precious and base metal properties in Nebraska, Colorado, Texas,
  New Mexico, Utah, California and Wyoming.

Prior to joining Uranerz USA, Mr. Hartman was president of Ogle
Petroleum Inc. from 1979 to 1982 where he was in overall operating charge of
this uranium production company that joint ventured with Duke Power on a
commercial solution mine in Wyoming. He was responsible for managing the project
from green field exploration through commercial production (shipped filtered
yellowcake to the converter). Mr. Hartman personally designed the processing
plant facilities.

Also, previous to his work with Uranerz USA, Mr. Hartman was
the Texas Mines Manager for Wyoming Mineral Corporation (Westinghouse) from 1976
to 1979, where he was responsible for the management of two production in situ
uranium mines with ion exchange processing plants in Bruni, and Three Rivers,
Texas (shipped dried yellow cake to the converter).

**Mr. Dennis Higgs** is a member of the board of
  directors. Mr. Higgs was appointed to the board of directors as President and
  Chief Executive Officer on May 26, 1999, and resigned as President and Chief
  Executive Officer on March 1, 2005. Mr. Higgs became Chairman of our Board of
  Directors on February 1, 2006.

Mr. Higgs has been involved in the financial and venture
capital markets for over twenty years, raising several millions of dollars in
the United States, Canada and Europe. He founded his first junior exploration
company in 1983 and took it public through an initial public offering in 1984.
Since then, Mr. Higgs has been involved in the founding, financing and initial
public listing of several companies, including Arizona Star Resource Corp. (TSX:
AZS) and BioSource International Inc. (NASDAQ: BIOI). BioSource was acquired
by Invitrogen Corporation at $12.50/share in October, 2005.

In July 1990, Mr. Higgs established Senate Capital Group Inc.,
a private venture capital company which provides management consulting and
investor relations services.

At present, Mr. Higgs serves as a director and officer of
Miranda Gold Corp., a Canadian public gold exploration company, which he founded
in May 1993.

59

---

Mr. Paul Saxtonwas appointed to the Board of Directors
on October 26, 2004. Mr. Saxton is a mining engineer who also holds an MBA from
the University of Western Ontario. He has been active in the mining industry
since 1969, holding various positions including mining engineer, mine
superintendent, president and chief executive officer of numerous Canadian
mining companies.

Following 10 years with Cominco, Mr. Saxton became vice-president
  and president of Mascot Gold Mines Ltd. (from 1983 to 1986), initially working
  on the design and construction of the Nickel Plate mine in British Columbia,
  Canada. Subsequently Mr. Saxton became a vice-president of Corona Corporation
  (from 1986 to 1987 where he was responsible for western operations and exploration
  for the company and was instrumental in the re-opening of the Nickel Plate Mine).
  In 1989, Mr. Saxton was appointed senior vice-president of Viceroy Resource
  Corporation where he was responsible for helping to obtain financing and the
  construction and operations of the Castle Mountain mine in California. In 1994,
  Mr. Saxton was appointed as president of Loki Gold Corporation and Baja Gold
  Inc. where he was responsible for arranging over $45 million in mine financing
  and bringing the Brewery Creek Gold mine into production. Loki Gold, Baja Gold
  and Viceroy Resource Corp. were merged in 1996 and Mr. Saxton became President
  of Viceroy at that time.

Following his departure from Viceroy in 1998, Mr. Saxton became
president of Standard Mining Corp., organizing the company and supervising its
exploration activities until 2001, when Standard Mining Corp. was merged with
Doublestar Resources Ltd. In March 2004, Mr. Saxton was appointed and continues
to serve as a director and president of Lincoln Gold Corporation, a company
engaged in mineral exploration in the State of Nevada.

Mr. Saxton is also Chairman and COO of Pinnacle Mines Ltd., a
TSX Venture company, engaged in exploration and mine development in Canada,
China and Mexico.

Mr. Saxton has been appointed to the Company's nomination and
governance committee, and compensation committee.

**Dr. Gerhard F. Kirchner** was appointed to the
  Board March 13, 2005. Dr. Kirchner has 40 years of international mine development
  and management experience including 20 years with Uranerz Exploration and Mining
  Ltd. (“UEM”) (from 1975 to 2005). At UEM, Dr. Kirchner spent nine
  years as General Manager and 11 years as Senior Vice President. He and his team
  were responsible for the Key Lake uranium discovery and the engineering and
  development of projects such as the Midwest uranium deposit, Eagle Point North
  uranium deposit, Star Lake gold deposit and the Crow Butte ISL uranium deposit.

Previous to his work with UEM, Dr. Kirchner spent six years
developing and managing the Kamoto Mine in Kolwezi, Zaire from (1968 to 1974);
six years consulting on mining and civil engineering projects in several
countries including Surinam, Nigeria, Congo, Saudi Arabia and Austria (from 1962
to 1968); five years as a mine superintendent and exploration manager in
Greenland (from 1957 to 1962) where he discovered the Molybdenum Porphyry
Erzberg.

During the past ten years, Dr. Kirchner has served as director
on the board of Mindoro Resources Limited.

Dr. Kirchner received a multidisciplinary education in mining
engineering and economic geology and a Doctorate in Mining Sciences from the
University of Leoben, Austria.

Mr. Arnold J. Dyck was appointed to the Board of
Directors on May 10, 2006. Mr. Dyck was employed at Uranerz Exploration and
Mining Limited from 1977 to 1998. Mr. Dyck progressed through various positions
with Uranerz Canada Limited, Uranerz Exploration and Mining Limited, and Uranerz
U.S.A. Inc. to become the Senior Vice-President and Chief Financial Officer for
the Uranerz group of companies. He also served as a member of the board of
directors for Uranerz U.S.A. Inc. and as chairman of the board with a subsidiary
mining company. Uranerz Exploration and Mining Limited, Uranerz Canada Limited,
Uranerz U.S.A. and the original Uranerz group of companies are not connected
with, or a predecessor company to Uranerz Energy Corporation. The original
Uranerz group of companies was acquired by Cameco, the world's largest primary
uranium producer, in 1998.

During the past five years, Mr. Dyck has been self employed as
a general contractor in designing, constructing and selling new homes and
renovating older homes and offices.

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Mr. Dyck is a graduate of the Registered Industrial Accountant
education program and was awarded the designation of certified Management
Accountant in 1975.

Mr. Dyck has been appointed to the Company's audit committee
and compensation committee.

**Mr. Richard W. Holmes** was appointed to the Board
  of Directors on May 23, 2006 Mr. Holmes was an assistant controller with Duke
  Power Company (now Duke Energy) from 1971 to 1981. Duke Energy has operated
  nuclear plants for more than thirty years. While at Duke Power Mr. Holmes was
  Assistant Controller of the parent company. He was also Treasurer of Eastover
  Land Company, a $100 million subsidiary of Duke's with interests in coal properties
  in Kentucky and West Virginia. Concurrently, Mr. Holmes was Treasurer of Western
  Fuel, Duke's uranium mining project in Wyoming.

Mr. Holmes left Duke in 1981 to become Treasurer and Controller
  of Ogle Resources Inc., an oil and gas company with offshore exploration, drilling
  and production from 1981 to 1986. At the same time, Mr. Holmes was Treasurer
  and Controller for a sister company with an investment in in-situ recovery uranium
  mining in Wyoming.

During the past five years, although retired, Mr. Holmes is active
  as Secretary, Treasurer for PhosMex Corporation, a California phosphate mining
  corporation.

Mr. Holmes received his bachelor's degree in accounting from
the University of Wisconsin. He held the position of Senior Auditor at Arthur
Andersen & Co. in Chicago, Illinois, from 1968 to 1971. Mr. Holmes was an
active certified public accountant from 1971 to 2003.

Mr. Holmes has been appointed to the Company's audit committee,
and the nominating and corporate governance committee.

Mr. Peter Bell was appointed to the Board of Directors
on May 10, 2006. Mr. Bell practiced as a licensed pharmacist until 1968. Since
that time he has been a self-employed consultant and a director and member of a
number of private and public companies and professional organizations. Mr. Bell
is a director of Current Technology Corporation which markets an electrostatic
hair maintenance and re-growth process, since 1992. Since 1997, Mr. Bell has
been a director and is the President of Ezon Healthcare Corporation, a private
company that is involved in the development of a graphic labeling system for
pharmaceutical products.

Mr. Bell has provided a wide range of consultant services to
businesses and health care companies and organizations. These consultant
services included: sales management and reorganization of sales force; regional
market development and marketing strategy; medical opinion surveys and market
analysis; medical device product market development; business immigration
program presentations; management studies in healthcare organizations;
development and growth of public corporations.

Mr. Bell holds a Bachelor of Science Degree in Pharmacy from
the University of Manitoba and a Masters in Business Administration from the
University of Western Ontario.

Mr. Bell has been appointed to the Company's audit committee,
the nominating and corporate governance committee, and the compensation
committee.

**Mr. Benjamin Leboe** was appointed as the Company’s
  Chief Financial Officer on May 23, 2006 and acted as our Corporate Secretary
  from October, 2006 to December, 2007. Mr. Leboe was a senior consultant, management
  consulting of the Business Development Bank of Canada, from January 2005 to
  February 2006. Previously, Mr. Leboe was president, secretary, treasurer, principal
  financial and accounting officer and a director of Asia Payment Systems Inc.,
  a United States and Hong Kong based company engaged in payment processing services
  and related applications from June 1998 to January 2005. Concurrently, from
  January 2003 to January 2005, Mr. Leboe was the chief financial officer of C-Chip
  Technologies Inc. (now Anensys Corporation), a Montreal based corporation developing
  high-tech products and services for security and risk mitigation activities.

Mr. Leboe has been the principal of Independent Management
Consultants of British Columbia from 1990 to date.

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Concurrently, Mr. Leboe was previously vice-president and chief
financial officer of VECW Industries Ltd. from 1990 to 1993, and a partner of
KPMG Consulting from 1978 to 1990.

Mr. Leboe received his bachelor of commerce degree from the
University of British Columbia. Mr. Leboe is a chartered accountant and a
certified management consultant in the Province of British Columbia.

**Mr. Kurtis Brown**, a thirty-five year veteran
  of the mining industry, was appointed Senior Vice-President in March 2007. Mr.
  Brown was an independent geological consultant for the five years prior to joining
  Uranerz. He has previously assisted with the start up of the Christensen Ranch
  ISR commercial uranium mine now owned by AREVA. Mr. Brown is a professional
  geologist.

Mr. Douglas Hirschman was appointed Vice-President,
Lands in December 2007. From January 2006 to June 2007 Mr. Hirschman was Manager
of Lands, International Newmont Gold Corporation. He was an independent
Consulting Landman from 2002 through 2005 and, as a graduate of the University
of Wyoming, has over thirty years of experience in the mineral exploration
industry.

**Ms. Sonya Reiss** joined our Company as Corporate
  Counsel in August 2007. She was appointed Vice President of Corporate Affairs
  and Corporate Secretary in December 2007. Ms. Reiss has eight years of legal
  experience practicing in United States and Canada. She was Corporate Counsel
  at Southwestern Resources Corporation from October 2006 to August 2007 and acted
  as a transaction lawyer with global law firms such as Shearman & Sterling,
  Osler Hoskin & Harcourt LLP and Fasken Martineau DuMoulin LLP from February
  1999 to October 2006. Ms. Reiss has a Bachelor of Arts (English Honours), a
  Master of Arts (English and Critical Theory) and a Bachelor of Laws, University
  of B.C.

Advisory Board

We have an advisory board that consists entirely of
professional geologists.

Dr. Franz J. Dahlkamp has over 45 years experience as an
economic geologist, with specific emphasis in uranium. He started as an economic
geologist with several mining companies in Germany and abroad. In 1968 he began
working with the Uranerz group of companies and by 1974 he became the head of
their exploration department. While at Uranerz he organized and established the
Uranerz group of subsidiary companies for uranium exploration in Australia,
Canada, and the USA, and conducted reconnaissance surveys for uranium
worldwide.

Since 1978 Dr. Dahlkamp has been consulting for mining
companies, utilities, national and international institutions (governments of
Germany, Austria, USA, Egypt, Iran, Mongolia; UN/IAEA, OECD/NEA). Also, since
1978 to 2002, Dr. Dahlkamp lectured at the Universities of Leoben and Salzburg,
Austria, and Munich, Germany (on uranium deposits: geology, economics, and
exploration).

Dr. Dahlkamp has published over fifty papers including six books
  (eg. Uranlagerstätten 1979, Uranium Ore Deposits 1993).

Dr. Dahlkamp has a PhD (1958), a Dr. of Science (Habilitation
1979), and is an Honorary Chair (Honorar-Professor) at Mining-University of
Leoben (1990).

Dr. Gerhard Ruhrmann has close to 30 years experience in
uranium exploration, mining and mine waste management. From 1976 to 1981, Dr.
Ruhrmann was project geologist and exploration manager for Uranerz Exploration
and Mining (UEM) in Canada, supervising field work in the Otish Mountains of
Quebec, the Athabasca Basin in Saskatchewan, and the Thelon Basin in Nunavut. In
1982, Dr. Ruhrmann joined Key Lake Mining Corporation, to develop exploration
tools for high grade unconformity-related uranium deposits on the basis of
geological and mineralogical research at the Key Lake open pits and other mines
in the Athabasca Basin. This resulted in a number of papers published in a
variety of scientific periodicals including technical documents of the
International Atomic Energy Agency.

In 1988, Dr. Ruhrmann became engaged in hydrogeological and
geotechnical work in Cameco's engineering division, assessing above-ground
uranium tailings management facilities and contributing to the in-pit tailings
disposal concept at the Deilmann open pit in Saskatchewan.

62

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In 1993, Uranerzbergbau (UEB) in Germany called Dr. Ruhrmann to
join its consulting branch. Assignments included the assessment of exploration
and mining projects in central Asia and western Africa, managing a subsidiary
exploration company in Guinea, providing technical assistance to regulatory
agencies in Papua New Guinea, monitoring the reclamation work at the former
uranium mines in eastern Germany, designing reclamation concepts for closed-out
uranium mines in central Asia and eastern Europe as well as reviewing the mining
practice in Vietnam. On the basis of this experience, Dr. Ruhrmann co-authored a
book on environmental mine management, published in 2001.

Since 2003, Dr. Ruhrmann is practicing as an independent
consultant to the mining industry and international technical assistance
agencies. Assignments include a review of the mining industry in Mongolia,
enhancement of small-scale mining in Papua New Guinea, quality control at
uranium mine rehabilitation projects and the assessment of uranium
prospects.

Dr. Ruhrmann has a diploma in geology and holds a doctor degree
in geology from the University of Tuebingen, Germany. Since 2001, Dr. Ruhrmann
is teaching mineral exploration at the University of Leoben, Austria.

Mr. Kenneth Cunningham brings over thirty years of
experience from diversified mineral exploration and mining geology through to
executive management. Eighteen of these years have been focused in Nevada.
Currently Mr. Cunningham is the President and Chief Executive Officer of Miranda
Gold Corp. where he aggressively positioned this company in the Cortez Gold
Trend and successfully negotiated joint ventures with major mining companies
including Newmont, Placer Dome, Newcrest and Barrick. Previously, he was
Exploration Manager with Uranerz U.S.A. Inc. During his tenure with Uranerz Mr.
Cunningham led the exploration and acquisition effort that resulted in two
Nevada gold discoveries; a three-million-ounce discovery in the Battle Mountain
trend and a one-plus-million ounce discovery in the northern Carlin trend. Mr.
Cunningham has also been Vice President of Tenneco Minerals Company and a
Resident Manager with Echo Bay Mining Company.

Mr. Cunningham started his career with Houston Oil and Minerals
as a member of its uranium exploration team. In 1978 he was responsible for the
discovery of the Death Valley uranium deposit on Alaskas Seward Peninsula. This
deposit contains ten-million-pounds of uranium at a grade of .25% U3O8.

Mr. Joe Hebert is currently Vice President of
Exploration for Miranda Gold Corp. Most recently, Mr. Hebert was the senior
exploration geologist for the Cortez Joint Venture (Placer Dome and Kennecott
Minerals) located on the Battle Mountain Trend in North Central Nevada. He was a
member of the exploration team who discovered the 7.5 million ounce Cortez Hills
gold deposit. During his tenure at Cortez he directed all generative and
acquisition efforts within the joint venture area of interest.

From 1992 to 1999 Mr. Hebert consulted for Uranerz USA, Inc.
where he conducted project evaluations and generative programs primarily in
north central Nevada. The most significant result of this program was the
recognition of gold potential and acquisition recommendations of the
Nike-Converse property in Buffalo Valley where Uranerz discovered approximately
3 M oz of gold resource. He also recommended the REN property for acquisition,
where currently development drilling on a high-grade resource is being
conducted.

During the period when he was consulting, Mr. Hebert initiated
a countrywide evaluation of Mongolia, identifying essentially unexplored
epithermal systems from regional compilation and focused reconnaissance. He
focused his client in gold-belts of NE Mongolia, acquiring for them two large
concessions with multiple ore-grade showings in large epithermal and
intrusive-related alteration cells. This program required interaction with
high-level government officials, Mongolian junior companies, Mongolian
Geological Survey and supervising native crews in remote camps.

Mr. Hebert is credited with team participation in multiple gold
discoveries in Nevada and Utah over the course of his career. He has also had
staff and contract positions with several US majors over the years including
Superior Oil, Tenneco, and Freeport Minerals.

None of our executive officers or key employees is related by
blood, marriage or adoption to any other director or executive officer.

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To our knowledge, there is no arrangement or understanding
between any of our officers and any other person pursuant to which the officer
was selected to serve as an officer.

Committees of the Board of Directors

Set forth below are our company's current practices relating to
the functions associated with an audit committee, a compensation committee and a
corporate governance and nominating committee.

Audit Committee

We have a standing audit committee and audit committee charter,
which complies with Rule 10A-3 and the requirements of the American Stock
Exchange. Our audit committee was established in accordance with section 3 (a)
of the Securities Exchange Act of 1934, as amended. Our audit committee is
comprised of three directors all of whom, in the opinion of the Companys Board
of Directors are independent (in accordance with Rule 10A-3 and the requirements
of the American Stock Exchange): Arnold Dyck, Peter Bell and Richard Holmes. Mr.
Arnold Dyck satisfies the requirement of a financial expert as defined under
Item 407(d)(5) of Regulation S-K and is, in the opinion of the Companys Board
of Directors, independent as that term is used in the American Stock Exchange
Company Guide and Rule 10A-3 of the Securities Exchange Act of 1934, as amended.

Our audit committee meets with our management and our external
auditors to review matters affecting financial reporting, the system of internal
accounting and financial controls and procedures and the audit procedures and
audit plans. Our audit committee reviews our significant financial risks, is
involved in the appointment of senior financial executives and annually reviews
our insurance coverage and any off-balance sheet transactions.

Our audit committee monitors our audit and the preparation of
financial statements and all financial disclosure contained in our SEC filings.
Our audit committee appoints our external auditors, monitors their
qualifications and independence and determines the appropriate level of their
remuneration. The external auditors report directly to the audit committee. Our
audit committee has the authority to terminate our external auditors engagement
and approve in advance any services to be provided by the external auditors that
are not related to the audit.

Compensation Committee

We have a Compensation Committee comprised of three directors
all of whom, in the opinion of the Companys Board of Directors, are independent
(under the American Stock Exchange Company Guide): Peter Bell, Arnold J. Dyck
and Paul Saxton. We have a Compensation Committee charter that complies with the
requirements of the American Stock Exchange. Our Compensation Committee is
responsible for considering and authorizing terms of employment and compensation
of executive officers and providing advice on compensation structures in the
various jurisdictions in which we operate. Our Chief Executive Officer may not
be present during the voting determination or deliberations of his or her
compensation. In addition, our Compensation Committee reviews both our overall
salary objectives and significant modifications made to employee benefit plans,
including those applicable to executive officers, and proposes awards of stock
options.

Corporate Governance and Nominating Committee

We have a Corporate Governance and Nominating Committee
comprised of three directors all of whom, in the opinion of the Companys Board
of Directors, are independent (under the American Stock Exchange Company Guide):
Richard Holmes, Peter Bell and Paul Saxton. We have a Nominating Committee
charter that complies with the requirements of the American Stock Exchange. Our
Corporate Governance Committee is responsible for developing our approach to
corporate governance issues.

Code of Ethics

We have adopted a corporate code of ethics administered by our
  chief financial officer, Benjamin Leboe. We believe our code of ethics is reasonably
  designed to deter wrongdoing and promote honest and ethical conduct, to provide
  full, fair, accurate, timely and understandable disclosure in public reports,
  to comply with applicable laws, to ensure prompt internal reporting of code
  violations, and to provide accountability for adherence to the code. Our code
  of ethics provides written standards that are reasonably designed to deter wrongdoing
  and to promote:

64

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- Honest and ethical conduct, including the ethical handling of actual or
    apparent conflicts of interest between personal and professional relationships;
- Full, fair, accurate, timely and understandable disclosure in reports and
    documents that are filed with, or submitted to, the SEC and in other public
    communications made by an issuer;
- Compliance with applicable governmental laws, rules and regulations; and
- The prompt internal reporting of violations of the code to an appropriate
    person or persons identified in the code; and
- Accountability for adherence to the code.

Our Code of Ethics is available at our website at
www.uranerz.com. We intend to disclose any waiver from a provision of our code
of ethics that applies to any of our principal executive officer, principal
financial officer, principal accounting officer or controller or persons
performing similar functions that relates to any element of our code of ethics
on our website. No waivers were granted from the requirements of our Code of
Ethics during the year ended December 31, 2007, or during the subsequent period
from January 1, 2007, through the date of this report.

Recommendation to the Board of Directors

There have been no changes in the Companys procedures by which
shareholders of the Company may recommend nominees to the Companys Board of
Directors.

Compliance with Section 16(A) of the Securities Exchange
Act.

Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who beneficially own more than ten percent
of our equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than ten percent shareholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file. Based on our review of the copies
of such forms received by us, we believe that during the fiscal year ended
December 31, 2007 all such filing requirements applicable to our officers and
directors were complied with other than the following reports which were filed
late by the following persons:

Name and Principal Position
    Number of Late Reports
    Transactions Not Timely
      Reported
    Known Failures to File a
      Required FormDennis Higgs
    One
    One
    NoneGlenn Catchpole
    None
    None
    NonePaul Saxton
    Three
    Three
    NoneGerhard Kirchner
    Two
    Two
    NoneGeorge Hartman
    One
    One
    NonePeter Bell
    None
    None
    NoneArnold Dyck
    None
    None
    NoneRichard Holmes
    None
    None
    NoneBenjamin Leboe
    None
    None
    NoneKurtis Brown
    None
    None
    NoneDouglas Hirschman
    One
    None
    NoneSonya Reiss
    One
    None
    None


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ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation Table

A summary of cash and other compensation paid in accordance
with management consulting contracts for our Principal Executive Officer and
other named executive officers for the last two fiscal years is as follows:

|Name(5)                                                    |  |           |  |  |                 |  |  |               |  |  |        |  |  | Option          |  |  | Non-Equity     |  |  | Nonqualified |  |  |           |  |  |                 | 
|---------------------------------------------------------- |  | --------- |  |  | --------------- |  |  | ------------- |  |  | ------ |  |  | --------------- |  |  | -------------- |  |  | ------------ |  |  | --------- |  |  | --------------- | 
|and                                                        |  |           |  |  |                 |  |  |               |  |  | Stock  |  |  | Awards          |  |  | Incentive Plan |  |  | Deferred     |  |  | All other |  |  | Total           | 
|Principal                                                  |  | Year      |  |  | Salary          |  |  | Bonus         |  |  | Awards |  |  | ($)             |  |  | Compensation   |  |  | Compensation |  |  | Comp.     |  |  |                 | 
|Position                                                   |  |           |  |  |                 |  |  |               |  |  |        |  |  |                 |  |  |                |  |  |              |  |  |           |  |  |                 | 
|                                                           |  |           |  |  | ($)             |  |  | ($)           |  |  | $      |  |  | **(Note 1)**    |  |  | ($)            |  |  | Earnings     |  |  |           |  |  |                 | 
|                                                           |  |           |  |  |                 |  |  |               |  |  |        |  |  |                 |  |  |                |  |  | ($)          |  |  |           |  |  |                 | 
|(a)                                                        |  | (b)       |  |  | (c)             |  |  | (d)           |  |  | (e)    |  |  | (f)             |  |  | (g)            |  |  | (h)          |  |  | (i)       |  |  | (j)             | 
|Dennis Higgs Chairman and Director
      (2)               |  | 2007 2006 |  |  | 142,736 103,200 |  |  | 2,000 35,000  |  |  |        |  |  | 710,050 483,700 |  |  |                |  |  |              |  |  | 9,731     |  |  | 854,786 631,631 | 
|Glenn Catchpole President/PEO and Director
      (3)       |  | 2007 2006 |  |  | 120,000 96,000  |  |  | 10,000 50,000 |  |  |        |  |  | 710,050 483,700 |  |  |                |  |  |              |  |  | 6,000     |  |  | 840,050 635,700 | 
|George Hartman Exec. Vice
      President and Director (4) |  | 2007 2006 |  |  | 199,000 174,000 |  |  | 2,000 25,000  |  |  |        |  |  | 710,050 711,326 |  |  |                |  |  |              |  |  |           |  |  | 911,050 910,326 | 
|Benjamin Leboe Chief Financial Officer
      (5)           |  | 2007 2006 |  |  | 82,017 31,414   |  |  | 2,000         |  |  |        |  |  | 355,000 204,729 |  |  |                |  |  |              |  |  |           |  |  | 439,017 236,143 | 
|Kurtis Brown VP (6)                                        |  | 2007      |  |  | 103,750         |  |  | 17,000        |  |  |        |  |  | 346,147         |  |  |                |  |  |              |  |  |           |  |  | 466,897         | 

Notes to Summary of Executive Compensation and Executive
Compensation Agreements

|1. | Option award compensation is the fair value for stock
      options awarded during the period, a notional amount estimated at the date
      of the grant using the Black-Scholes option-pricing model. The actual
      value received by the executives may differ materially and adversely from
      that reported herein.                                                                                                                                                                                                                                                                 
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2. | Salary is a management fee paid to a private holding
      company of Mr. Dennis Higgs. Mr. Higgs became Chairman of our Board on
      February 1, 2006. In 2005 we entered into a consulting agreement with Ubex
      Capital Inc., wholly owned by Dennis Higgs. The Agreement states that we
      will pay a monthly fee of CDN$12,500. The monthly fee increases to
      CDN$15,000 in 2008.                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3. | Salary is a management fee paid to a private holding
      company of Mr. Glenn Catchpole. Mr. Catchpole was appointed President and
      CEO on March 1, 2005. In 2005 we entered into a consulting agreement with
      Catchpole Enterprises Inc. Catchpole Enterprises is wholly owned by Glenn
      and Judy Catchpole. The Agreement states that we will pay a monthly
      consulting fee of US $10,000 in consideration of the provision of the
      services of Mr. Catchpole as our President and Chief Executive Officer.
      The monthly fee increases to US $15,000 in 2007.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|4. | Salary is a consulting fee paid to Mr. George Hartman.
      Mr. Hartmann was appointed Senior Vice President -Mining on May 9, 2005
      and subsequently appointed Executive Vice President and Chief Operation
      Officer. Mr. Hartman is paid for consulting on the basis of $1,000 per
      day.                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|5. | Salary is a consulting fee paid to an entity owned by
      Benjamin Leboe. Mr. Leboe was appointed Chief Financial Officer on May 23,
      2006 and Corporate Secretary on October 12, 2006. In 2006 we entered into
      a consulting agreement with Independent Management Consultants of British
      Columbia. (IMC). IMC is wholly owned by Benjamin Leboe, our Chief
      Financial Officer. The Agreement states that we will pay for consulting
      services provided, based upon a rate of CDN$10,000 per month. The monthly
      rate increases to CDN$12,000 in 2008.       

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Compensation Discussion and Analysis

Oversight of Executive Compensation Program

The Compensation Committee of the Board of Directors oversees
the Companys compensation programs, which are designed specifically for the
Companys most senior executives officers, including the Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer and the other
executive officers named in the Summary Compensation Table (collectively, the
senior executive officers). Additionally, the Compensation Committee is
charged with the review and approval of all annual compensation decisions
relating to senior executive officers.

The Compensation Committee is composed entirely of independent,
non-management members of the Board of Directors. Each year, and at such other
times as is necessary, the Company reviews any and all relationships that each
director has with the Company and the Board of Directors subsequently reviews
these findings. The Board of Directors has determined that none of the
Compensation Committee members have any material business relationships with the
Company.

The responsibilities of the Compensation Committee, as stated
in its charter, include the following:

- Review and assess the adequacy of the Compensation Committee charter
  annually and submit any proposed changes to the Board of Directors for
  approval;
- Produce an annual report on senior executive officer compensation for
  inclusion in the Companys annual report and proxy statement relating to its
  annual meeting of stockholders;
- Review and make such recommendations to the Board of Directors as the
  Compensation Committee deems advisable with regard to all incentive-based
  compensation plans and equity- based plans;
- Review and approve the corporate goals and objectives that may be relevant
  to the compensation of the Companys senior executive officers;
- Evaluate senior executive officer performance in light of the goals and
  objectives that were set and determine and recommend senior executive officer
  compensation based on such evaluation; and
- Review and approve the recommendations of the chief executive officer with
  regard to the compensation of all officers of the Company other than the chief
  executive officer.

Overview of Compensation Program

In order to recruit and retain the most qualified and competent
individuals as senior executive officers, the Company strives to maintain a
compensation program that is competitive in the global labor market. The purpose
of the Companys compensation program is to reward exceptional organizational
and individual performance.

The following compensation objectives are considered in setting
the compensation programs for our named executive officers:

- Drive and reward performance which supports the Companys core values;
- Design competitive total compensation and rewards programs to enhance the
  Companys ability to attract and retain knowledgeable and experienced senior
  executive officers; and
- Set compensation and incentive levels that reflect competitive market
  practices.

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Compensation Elements and Rationale

To reward both short and long-term performance in the
compensation program and in furtherance of the Companys compensation objectives
noted above, the Companys compensation program is based on the following
objectives:

| | (i) | Performance Goals
| | --- | -----------------

The Compensation Committee believes that a significant portion
of a senior executive officers compensation should be tied not only to
individual performance, but also to the Companys performance as a whole
measured against both financial and non-financial goals and objectives. During
periods when performance meets or exceeds these established objectives, senior
executive officers should be paid at or more than expected levels. When the
Companys performance does not meet key objectives, incentive award payments, if
any, should be less than such levels.

| | (ii) | Incentive Compensation
| | ---- | ----------------------

A large portion of compensation should be paid in the form of
short-term and long-term incentives, which are calculated and paid based
primarily on financial measures of profitability and stockholder value creation.
Senior executive officers have the incentive of increasing Company profitability
and stockholder return in order to earn a major portion of their compensation
package.

| | (iii) | Competitive Compensation Program
| | ----- | --------------------------------

The Compensation Committee reviews the compensation of
executives at peer companies to ensure that the compensation program is
competitive. The Company believes that a competitive compensation program will
enhance its ability to attract and retain senior executive officers.

Review of Senior Executive Officer
Performance

The Compensation Committee reviews, on an annual basis, each
compensation package for the senior executive officers. In each case, the
Compensation Committee takes into account the scope of responsibilities and
experience and balances these against competitive salary levels. The
Compensation Committee has the opportunity to meet with the senior executive
officers at various times during the year, which allows the Compensation
Committee to form its own assessment of each individuals performance.

Components of the Executive Compensation
Program

The Compensation Committee believes the total compensation and
benefits program for named executive officers should consist of the
following:

- Base salary; and
- Stock incentive plan.

Many of the Companys senior executive officers provide
services through consulting or management agreements with the Company. Fees are
paid under consulting or management fees pursuant to these agreements. From
the Companys perspective, these services are provided in this manner for
flexibility considerations. The Company has determined that it is in the best
interests of the Company and its shareholders to maintain consulting and
management agreements rather than employment agreements as it decreases the
number of actual employees of the Company and ensures that employment of key
officers can be negotiated on an as-needed basis with individualized termsa
vital concern to the Company given the relative costs of management salaries and
expenses in a development stage company.

68

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Dennis Higgs, Chairman of the Board of Directors (and
former President)

Mr. Higgs is compensated indirectly through the Companys
consulting agreement with Ubex Capital Inc. The Company engaged Ubex in early
2005 to provide business development and strategic planning consulting services
and management to create a viable resource company. The Board of Directors
considered Mr. Higgs continuing involvement to be of vital interest to the
Companys success and increased Ubexs consulting services over time to the
point where Mr. Higgs provides the Company services as a fully involved
Executive Chairman. The Board upon recommendation from the Compensation
Committee has decided to continue the consulting arrangement to minimize
administrative costs and to maintain the certainty and flexibility of
contractual arrangements. Mr. Higgs has over twenty years experience in
establishing and growing public companies and the Board of Directors upon
recommendation from the Compensation Committee has determined that his
compensation shall be similar to full time Executive Chairmen of public
companies with capitalization in the $200  500 million range.

Glenn Catchpole

Mr. Catchpole is compensated indirectly through the Companys
consulting agreement with Catchpole Enterprises LLC. (CE). The Company engaged
CE in early 2005 to provide industry expertise and strategic planning consulting
services and full-time executive management to create a viable resource company.
The Board of Directors and the Compensation Committee considers Mr. Catchpoles
continuing involvement to be of vital interest to the Companys success as
President and Chief Executive Officer. The Board has chosen the consulting
arrangement to minimize administrative costs and to maintain the certainty and
flexibility of contractual arrangements. Mr. Catchpole has over thirty years in
establishing and growing public companies and the Board of Directors upon
recommendation from the Compensation Committee has determined that his
compensation shall be similar to full time president and CEO of public companies
with capitalization in the $200  500 million range.

George Hartman

The Companys compensation policy for Mr. Hartman is based on
days spent consulting for the Company. The Board of Directors and the
Compensation Committee believes that this provides the Company with greater
flexibility in controlling expenses. Mr. Hartmans services as Executive
Vice-President, Mining entail a varying degree of attention to the Companys
exploration and development activities. Mr. Hartman has extensive expertise in
the area of mining production, including specifically, in-situ recovery of
uranium, which expertise is very valuable to the Company. Mr. Hartmans salary
exceeded that of other officers in 2006 and 2007 because of the value of his
expertise to the Company and the fact that he spent a substantial amount of time
attending to the Companys mineral projects in those years.

Benjamin Leboe

The Companys compensation policy for Mr. Leboe, as Principal
of Independent Management Consultants of British Columbia is based on time spent
consulting for the Company. The Board of Directors and the Compensation
Committee believes that this provides the Company with greater flexibility in
controlling expenses. Mr. Leboes services as Chief Financial Officer entail a
high and specialized degree of attention to the Companys financial management
and reporting activities. Mr. Leboe has extensive expertise in the area of
financial management, accounting, business valuation and management consulting,
which expertise is very valuable to the Company. Mr. Leboes consulting rate is
based on the Board of Directors determination upon recommendation by the
Compensation Committee of the value of his expertise to the Company and is
comparable to a full time Chief Financial Officer of public companies with
capitalization in the $200  500 million range.

69

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Grants of Plan-Based Awards

|                |  |            |        |         |           |  |           |         |  |          |        |   |            | All Other |  |           |  |  |  |               | 
|--------------- |  | ---------- | ------ | ------- | --------- |  | --------- | ------- |  | -------- | ------ | - | ---------- | --------- |  | --------- |  |  |  | ------------- | 
|                |  |            |        |         |           |  |           |         |  |          |        |   |            | Stock     |  |           |  |  |  |               | 
|                |  |            |        |         |           |  |           |         |  |          |        |   |            | Awards:   |  |           |  |  |  |               | 
|                |  | Estimated  |        |         | Future    |  |           | Payouts |  |          | Under  |   |            | Number of |  |           |  |  |  |               | 
|                |  | Non-Equity |        |         | Incentive |  |           | Plan    |  |          | Awards |   |            | Shares of |  |           |  |  |  | Award Date    | 
|                |  | (1)        |        |         |           |  |           |         |  |          |        |   |            |           |  |           |  |  |  | Fair Value of | 
|                |  |            |        |         |           |  |           |         |  | Stock or |        |   |            |           |  | Stock and | 
|                |  | Threshold  | Target | Maximum |           |  | Units (2) |         |  | Award    |        |   | Option     |          
|Name            |  | $          | $      | $       |           |  | (#)       |         |  | Date     |        |   | Awards (3) |          
|Dennis Higgs    |  | --         | --     | --      |           |  | 250,000   |         |  | 01/26/07 |        | $ | 710,050    |          
|Glenn Catchpole |  | --         | --     | --      |           |  | 250,000   |         |  | 01/26/07 |        | $ | 710,050    |          
|George Hartman  |  | --         | --     | --      |           |  | 250,000   |         |  | 01/26/07 |        | $ | 710,050    |          
|Benjamin Leboe  |  | --         | --     | --      |           |  | 125,000   |         |  | 01/26/07 |        | $ | 355,000    |          
|Kurtis Brown    |  | --         | --     | --      |           |  | 15,000    |         |  | 01/26/07 |        | $ | 42,600     |          
|Kurtis Brown    |  | --         | --     | --      |           |  | 250,000   |         |  | 02/09/07 |        | $ | 303,547    |          

Disclosure Relating to Grants of Plan-Based Awards

In 2007 the Company granted Mr. Higgs, Mr. Catchpole, Mr. Hartman,
  Mr. Leboe and Mr. Brown stock options under the Company’s 2005 Nonqualified
  Stock Option Plan. Mr. Higgs received 250,000 options, exercisable at $3.20
  per share of common stock acquirable, expiring January 26, 2012. Mr. Catchpole
  received 250,000 options, exercisable at $3.20 per share of common stock acquirable,
  expiring January 26, 2012. Mr. Hartmann received 250,000 options, exercisable
  at $3.20 per share of common stock acquirable, expiring January 26, 2012 . Mr
  Leboe received 125,000 options, exercisable at $3.20 per share of common stock
  acquirable, expiring January 26, 2012 and Mr. Brown received 15,000 options,
  exercisable at $3.20 per share of common stock acquirable, expiring January
  26, 2012 and 250,000 exercisable at $3.45 per share of common stock acquirable,
  expiring February 9 , 2012. For a discussion of the terms and conditions of
  the 2005 Nonqualified Stock Option Plan please see the disclosure under the
  section heading “Market for Common Equity - 2005 Stock Option Plan”

70

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Outstanding Equity Awards to Executives at Fiscal Year-end

|                | Option Awards                   | Stock Awards                      
|--------------- | ------------------------------- | ----------------------------------
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                |                                 |                                   
|                | Number of                       | **Number
      of**               
|                | Securities                      | Securities                        
|                | Underlying                      | **Underlying**                    
|                | Unexercised                     | **Unexercised**                   
|                | Options                         | Options                           
|                | (#)                             | (#)                               
|Name            | Exercisable                     | **Unexercisable**                 
|(a)             | (b)                             | (c)                               
|Dennis Higgs    | 350,000 250,000                 | Nil Nil                           
|Glenn Catchpole | 350,000 250,000                 | Nil Nil                           
|George Hartman  | 350,000 250,000                 | Nil Nil                           
|Benjamin Leboe  | 100,000 125,000                 | Nil Nil                           
|Kurtis Brown    | 15,000 62,500 Nil
      Nil Nil | Nil Nil 62,500
      62,500 62,500

Option Exercises and Stock Vested in 2007

|                | Option Grants   | Stock Awards  
|--------------- | --------------- | --------------
|                | Number of       | Value Realized
|                | Shares Acquired | on Exercise   
|Name            | on Exercise     | (1)($)        
|Dennis Higgs    | Nil             | Nil           
|Glenn Catchpole | Nil             | Nil           
|George Hartman  | Nil             | Nil           
|Benjamin Leboe  | Nil             | Nil           
|Kurtis Brown    | Nil             | Nil           

71

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Compensation Committee Interlocks and Insider
Participation

No person who served as a member of the Compensation Committee
during fiscal 2007 was a current or former officer or employee of the
Corporation or engaged in certain transactions with the Company required to be
disclosed by regulations of the SEC. Additionally, there were no compensation
committee interlocks during 2007, which generally means that no executive
officer of the Corporation served as a director or member of the compensation
committee of another entity, which had an executive officer serving as a
director or member of the Companys Compensation Committee.

Compensation Committee Report

The Uranerz Energy Corporation Compensation Committee oversees
the Companys compensation reporting process on behalf of the Board of
Directors. The Committee has three members, each of whom is independent as
defined in the American Stock Exchange Company Guide. The Committee operates
under a written charter, revised and adopted by the Board.

The Committee assists the Board of Directors by overseeing the
(1) annual review of director and executive officer compensation policies and
goals, (2) determining the compensation of directors and executive officers, (3)
and providing accurate public disclosure of the Companys compensation.

In the course of providing its oversight responsibilities
regarding the Companys compensation of directors and executive officers in
2007, the Committee reviewed and discussed with management the Compensation
Discussion and Analysis included in this Annual Report.

Based on the Committees review of the Compensation Discussion
and Analysis and discussions with the Board of Directors and the Companys
management, the Committee recommended that the Compensation Discussion and
Analysis be included in this Annual Report.

Submitted by the following members of the Compensation
Committee of the Board of Directors:

/s/ Peter BellPeter Bell

/s/ Arnold J. DyckArnold J. Dyck

/s/ Paul SaxtonPaul Saxton

Pension Benefits

None

Non-Qualified Deferred Compensation

None

Retirement, Resignation or Termination Plans

Officers with contracts for services have notice requirements
which permit pay in lieu of notice. In December 2007 we approved a policy
whereby officers will receive a termination payment of a multiple of their
annual compensation following a change in control of our Company. Individual
contacts have not yet been amended to reflect this commitment. The multiple used
for a change of control payment is five times for officers Higgs, Catchpole and
Hartman and three times for all other officers.

72

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Director Compensation

|                 | Fees      |        |         |                |              |              |        
|---------------- | --------- | ------ | ------- | -------------- | ------------ | ------------ | -------
|                 | Earned or |        |         | Non-Equity     | Non-         |              |        
|                 |           |        |         |                | Qualified    |              |        
|                 | Paid in   | Stock  |         | Incentive Plan | Compensation | All Other    |        
|Name             | Cash      | Awards | Option  | Compensation   | Earnings     | Compensation | Total  
|                 |           |        | Awards  |                |              |              |        
|                 | ($)       | ($)    | ($)     | ($)            | ($)          | ($)          | ($)    
|                 |           |        | Note 1  |                |              |              |        
|(a)              | (b)       | (c)    | (d)     | (e)            | (f)          | (g)          | (h)    
|Gerhard Kirchner | 7,000     |        | 170,400 |                |              |              | 177,400
|Paul Saxton      | 11,000    |        | 127,800 |                |              |              | 138,800
|Arnold Dyck      | 22,000    |        | 127,800 |                |              |              | 149,800
|Peter Bell       | 22,500    |        | 127,800 |                |              |              | 150,300
|Richard Holmes   | 19,000    |        | 127,800 |                |              |              | 146,800

| | 1. | Option award compensation is the fair value for stock
      options granted during the period, a notional amount estimated at the date
      of the grant using the Black-Scholes option-pricing model. All options
      were priced at the market price of common shares on the date of the grant.
      The actual value received by the directors may differ materially and
      adversely from that reported herein.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Director Compensation Agreements and Summary of Director
Compensation Policies

The Company did not compensate directors in 2005. In 2006 the
Company established policies for director compensation as follows:

Non Executive members:

$1,000 per meeting ($500 per telephone meeting) plus:

- Audit Committee: Chair: $11,000/year. Members: $8,000/year.
- Nominating & Governance Committee: Chair: $3,000/year. Members:
  $2,000/year.
- Compensation Committee: Chair: $4,500/year. Members: $3,000/year.

Executives and officers who are also directors are not
compensated under this plan

73

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following tables set forth information as of December 31,
2007 regarding the ownership of our common stock by:

each person who is known by us to own more than 5% of our
shares of common stock; and each named executive officer, each director and all
of our directors and executive officers as a group.

The number of shares beneficially owned and the percentage of
shares beneficially owned are based on 39,224,087 shares of common stock
outstanding as of December 31, 2007.

Beneficial ownership is determined in accordance with the rules
and regulations of the Securities and Exchange Commission. Shares subject to
options that are exercisable within 60 days following December 31, 2007 are
deemed to be outstanding and beneficially owned by the optionee for the purpose
of computing share and percentage ownership of that optionee but are not deemed
to be outstanding for the purpose of computing the percentage ownership of any
other person. Except as indicated in the footnotes to this table, and as
affected by applicable community property laws, all persons listed have sole
voting and investment power for all shares shown as beneficially owned by them.

Title of Class
    Name and Address of Beneficial
      Owner
    Number of Shares of
      Common Stock
    Percentage of Common Stock(1)DIRECTORS AND EXECUTIVE OFFICERSCommon Stock
    Dennis Higgs Director, Chairman Suite
      1410  800 West Pender St. Vancouver, B.C., V6C 2V6
    4,199,001(2)
    9.20%Common Stock
    Glenn Catchpole Director, President and
      CEO/PEO 222 Carriage Circle Cheyenne, WY., 82009
    2,031,000 (3)
    4.45%Common Stock
    George Hartman Director, Senior Vice
      President, COO 1220 Elkhorn Valley Drive Casper, WY., 82609
    1,231,000 (4)
    2.70%Common Stock
    Dr. Gerhard Kirchner 330  325 Keevil
      Crescent Saskatoon, Saskatchewan S7N 4R*
    690,000 (5)
    1.51%Common Stock
    Paul Saxton 188 Stonegate Drive Furry
      Creek, BC., V0N 3G4
    250,000 (6)
    **Common Stock
    Peter
      Bell
    215,000 (7)
    **


74

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#105  3389 Capilano Road North Vancouver,
      B.C., V7R 4W7Common Stock
    Arnold J. Dyck 504  230 Saskatchewan
      Crescent East Saskatoon, Saskatchewan S7N 0K6
    198,000 (8)
    **Common Stock
    Richard Holmes 2611 Tanbridge Road
      Charlotte, NC., 28226
    175,000 (9)
    **Common Stock
    Benjamin Leboe, CFO/PFO 16730 Carrs Landing
      Road Lake Country, BC V4V 1B2
    227,000 (10)
    **Common Stock
    Kurtis Brown 3707 Brisbane Avenue
      Bakersfield, CA 93313
    86,140 (11)
    **Total
    
    9,302,141
    20.39%5% Stockholders
    Nil


|** - indicates ownership less than 1%
|-------------------------------------
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     
|                                     

It is believed by us that all persons named have full voting
and investment power with respect to the shares indicated, unless otherwise
noted in the table. Under the rules of the Securities and Exchange Commission, a
person (or group of persons) is deemed to be a "beneficial owner" of a security
if he or she, directly or indirectly, has or shares the power to vote or to
direct the voting of such security, or the power to dispose of or to direct the
disposition of such security. Accordingly, more than one person may be deemed to
be a beneficial owner of the same security. A person is also deemed to be a
beneficial owner of any security, which that person has the right to acquire
within 60 days, such as options or warrants to purchase our common stock.

We have no knowledge of any arrangements, including any pledge
by any person of our securities, the operation of which may at a subsequent date
result in a change in our control.

75

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We are not, to the best of our knowledge, directly or
indirectly owned or controlled by another corporation or foreign government.

As of December 31, 2007 we had approximately 200 shareholders
of record of our common stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE

Reportable transactions with related parties since January 1,
2007, including named security holders, are as follows.

Mr. Dennis Higgs, Director and Chairman

During the year ended December 31, 2007, the Company incurred
$318,997 (2006 - $242,826, 2005 - $92,826) for consulting services and office
expenses (included in general and administrative expenses) to companies
controlled by Mr. Higgs. Other general and administrative expenses were
reimbursed in the normal course of business. At December 31, 2007, $18,000 (2006
 $58,194, 2005 - $90,562) is owing to the director and these companies, and the
amounts are unsecured, non-interest bearing, and due on demand. As at December
31, 2007, the Company had $Nil (2006 - $26,266, 2005 -$19,815) in prepaid
expenses to these companies.

Mr. Glenn Catchpole, Director, President and Chief Executive
Officer

During the year ended December 31, 2007, the Company incurred
$120,000 (2006 - $102,000, 2005  $80,000) for consulting services (included in
general and administrative expenses) to a company controlled by the President of
the Company. Other general and administrative expenses were reimbursed in the
normal course of business. At December 31, 2007, the Company owes $Nil (2006 
$48,000, 2005 - $Nil) which was unsecured, non-interest bearing, and due on
demand.

Mr. George Hartman, Director, Executive Vice-President and
Chief Operating Officer

On October 30, 2006, the Company entered into an agreement with
Mr. Hartman (the Related Party), to use certain geological reports held by the
Related Party for the purposes of staking and acquiring potential areas of
interest. Under the terms of the agreement, the Company agreed to pay the
Related Party the sum of $0.40 for each measured and indicated pound of uranium
staked by the Company or a fee of $750 for each claim registered with the Bureau
of Land Management, based on the use of the geological reports. This fee is
payable to the Related Party in shares of common stock of the Company based on a
share price of $2.50 per share. In connection with the issuance of the common
shares, the Company agreed to grant the related party registration rights for
the resale of such shares. If the shares are not registered and eligible for
resale six months after issuance, the Company shall pay a penalty of an
additional 10% of the number of shares issued. In December 2007, the staking and
acquisition program was completed and a liability of $402,250 (2006 - $Nil, 2005
- $Nil) was recorded as due to the Related Party. This debt will be settled
through the issuance of 160,900 common shares in 2008.

During the year ended December 31, 2007, the Company incurred
$199,000 (2006 - $174,000, 2005 - $86,000) for consulting services (included in
general and administrative expenses) Mr. Hartman. Other general and
administrative expenses were reimbursed in the normal course of business. In
2007, the Company acquired property assets from this director, valued at
$402,250 (see Note 7 (a)). During the year ended December 31, 2006, the Company
settled $121,148 of debt through the granting of 131,000 stock options. At
December 31, 2007, consulting services and expenditures incurred on behalf of
the Company of $50,865 (2006  $93,853, 2005 -$53,138) is owed to this director,
and the amounts are unsecured, non-interest bearing, and due on demand.

Mr. Benjamin Leboe, Director, Chief Financial Officer

During the year ended December 31, 2007, the Company incurred
consulting fees of $82,017 (2006 - $31,414, 2005 - $Nil) to an entity controlled
by Mr. Leboe. The amounts have been recorded as general and administrative
expense.

76

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Other

As disclosed above under Executive Compensation  Stock Option
Grants, we granted options to purchase shares of our common stock to our
officers and directors under our 2005 Stock Option Plan during 2006 and 2007.

Director Independence

We had eight directors at December 31, 2007, including five
independent directors, as follows:

Dennis Higgs 
  Glenn Catchpole 
  George Hartman
  Dr. Gerhard Kirchner, independent
  Paul Saxton, independent 
  Arnold Dyck, independent 
  Peter Bell, independent 
  Richard Holmes, independent

An independent director is a director whom the Board of
Directors has determined satisfies the requirements for independence under the
American Stock Exchange Company Guide.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth information regarding the amount
billed to us by our independent auditor, Manning Elliott LLP for our three
fiscal years ended December 31, 2007:

Years Ended December 312007
    2006Audit Fees
    53,200
    $34,250Audit Related Fees
    1,350
    NilTax Fees
    7,000
    NilAll Other Fees
    Nil
    NilTotal
    61,550
    $34,250


Audit Fees

Audit Fees are the aggregate fees billed by our independent
auditor for the audit of our annual financial statements, reviews of interim
financial statements and attestation services that are provided in connection
with statutory and regulatory filings or engagements.

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

Our audit committee approves all services provided by our independent
  accountant.

77

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Documents Filed as Part of This Report.

(1) Financial Statements

- Consolidated Balance Sheets as of December 31, 2007 and 2006
- Statements of Consolidated Operations for the years ended December 31,
  2007, 2006, and 2005
- Statements of Consolidated Common Shareholders Equity for the years ended
  December 31, 2007, 2006 and 2005
- Statements of Consolidated Cash Flows for the years ended December 31,
  2007, 2006, and 2005
- Notes to Consolidated Financial Statements
- Report of Independent Registered Public Accounting Firm

(2) Financial Statement Schedules

Schedules are omitted and are not applicable or not required,
or the required information is shown in the financial statements or notes
thereto.

(3) Exhibits

Where an exhibit is filed by incorporation by reference to a
previously filed registration statement or report, such registration statement
or report is identified in parentheses.

|Exhibit |                                                                                                                                       
|------- | --------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                           
|3.1     | Articles of Incorporation (1)                                                                                                         
|3.2     | Bylaws, as amended (1)                                                                                                                
|3.3     | Articles of Amendment (3)                                                                                                             
|10.1    | Office and Administration Services Agreement between the
      Company and Senate Capital Group Inc. dated September 1, 2005
      (2)
|10.2    | Agreement for Services between the Company and Highlands
      Capital, Inc. dated November 1, 2005 (2)                               
|10.3    | Financial Public Relations Agreement between the Company
      and Accent Marketing Ltd. dated November 1, 2005 (2)                   

78

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|10.4  | Mineral Property Purchase Agreement between the Company
      and Ubex Capital Inc. dated April 26, 2005 (2)                                                                                              
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.5  | Joint Venture Agreement between the Company and Triex
      Minerals Corporation dated November 4, 2005 (2)                                                                                               
|10.6  | Consulting Agreement between the Company and Ubex Capital
      Inc. for management and consulting services (2)                                                                                           
|10.7  | Consulting Agreement between Catchpole Enterprises and
      the Company (3)                                                                                                                              
|10.8  | Joint Venture Agreement between the Company and Bluerock
      Resources Ltd. (3)                                                                                                                         
|10.9  | Option and Purchase Agreement for federal mining claims
      in Wyoming (3)                                                                                                                              
|10.10 | Agreement to Purchase ten mining claims in Wyoming
      (3)                                                                                                                                              
|10.11 | 2005 Stock Option Plan (4)                                                                                                                                                                                
|10.12 | Mr. George Hartman letter agreement. (3)                                                                                                                                                                  
|10.13 | Black Range Minerals Agreement dated June 7, 2006
      (5)                                                                                                                                               
|10.14 | Amendment to Joint Venture Agreement dated September 12,
      2006 between the Company and Bluerock Resources Ltd. (6)                                                                                   
|10.15 | Agreement dated February 1, 2007 between the Company and
      Robert C. Shook to acquire three projects separate uranium projects
      located in northeast Wyoming, in central Power River Basin (7)(8)
|10.16 | Consulting Agreement dated February 1, 2007 between the
      Company and O & M Partners, LLC (7)(8)                                                                                                      
|10.17 | Christensen Ranch Agreement dated October 30, 2006
      between the Company and George Hartman (9) (10)                                                                                                  

79

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|10.18 | Amendment Agreement
        dated January 1, 2007 between the Company and Ubex Capital Inc. (10)                                                                                                                   
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.19 | Amendment Agreement dated January
        1, 2007 between the Company and Catchpole Enterprises Inc. (10)                                                                                                          
|10.20 | Amendment Agreement
        dated January 1, 2007 between the Company and Senate Capital Group Inc.
        (10)                                                                                                   
|10.21 | Purchase and Sale Agreement with
        NAMMCO dated September 19, 2007, as amended (11)(12)                                                                                                                      
|10.22 | Joint Venture
        Agreement with United Nuclear LLC dated January 15, 2008 (12)                                                                                                                                
|10.23 | Agreement with IMC                                                                                                                                                                                                 
|21.1  | List
        of Subsidiaries of Company                                                                                                                                                                            
|23.1  | Consent
        of Manning Elliott LLP, independent registered accountants                                                                                                                                         
|31.1  | Certification of Chief Executive
        Officer pursuant to Rule 13a-15(f) of the Exchange Act                                                                                                                    
|31.2  | Certification of Chief Financial
        Officer pursuant to Rule 13a-15(f) of the Exchange Act                                                                                                                    
|32.1  | Certification of Chief Executive
        Officer pursuant to Rule 13a or 15(d) of the Exchange Act and 18 U.S.C.
        Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002
|32.2  | Certification of Chief Financial
        Officer pursuant to Rule 13a or 15(d) of the Exchange Act and 18 U.S.C.
        Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
        Act of 2002

|(1)  | Previously filed with the Securities and Exchange Commission
        as an exhibit to the Registrants Form SB-2 filed March 15, 2002
|---- | -------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                      
|(2)  | Previously filed as an exhibit to the Quarterly Report
        on Form 10-QSB filed November 21, 2005                                
|     |                                                                                                                                      
|(3)  | Previously filed as an exhibit to the Annual Report
        on Form 10-KSB filed April 14, 2006                                      
|     |                                                                                                                                      
|(4)  | Filed as an exhibit to our Registration Statement on
        Form S-8 filed with the SEC on November 21, 2005.                       
|     |                                                                                                                                      
|(5)  | Previously filed as an exhibit to the Quarterly Report
        on Form 10-QSB filed August 15, 2006                                  
|     |                                                                                                                                      
|(6)  | Filed as an exhibit to our Quarterly Report on Form
        10-QSB filed November 13, 2006.                                          
|     |                                                                                                                                      
|(7)  | As reported in two separate Current Reports on Form
        8-K filed on February 8, 2007.                                           
|     |                                                                                                                                      
|(8)  | Previously filed as an exhibit to the Annual Report
        on Form 10-KSB filed April 2, 2006                                       
|     |                                                                                                                                      
|(9)  | As in Current Report on Form 8-K filed on November 2,
        2006.                                                                  
|     |                                                                                                                                      
|(10) | Filed as an exhibit to our Quarterly Report on Form
        10-QSB filed August 14, 2007.                                            

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|(11) | As reported and filed in Current Report on Form 8-K
        filed on September 24, 2007.
|---- | ----------------------------------------------------------------------------------------
|     |                                                                                         
|(12) | As reported and filed in Current Report on Form 8-K filed on January 16,
      2008.    

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GLOSSARY OF TECHNICAL TERMS

The following defined technical terms are used in this Annual
Report: Alluvium: sedimentary deposits formed by streams and rivers.

Anomaly: an irregularity or inconsistency; something
which is unusual.

Development drilling: drilling done to determine more
precisely the areal extent, grade and morphology of an ore deposit subsequent to
the determination of the commercial viability of mining development.

Exploration drilling: drilling done in search of new
mineral deposits or for the possible extensions of existing deposits up to the
time a company decides that sufficient ore reserves are present to justify
commercial development.

FASB: Financial Accounting Standards Board

FERC: Federal Energy Regulatory Commission

GAAP: Accounting principles generally accepted in the
United States of America

In-situ recovery (ISR): the recovery, by chemical
leaching, of the uranium component of an ore body without physically extracting
the ore from the ground. ISR utilize injection of appropriate oxidizing
chemicals into an ore-bearing sandstone deposit with extraction by production
wells. Also referred to as solution mining.

SEC: Securities and Exchange Commission

SFAS: Statement of Financial Accounting Standards

**uranium**: a heavy, naturally radioactive, metallic
  element of atomic number 92. Its two principal isotopes are 235U and 238U, of
  which the 235U is the necessary component for the nuclear fuel cycle.

Uranium concentrate (yellowcake): a yellowish to
yellow-brownish powder obtained from the chemical milling of uranium ore.
Yellowcake typically contains 70 to 90% U3O8 by weight.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

URANERZ ENERGY CORPORATION

|By: | /s/ Glenn Catchpole                                                | 
|--- | ------------------------------------------------------------------ | 
|    | Glenn Catchpole, President and
      Principal Executive Officer   | 
|    | Director                                                           | 
|    | Date: March 17, 2008                                               | 
|    |                                                                    | 
|By: | /s/ Benjamin Leboe                                                 | 
|    | Benjamin Leboe, Chief Financial
      Officer                      | 
|    | Principal Financial Officer and
      Principal Accounting Officer | 
|    | Date: March 17, 2008                                               | 

In accordance with the Securities Exchange Act, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated

|Per: | /s/ Glenn Catchpole                        | 
|---- | ------------------------------------------ | 
|     | Glenn Catchpole, President,
      Director | 
|     | Date: March 17, 2008                       | 
|     |                                            | 
|     |                                            | 
|Per: | /s/ Dennis Higgs                           | 
|     | Dennis Higgs, Chairman, Director           | 
|     | Date: March 17, 2008                       | 
|     |                                            | 
|     |                                            | 
|Per: | /s/ Gerhard Kirchner                       | 
|     | Dr. Gerhard Kirchner, Director             | 
|     | Date: March 17, 2008                       | 

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|Per: | /s/ George Hartman                             | 
|---- | ---------------------------------------------- | 
|     | George Hartman, Vice President,
      Director | 
|     | Date: March 17, 2008                           | 
|     |                                                | 
|     |                                                | 
|Per: | /s/ Peter Bell                                 | 
|     | Peter Bell, Director,                          | 
|     | Date: March 17, 2008                           | 
|     |                                                | 
|     |                                                | 
|Per: | /s/ Paul Saxton                                | 
|     | Paul Saxton, Director                          | 
|     | Date: March 17, 2008                           | 
|     |                                                | 
|Per: | /s/ Arnold Dyck                                | 
|     | Arnold Dyck, Director                          | 
|     | Date: March 17, 2008                           | 
|     |                                                | 
|     |                                                | 
|Per: | /s/ Richard Holmes                             | 
|     | Richard Holmes, Director                       | 
|     | Date: March 17, 2008                           | 

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