---





Energy Fuels
Inc.

******

Consolidated Financial Statements

For the 15 months ended
December 31, 2013 and the 12 months ended September 30, 2012
(Expressed in U.S. Dollars)

---

|                                         | KPMG LLP  |                | 
|---------------------------------------- | --------- | -------------- | 
|Chartered Professional
      Accountants | Telephone | (416) 777-8500
|Bay Adelaide Centre                      | Fax       | (416) 777-8818
|333 Bay Street Suite 4600                | Internet  | www.kpmg.ca   
|Toronto ON M5H 2S5                       |           |               
|Canada                                   |           |               

INDEPENDENT AUDITORS REPORT

To the Shareholders of Energy Fuels Inc.

We have audited the accompanying consolidated financial
statements of Energy Fuels Inc., which comprise the consolidated statements of
financial position as at December 31, 2013 and September 30, 2012, the
consolidated statements of comprehensive income (loss), shareholders equity and
cash flows for the fifteen-month period ended December 31, 2013 and year ended
September 30, 2012, and notes, comprising a summary of significant accounting
policies and other explanatory information.

Managements Responsibility for the Consolidated Financial
Statements

Management is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or
error.

Auditors Responsibility

Our responsibility is to express an opinion on these
consolidated financial statements based on our audits. We conducted our audits
in accordance with Canadian generally accepted auditing standards. Those
standards require that we comply with ethical requirements and plan and perform
the audit to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on our judgment, including the
assessment of the risks of material misstatement of the consolidatedfinancial statements, whether due to fraud or error. In making those risk
assessments, we consider internal control relevant to the entitys preparation
and fair presentation of the consolidated financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entitys
internal control.An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the
consolidated financial statements.

We believe that the audit evidence we have obtained in our
audits is sufficient and appropriate to provide a basis for our audit opinion.

KPMG LLP is a Canadian limited liability
partnership and a member firm of the KPMGnetwork of
independent member firms affiliated with KPMG International Cooperative(KPMG International), a Swiss entity.KPMG Canada provides services to KPMG LLP.

---

Page 2

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Energy Fuels Inc. as at December 31, 2013 and September 30, 2012, and its consolidated financial performance and
its consolidated cash flows for the fifteen-month period ended December 31, 2013 and year ended September 30, 2012 in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

/s/ KPMG LLP

Chartered Professional Accountants, Licensed Public AccountantsMarch 26, 2014 
  Toronto,Canada

---

|ENERGY FUELS INC.                             
|----------------------------------------------
|Consolidated Statements of Financial Position 
|(Expressed in
      thousands of U.S. dollars)

|                                                            |   | December 31, 2013 |   |   | September 30, 2012   |  
|----------------------------------------------------------- | - | ----------------- | - | - | -------------------- | -
|                                                            |   |                   |   |   | (Revised, Note
    5 | )
|ASSETS                                                      |   |                   |   |   |                      |  
|                                                            |   |                   |   |   |                      |  
|Current assets                                              |   |                   |   |   |                      |  
|Cash and cash
      equivalents                             | $ | 6,628             |   | $ | 13,657               |  
|Marketable
      securities (Note 9)                        |   | 409               |   |   | 1,627                |  
|Trade and other
      receivables (Note 10)                 |   | 653               |   |   | 15,268               |  
|Inventories
      (Note 11)                                 |   | 28,040            |   |   | 28,180               |  
|Assets held for
      sale (Note 12)                        |   | 4,415             |   |   | -                    |  
|Prepaid expenses and other assets                           |   | 757               |   |   | 466                  |  
|                                                            |   | 40,902            |   |   | 59,198               |  
|Non-current                                                 |   |                   |   |   |                      |  
|Inventories
      (Note 11)                                 |   | -                 |   |   | 2,688                |  
|Property, plant
      and equipment (Note 12)               |   | 100,969           |   |   | 119,524              |  
|Investment in
      Virginia Energy Resources Inc. (Note 6) |   | 1,012             |   |   | -                    |  
|Intangible
      assets (Note 14)                           |   | 7,772             |   |   | 13,909               |  
|Restricted cash (Note 15)                                   |   | 25,478            |   |   | 28,525               |  
|                                                            | $ | 176,133           |   | $ | 223,844              |  
|                                                            |   |                   |   |   |                      |  
|LIABILITIES &
      SHAREHOLDERS' EQUITY                    |   |                   |   |   |                      |  
|                                                            |   |                   |   |   |                      |  
|Current liabilities                                         |   |                   |   |   |                      |  
|Accounts payable
      and accrued liabilities              | $ | 5,442             |   | $ | 15,347               |  
|Deferred revenue                                            |   | 1,429             |   |   | 1,150                |  
|Current portion
      of long-term liabilities              |   |                   |   |   |                      |  
|Decommissioning
      liability (Note 15)                   |   | 172               |   |   | 43                   |  
|Loans and borrowings
      (Note 16)                        |   | 378               |   |   | 724                  |  
|                                                            |   | 7,421             |   |   | 17,264               |  
|Non-current                                                 |   |                   |   |   |                      |  
|Long-term
      decommissioning liability (Note 15)         |   | 13,627            |   |   | 15,156               |  
|Long-term loans and borrowings (Note 16)                    |   | 17,952            |   |   | 22,765               |  
|                                                            |   | 39,000            |   |   | 55,185               |  
|                                                            |   |                   |   |   |                      |  
|Shareholders' equity                                        |   |                   |   |   |                      |  
|Capital stock
      (Note 18)                               | $ | 232,089           |   | $ | 178,745              |  
|Contributed
      surplus (Note 18)                         |   | 21,182            |   |   | 17,906               |  
|Share purchase
      warrants (Note 18)                     |   | 4,838             |   |   | 6,002                |  
|Deficit                                                     |   | (120,366          | ) |   | (33,041              | )
|Accumulated other comprehensive loss                        |   | (610              | ) |   | (953                 | )
|                                                            |   | 137,133           |   |   | 168,659              |  
|                                                            | $ | 176,133           |   | $ | 223,844              |  

Additional footnote references

Commitments and contingencies (Note
23)    Subsequent events (Note 12 and 25)

Approved by the Board

(signed) Stephen P. Antony , Director

(signed) Larry Goldberg , Director

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

2

---

|ENERGY FUELS INC.                                                       
|------------------------------------------------------------------------
|Consolidated Statements of Comprehensive Income
      (Loss)            
|(Expressed in
      thousands of U.S. dollars, except per share amounts)

|                                                                                   |   | 15 month     |   |   | 12 month          |  
|---------------------------------------------------------------------------------- | - | ------------ | - | - | ----------------- | -
|                                                                                   |   | period ended |   |   | period ended      |  
|                                                                                   |   | December 31, |   |   | September 30,     |  
|                                                                                   |   | 2013         |   |   | 2012              |  
|                                                                                   |   |              |   |   | (Revised, Note 5) |  
|                                                                                   |   |              |   |   |                   |  
|REVENUES (Note 22)                                                                 | $ | 73,248       |   | $ | 25,028            |  
|                                                                                   |   |              |   |   |                   |  
|COST OF SALES                                                                      |   |              |   |   |                   |  
|Production cost of sales                                                           |   | (56,802      | ) |   | (21,093           | )
|Depreciation, depletion and
      amortization (Note 22)                           |   | (7,710       | ) |   | (617              | )
|Impairment of inventories (Note 11)                                                |   | (3,269       | ) |   | -                 |  
|TOTAL COST OF SALES                                                                |   | (67,781      | ) |   | (21,710           | )
|GROSS PROFIT                                                                       |   | 5,467        |   |   | 3,318             |  
|Care and maintenance expenses
      (Note 12)                                      |   | (5,402       | ) |   | -                 |  
|Selling, general and administrative expenses
      (Note 22)                       |   | (24,897      | ) |   | (11,442           | )
|Finance income (expense)
      (Note 22)                                           |   | 960          |   |   | (1,869            | )
|Gain on purchase of Denison US Mining
      Division (Note 5)                      |   | -            |   |   | 40,631            |  
|Impairment of property, plant
      and equipment (Note 13)                        |   | (60,257      | ) |   | (24,022           | )
|Impairment of Virginia Energy Resources (Note
      6)                             |   | (1,941       | ) |   | -                 |  
|Other expense (Note 22)                                                            |   | (1,255       | ) |   | (5,082            | )
|NET PROFIT (LOSS) BEFORE TAXES                                                     |   | (87,325      | ) |   | 1,534             |  
|Income tax expense (Note 21)                                                       |   | -            |   |   | -                 |  
|NET PROFIT (LOSS) FOR THE PERIOD                                                   |   | (87,325      | ) |   | 1,534             |  
|ITEMS THAT MAY BE
      RECLASSIFIED TO PROFIT OR LOSS                             |   |              |   |   |                   |  
|Share of other comprehensive loss of Virginia
      Energy Resources Inc. (Note 6) |   | (38          | ) |   | -                 |  
|Foreign currency translation adjustment                                            |   | 381          |   |   | 298               |  
|COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD                                         | $ | (86,982      | ) | $ | 1,832             |  
|                                                                                   |   |              |   |   |                   |  
|EARNINGS (LOSS) PER COMMON SHARE                                                   |   |              |   |   |                   |  
|BASIC AND DILUTED EARNINGS (LOSS) PER
      SHARE (Note 19)                        | $ | (5.61        | ) | $ | 0.26              |  

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

3

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|ENERGY FUELS INC.                              
|-----------------------------------------------
|Consolidated Statements of Shareholders' Equity
|(Expressed in
      thousands of U.S. dollars) 

|                                                                           |   | 15 month     |   |   | 12 month          |  
|-------------------------------------------------------------------------- | - | ------------ | - | - | ----------------- | -
|                                                                           |   | period ended |   |   | period ended      |  
|                                                                           |   | December 31, |   |   | September 30,     |  
|                                                                           |   | 2013         |   |   | 2012              |  
|                                                                           |   |              |   |   | (Revised, Note 5) |  
|Capital stock (Note
      18)                                              |   |              |   |   |                   |  
|Balance, beginning of period                                               | $ | 178,745      |   | $ | 60,052            |  
|Shares issued for Titan Uranium, Inc. asset purchase (Note 8)              |   | -            |   |   | 32,559            |  
|Shares issued for
      Denison US Mining merger (Note 5)                  |   | -            |   |   | 80,303            |  
|Shares and Warrants issued for Private Placement                           |   | 5,684        |   |   | 6,549             |  
|Shares issued for
      acquisition of joint venture interests (Note 4)    |   | 682          |   |   | -                 |  
|Shares issued for Investment in Virginia Energy (Note 6)                   |   | 3,947        |   |   | -                 |  
|Shares issued for
      consulting fees                                    |   | 167          |   |   | -                 |  
|Shares issued for property acquisition                                     |   | 275          |   |   | -                 |  
|Shares isssued for
      Strathmore Minerals Corp. asset purchase (Note 7) |   | 38,634       |   |   | -                 |  
|Shares and compensation warrants issued for public offering                |   | 4,775        |   |   |                   |  
|Tax recovery from
      expired share purchase warrants                    |   | 266          |   |   |                   |  
|Share issuance costs                                                       |   | (1,086       | ) |   | (723              | )
|Stock options
      exercised (Note 20)                                    |   | -            |   |   | 5                 |  
|Balance, end of
      period                                               |   | 232,089      |   |   | 178,745           |  
|                                                                           |   |              |   |   |                   |  
|Contributed surplus                                                        |   |              |   |   |                   |  
|Balance, beginning of period                                               |   | 17,906       |   |   | 13,809            |  
|Share purchase warrants expired                                            |   | 2,004        |   |   | -                 |  
|Tax expense from
      expired share purchase warrants                     |   | (266         | ) |   |                   |  
|Share-based compensation                                                   |   | 1,538        |   |   | 4,099             |  
|Stock options
      exercised (Note 20)                                    |   | -            |   |   | (2                | )
|Balance, end of
      period                                               |   | 21,182       |   |   | 17,906            |  
|                                                                           |   |              |   |   |                   |  
|Share purchase
      warrants                                              |   |              |   |   |                   |  
|Balance, beginning of period                                               |   | 6,002        |   |   | 4,159             |  
|Warrants issued in exchange for Titan warrants                             |   | -            |   |   | 541               |  
|Share purchase
      warrants expired                                      |   | (2,004       | ) |   | -                 |  
|Warrants issued for private placement (Note 18)                            |   | 838          |   |   | 1,464             |  
|Warrants issued
      for public offering                                  |   | 60           |   |   | -                 |  
|Share issuance costs - private placement                                   |   | (58          | ) |   | (162              | )
|Balance, end of period                                                     |   | 4,838        |   |   | 6,002             |  
|                                                                           |   |              |   |   |                   |  
|Deficit                                                                    |   |              |   |   |                   |  
|Balance,
      beginning of period                                         |   | (33,041      | ) |   | (34,575           | )
|Net income (loss)
      for the period                                     |   | (87,325      | ) |   | 1,534             |  
|Balance, end of
      period                                               |   | (120,366     | ) |   | (33,041           | )
|                                                                           |   |              |   |   |                   |  
|Accumulated other
      comprehensive loss                                 |   |              |   |   |                   |  
|Balance, beginning of period                                               |   | (953         | ) |   | (1,251            | )
|Share of comprehensive loss of equity-accounted investees                  |   | (38          | ) |   | -                 |  
|Foreign currency
      translation reserve                                 |   | 381          |   |   | 298               |  
|Balance, end of
      period                                               |   | (610         | ) |   | (953              | )
|                                                                           |   |              |   |   |                   |  
|Total shareholders'
      equity                                           | $ | 137,133      |   | $ | 168,659           |  

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

4

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|ENERGY FUELS INC.                                            
|-------------------------------------------------------------
|Condensed Interim Consolidated Statements of Cash
      Flows
|(Expressed in
      thousands of U.S. dollars)               

|                                                                                                                   |   | 15 month     |   |   | 12 month      |  
|------------------------------------------------------------------------------------------------------------------ | - | ------------ | - | - | ------------- | -
|                                                                                                                   |   | period ended |   |   | period ended  |  
|                                                                                                                   |   | December 31, |   |   | September 30, |  
|                                                                                                                   |   | 2013         |   |   | 2012          |  
|                                                                                                                   |   |              |   |   |               |  
|OPERATING ACTIVITIES                                                                                               |   |              |   |   |               |  
|Net income (loss) for the period                                                                                   | $ | (87,325      | ) | $ | 1,534         |  
|Items not
      involving cash:                                                                                    |   |              |   |   |               |  
|Depletion,
      depreciation and amortization                                                                     |   | 16,393       |   |   | 2,634         |  
|Stock-based compensation                                                                                           |   | 1,538        |   |   | 3,642         |  
|Finance income
      (expense)                                                                                     |   | (961         | ) |   | 1,869         |  
|Unrealized foreign currency translation                                                                            |   | (582         | ) |   | 226           |  
|Equity-settled
      share-based payment transactions                                                              |   | 1,156        |   |   | -             |  
|Gain on purchase of Denison US Mining Division (Note 5)                                                            |   | -            |   |   | (40,632       | )
|Shares issued for
      Denison US Mining advisory fees (Note 5)                                                   |   | -            |   |   | 981           |  
|Adjustment of decommissioning liability                                                                            |   | (259         | ) |   | -             |  
|Impairment of
      property, plant and equipment (Note 13)                                                        |   | 60,257       |   |   | 24,022        |  
|Impairment of investment in Virginia Energy Resources Inc. (Note 6)                                                |   | 1,941        |   |   | -             |  
|Impairment of
      inventories (Note 11)                                                                          |   | 3,269        |   |   | -             |  
|Other expense (Note 22)                                                                                            |   | (31          | ) |   | 189           |  
|Share of
      equity-accounted investees, net of tax (Note 6)                                                     |   | 1,286        |   |   | -             |  
|Cash received
      for services not yet provided                                                                  |   | 278          |   |   | -             |  
|Change in non-cash working
      capital (Note 22)                                                                 |   | 2,890        |   |   | (8,902        | )
|Expenditures on
      reclamation of mineral interests                                                             |   | (42          | ) |   | -             |  
|Interest received                                                                                                  |   | 645          |   |   | 183           |  
|                                                                                                                   |   | 453          |   |   | (14,254       | )
|INVESTING ACTIVITIES                                                                                               |   |              |   |   |               |  
|Development
      expenditures on property, plant and equipment                                                    |   | (6,503       | ) |   | (3,528        | )
|Expenditures on exploration,
      evaluation and development                                                      |   | (14,615      | ) |   | (3,550        | )
|Acquisition of
      Titan Uranium, net of cash acquired                                                           |   | -            |   |   | (486          | )
|Acquisition of joint venture
      interests, net of cash acquired                                                 |   | (758         | ) |   | -             |  
|Expenditures for
      Investment in Virginia Energy Resources Inc. (Note 6)                                       |   | (344         | ) |   | -             |  
|Cash acquired in the acquisition
      of Denison Mines US Division (Note 5)                                       |   | -            |   |   | 552           |  
|Acquisition of
      Strathmore Minerals Corp., net of cash acquired (Note 7)                                      |   | 1,399        |   |   | -             |  
|Proceeds from sale of property,
      plant and equipment                                                          |   | 1,100        |   |   | 324           |  
|Proceeds from
      sale of marketable securities                                                                  |   | 839          |   |   | -             |  
|Change in cash deposited with regulatory agencies
      for decommissioning liabilities, net of interest (Note 15) |   | 4,003        |   |   | 1,010         |  
|                                                                                                                   |   | (14,879      | ) |   | (5,678        | )
|FINANCING ACTIVITIES                                                                                               |   |              |   |   |               |  
|Issuance of
      common shares and warrants, net of share issuance costs                                          |   | 10,239       |   |   | 7,137         |  
|Stock option exercises                                                                                             |   | -            |   |   | 3             |  
|Repayment of
      borrowings                                                                                      |   | (608         | ) |   | (2,252        | )
|Proceeds from issue of
      convertible debentures                                                                |   | -            |   |   | 21,551        |  
|Interest paid on convertible debentures                                                                            |   | (1,768       | ) |   | -             |  
|                                                                                                                   |   | 7,863        |   |   | 26,439        |  
|                                                                                                                   |   |              |   |   |               |  
|INCREASE (DECREASE) IN CASH AND CASH
      EQUIVALENTS DURING THE PERIOD                                           |   | (6,563       | ) |   | 6,507         |  
|Effect of
      exchange rate fluctuations on cash held                                                            |   | (466         | ) |   | 195           |  
|Cash and cash equivalents - beginning of period                                                                    |   | 13,657       |   |   | 6,955         |  
|CASH AND CASH EQUIVALENTS - END OF PERIOD                                                                          | $ | 6,628        |   | $ | 13,657        |  
|                                                                                                                   |   |              |   |   |               |  
|Non-cash investing and
      financing transactions:                                                               |   |              |   |   |               |  
|Issuance of shares for
      acquisition of joint venture interests (Note 4)                                       | $ | 682          |   | $ | -             |  
|Issuance of
      shares for investment in Virginia Energy (Note 6)                                                |   | 3,945        |   |   | -             |  
|Issuance of shares and warrants
      for acquisition of Strathmore Minerals Corp (Note 7)                         |   | 37,097       |   |   | -             |  
|Issuance of
      shares and warrants for acquisition of Titan Uranium Inc. (Note 8)                               |   | -            |   |   | 33,470        |  
|Issuance of shares and warrants
      for acquisition of Denison US Mining Division (Note 5)                       |   | -            |   |   | 80,303        |  
|Issuance of
      secured notes for acquisition of mineral properties                                              |   | 275          |   |   | 1,161         |  

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

5

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|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

1. REPORTING ENTITY AND NATURE OF OPERATIONS

Energy Fuels Inc. was incorporated under the laws of the
Province of Alberta and continued and is now incorporated in the Province of
Ontario. Energy Fuels Inc. registered and head office is located at 2 Toronto
Street, Suite 500, Toronto, Ontario, Canada, M5C 2B6 and its principle place of
business and the head office of the Companys U.S. subsidiaries is located at
225Union Blvd. Suite 600, Lakewood, Colorado, 80228 USA.

Energy Fuels Inc. and its subsidiary companies (collectively,
the Company or EFI) are engaged in uranium mining and related activities,
including acquisition, exploration and development of uranium and vanadium
bearing properties, and extraction, processing and selling of uranium and
vanadium.

Uranium, the Companys primary product, is
produced in the form of uranium oxide concentrates (U3O8) and sold
to various customers around the world for further processing. Vanadium, a co-product of some of the Companys mines, is
also produced and is in the form of vanadium pentoxide V2O5). The Company also processes uranium bearing
waste materials, referred to as alternate feed materials.

In fiscal 2013, due to current market conditions, the Company
placed certain of its mines on standby (see note 12).

The Company and its significant subsidiaries, equity accounted
investees, and joint operations, including those acquired through the acquisition
of Denison Mines Holding Corp. and White Canyon Uranium Ltd (as described in
Note 5) and in the acquisition of Strathmore Minerals Corp. (as described in
Note 7) are as follows:

Functional
    Dec. 31,
    Sept. 30,Entity
    Function
    Location
    currency
    2013
    2012Energy Fuels Inc.
    Corporate
    Ontario
    CAD
    100%
    100%Energy Fuels Wyoming Inc. (EFW)
    Exploration
    Wyoming
    USD
    100%
    100%Energy Fuels Holdings Corp. ("EFHC")
    Corporate
    Colorado
    USD
    100%
    100%Energy Fuels Resources (USA) Inc. ("EFR")
    Corporate
    Colorado
    USD
    100%
    100%EFR White Mesa LLC ("White Mesa")
    Mill
    Utah
    USD
    100%
    100%EFR Henry Mountains LLC
    Exploration
    Colorado
    USD
    100%
    100%EFR White Canyon Corp
    Mining
    Utah
    USD
    100%
    100%EFR Colorado Plateau LLC
    Mining
    Colorado
    USD
    100%
    100%EFR Arizona Strip LLC
    Mining
    Arizona
    USD
    100%
    100%Strathmore Resources (US) Ltd
    Exploration
    Nevada
    USD
    100%
    0%Roca Honda Resources LLC
    Exploration
    Delaware
    USD
    60%
    0%Wyoming Gold Mining Company
    Exploration
    Wyoming
    USD
    100%
    0%Virginia Energy Resources Inc.
    Exploration
    British Columbia
    USD
    17%
    0%


2. BASIS OF PRESENTATION

The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS) as issued
by the International Accounting Standards Board (IASB) in United States
dollars (USD). All numbers are expressed in thousands of USD, except per share
amounts. Certain footnote disclosures have share prices which are reported in
Canadian dollars (Cdn$).

These financial statements have been authorized for issue by
the Companys board of directors on March 26, 2014.

Change in fiscal year end

In November 2013, the Company announced the change in its
fiscal year end from September 30 to December 31, effective as of December 31,
2013. Accordingly, for the 2013fiscal reporting year, the Company is reporting
audited consolidated financial statements for the fifteen month period ending
December 31, 2013, with comparative figures for the twelve month period ended
September 30, 2012 and consequently the results shown are not fully
comparable. The reason for this change is to better align the Companys year-end
with the year-ends of its major uranium customers, certain material subsidiaries
and industry peers.

6

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Share consolidation

At a special meeting held on October 30, 2013, the Companys
shareholders approved a share consolidation, in which fifty common shares of the
Company were exchanged for one new common share. The share consolidation
occurred
on November 5, 2013. All share and per share amounts in these consolidated
financial statements have been restated to reflect the share consolidation.

Principles of consolidation

These consolidated financial statements include the accounts of
the Company together with its wholly-owned subsidiaries. Subsidiaries are
entities controlled by the Company. The Company controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the
entity. The financial statements of subsidiaries are included in the
consolidated financial statements from the date on which control commences until
the date on which control ceases.

Intercompany transactions, balances and unrealized gains on
transactions between the Company and its subsidiaries are eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency
with the policies adopted by the Company.

Business combinations

A business combination is defined as an acquisition of assets
and liabilities that constitute a business. A business consists of inputs,
including non-current assets, and processes, including operational processes,
that when applied to those inputs, have the ability to create outputs that
provide a return to the Company and its shareholders. A business also includes
those assets and liabilities that do not necessarily have all the inputs and
processes required to produce outputs, but can be integrated with the inputs and
processes of the Company to create outputs.

Business combinations are accounted for using the acquisition
method whereby identifiable assets acquired and liabilities assumed, including
contingent liabilities, are recorded at 100% of their acquisition-date fair
values. The Company measures goodwill as the fair value of the consideration
transferred plus the recognized amount of any non-controlling interests in the
acquiree; plus the net recognized amount (generally fair value) of the
identifiable assets acquired and liabilities assumed. When the excess is
negative, a bargain purchase gain is recognized immediately in profit and loss.
The acquisition date is the date the Company acquires control over the acquiree.
The Company considers all relevant facts and circumstances in determining the
acquisition date.

Acquisition related costs, other than costs to issue debt or
equity securities of the acquirer, including investment banking fees, legal
fees, accounting fees, valuation fees and other professional or consulting fees
are expensed as incurred.

If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the combination occurs,
the Company reports in its financial statements provisional amounts for the
items for which the accounting is incomplete. During the measurement period, the
Company will retrospectively adjust the provisional amounts recognized at the
acquisition date to reflect new information obtained about facts and
circumstances that existed as of the acquisition date and, if known, would have
affected the measurement of the amounts recognized as of that date. The maximum
length of time for the measurement period is one year from the acquisition
date.

Interests in equity-accounted investees

The Companys interests in equity-accounted investees comprise
interests in associates. Associates are those entities in which the Company has
significant influence, but not control, over the financial and operating
policies. Investments in associates are accounted for using the equity method
and are recognized initially at cost. The cost of an associate is measured at
the fair value of the assets given up, shares issued or liabilities assumed at
the date of acquisition plus costs directly attributable to the acquisition.

7

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

These financial statements include the Companys share of the
profit or loss and other comprehensive income of equity-accounted investees,
after adjustments to align the accounting policies with those of the Company,
from the date that significant influence commences until significant influence
ceases.

When the Companys share of losses exceeds its interest in an
equity-accounted investee, the carrying amount of the investment, including any
long-term interests that form part thereof, is reduced to zero, and the
recognition of further losses is discontinued except to the extent that the
Company has an obligation or has made payments on behalf of the investee.

The carrying value of an associate is reviewed on a regular
basis and, if impairment in the carrying value has occurred, it is written down
to its recoverable amount in the period in which impairment is identified.

Unrealized gains and losses on transactions between the Company
and its associates are eliminated to the extent of the Companys interest in its
associates.

Joint operations

Joint operations are entities the Company has rights to its
proportionate share of the assets and obligations for the liabilities, relating
to an arrangement. These consolidated financial statements include the Companys
proportionate share of the entities assets, liabilities, revenue and expenses
with items of a similar nature on a line-by-line basis, from the date that joint
control commences until the date that joint control ceases.

Revenue

|a. | Sale of goods
|-- | -------------

Revenue from the sale of mineral concentrates is recognized
when it is probable that the economic benefits will flow to the Company and
delivery has occurred, the sales price and costs incurred with respect to the
transaction can be measured reliably and collectability is reasonably assured.
For uranium, revenue is typically recognized when delivery is evidenced by book
transfer at the applicable uranium storage facility. For vanadium related
products, revenue is typically recognized at the time of shipment to the
customer.

|b. | Rendering of services
|-- | ---------------------

Revenue from toll milling services is recognized as material is
processed in accordance with the specifics of the applicable toll milling
agreement. Revenue and unbilled accounts receivable are recorded as related
costs are incurred using billing formulas included in the applicable toll
milling agreement.

Revenue from alternate feed process milling is recognized as
material is processed, in accordance with the specifics of the applicable
processing agreement. Deferred revenues represent processing proceeds received
on delivery of alternate feed materials but in advance of the required
processing activity.

Interest income and expense

Interest income and expense are recognized as they accrue in
profit or loss, using the effective interest method.

Foreign currency transactions

Transactions in foreign currencies are translated to the
respective functional currencies of the Companys subsidiaries, investments in
associates, and joint operations at exchange rates at the dates of the
transactions.

Monetary assets and liabilities denominated in foreign
currencies are translated to the functional currency at the exchange rate at the
reporting date. Non-monetary assets and liabilities that are measured at fair
value in a foreign currency are translated to the functional currency at the
exchange rate when the fair value was determined. Foreign currency differences
are generally recognized in profit or loss. Non-monetary items that are measured
based on historical cost in a foreign currency are not translated.

8

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The asset and liabilities of entities whose functional currency
is not the US dollar are translated into the US dollar at exchanges rates of the
reporting date. The income and expenses of such entities are translated into the
US dollar using average exchange rates for the reporting period. If settlement
of a monetary item receivable from or payable to an entity whose functional
currency is not the US dollar is neither planned nor likely to occur in the
foreseeable future, then foreign currency differences arising from such item
form part of the net investment in the foreign operation. Accordingly, such
differences are recognized in OCI.

Employee benefits

|a. | Short-term employee
benefits
|-- | ----------------------------

Short-term employee benefits are expensed as the related
service is provided. A liability is recognized for the amount expected to be
paid if the Company has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the obligation
can be estimated reliably.

|b. | Share-based payment
transactions
|-- | --------------------------------

The Company uses a fair value-based method of accounting for
stock options granted to employees, directors, and non-employees. The fair value
of the award is determined using the Black-Scholes option pricing model on the
date of the grant. For awards with graded vesting, the fair value of each
tranche, adjusted for expected forfeitures, is recognized over its respective
vesting period as an increase in stock-based compensation expense and the
contributed surplus account.When such stock options are exercised, the
proceeds received by the Company, together with the respective amount previously
recorded in contributed surplus, are credited to capital stock.

Inventories

Expenditures, including depreciation, depletion and
amortization of production assets, incurred in the mining and processing
activities that will result in the future concentrate production are deferred
and accumulated as ore in stockpiles and in-process and concentrate
inventories.

Stockpiles are comprised of coarse ore that has been extracted
from the mine and is available for further processing. Mining production costs
are added to the stockpile as incurred along with a pro-rata share of the
depletion of the associated mineral property and removed from the stockpile
based upon the average cost per ton of ore produced from mines considered to be
in commercial production. The current portion of ore in stockpiles represents
the amount expected to be processed in the next twelve months. Stockpiles are
valued at the lower of their weighted average cost or net realizable value
(NRV). NRV is the difference between the estimated future concentrate price
(net of selling costs) and estimated costs to complete production into a
saleable form.

In-process and concentrate inventories include the cost of the
ore removed from the stockpile as well as production costs incurred to process
the ore into a saleable product, as well as the additions from any product
purchased from the market. Processing costs typically include labor, chemical
reagents and directly attributable mill overhead expenditures. Work in-process
and concentrates are carried at the lower of average costs or NRV.

Materials and other supplies held for use in the production of
inventories are carried at average cost and are not written down below that cost
if the finished products in which they will be incorporated are expected to be
sold at or above cost. However, when a decline in the price of concentrates
indicates that the cost of the finished products exceeds net realizable value,
the materials are written down to NRV. In such a circumstance, the cost to
replace the inventory through the market would be the best available measure of
NRV.

Property, plant and equipment

|a. | Recognition and
measurement
|-- | ---------------------------

Property, plant and equipment are measured at cost less
accumulated depreciation and any accumulated impairment losses. Cost includes
expenditures that are directly attributable to the acquisition of the asset.
Subsequent costs are included in the assets carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will
flow to the Company and the cost can be measured reliably. The carrying amount
of a replaced asset is derecognized when it is replaced, and the cost of the
replacement asset is capitalized.

9

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

|   |                                           
|-- | ------------------------------------------
|b. | Depreciation, depletion and
  amortization

Depreciation, depletion and amortization are calculated on a
straight line or unit of production basis as appropriate. Where a straight line
methodology is used, the assets are depreciated to their estimated residual
value over an estimated useful life which ranges from three to twenty depending
upon the asset type. Where a unit of production methodology is used, the assets
are depreciated to their estimated residual value over the useful life defined
by managements best estimate of recoverable reserves and/or resources in the
current mine plan. When assets are retired or sold, the resulting gains or
losses are reflected in current earnings as a component of other income or
expense. The Company allocates the amount initially recognized in respect of an
item of property, plant and equipment to its significant parts and depreciates
separately each such part. Residual values, method of depreciation and useful
lives of the assets are reviewed at least annually and adjusted if
appropriate.

Where straight-line depreciation is utilized, the range of
useful lives for various asset classes is generally as follows:


    Buildings
    15 years
    Shop tools and equipment
    3-5 years
    Mining equipment
    5 years
    Mill equipment
    5-20 years
    Office equipment
    4-5 years
    Furniture and fixtures
    5-7 years
    Light trucks & utility vehicles
    5 years


The amortization method, residual values, and useful lives of
property, plant and equipment are reviewed annually and any change in estimate
is applied prospectively.

Exploration and evaluation assets

Exploration and evaluation activities involve the search for
minerals, the determination of technical feasibility and the assessment of
commercial viability of an identified resource. Exploration and evaluation
expenditures include costs which are directly attributable to researching and
analyzing existing exploration data; conducting geological studies, exploratory
drilling and sampling; examining and testing extraction and treatment methods;
completing pre-feasibility and feasibility studies; and costs incurred in
acquiring mineral rights.

Exploration and evaluation expenditures are capitalized and are
classified as mineral property Pre-development and non-operating within
property, plant and equipment, until the project demonstrates technical
feasibility and commercial viability. Technical feasibility and commercial
viability generally coincide with the establishment of proven and probable
reserves; however, they may also occur when the Company makes a decision to
proceed with development or begins production. Upon demonstrating technical
feasibility and commercial viability, and subject to an impairment analysis,
capitalized exploration and evaluation costs are transferred to the mineral
properties operating balance within property, plant and equipment.

Intangible assets

Sales contracts acquired in a business combination are
recognized initially at fair value at the acquisition date. The Companys
intangible assets are recorded at cost less accumulated amortization.

Amortization is recorded as the Company sells inventory under
its long-term sales contracts based on units sold, and is recognized in selling,
general and administration expense of profit and loss.

Financial instruments

The Company recognizes financial assets and financial
liabilities when the Company becomes a party to a contract. Financial assets and
financial liabilities, with the exception of financial assets classified as fair
value through profit or loss, are measured at fair value plus transaction costs on
initial recognition. Financial assets at fair value through profit and loss are
measured at fair value on initial recognition and transaction costs are expensed
when incurred.

10

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Measurement in subsequent periods depends on the classification
of the financial instrument:

|a. | Financial assets and liabilities at fair value through
      profit and loss (FVTPL)
|-- | --------------------------------------------------------------------------------------

Financial assets and liabilities are classified as FVTPL when
acquired principally for the purpose of trading, if so designated by management
(fair value option), or if they are derivative instruments. Financial assets or
liabilities classified as FVTPL are measured at fair value, with changes
recognized in profit and loss. The Companys financial instruments classified as FVTPL include convertible debentures (Note 15). The Company does not currently
hold any derivative instruments. Interest expense is recorded using the
effective interest method.

|b. | Available-for-sale financial
  assets
|-- | -------------------------------------

The Company's investments in equity securities are classified
as available-for-sale financial assets. Subsequent to initial recognition, they
are measured at fair value and changes therein, other than impairment losses,
and foreign currency differences on available-for-sale monetary items, are
recognized directly in other comprehensive income (loss). When an investment is
derecognized, the cumulative gain or loss in equity is transferred to profit or
loss. The Company has classified its marketable securities as available for
sale.

|c. | Loans and receivables
|-- | ---------------------

Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active market. Loans
and receivables are initially recognized at the amount expected to be received,
less a discount (when material) to reduce the loans and receivables to fair
value. Subsequently, loans and receivables are measured at amortized cost using
the effective interest method less a provision for impairment.

Loans and receivables comprise of trade and other
receivables.

Cash and cash equivalents includes cash on hand, term deposits
and other short-term highly liquid investments with original maturities of three
months or less that are subject insignificant risk of changes in their fair
value, and are used by the Company in the management of short-term
commitments.

|d. | Other financial
liabilities
|-- | ---------------------------

Other financial liabilities are financial liabilities that are
not classified as FVTPL. Subsequent to initial recognition, other financial
liabilities are measured at amortized cost using the effective interest rate
method. Accounts payable, accrued liabilities, finance leases and notes payable
are classified as other financial liabilities.

The effective interest method is a method of calculating the
amortized cost of an instrument and of allocating interest income over the
relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash payments (including all fees or points paid or received
that form an integral part of the effective interest rate, transaction costs and
other premiums or discounts) through the expected life of the financial
liability or to the net carrying amount on initial recognition.

Capital stock

Common shares are classified as equity. Incremental costs
directly attributable to the issue of common shares and share options are
recognized as a deduction from equity, net of any tax effects.

Treasury shares

When shares recognized as equity are repurchased, the amount of
the consideration paid, which includes directly attributable costs, net of any
tax effects, is recognized as a deduction from equity. Repurchased shares are
classified as treasury shares and are presented as a reduction in common shares.
When treasury shares are sold or reissued subsequently, the amount received is
recognized as an increase in equity and the resulting surplus or deficit on the
transaction is presented within contributed surplus.

11

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Impairment

|a. | Non-derivative financial
assets
|-- | -------------------------------

At each reporting date, the Company assesses whether there is
objective evidence that a financial asset (other than a financial asset
classified as fair value through profit and loss) is impaired.

Objective evidence of an impairment loss includes:

| | significant financial difficulty of the
      obligor;                                                                  
|- | ------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                         
| | delinquencies in interest or principal
      payments;                                                                  
|  |                                                                                                                         
| | increased probability that the borrower will
      enter bankruptcy or other financial reorganization; and              
|  |                                                                                                                         
| | in the case of equity securities, a significant
  or prolonged decline in the fair value of the security below its cost.

If such evidence exists, the Company recognizes an impairment
loss, as follows:

|(i)  | Financial assets carried at amortized cost: The loss is
      the difference between the amortized cost of the loan or receivable and
      the present value of the estimated future cash flows, discounted using the
      instruments original effective interest rate. The carrying amount of the
      asset is reduced by this amount either directly or indirectly through the
      use of an allowance account.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                          
|(ii) | Available-for-sale financial assets: The impairment loss
      is the difference between the original cost of the asset and its fair
      value at the measurement date, less any impairment losses previously
      recognized in profit and loss. This amount represents the cumulative loss
      in accumulated other comprehensive income (loss) that is reclassified to
      net income.                         

|b. | Non-financial assets
|-- | --------------------

At each reporting date, the Company reviews the carrying
amounts of its non-financial assets (other than inventories) to determine
whether there is any indication of impairment. If any such indication exists,
then the assets recoverable amount is estimated.

For impairment testing, assets are grouped together into the
smallest group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows of other assets or cash generating
unit (CGU).

The recoverable amount of an asset or CGU is the greater of its
value in use and its fair value less costs to sell. An impairment loss is
recognized if the carrying amount of an asset or CGU exceeds its recoverable
amount.

Impairment losses are recognized in profit or loss. They are
allocated first to reduce the carrying amount of any goodwill allocated to the
CGU, and then to reduce the carrying amounts of the other assets in the CGU on a
pro rata basis.

An impairment loss is reversed only to the extent that the
assets carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been
recognized.

Decommissioning liabilities

The Companys decommissioning liabilities relates to expected
mine and mill reclamation and closure activities, as well as costs associated
with reclamation of exploration drilling. Such costs, discounted to their
present value, are provided for and capitalized at the start of each project to
the carrying amount of the asset, along with a corresponding liability as soon
as the obligation to incur such costs arises. The decommissioning liability is
accreted to full value over time through periodic accretion charges recorded to
operations as accretion expense. The Company periodically adjusts the carrying amounts of the
decommissioning liability and the related asset for changes in estimates of the
amount or timing of underlying future cash flows, and discount rates.

12

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|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The Companys activities are subject to numerous governmental
laws and regulations. Estimates of future reclamation liabilities for asset
decommissioning and site restoration are recognized in the period when such
liabilities are incurred. These estimates are updated on a periodic basis and
are subject to changing laws, regulatory requirements, changing technology and
other factors which will be recognized when appropriate. Liabilities related to
site restoration include long-term treatment and monitoring costs and
incorporate total expected costs net of recoveries. Expenditures incurred to
dismantle facilities, restore and monitor closed resource properties are charged
against the related reclamation and remediation liability.

Income taxes

Income tax expense comprises current and deferred tax. Current
tax and deferred tax are recognized in profit or loss except to the extent that
it relates to a business combination, or items recognized directly in equity or
in other comprehensive income (loss).

Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or substantively
enacted at the reporting date, and any adjustment to tax payable in respect of
previous years.

Deferred tax is recognized in respect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. Deferred tax is not
recognized for the following temporary differences: the initial recognition of
assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss, and differences
relating to investments in subsidiaries and jointly controlled entities to the
extent that it is probable that they will not reverse in the foreseeable future.
In addition, deferred tax is not recognized for taxable temporary differences
arising on the initial recognition of goodwill. Deferred tax is measured at the
tax rates that are expected to be applied to temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by
the reporting date. Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will
be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax
credits and deductible temporary differences, to the extent that it is probable
that future taxable profits will be available against which they can be
utilized. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realized.

Earnings (loss) per share

The Company presents basic and diluted earnings (loss) per
share data for its common shares, calculated by dividing the earnings or loss
attributable to common shareholders of the Company by the weighted average
number of common shares outstanding during the period. Diluted earnings (loss)
per share is determined by adjusting the earnings or loss attributable to common
shareholders and the weighted average number of common shares outstanding for
the effects of all potential dilutive instruments.

Borrowing costs

Borrowing costs attributable to the acquisition, construction
or production of qualifying assets are added to the cost of those assets, until
such time as the assets are substantially ready for their intended use. The
Company does not capitalize borrowing costs related to exploration and
evaluation assets. All other borrowing costs are recognized as finance costs in
profit and loss in the period in which they are incurred.

13

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

New accounting standards adopted during the current
year

The Company has adopted the following new standards, including
any consequential amendments to other standards, with a date of initial
application of October 1, 2012.

|(i)   | IAS 28 Investments in Associates and Joint Ventures
      (2011)                 
|----- | ---------------------------------------------------------------------------------
|(ii)  | IFRS 10 Consolidated Financial Statements (IFRS
      10)                      
|(iii) | IFRS 11 Joint Arrangements (IFRS 11)                                           
|(iv)  | IFRS 12 Disclosure of Interests in Other Entities
      (IFRS 12)              
|(v)   | Presentation of Items of Other Comprehensive Income
      (Amendments to IAS 1)

The nature and effects of the changes are explained below.

|(i) | IAS 28
|--- | ------

Associates are those entities in which the Company has
significant influence, but not control, over the financial and operating
policies. Investments in associates are accounted for using the equity method
and are recognized initially at cost. The cost of an associate is measured at
the fair value of the assets given up, shares issued or liabilities assumed at
the date of acquisition plus costs directly attributable to the acquisition.

The condensed consolidated interim financial statements include
the Companys share of the profit or loss and other comprehensive income of
equity-accounted investees, after adjustments to align the accounting policies
with those of the Company, from the date that significant influence commences
until significant influence ceases.

When the Companys share of losses exceeds its interest in an
equity-accounted investee, the carrying amount of the investment, including any
long-term interests that form part thereof, is reduced to zero, and the
recognition of further losses is discontinued except to the extent that the
Company has an obligation or has made payments on behalf of the investee.

The carrying value of an associate is reviewed on a regular
basis and, if impairment in the carrying value has occurred, it is written down
to its recoverable amount in the period in which impairment is identified.

Unrealized gains and losses on transactions between the Company
and its associates are eliminated to the extent of the Companys interest in its
associates.

|(ii) | IFRS 10
|---- | -------

As a result of adopting IFRS 10, the Company has changed its
accounting policy for determining whether it has control over and consequently
whether it consolidates its investees. IFRS 10 introduces a new control model
that focuses on whether the Company has power over an investee, exposure or
rights to variable returns from its involvement with the investee and ability to
use its power to affect those returns.

In accordance with the transitional provisions of IFRS 10, the
Company reassessed the control conclusion for its investees at October 1, 2012.
The reassessment resulted in no changes to its control conclusion for its
investees at October 1, 2012.

|(iii) | IFRS 11
|----- | -------

As a result of IFRS 11, the Company has changed its accounting
policy for its interests in joint arrangements. Under IFRS 11, the Company has
assessed and classified its interests in joint arrangements as either joint
operations (if the Company has rights to the assets and obligations for the
liabilities, relating to an arrangement) or joint ventures (if the Company has
rights only to the net assets of an arrangement). When making this assessment,
the Company considered the structure of the arrangements, the legal form of any
separate vehicles, the contractual terms of the arrangements and other facts and
circumstances. Previously, the structure of the arrangement was the sole focus
of classification.

The Company has re-evaluated its involvement in its joint
arrangement Colorado Strip Partners LLC (CPP) and Arizona Strip Partner LLC
(ASP) and has reclassified the investment from a jointly controlled entity to
a joint operation. The reclassification did not have any impact on the
financial statements for the 12 months ended September 30, 2012. On October 1,
2012 the Company acquired the remaining balance the remaining 50% interest of
CPP and ASP. See Note 4 for further details.

14

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

|     |        
|---- | -------
|(iv) | IFRS 12

As a result of the adoption of IFRS 12, the Company has
expanded its disclosures about its interests in subsidiaries and
equity-accounted investees.

|(v) | Amendments to IAS 1
|--- | -------------------

As a result of the amendments to IAS 1, the Company has
modified the presentation of items in other comprehensive income (loss) in its
statement of comprehensive loss, to present separately items that would be
reclassified to profit or loss from those that would never be. Comparative
information has been re-presented accordingly.

Future Accounting Changes

IFRS 9 Financial Instruments

This standard replaces IAS 39, Financial Instruments:
Recognition and Measurement, in phases. IFRS 9 (2009) reflects the IASB's first
phase of the project relating to the classification and measurement of financial
assets. Under IFRS 9 (2009), financial assets are classified and measured based
on the business model in which they were held and the characteristics of their
contractual cash flows. IFRS 9 (2010) provides guidance on the classification
and measurement of financial liabilities and the requirements of IAS 39 for the
de-recognition of financial assets and liabilities. IFRS 9 (2013) introduces a
new general hedge accounting model which provides guidance on the eligibility of
hedging instruments and hedged items, accounting for the time value component of
options, qualifying criteria for applying hedge accounting, modification and
discontinuation of hedging relationships, and required disclosures. In
subsequent
phases, the IASB plans to make limited amendments to the classification and
measurement requirements of IFRS 9 and to add new requirements to address macro
hedge accounting and impairment of financial assets. The IASB tentatively
decided to require an entity to apply IFRS 9 for annual periods beginning on or
after January 1, 2018. We do not intend to adopt this standard early due to
possible further changes in the standard before it becomes final.

IFRS 13 Fair Value Measurement

In May 2011, the IASB issued IFRS 13 Fair Value Measurement
(IFRS 13), which is effective for annual periods beginning on or after January
1, 2013, with early application permitted. IFRS 13 defines fair value, sets out
in a single standard a framework for measuring fair value, requires disclosures
about fair value measurements, and applies when other IFRSs require or permit
fair value measurements. IFRS 13 does not introduce requirements to measure
assets or liabilities at fair value, nor does it eliminate practicable exception
to fair value measurement that currently exist in certain standards. The Company
has not yet assessed the impact of the Standard on the consolidated
financial statements.

Amendments to IAS 32, Financial Instruments:
Presentation

Clarifies that an entity currently has a legally enforceable
right to off-set financial assets and liabilities if that right is: not
contingent on a future event; and enforceable both in the normal course of
business and in the event of default, insolvency or bankruptcy of the entity and
all counterparties. The amendments to IAS 32 also clarify when a settlement
mechanism provides for net settlement or gross settlement that is equivalent to
net settlement. The effective date for the amendments to IAS 32 is annual
periods beginning on or after January 1, 2014. The amendments to IAS 32 are to
be applied retrospectively. The Company intends to adopt the amendments to IAS
32 in its financial statements for the annual period beginning January 1, 2014.
The Company is in the process of assessing the impact of the revised standard.

15

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

IFRIC Interpretation 21, Levies

This interpretation of IAS 37, Provisions, Contingent
Liabilities, and Contingent Assets, is effective January 1, 2014 and clarifies
that a liability for a levy should be recognized when the activity that triggers
payment, as identified by the relevant legislation, occurs. We are currently
evaluating the impact of adopting this interpretation on our consolidated
financial statements.

Critical accounting estimates and judgments

The preparation of these consolidated financial statements in
accordance with IFRS requires the use of certain critical accounting estimates
and judgments that affect the amounts reported. It also requires management to
exercise judgment in applying the Companys accounting policies. These judgments
and estimates are based on managements best knowledge of the relevant facts and
circumstances taking into account previous experience. Although the Company
regularly reviews the estimates and judgments made that affect these financial
statements, actual results may be materially different.

Significant estimates made by management include:

|a. | Reserves and resources
|-- | ----------------------

Proven and probable reserves are the economically mineable
parts of the Companys measured and indicated mineral resources demonstrated by
at least a preliminary feasibility study. The Company estimates its proven and
probable reserves and measured, indicated and inferred mineral resources based
on information compiled by appropriately qualified persons. The information
relating to the geological data on the size, depth and shape of the ore body
requires complex geological judgments to interpret the data. The estimation of
future cash flows related to proven and probable reserves is based upon factors
such as estimates of foreign exchange rates, commodity prices, future capital
requirements and production costs along with geological assumptions and
judgments made in estimating the size and grade of the ore body. Changes in the
proven and probable reserves or measured, indicated and inferred mineral
resources estimates may impact the carrying value of property, plant and
equipment, goodwill, reclamation and remediation obligations, recognition of
deferred tax amounts and depreciation, depletion and amortization.

|b. | Depreciation, depletion and amortization of property,
      plant and equipment
|-- | -------------------------------------------------------------------------------

Property, plant and equipment comprise a large component of the
Companys assets and, as such, the depreciation and amortization of those assets
have a significant effect on the Companys financial statements. Depreciation
and amortization of property, plant and equipment used in production is
calculated on a straight line basis or a unit-of-production basis as
appropriate.

Plant and equipment assets depreciated using a straight-line
basis results in the allocation of production costs evenly over the assets useful
life defined as a period of time. Plant and equipment assets depreciated on a
units-of-production basis results in the allocation of production costs based on
current period production in proportion to total anticipated production from the
facility.

Mineral property assets are amortized using a
unit-of-production basis that allocates the cost of the asset to production cost
based on the current periods mined ore as a proportion of the total estimated
resources in the related ore body. The process of making these estimates
requires significant judgment in evaluating and assessing available geological,
geophysical, engineering and economic data, projected rates of production,
estimated commodity price forecasts and the timing of future expenditures, all
of which are, by their very nature, subject to interpretation and
uncertainty.

Changes in these estimates may materially impact the carrying
value of the Companys property, plant and equipment and the recorded amount of
amortization, depletion and depreciation.

|c. | Valuation of long-lived
assets
|-- | ------------------------------

The Company undertakes a review of the carrying values of
property, plant and equipment and intangibles whenever events or changes in
circumstances indicate that their carrying values may exceed their estimated net
recoverable amounts determined by reference to estimated future operating
results and discounted net cash flows. An impairment loss is recognized when the carrying value of those
assets is not recoverable. In undertaking this review, the management of the
Company is required to make significant estimates of, amongst other things,
future production and sale volumes, forecast commodity prices, future operating
and capital costs and reclamation costs to the end of the mine or mills life.
These estimates are subject to various risks and uncertainties, which may
ultimately have an effect on the expected recoverability of the carrying values
of plant, property and equipment and intangibles.

16

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

|   |                      
|-- | ---------------------
|d. | Business combinations

Management uses judgment in applying the acquisition method of
accounting for business combinations and in determining fair values of the
identifiable assets and liabilities acquired. The value placed on the acquired
assets and liabilities, including identifiable intangible assets, will have an
effect on the amount of goodwill or bargain purchase gain that the Company may
record on an acquisition. Changes in economic conditions, commodity prices and
other factors between the date that an acquisition is announced and when it
finally is consummated can have a material difference on the allocation used to
record a preliminary purchase price allocation versus the final purchase price
allocation which can take up to one year after acquisition to complete.

|e. | Decommissioning
liabilities
|-- | ---------------------------

Decommissioning liabilities are recorded as a liability when
the asset is initially constructed. The Company has accrued its best estimate of
its share of the cost to decommission its mining and milling properties in
accordance with existing laws, contracts and other policies. The estimate of
future costs involves a number of estimates relating to timing, type of costs,
mine closure plans, and review of potential methods and technical advancements.
Furthermore, due to uncertainties concerning environmental remediation, the
ultimate cost of the Companys decommissioning liability could differ from
amounts provided. The estimate of the Companys obligation is subject to change
due to amendments to applicable laws and regulations and as new information
concerning the Companys operations becomes available. The Company is not able
to determine the impact on its financial position, if any, of environmental laws
and regulations that may be enacted in the future.

|f. | Determination of significant
  influence
|-- | ----------------------------------------

Management determines its ability to exercise significant
influence over an investment in shares of other companies by looking at its
percentage interest and other qualitative factors including but not limited to
its voting rights, representation on the board of directors, participation in
policy-making processes material transactions between the Company and the
associate, interchange of managerial personnel, provision of essential technical
information and operating involvement.

|g. | Determination whether an acquisition represents a
      business combination or asset purchase
|-- | ----------------------------------------------------------------------------------------------

Management determines whether an acquisition represent a
business combination or asset purchase by considering the stage of exploration
and development of an acquired operation. Consideration is given to whether the
acquired properties include mineral reserves or mineral resources, in addition
to the permitting required and results of economic assessments.

4. ACQUISITION OF COLORADO PLATEAU PARTNERS LLC (CPP)
& ARIZONA STRIP PARTNERS LLC (ASP)

On September 21, 2012, the Company executed a Purchase
Agreement whereby the Company agreed to purchase from Aldershot Resources Ltd.
(Aldershot) its membership interest in the CPP and ASP, each a 50/50 joint
arrangement between Energy Fuels Resources Corp. (EFRC) and Aldershot. CPP and
ASP are exploration stage properties in the United States.

The acquisition was completed on October 1, 2012. Pursuant to
the Purchase Agreement, Aldershot received $750 in cash, cancellation of amounts
receivable
owed by Aldershot to EFRC of $557(including a note receivable of $509) and
70,551 shares of EFI common stock valued at Cdn$9.50 per share. The total
purchase price was $2,042 including $53 of transaction costs. The transaction
was accounted for as an asset purchase due to the stage of the exploration
properties. Accordingly, the cost of each item of property, plant and equipment
acquired as part of the Company of assets acquired was determined by allocating
the price paid for the Company of assets to each item based on its relative fair
value at the time of acquisition.

17

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The aggregate fair values of assets acquired and liabilities
assumed were as follows on the acquisition date:

Cash
    $
    75070,551 common shares of EFI
    
    682Cancellation of amounts
    receivable
    
    557Transaction costs
      incurred
    
    53Purchase consideration
    $
    2,042


The purchase price was allocated as
      follows:Cash and cash equivalents
    $
    45Property, plant and equipment (1)
    
    1,997Restricted cash
    
    54Decommissioning liability
    
    (54
    )$
    2,042


(1) The properties include the Calliham Lease, the Crain Lease,
four Utah State Leases, and 94 unpatented mining claims, all of which are
located in Utah. As a result of the acquisition, the Company owns 100% of the
Sage Plain Project.

5. ACQUISITION OF DENISON MINES HOLDINGS CORP. AND WHITE
CANYON URANIUM LTD.

On May 23, 2012, the Company and Denison Mines Corp.
(Denison) entered into an Arrangement Agreement (the Arrangement) whereby
EFI would acquire from Denison (the Acquisition) (i) all of the issued and
outstanding shares of Denison Mines Holdings Corp. (DMHC) (ii) all of the
issued and outstanding shares of White Canyon Uranium Ltd. (White Canyon), and
(iii) all indebtedness of DMHC, White Canyon and their direct and indirect
subsidiaries (collectively, the Denison US Mining Division) owing to Denison
and any affiliates of Denison (other than members of the Denison US Mining
Division). The Terms of the Arrangement required EFI to distribute 8,508,817
common shares to Denison shareholders on a pro-rata basis such that Denison
shareholders would receive approximately 0.02032 common shares of EFI for each
common share of Denison owned.

The shareholders of EFI and the shareholders of Denison
approved the Arrangement at their respective Special Meetings held on June 25,
2012. The Arrangement was approved by the Toronto Stock Exchange on June 7, 2012
and was approved by the Ontario Superior Court of Justice on June 27, 2012. The
Acquisition was completed on June 29, 2012.

The transaction was accounted for as a business combination
with the Company identified as the acquirer, owing to the fact that
post-transaction, Denison was given the right to nominate only two on a board of
ten directors, has a majority of senior management posts, and has overall
control of the day-to-day activities of the combined entities. In accordance
with IFRS, the accounting for this acquisition was initially done on a
preliminary basis. Subsequent to the preliminary accounting for the acquisition
in June 2013, as a result of information not available at the acquisition date, the Company made certain adjustments to the allocation of the
purchase price, taking into account new and relevant information available
including a valuation report from a third-party consultant received before the
end of the measurement period. The adjustments made subsequent to the
preliminary purchase allocation include an adjustment to decrease the
acquisition date estimated fair value of plant, property and equipment by
$16,109 and an adjustment to decrease decommissioning liabilities by $526. The
adjustments recorded resulted in a decrease in gain on bargain purchase of
$15,583 from the preliminary purchase allocation and the balance sheet was
revised accordingly.

18

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

A summary of the final allocation of the fair values of assets
acquired and liabilities assumed together with the adjustments made during the
preliminary purchase price allocation as disclosed in the Companys consolidated
financial statements for the 12 months ended September 30, 2012 is as
follows:

Preliminary
    
    
    Adjustments
    
    
    RevisedPurchase priceIssuance of 8,508,817 common shares of
      EFI
    $
    79,322
    
    $
    -
    
    $
    79,322Fair value of assets and
      liabilities acquiredCash and cash equivalents
    $
    552
    
    $
    -
    
    $
    552Trade and
      other receivables
    
    241
    
    
    -
    
    
    241Inventories
    
    31,530
    
    
    -
    
    
    31,530Prepaid
      expenses and other assets
    
    303
    
    
    -
    
    
    303Property, plant and
      equipment
    
    84,941
    
    
    (16,109
    )
    
    68,832Intangible assets
    
    15,851
    
    
    -
    
    
    15,851Restricted cash (1)
    
    24,965
    
    
    -
    
    
    24,965Accounts
      payable and accrued liabilities
    
    (7,802
    )
    
    -
    
    
    (7,802
    )Deferred revenue
    
    (1,150
    )
    
    -
    
    
    (1,150
    )Decommissioning liabilities
    
    (13,895
    )
    
    526
    
    
    (13,369
    )135,536
    
    
    
    
    
    119,953Gain on bargain purchase (2)
    
    (56,214
    )
    
    15,583
    
    
    (40,631
    )$
    79,322
    
    $
    -
    
    $
    79,322


|(1) | Cash, cash equivalents and fixed income securities posted
      as collateral for various bonds with state and federal regulatory agencies
      for estimated reclamation costs associated with the decommissioning
      liability of the White Mesa mill, and plant, property and
  equipment.                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(2) | The Acquisition of DMHC and White Canyon resulted in a
      gain on bargain purchase as a result of the excess of the estimated fair
      value of the assets and liabilities acquired as of the acquisition date,
      over the fair value of the issuance of 8,508,817EFI common shares at
      Cdn$9.50, for a total purchase price of $79,322.                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | Under IFRS 3, the fair value consideration was based on
      the Cdn$9.50 common share price of the EFI common shares issued on June
      29, 2012 (the date of Acquisition) and not the Cdn$13.00 common share
      price of the EFI common shares on May 23, 2012, the date when the
      Arrangement with Denison was announced. The decline in share price of EFI
      common shares in the intervening period without any adjustment to the
      number of common shares issued contributed to the bargain purchase
      gain.

19

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

As a result of the measurement period adjustments, the
comparative information presented in the consolidated financial statements for
the 12 months ended September 30, 2012 has been revised as follows:

As atSeptember 30, 2012As originally reported
    
    
    RevisedInventories
    $
    33,273
    
    $
    30,868Property, plant and equipment
    $
    133,085
    
    $
    119,524Decommissioning liability
    $
    (15,724
    )
    $
    (15,199
    )Deficit
    $
    17,602
    
    $
    33,041


|                                    |   | For the year
      ended |  
|----------------------------------- | - | ------------------------ | -
|                                    |   | September 30, 2012       |  
|                                    |   | As originally reported   |  
|Production cost of sales            | $ | (21,855                  | )
|Gain on bargain purchase            | $ | 56,215                   |  
|Net profit for the period           | $ | 16,973                   |  
|Comprehensive income for the period | $ | 17,271                   |  

Pro forma information

Pro forma results of operations have been prepared as if the
Denison US Mining division acquisition had occurred at October 1, 2011. The pro
forma consolidated financial statement information is not intended to be
indicative of the results that would actually have occurred, or the results
expected in future periods, had the events reflected herein occurred on the
dates indicated. Any potential synergies that may be realized and integration
costs that may be incurred have been excluded from the pro forma financial
statement information.

For the 12 months ended September 30, 2012, pro forma
consolidated revenue and net income is $94,294 and $2,961, respectively. The pro
forma net income is net of a total of $2,535 of acquisition costs incurred in
connection with the acquisition which included 87,478 of common shares of the
Company issued for advisory fees

6. INVESTMENT IN VIRGINIA ENERGY RESOURCES INC.

On January 28, 2013, pursuant to a private placement, the
Company acquired 9,439,857 common shares of Virginia Energy Resources
Inc. (Virginia Energy) at a price of Cdn$0.42 per common share. The 9,439,857
common shares acquired by the Company represented 16.5% of Virginia Energys
common shares outstanding. Consideration paid by the Company for this investment
consisted of $248 in cash and 437,028 common shares of the Company issued on a
private placement basis for an aggregate consideration of $4,156. The Company
issued 5,405 common shares in partial satisfaction of financial advisory
services provided in connection with its investment in Virginia Energy.

Virginia Energy is listed on the TSX Venture Exchange and owns
100% of the advanced-stage Coles Hill Project located in south central Virginia,
USA.

Pursuant to the subscription agreement with Virginia Energy,
for so long as the Energy Fuels owns at least 9.9% of the outstanding shares of
Virginia Energy, the Company has the right to participate in equity financings
by Virginia Energy in order to maintain its percentage ownership. In addition,
the Company has the right to nominate one director for election or appointment
to the Board of Directors of Virginia Energy as long as it holds at least 5% of
the issued and outstanding common shares, increasing to 9.9% after 2 years. The
provisions of the subscription arrangement allows EFI to appoint a director to
the Board of Virginia Energy and gives rights to participate in the operating and
financial decisions of Virginia Energy. Management has assessed these rights as
significant influence over Virginia Energy and consequently the Company has
accounted for its investment in Virginia Energy using equity accounting.

20

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The following table summarized the financial information of
Virginia Energy as included in its financial statements adjusted for fair value
adjustments at acquisition. The table also reconciles the summarized financial
information to the carrying amount of Energy Fuels interest in Virginia Energy.

December 31,**2013 (a)** ****Percentage ownership interest
    
    100.0%Current assets
    $
    4,806Non-current assets
    
    24,112Total assets
    
    28,918Current liabilities
    
    421Non-current liabilities
    
    4,038Total liabilities
    
    4,459Net
      assets (100%)
    
    24,459Energy Fuels's share of net
      assets (16.5%)
    
    4,036Impact of fair valuation of the Company's
      interest on acquisition
    
    (1,083
    )Impairment (b)
    
    (1,941
    )Carrying amount of interest in associate
    $
    1,012Net loss for the nine months ended Sep 30, 2013 (100%)
    $
    7,796Energy Fuels's share of net loss (16.5%)
    $
    1,286Other comprehensive loss for the nine months ended Sep 30, 2013
      (100%)
    $
    230Energy Fuels's share of other comprehensive loss (16.5%)
    $
    38


|(a) | Virginia Energy generally releases its financial
      statements after Energy Fuels releases its financial statements.
      Accordingly, the Company records its share of Virginia Energys
      comprehensive income or loss using information available from the previous
      quarter. The Company has recorded a loss of $1,286 in other income
      (expense) and $38 in other comprehensive income (loss) for its share of
      comprehensive income or loss of Virginia Energy for the nine months ended
      September 30, 2013.                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(b) | During the 15 months ended December 31, 2013, it was
      determined that the carrying amount of the Companys investment in
      Virginia Energy exceeded the recoverable amount of the investment. The
      recoverable amount was based on an estimate of the investment's fair value
      less costs of disposal. Fair value was derived from the price of Virginia
      Energys shares (VUI.V) at the close of the TSX Venture Exchange on
      December 31, 2013 less selling costs of $57. As a result, the Company
      recorded an impairment charge of $1,941.

7. ACQUISITION OF STRATHMORE MINERALS CORP.

On June 11, 2013 the Company and Strathmore entered into an
agreement whereby EFI agreed to acquire, by way of a Plan of Arrangement (the
Arrangement), all of the outstanding common shares of Strathmore. Strathmores
primary U.S. mineral properties are the Gas Hills project in Wyoming and a 60%
stake in Roca Honda in New Mexico.

The shareholders of EFI and the shareholders of Strathmore
approved the Arrangement at their respective Special Meetings held on August 13,
2013 and August 20, 2013 respectively. Subsequent to receiving approval from the
Toronto Stock Exchange and the Supreme Court of British Columbia, the
acquisition was completed August 30, 2013.

Pursuant to the Arrangement, Strathmore shareholders received
0.0294 EFI common shares for each common share of Strathmore. Under the terms of
the Arrangement, all Strathmore options vested fully upon change in control and
were replaced with options of EFI based on the exchange ratio.

21

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The cost of acquisition included the fair value of the issuance
of the following instruments:3,665,395 Energy Fuels common shares at Cdn$10.50(
$9.95) per share aggregating to $36,470, plus 63,024EFI common shares at
Cdn$10.50 (S9.95) per share aggregating to $627 for replacement of Strathmores
restricted share units.

Transaction costs totaled $1,362 including the issuance of
55,095 EFI common shares valued at $548 in satisfaction of the advisory fee,
bringing the total purchase price to $38,459. The value of the Energy Fuels
shares issued was calculated using the share price of the Companys shares on
the date the acquisition closed.

The transaction was accounted for as an asset acquisition and
not a business combination under IFRS 3 due to the stage of its mineral property
projects. The cost of each item of property, plant and equipment acquired was
determined by allocating the price paid for the Company of assets to each item
based on its relative fair value at the time of acquisition.

The aggregate fair values of assets acquired and liabilities
assumed were as follows on the acquisition date:

$Issuance of 3,665,395 common
      shares for replacement of Strathmore common shares
    
    36,470Issuance of 63,024 common shares for
      replacement of Strathmore restricted share units
    
    627Transaction costs
    
    1,362Purchase consideration
    
    38,459


The purchase price was allocated as follows:

Cash and cash equivalents
    
    2,213Marketable securities
    
    245Trade and other receivables
    
    413Prepaid expenses and other assets
    
    37Property, plant and equipment
    
    35,671Restricted cash
    
    902Accounts payable and accrued liabilities
    
    (917
    )Current
      decommissioning liability
    
    (105
    )Net identifiable assets
    
    38,459


8. ACQUISITION OF TITAN URANIUM INC.

On December 5, 2011, the Company and Titan Uranium Inc.
(Titan) entered into an agreement whereby EFI agreed to acquire, by way of a
Plan of Arrangement (Arrangement), all of the outstanding common shares of
Titan. Titans primary U.S. mineral property is the Sheep Mountain Project
located about 8 miles south of Jeffrey City, Wyoming.

The shareholders of EFI and the shareholders of Titan approved
the Arrangement at their respective Special Meetings held on February 10, 2012
and February 14, 2012. The Arrangement has been approved by the Toronto Stock
Exchange and was approved by the Supreme Court of British Columbia on February
21, 2012. The acquisition was completed on February 29, 2012.

Pursuant to the Arrangement, Titan shareholders received 0.68
of an EFI common share for each common share of Titan. Under the terms of the
Arrangement, all outstanding warrants of Titan became exercisable for common
shares in EFI. The number of shares received upon exercise and the exercise
price of Titans outstanding share purchase warrants were adjusted
proportionately to reflect the share exchange ratio. Under the terms of the
Arrangement, all Titan options expired on the business day preceding the
transaction close date.

The cost of acquisition included the fair value of the issuance
of the following instruments: 1,781,280 Energy Fuels common shares at C$18.00
per share aggregating to C$32,063 ($32,499), plus 298,538 share purchase
warrants of Energy Fuels, with an average exercise price of C$31.50 per share
and a fair value of $541.

Acquisition costs totaled $1,214 including the issuance of
25,130 EFI common shares to an associate of a shareholder, valued at $431 in
satisfaction of the advisory fee, bringing the total purchase price to $34,254.
The value of the Energy Fuels shares issued was calculated using the share price
of the Companys shares on the date the acquisition closed.

22

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The following weighted average assumptions were used for the
Black-Scholes option pricing model to calculate the fair value of the warrants
of Titan assumed as part of the acquisition:

Risk-free rate
    
    0.92% - 0.94%Expected life
    
    0.76  1.43 yearsExpected volatility
    
    74% - 106%Expected dividend yield
    
    0.0%


The transaction was accounted for as an asset acquisition and
the cost of each item of property, plant and equipment acquired as part of the
group of assets acquired was determined by allocating the price paid for the
group of assets to each item based on its relative fair value at the time of
acquisition. Expected volatility is measured based on the Companys historical
share price volatility over the expected life of the options.

The aggregate fair values of assets acquired and liabilities
assumed were as follows on the acquisition date:

|                                         | $ |        | 
|---------------------------------------- | - | ------ | 
|1,781,280 common shares of
      EFI     |   | 32,499 | 
|Fair value of warrants assumed (Note 18) |   | 541    | 
|Transaction costs incurred               |   | 1,214  | 
|Purchase consideration                   |   | 34,254 | 

The purchase price was allocated as follows:

Cash and cash equivalents
    
    299Marketable securities
    
    3,446Treasury shares (Note 18)
    
    370Prepaid expenses and other assets
    
    221Property, plant and equipment (1)
    
    34,366Restricted cash
    
    2,007Accounts payable and accrued liabilities
    
    (3,026
    )Loans and borrowings
    
    (1,103
    )Due to related parties
    
    (1,026
    )Decommissioning
      liability
    
    (1,301
    )Net identifiable assets
    $
    34,254


(1)The two properties included as part of property, plant and
equipment are the Sheep Mountain property in Wyoming and the Green River
property located in the San Rafael district of Utah.

9. MARKETABLE SECURITIES

Marketable securities are classified as available-for-sale, are
stated at their fair values, and consist of the following:

December,
    
    
    September 30,2013
    
    
    2012$
    
    
    $Mega Uranium Ltd.2,877,000 common shares
      (September 30, 2012 - 10,000,000)
    
    243
    
    
    1,627Bayswater Uranium
      Corporation(1) (Note 7)2,759,807 common shares
      (September 30, 2012 - nil)
    
    157
    
    
    -Other(1) (Note 7)
    
    9
    
    
    -409
    
    
    1,627


(1) Acquired in the transaction with
Strathmore at an aggregate fair value of $245.

23

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The Company has classified its investments in Mega Uranium Ltd.
(Mega) and Bayswater Uranium Corporation ("Bayswater") as available-for-sale
investments. During the 15 months ended December 31, 2013 the Company sold
7,123,000 shares of Mega for gross proceeds of $849, and recorded a loss of $539
in profit and loss.

The investment in Mega and Bayswater are classified as Level 1
in the fair value hierarchy outlined in IFRS 7 Financial Instruments:
Disclosuresas their fair value has been determined based on a quoted price
in an active market.

10. TRADE AND OTHER RECEIVABLES

|                                                     |   | December 31, |  |   | September 30, | 
|---------------------------------------------------- | - | ------------ |  | - | ------------- | 
|                                                     |   | 2013         |  |   | 2012          | 
|                                                     | $ |              |  | $ |               | 
|Trade receivables - mineral concentrate s
      ales |   | -            |  |   | 12,807        | 
|Other receivables                                    |   | 653          |  |   | 1,906         | 
|Notes receivable (1)                                 |   | -            |  |   | 555           | 
|                                                     |   | 653          |  |   | 15,268        | 

|(1) | The September 30, 2012 amount of $555 included a $509
      promissory note receivable from Aldershot, which held a 50% interest in
      the CPP joint venture with EFRC until the promissory note was canceled on
      October 1, 2012 as a result of EFRCs acquisition of Aldershots 50% joint
      venture interest in CPP (Note 4).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11. INVENTORIES

|                                                         |   | December 31, |  |   | September 30, | 
|-------------------------------------------------------- | - | ------------ |  | - | ------------- | 
|                                                         |   | 2013         |  |   | 2012          | 
|                                                         | $ |              |  | $ |               | 
|Concentrates and
      work-in-progress (1)              |   | 19,754       |  |   | 11,376        | 
|Inventory of ore and alternate feed i n
      stockpiles |   | 4,618        |  |   | 15,290        | 
|Raw materials and consumables                            |   | 3,668        |  |   | 4,202         | 
|                                                         |   | 28,040       |  |   | 30,868        | 

Inventories - by duration

|Current                       |  | 28,040 |  |  | 28,180 | 
|----------------------------- |  | ------ |  |  | ------ | 
|Long-term - ore in stockpiles |  | -      |  |  | 2,688  | 
|                              |  | 28,040 |  |  | 30,868 | 

|(1) | During the15 months ended December 31, 2013, the Company
      recorded an impairment loss of $3,269ona write down of inventories to net
      realizable value in profit and loss.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As at December 31, 2013, $4,618 of inventories are carried at
fair value less costs of disposal (September 30, 2012 Nil). The current portion
of inventory of ore in stockpiles represents ore that is currently expected to
be processed within the next twelve months.

24

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

12. PROPERTY, PLANT AND EQUIPMENT

Mineral
      PropertiesPlant and
    
    
    
    
    
    Care and
    
    
    Pre-developmentequipment
    
    
    Operating
    
    
    maintenance
    
    
    **and non-operating**
    
    
    TotalCostBalance at September 30, 2011
    
    14,277
    
    
    -
    
    
    -
    
    
    20,257
    
    
    34,534Acquisition
      of Titan Uranium (Note 8)
    
    43
    
    
    -
    
    
    -
    
    
    34,323
    
    
    34,366Acquisition of Denison US
      Mining Division (Note 5)
    
    64,634
    
    
    176
    
    
    -
    
    
    4,015
    
    
    68,825Additions
    
    2,180
    
    
    2,112
    
    
    -
    
    
    5,395
    
    
    9,687Disposals
    
    (516
    )
    
    -
    
    
    -
    
    
    -
    
    
    (516
    )Balance at September 30, 2012
    $
    80,618
    
    $
    2,288
    
    $
    -
    
    $
    63,990
    
    $
    146,896Acquisition of Colorado
      Plateau Partners LLC &
    
    -
    
    
    -
    
    
    -
    
    
    1,997
    
    
    1,997Arizona
      Strip Partners LLC (Note 4)Additions
    
    3,174
    
    
    3,057
    
    
    -
    
    
    13,297
    
    
    19,528Acquisition
      of Strathmore Minerals Corp (Note 7)
    
    965
    
    
    -
    
    
    -
    
    
    34,706
    
    
    35,671Disposals for the period
    
    (1,502
    )
    
    -
    
    
    -
    
    
    -
    
    
    (1,502
    )Reclassification to operating (2)
    
    -
    
    
    5,179
    
    
    -
    
    
    (5,179
    )
    
    -Reclassification to care
      and maintenance (1)
    
    -
    
    
    (3,169
    )
    
    3,169
    
    
    -
    
    
    -Revision of
      decommissioning liability
    
    (2,071
    )
    
    (28
    )
    
    93
    
    
    334
    
    
    (1,672
    )Reclassified to assets held for sale (4)
    
    -
    
    
    -
    
    
    -
    
    
    (4,415
    )
    
    (4,415
    )Balance at December 31, 2013
    $
    81,184
    
    $
    7,327
    
    $
    3,262
    
    $
    104,730
    
    $
    196,503Depreciation, depletion, disposals and
      impairmentBalance at September 30, 2011
    $
    1,242
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    1,242Depreciation for the period
    
    2,414
    
    
    -
    
    
    -
    
    
    -
    
    
    2,414Depletion
      for the period
    
    -
    
    
    37
    
    
    -
    
    
    -
    
    
    37Disposals for the period
    
    (343
    )
    
    -
    
    
    -
    
    
    -
    
    
    (343
    )Impairment (Note 13)
    
    12,028
    
    
    -
    
    
    -
    
    
    11,994
    
    
    24,022Balance at September 30, 2012
    
    15,341
    
    
    37
    
    
    -
    
    
    11,994
    
    
    27,372Depreciation for the period
    
    8,460
    
    
    -
    
    
    -
    
    
    -
    
    
    8,460Depletion for the period
    
    -
    
    
    622
    
    
    -
    
    
    -
    
    
    622Disposals
      for the period
    
    (1,177
    )
    
    -
    
    
    -
    
    
    -
    
    
    (1,177
    )Reclassification to care
      and maintenance (1)
    
    -
    
    
    (232
    )
    
    232
    
    
    -
    
    
    -Impairment (Note 13)(3)
    
    36,298
    
    
    4,173
    
    
    2,730
    
    
    17,056
    
    
    60,257Balance at December 31, 2013
    $
    58,922
    
    $
    4,600
    
    $
    2,962
    
    $
    29,050
    
    $
    95,534Carrying amountsAt September 30, 2012
    $
    65,277
    
    $
    2,251
    
    $
    -
    
    $
    51,996
    
    $
    119,524At
      December 31, 2013
    $
    22,262
    
    $
    2,727
    
    $
    300
    
    $
    75,680
    
    $
    100,969


|(1) | The Beaver, Pandora, and Daneros mines were placed on
      care and maintenance in the15 months ended December 31, 2013 as a result of
      current market conditions. Costs associated with the care and maintenance
      for mines are expensed in the period in which they are incurred and
      depletion is no longer recorded. For the 15 months ended December 31,
      2013, the costs expensed in profit and loss were $5,402.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(2) | The Pinenut mine achieved commercial production in July
      2013.                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3) | During the 15 months ended December 31, 2013, the Company
      tested its property, plant and equipment for impairment (excluding any
      assets acquired pursuant to the acquisition of Strathmore) and recognized
      an impairment loss of $60,257. A summary of the impairment charge by asset
      is provided in Note 13.                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(4) | During the 15 months ended December 31, 2013 the Company
      identified some non-core assets and reclassified them to assets held for
      sale.                                                                                                                                                                                                                                                                                         

25

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Pre-development and non-operating properties

The Company enters into exploration agreements from time to
time whereby it may earn an interest in certain mineral properties by issuing
common shares, making cash option payments and/or incurring expenditures in
varying amounts by specified dates.

The following is a summary of the carrying value of
pre-development non-operating property expenses shown by area of interest:

December 31,
    
    
    September 30,2013
    
    
    2012$
    
    
    $Colorado Plateau
    
    2,282
    
    
    11,010Henry Mountains
    
    1,170
    
    
    3,567Arizona Strip
    
    3,002
    
    
    2,737Wyoming (1)
    
    43,372
    
    
    34,682New Mexico (2)
    
    25,854
    
    
    -Total
    
    75,680
    
    
    51,996


|(1) | Includes the Gas Hills, Juniper Ridge and Copper King
      mineral interests from the acquisition of Strathmore as well as the
      Companys Sheep Mountain project.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                        
|(2) | Includes the Roca Honda, Marquez, Nose Rock, Dalton Pass
      and Sky mineral interests from the acquisition of
  Strathmore.                                         

13. IMPAIRMENT OF NON-CURRENT ASSETS

Impairment for the 15 months ended December 31,
2013

The Company considers both quantitative and qualitative factors
to assess impairment.

In the 15 months ended December 31, 2013, the Company
identified the recent and the continued decline of uranium prices and the
Companys expectation to place certain of its mineral properties on care and
maintenance as indicators of impairment.

For the purpose of performing impairment analysis, the Company
grouped its plant and equipment at its White Mesa Mill together with its mines
located in the Colorado Plateau, Henry Mountains and Arizona strip geographic
regions as a single cash generating unit (CGU) (collectively referred as WMM
CGU). The Company also assessed impairment of its properties in Wyoming and New
Mexico on a standalone basis.

Based on the impairment analysis, the Company recorded an
impairment loss of $60,257, in the quarter ended September 30, 2013, with
respect to the WMM CGU. No impairment was recorded with respect to the Companys
mineral properties in the Wyoming and New Mexico area. The Company determined
there were no additional indications of impairment at December 31, 2013.

26

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     

The following table summarizes the impairment charges for
property, plant and equipment related to the WMM CGU by area of interest for the
15 month period ending December 31, 2013:

As at December 31, 2013Pre-
    
    
    Impairment
    
    
    Post-impairment
    
    
    loss
    
    
    impairmentPlant and equipment
    
    58,560
    
    
    (36,298
    )
    
    22,262Total plant and equipment
    
    58,560
    
    
    (36,298
    )
    
    22,262Mineral PropertiesOperatingArizona Strip
    
    6,900
    
    
    (4,173
    )
    
    2,727Total operating
    
    6,900
    
    
    (4,173
    )
    
    2,727Care and
      maintenanceColorado
      Plateau
    
    2,136
    
    
    (1,836
    )
    
    300Daneros
    
    894
    
    
    (894
    )
    
    -Total care and maintenance
    
    3,030
    
    
    (2,730
    )
    
    300Pre-development and non-operatingColorado
      Plateau
    
    11,936
    
    
    (9,654
    )
    
    2,282Henry Mountains
    
    5,013
    
    
    (3,843
    )
    
    1,170Arizona
      Strip
    
    6,561
    
    
    (3,559
    )
    
    3,002Wyoming
    
    43,372
    
    
    -
    
    
    43,372New Mexico
    
    25,854
    
    
    -
    
    
    25,854Total pre-development and non-operating
    
    92,736
    
    
    (17,056
    )
    
    75,680Total
    
    161,226
    
    
    (60,257
    )
    
    100,969


Key Assumptions

The recoverable amount in the impairment analysis was based on
the fair value less costs of disposal using discounted cash flow projections. Key
assumptions used in the calculation of recoverable amounts include discount
rates, uranium prices, future timing of production volume including the date
when a mineral property can be brought into production and the expected cost to
produce uranium and future operating costs.

The Companys estimate of future uranium sales prices were
based on the uranium prices prepared by industry analysts. For the purpose of
the impairment analysis, management estimated a uranium price of $ 38.00/lb. for
the period up to December 31, 2014; a price range of $42.00/lb. to $55.00/lb.
for the period 2015 to 2018 and $62.00/lb. to $75.00/lb. for the period 2019 to
2024. The Company used a pre-tax discount rate of 12.5% based on the Companys
estimated weighted-average cost of capital for discounting the cash flow
projections.

Impairment charges recognized against property, plant and
equipment may be reversed if there are changes in the assumptions or estimates
used in determining the recoverable amounts of the WMM CGU which indicate that a
previously recognized impairment loss may no longer exist or may have
decreased.

Sensitivity analysis

As at December 31, 2013, a 5% increase or decrease in the
future uranium prices would result in a change in the recoverable amount by
approximately $13.6 million, and a 1% increase or decrease in the discount rate
would result in an approximately $4.6 million change in the recoverable amount
based on current life of mine plans models.

27

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Significant changes in uranium price would cause the Company to
review its mine plans accordingly (See Note 25 for discussion change in industry
price forecast).

Impairment for the 12 months ended September 30,
2012

Due to the acquisition of DMHC (Note 5) which resulted in the
Company acquiring the White Mesa Mill, a fully operational uranium mill, the
Company assessed the recoverable amount of  Pińon Ridge Mill site for which the
Company is incurring costs to obtain the mill permit. The Company estimated that
the recoverable amount of Pińon Ridge Mill site based on fair value less cost to sell,
considering comparable sales price per acre for nearby land. Based on the
assessment, the carrying value of the  Pińon Ridge Mill was determined to be $12.0
million higher than its recoverable amount, and an impairment loss was
recognized in profit and loss for the 12 months ended September 30, 2012.

During the 12 months ended September 30, 2012, as a result of
the drop in the U3O8 spot price through September 30, 2012, the Company's
decisions to place the Beaver and Daneros mines on stand-by status and the fact
that the Company has not budgeted any material investment in its exploration and
evaluation assets, the Company tested its exploration and evaluation assets
(excluding any assets acquired pursuant to the acquisitions of Titan, DMHC and
White Canyon) for impairment and recognized an impairment loss of $11,994.

The following table summarizes the impairment charges for to
the property, plant and equipment related to the by area of interest for the 12
month period ending September 30, 2012:

As at September
      30, 2012Pre -
    
    
    Impairmentimpairment
    
    
    loss
    
    
    Post impairmentPlant and equipmentProperty, plant and equipment
    
    53,062
    
    
    (12,028
    )
    
    41,035Total plant and equipment
    
    53,062
    
    
    (12,028
    )
    
    41,035Pre-development and non-operatingColorado
      Plateau
    
    24,626
    
    
    (11,994
    )
    
    12,632Henry Mountains
    
    14,450
    
    
    -
    
    
    14,450Daneros
    
    8,922
    
    
    -
    
    
    8,922Arizona Strip
    
    7,803
    
    
    -
    
    
    7,803Wyoming
    
    34,682
    
    
    -
    
    
    34,682Total pre-development and non-operating
    
    90,483
    
    
    (11,994
    )
    
    78,489Total
    
    143,545
    
    
    (24,022
    )
    
    119,524


28

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

14. INTANGIBLE ASSETS

|                              |   | Sales     | 
|----------------------------- | - | --------- | 
|                              |   | contracts | 
|Cost                          |   |           | 
|Balance at September 30, 2012 | $ | 15,851    | 
|Balance at December 31, 2013  | $ | 15,851    | 
|Amortization                  |   |           | 
|Balance at September 30, 2012 | $ | 1,942     | 
|Amortization for the period   |   | 6,137     | 
|Balance at December 31, 2013  | $ | 8,079     | 
|Carrying amounts              |   |           | 
|At September 30, 2012         | $ | 13,909    | 
|At
      December 31, 2013    | $ | 7,772     | 

15. DECOMMISSIONING LIABILITIES AND RESTRICTED CASH

The following table summarizes the Companys decommissioning
liabilities:

|                                                                        |   | December 31, |   |   | September 30, |  
|----------------------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|                                                                        |   | 2013         |   |   | 2012          |  
|                                                                        | $ |              |   | $ |               |  
|Reclamation obligations,
      beginning of period                      |   | 15,199       |   |   | 466           |  
|Revision of estimate (1)                                                |   | (1,933       | ) |   | (45           | )
|Liability from acquisition of Titan Uranium, Inc.                       |   | -            |   |   | 1,301         |  
|Liability from acquisition of
      Denison US Mining Division (Note 5) |   | -            |   |   | 13,369        |  
|Liability from acquisition of Colorado Plateau Partners LLC &           |   |              |   |   |               |  
|Arizona Strip Partners LLC (Note
      4)                               |   | 54           |   |   | -             |  
|Liability from acquisition of Strathmore Minerals Corp (Note 7)         |   | 105          |   |   | -             |  
|Accretion                                                               |   | 416          |   |   | 108           |  
|Reclamation work                                                        |   | (42          | ) |   | -             |  
|Reclamation obligations, end of period                                  |   | 13,799       |   |   | 15,199        |  
|Site restoration liability by
      location:                           |   |              |   |   |               |  
|Exploration drill holes                                                 |   | 172          |   |   | 43            |  
|White Mesa Mill                                                         |   | 8,206        |   |   | 9,944         |  
|Colorado Plateau                                                        |   | 2,053        |   |   | 1,679         |  
|Henry Mountains                                                         |   | 441          |   |   | 417           |  
|Daneros                                                                 |   | 78           |   |   | 74            |  
|Arizona Strip                                                           |   | 1,550        |   |   | 1,712         |  
|Sheep Mountain                                                          |   | 1,299        |   |   | 1,330         |  
|                                                                        |   | 13,799       |   |   | 15,199        |  
|Site restoration liability:                                             |   |              |   |   |               |  
|Current                                                                 |   | 172          |   |   | 43            |  
|Non-current                                                             |   | 13,627       |   |   | 15,156        |  
|                                                                        |   | 13,799       |   |   | 15,199        |  

29

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

|(1) | Revision of estimates is as a result of a change in the
      risk-free discount rates used to calculate decommissioning
    liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------

The decommissioning and reclamation of the White Mesa mill and
U.S. mines are subject to legal and regulatory requirements. Estimates of the
costs of reclamation are reviewed periodically by the applicable regulatory
authorities. The above accrual represents the Companys best estimate of the
present value of future reclamation costs, discounted using risk-free interest
rates ranging from 0.14% to 3.83% based on US Treasury rates of varying lengths
ranging from 1 to 30 years. The total undiscounted decommissioning liability as
at December 31, 2013 is $27,963 (September 30, 2012 - $26,647). Reclamation
costs are expected to be incurred between 2014 and 2040.

Restricted cash, which is held by or for the benefit of
regulatory agencies to settle these future obligations, are comprised of the
following:

|                                                                                                                    |   | December 31, |   |   | September 30, |  
|------------------------------------------------------------------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|                                                                                                                    |   | 2013         |   |   | 2012          |  
|                                                                                                                    | $ |              |   | $ |               |  
|Restricted cash, beginning of
      year                                                                            |   | 28,525       |   |   | 2,563         |  
|Restricted cash from
      acquisition of Titan (Note 8)                                                            |   | -            |   |   | 2,007         |  
|Restricted
      cash from acquisition of Denison US Mining Division (Note 5 )                                      |   | -            |   |   | 24,965        |  
|Restricted cash from
      acquisition of Colorado Plateau Partners LLC & Arizona Strip Partners
      LLC (Note 4) |   | 54           |   |   | -             |  
|Restricted
      cash from acquisition of Strathmore Minerals Corp (Note 7 )                                        |   | 902          |   |   | -             |  
|Refunds and returns for the year                                                                                    |   | (4,003       | ) |   | (1,010        | )
|Restricted cash, end of period                                                                                      |   | 25,478       |   |   | 28,525        |  

Mill and mine reclamation

The Company has cash, cash equivalents and fixed income
securities as collateral for various bonds posted in favour of the State of
Utah, the applicable state regulatory agencies in Colorado and Arizona and the
U.S. Bureau of Land Management for estimated reclamation costs associated with
the White Mesa mill and mining properties. Cash equivalents are short-term
highly liquid investments with original maturities of three months or less. The
restricted cash will be released when the Company has reclaimed a mineral
property. During the 15 months ended December 31, 2013, the Company had a net
refunds and returns of $4,003 from its collateral account (September 30, 2012
($1,010) primarily as a result of the restructuring of the Companys surety
arrangements and the reduction of bonding requirements at some of the Companys
projects.

16. LOANS AND BORROWINGS

The contractual terms of the Companys interest-bearing loans
and borrowings, which are measured at amortized cost, and the Companys
convertible debentures which are measured at fair value, are as follows.

|                                               |   | December 31, |  |   | September 30, | 
|---------------------------------------------- | - | ------------ |  | - | ------------- | 
|                                               |   | 2013         |  |   | 2012          | 
|                                               | $ |              |  | $ |               | 
|Current portion of loans and
      borrowings: |   |              |  |   |               | 
|Convertible debentures (1)                     |   | -            |  |   | 354           | 
|Secured note (2)                               |   | 250          |  |   | 250           | 
|Finance leases and other                       |   | 128          |  |   | 120           | 
|                                               |   | 378          |  |   | 724           | 
|Long-term loans and borrowings:                |   |              |  |   |               | 
|Convertible debentures
      (1)               |   | 17,478       |  |   | 21,750        | 
|Secured note (2)                               |   | 203          |  |   | 602           | 
|Finance leases and other                       |   | 271          |  |   | 413           | 
|                                               |   | 17,952       |  |   | 22,765        | 

30

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Terms and debt repayment schedule

Terms and conditions of outstanding loans were as follows:

December 31,
    
    
    September 30,2013
    
    
    2012$
    
    
    
    
    
    $Nominalinterest
    
    
    Year of
    
    
    
    
    
    Carrying
    
    
    
    
    
    CarryingCurrency
    
    
    rate
    
    
    maturity
    
    
    Face value
    
    
    **amount**
    
    
    Face value
    
    
    amountConvertible debentures (1)
    
    USD
    
    
    8.5%
    
    
    2017
    
    
    20,684
    
    
    17,478
    
    
    22,365
    
    
    22,104Secured note (2)
    
    USD
    
    
    -
    
    
    2016
    
    
    500
    
    
    453
    
    
    1,126
    
    
    852Finance leases and other
    
    USD
    
    
    7%
    
    
    2013 -2017
    
    
    566
    
    
    399
    
    
    566
    
    
    53321,750
    
    
    18,330
    
    
    24,057
    
    
    23,489


|(1) | On July 24, 2012 the Company completed a bought deal
      public offering of 22,000 floating-rate convertible unsecured subordinated
      debentures maturing June 30, 2017(the Debentures). The Debentures were
      issued at a price of Cdn$1,000 per Debenture for gross proceeds of $21,551
      (the Offering). The Debentures are convertible into common shares at the
      option of the holder at a conversion price of Cdn$15.00 per common share.
      Interest is paid in cash and in addition, unless an event of default has
      occurred and is continuing, the Company may elect, from time to time,
      subject to applicable regulatory approval, to satisfy its obligation to
      pay interest on the Debentures, on the date it is payable under the
      indenture (i) in cash; (ii) by delivering sufficient common shares to the
      debenture trustee, for sale, to satisfy the interest obligations in
      accordance with the indenture in which event holders of the Debentures
      will be entitled to receive a cash payment equal to the proceeds of the
      sale of such common shares; or (iii) any combination of (i) and
    (ii).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Debentures will accrue interest,
payable semi-annually in arrears on June 30 and December 31 of each year at a
fluctuating rate, of not less than 8.5% and not more than 13.5%, indexed to the
simple average spot price of uranium as reported on the Ux Weekly Indicator
Price. Interest can be paid in cash or issuance of the Companys common shares.
The Debentures may be redeemed in whole or part, at par plus accrued interest
and unpaid interest by the Company between June 30, 2015 and June 30, 2017
subject to certain terms and conditions, provided the volume weighted average
trading price of the common shares of the Company on the TSX during the 20
consecutive trading days ending five days preceding the date on which the notice
of redemption is given is not less than 125% of the conversion price.

Upon redemption or at maturity, the
Company will repay the indebtedness represented by the Debentures by paying to
the debenture trustee in Canadian dollars an amount equal to the aggregate
principal amount of the outstanding Debentures which are to be redeemed or which
have matured, as applicable, together with accrued and unpaid interest thereon.

Subject to any required regulatory
approval and provided no event of default has occurred and is continuing, the
Company has the option to satisfy its obligation to repay the Cdn$1.00 principal
amount of the Debentures, in whole or in part, due at redemption or maturity,
upon at least 40 days and not more than 60 days prior notice, by delivering
that number of common shares obtained by dividing the Cdn$1,000 principal amount
of the Debentures maturing or to be redeemed as applicable, by 95% of the
volume-weighted average trading price of the common shares on the TSX during the
20 consecutive trading days ending five trading days preceding the date fixed
for redemption or the maturity date, as the case may be. The debentures are
classified as FVTPL where the debentures are measured at fair value based on the
closing price on the TSX and changes are recognized in profit and loss. For the
15 months ended December 31, 2013 the Company recorded a gain on revaluation of
convertible debentures of $2,744 (September 30, 2013 - $601).

|(2) | On October 12, 2011 the Company issued a secured note in
      the amount of $1,126 for the assignment of a mineral lease with an
      effective interest rate of 7%. To date the Company has paid $625 in
      accordance with the terms of the agreement. The remaining balance of the
      note is repayable on the following schedule: October 13, 2014 ($250), and
      October 13, 2015 ($250). This note is secured by the lease. The current
      portion of this note is $250.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

31

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

17. RELATED PARTY TRANSACTIONS

Key management personnel compensation

Key management includes the Companys Chief Executive Officer
(CEO), Chief Financial Officer (CFO), Chief Operating Officer (COO), General
Counsel and Secretary, Senior Vice President Marketing and Sales, and the
directors. In addition to their salaries or directors fees, executive officers
and directors also participate in the Company's stock option plan (see Note
20).

Key management personnel compensation is comprised of the
following:

|                                                |   | 15 months ended |  |   | 12 months
      ended | 
|----------------------------------------------- | - | --------------- |  | - | --------------------- | 
|                                                |   | December 31,    |  |   | September 30,         | 
|                                                |   | 2013            |  |   | 2012                  | 
|Salaries and short-term
      employee benefits | $ | 2,316           |  | $ | 1,107                 | 
|Share-based payments                            |   | 923             |  |   | 2,983                 | 
|                                                | $ | 3,239           |  | $ | 4,090                 | 

18. CAPITAL STOCK AND CONTRIBUTED SURPLUS

Authorized capital stock

The Company is authorized to issue an unlimited number of
Common Shares without par value, unlimited Preferred Shares issuable in series,
and unlimited Series A Preferred Shares. The Series A Preferred shares are
non-redeemable, non-callable, non-voting and with no right to dividends. The
Preferred Shares issuable in series will have the rights, privileges,
restrictions and conditions assigned to the particular series upon the Board of
Directors approving their issuance.

Issued capital stock

The issued and outstanding capital stock consists of Common
Shares as follows:

December 31, 2013
    
    
    September 30, 2012Shares
    
    
    Amount $
    
    
    Shares
    
    
    Amount $Balance, beginning of period
    
    13,572,121
    
    
    178,745
    
    
    2,479,993
    
    
    60,052Shares issued for acquisition of joint
      venture interests (Note 4)
    
    70,551
    
    
    682
    
    
    -
    
    
    -Shares issued for Titan
      Uranium Inc. asset purchase (a)
    
    -
    
    
    -
    
    
    1,781,280
    
    
    32,498Shares issued for Titan Uranium Inc.
      advisory fees (b)
    
    -
    
    
    -
    
    
    25,130
    
    
    431Shares issued for
      Denison US Mining merger (Note 5)
    
    -
    
    
    -
    
    
    8,508,817
    
    
    79,322Shares issued for Denison US Mining advisory fees
    
    -
    
    
    -
    
    
    87,478
    
    
    981Shares and warrants
      issued for private placement (c)
    
    -
    
    
    -
    
    
    710,010
    
    
    6,549Shares issued for Virginia Energy
      shares (Note 6)
    
    437,028
    
    
    3,908
    
    
    -
    
    
    -Shares issued for
      Virginia Energy advisory fees (Note 5)
    
    5,405
    
    
    39
    
    
    -
    
    
    -Stock options exercised
    
    -
    
    
    -
    
    
    333
    
    
    5Treasury shares (d)
    
    -
    
    
    -
    
    
    (20,920
    )
    
    (370
    )Shares and warrants issued for private
      placement (e)
    
    947,616
    
    
    5,684
    
    
    -
    
    
    -Shares issued for
      investor relations
    
    21,000
    
    
    167
    
    
    -
    
    
    -Shares issued for property acquisitions
    
    31,407
    
    
    275
    
    
    -
    
    
    -Shares issued
      Strathmore Minerals Corp. asset purchase (Note 7) (f)
    
    3,728,419
    
    
    37,097
    
    
    -
    
    
    -Shares issued Strathmore Minerals Corp.
      advisory fees (g)
    
    55,095
    
    
    548
    
    
    -
    
    
    -Shares issued to
      employees of Strathmore in consideration oftermination liability (h)
    
    107,645
    
    
    989
    
    
    -
    
    
    -Shares and compensation
      warrants issued for public offering (i)
    
    625,000
    
    
    4,775
    
    
    -
    
    
    -Tax recovery from expired share
      purchase warrants
    
    -
    
    
    266Adjustment due to rounding for share consolidation
    
    (36
    )
    
    -
    
    
    -
    
    
    -Share issuance costs
    
    -
    
    
    (1,086
    )
    
    -
    
    
    (723
    )Balance, end of period
    
    19,601,251
    
    
    232,089
    
    
    13,572,121
    
    
    178,745


32

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

|a) | On February 29, 2012, the Company completed the
      acquisition of Titan Uranium Inc. in exchange of 1,781,208 EFIs common
      shares at Cdn$18.00 per share aggregating to $32,498. The acquisition was
      accounted for as an asset purchase.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|b) | Pursuant to the acquisition of Titan Uranium Inc., the
      Company issued 25,130 EFI common shares valued at $431 in satisfaction of
      the advisory fee. The value of the EFI shares issued was calculated using
      the share price of the Companys shares on the date the acquisition
      closed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|c) | On June 21, 2012, the Company completed an equity private
      placement of 710,110 non-transferable subscription receipts at a price of
      Cdn$11.50 per subscription receipt for gross total proceeds of $8,013.
      Each subscription receipt was exchangeable into one unit of the Company
      upon completion of the Acquisition of the Denison US Mining Division. Each
      unit consisted of one common share and one-half of one warrant. Each whole
      warrant entitles the holder to purchase one additional common share at a
      price of Cdn$13.50 until June 22, 2015.The fair value of the 355,005 full
      warrants that were issued on the completion of the private placement
      totaled $1,464 and this value was recorded in share purchase warrants, a
      separate component of shareholders equity.                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|d) | As a result of the Companys acquisition of Titan
      Uranium Inc., the Company acquired ownership of 20,920 shares of EFI
      common stock. Such shares are treated as treasury shares at December 31,
      2013 and are shown as a reduction of equity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|e) | On June 13, 2013, the Company completed an equity private
      placement of 947,616 non-transferable subscription receipts at a price of
      Cdn$7.00 ($6.75) per subscription receipt for gross total proceeds of
      $6,522. Each subscription receipt was exchangeable into one unit of the
      Company. Each unit consisted of one common share and one-half of one
      warrant. Each whole warrant entitles the holder to purchase one additional
      common share at a price of Cdn$9.50 until June 15, 2015.Also included in
      the consideration are compensation warrants where each whole warrant
      entitles the holder to purchase one common share at a price of Cdn$9.00
      until June 15, 2015. The fair value of the 473,808full warrants and the
      50,594 compensation warrants that were issued on the completion of the
      private placement totaled $838 and this value was recorded in share
      purchase warrants, a separate component of shareholders equity.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|f) | On August 29, 2013 the Company completed the acquisition
      of Strathmore in exchange for 3,665,395 Energy Fuels common shares at
      Cdn$10.50 ($10.00) per share aggregating to $36,470, plus 63,024 EFI
      common shares at Cdn$10.50 (S10.00) per share aggregating to $627 for
      replacement of Strathmores restricted share units which had fully vested
      upon acquisition by EFI.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|g) | Pursuant to the acquisition of Strathmore, the Company
      issued 55,095 EFI common shares valued at $548 in satisfaction of the
      advisory fee. The value of the Energy Fuels shares issued was calculated
      using the share price of the Companys shares on the date the acquisition
      closed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|h) | On September 11, 2013 the Company issued 107,645 shares
      valued at $989 to former employees of Strathmore in consideration for
      termination liabilities of certain employees. The value of the Energy
      Fuels shares issued was calculated using the share price of the Companys
      shares on the date the shares were issued. These costs were expensed in
      the consolidated financial statements of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|i) | On October 16, 2013 the Company completed an offering of
      625,000 shares at a price of Cdn$8.00 ($7.73) for total gross proceeds of
      $4,833. Also included in the consideration are 30,963compensation warrants
      where each whole warrant entitles the holder to purchase one common share
      at a price of Cdn$8.00 until October 16, 2016. The fair value of the
      30,963 compensation warrants that were issued on the completion of the
      offering totaled $58.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

33

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Contributed surplus

December 31,
    
    
    September 30,2013
    
    
    2012$
    
    
    $Balance, beginning of period
    
    17,906
    
    
    13,809Share purchase warrants expired
    
    2,004
    
    
    -Tax expense from expired share
      purchase warrants
    
    (266
    )
    
    -Share-based compensation
    
    1,538
    
    
    4,099Stock options exercised
    
    -
    
    
    (2
    )Balance, end of
      period
    
    21,182
    
    
    17,906


Share Purchase Warrants

|             |  |                  |  |  | Exercise Price |  |  | Warrants | 
|------------ |  | ---------------- |  |  | -------------- |  |  | -------- | 
|Month Issued |  | Expiry Date      |  |  | Cdn$           |  |  | Issued   | 
|March 2011   |  | March 31, 2015   |  |  | 32.50          |  |  | 230,000  | 
|June 2012    |  | June 22, 2015    |  |  | 13.25          |  |  | 355,005  | 
|June 2013    |  | June 15, 2015    |  |  | 9.50           |  |  | 473,808  | 
|June 2013    |  | June 15, 2015    |  |  | 9.00           |  |  | 50,594   | 
|October 2013 |  | October 16, 2015 |  |  | 8.00           |  |  | 30,963   | 

|                                                                                |  | Weighted       |  |  | Number of warrants |  
|------------------------------------------------------------------------------- |  | -------------- |  |  | ------------------ | -
|                                                                                |  | Average        |  |  |                    |  
|                                                                                |  | Exercise Price |  |  | December 31,       |  
|                                                                                |  | Cdn$           |  |  | 2013               |  
|Balance, beginning of period                                                    |  | 24.50          |  |  | 915,743            |  
|Warrants issued i n
      exchange for Titan Uranium Inc. warrants              |  | 32.50          |  |  | -                  |  
|Warrants
      issued i n connection with private placement                     |  | 13.25          |  |  | -                  |  
|Expiration of agent
      warrants issued in connection with public offering    |  | 25.00          |  |  | (32,200            | )
|Expiration
      of warrants issued in exchange for Titan Uranium Inc. warrants |  | 32.50          |  |  | (298,538           | )
|Warrants issued i n
      connection with private placement                     |  | 9.45           |  |  | 524,402            |  
|Warrants issued i n connection with the
      public offering                   |  | 8.00           |  |  | 30,963             |  
|Balance, end of period                                                          |  | 15.24          |  |  | 1,140,370          |  

|                                                                                    |   | December 31, |   |   | September 30, |  
|----------------------------------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|                                                                                    |   | 2013         |   |   | 2012          |  
|                                                                                    | $ |              |   | $ |               |  
|Balance, beginning of period                                                        |   | 6,002        |   |   | 4,159         |  
|Warrants issued in exchange for
      Ti tan Uranium Inc. warrants (1)              |   | -            |   |   | 541           |  
|Warrants issued
      in connection with public offering (2)                        |   | -            |   |   | 1,464         |  
|Expiration of warrants issued in
      exchange for Titan Uranium Inc. warrants (1) |   | (541         | ) |   | -             |  
|Expiration of
      warrants issued in connection with public offering (2)          |   | (1,464       | ) |   | -             |  
|Warrants issued in connection
      with private placement (3)                      |   | 838          |   |   | -             |  
|Warrants issued
      in connection with the public offering (4)                    |   | 60           |   |   | -             |  
|Share issuance costs                                                                |   | (58          | ) |   | (162          | )
|Balance, end of period                                                              |   | 4,837        |   |   | 6,002         |  

34

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     

|(1) | The following weighted average assumptions were used for
      the Black-Scholes option pricing model to calculate the $541 of fair value
      for the 298,538Titan warrants assumed as part of the acquisition of
      Titan:
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Risk-free rate
    
    0.92% - 0.94%Expected life
    
    0.76  1.43 yearsExpected volatility
    
    74% - 106%*Expected dividend yield
    
    0.0%


|(2) | The following weighted average assumptions were used for
      the Black-Scholes option pricing model to calculate the $1,464 of fair
      value for the 355,005warrants issued in connection with the June 2012
      private placement:
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Risk-free rate          |  | 1.22%     | 
|----------------------- |  | --------- | 
|Expected life           |  | 3.0 years | 
|Expected volatility     |  | 82%*      | 
|Expected dividend yield |  | 0.0%      | 

|(3) | The following weighted average assumptions were used for
      the Black-Scholes option pricing model to calculate the $838 of fair value
      for the 542,402 warrants issued in connection with the June 2013 private
      placement.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Risk-free rate          |  | 1.016%    | 
|----------------------- |  | --------- | 
|Expected life           |  | 2.0 years | 
|Expected volatility     |  | 94%*      | 
|Expected dividend yield |  | 0.0%      | 

|(4) | The following weighted average assumptions were used for
      the Black-Scholes option pricing model to calculate the $60 of fair value
      for the 30,963 warrants issued in connection with the October 2013 public
      offering:
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Risk-free rate          |  | 1.186%    | 
|----------------------- |  | --------- | 
|Expected life           |  | 2.0 years | 
|Expected volatility     |  | 93%*      | 
|Expected dividend yield |  | 0.0%      | 

|* | Expected volatility is measured based on the Companys
      historical share price volatility over the expected life of the
      warrants.
|- | --------------------------------------------------------------------------------------------------------------------------------------------

19. EARNINGS (LOSS) PER COMMON SHARE

|                                                                             |  | 15 months ended |   |   | 12 months ended | 
|---------------------------------------------------------------------------- |  | --------------- | - | - | --------------- | 
|                                                                             |  | December 31,    |   |   | September 30,   | 
|                                                                             |  | 2013            |   |   | 2012            | 
|Earnings (loss) attributable
      to shareholders                           |  | ($87,325        | ) | $ | 1,534           | 
|Basic and diluted weighted average number of common shares
      outstanding |  | 15,557,980      |   |   | 5,898,176       | 
|Earnings (loss) per common share                                             |  | ($5.61          | ) | $ | 0.26            | 

Basic earnings (loss) per share

The calculation of basic earnings per share at December 31,
2013 was based on the net income (loss) attributable to common shareholders of
$(87,325) (September 30, 2012  $1,534), and a weighted average number of common
shares outstanding of 15,557,980(September 30, 2012  5,898,176).

35

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Weighted average number of common shares (basic)

The following is a reconciliation of weighted average shares
outstanding for the 15 months ended December 31, 2013 and the 12 months ended
September 30, 2012:

15 months ended
    
    
    12 months endedDecember 31, 2013
    
    
    September 30, 2012Issued common shares at
      beginning of period
    
    13,572,121
    
    
    2,479,993Effect of treasury s hares held
    
    -
    
    
    (12,266
    )Effect of share
      options exercised
    
    -
    
    
    153Effect of shares issued related
      to Denison US Mining merger
    
    -
    
    
    2,190,289Effect of shares
      issued in asset acquisitions
    
    1,101,711
    
    
    1,059,100Effect of shares issued in a
      private placements
    
    744,151
    
    
    180,907Effect of shares
      issued in a public offerings
    
    104,167
    
    
    -Effect of shares issued to settle obligations
    
    35,830
    
    
    -Weighted average shares outstanding
    
    15,557,980
    
    
    5,898,176


Diluted earnings (loss) per share

The calculation of diluted earnings per share after adjustment
for the effects of all potential dilutive common shares, calculated as
follows:

|                                                                             |  | 15 months ended |   |   | 12 months ended | 
|---------------------------------------------------------------------------- |  | --------------- | - | - | --------------- | 
|                                                                             |  | December 31,    |   |   | September 30,   | 
|                                                                             |  | 2013            |   |   | 2012            | 
|Earnings (loss) attributable
      to shareholders                           |  | ($87,325        | ) | $ | 1,534           | 
|Basic and diluted weighted average number of common shares
      outstanding |  | 15,557,980      |   |   | 5,898,176       | 
|Earnings (loss) per common share                                             |  | ($5.61          | ) | $ | 0.26            | 

At December 31, 2013, 1,935,688 options and warrants (September
30, 2012  1,520,098)and the potential conversion of the uranium debentures have
been excluded from the calculation as their effect would have been
anti-dilutive.

The average market value of the Companys shares for purposes
of calculating the dilutive effect of share options was based on quoted market
prices for the period during which the options were outstanding.

20. SHARE-BASED PAYMENTS

Stock options

The fair value of stock options granted during the 15 months
ended December 31, 2013 and the 12 months ended September 30, 2012 is as
follows:

|                                      |   | 15 months ended   |  |   | 12 months ended    | 
|------------------------------------- | - | ----------------- |  | - | ------------------ | 
|                                      |   | December 31, 2013 |  |   | September 30, 2012 | 
|                                      | $ |                   |  | $ |                    | 
|Share option
      plan expense (1)   |   | 1,269             |  |   | 4,099              | 
|Replacement of Strathmore options (2) |   | 269               |  |   | -                  | 
|Value of s tock options granted       |   | 1,538             |  |   | 4,099              | 

|(1) | The Company has established a stock option plan whereby
      the Board of Directors may grant options to employees, directors and
      consultants to purchase common shares of the Company. The maximum number
      of authorized but unissued shares available to be granted under the plan
      shall not exceed 10% of its issued and outstanding common shares. The exercise
price of the options is set at the Companys closing share price on the day
before the grant date.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

36

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

For the15 months ended December 31,
2013, the Company granted 496,121 stock options (September 30, 2012  502,920) to
its employees, directors, consultants and former employees of Strathmore,
recording stock-based compensation expense of $1,538 including $312 capitalized
as a cost of the Strathmore transaction (September 30, 2012  $3,636, net of
$457 capitalized).

The fair value of stock options granted
to employees, directors and consultants was estimated on the dates of the grants
using the Black-Scholes option pricing model with the following assumptions used
for the grants made during the year:

Risk-free rate
    
    1.18% - 1.84%Expected life
    
    1.2 5.0 yearsExpected volatility
    
    60% - 95%*Expected dividend yield
    
    0.0%


|(2) | The fair value of stock options granted to former
      employees, directors and consultants of Strathmore was estimated on the
      dates of the grants using the Black-Scholes option pricing model with the
      following assumptions used for the grants made during the
  year:
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Risk-free rate          |  | 1.06% - 2.40%  | 
|----------------------- |  | -------------- | 
|Expected life           |  | 0.2 9.2 years | 
|Expected volatility     |  | 51% - 104%*    | 
|Expected dividend yield |  | 0.0%           | 

|* | Expected volatility is measured based on the Companys
      historical share price volatility over the expected life of the stock
      options.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------

The summary of the Companys stock options at December 31, 2013
and September 30, 2012, and the changes for the fiscal years ending on those
dates is presented below:

15 months ended
    
    
    
    
    
    12 months endedDecember 31, 2013
    
    
    
    
    
    September 30, 2012Weighted
    
    
    
    
    
    Range of
    
    
    WeightedRange of
    
    
    Average
    
    
    
    
    
    Exercise
    
    
    AverageExercise Prices
    
    
    Exercise Price
    
    
    Number of
    
    
    Prices
    
    
    Exercise Price
    
    
    Number ofCdn$
    
    
    Cdn$
    
    
    Options
    
    
    Cdn$
    
    
    Cdn$
    
    
    OptionsBalance, beginning of period
    
    8.00 -
      112.50
    
    
    16.56
    
    
    620,756
    
    
    0.16 - 2.25
    
    
    29.52
    
    
    132,406Transactions during the period:Granted
    
    7.60 -
      44.22
    
    
    14.79
    
    
    496,121
    
    
    11.50 - 43.00
    
    
    13.32
    
    
    502,920Exercised
    
    -
    
    
    -
    
    
    -
    
    
    10.00
    
    
    10.00
    
    
    (333
    )Forfeited
    
    7.60 -
      44.22
    
    
    19.45
    
    
    (180,323)
    
    
    10.00 - 112.50
    
    
    19.69
    
    
    (12,867
    )Expired
    
    13.95 - 112.50
    
    
    24.50
    
    
    (141,236)
    
    
    22.50
    
    
    22.50
    
    
    (1,370
    )Balance, end of period
    
    7.60 - 44.22
    
    
    14.27
    
    
    795,318
    
    
    8.00 - 112.50
    
    
    16.63
    
    
    620,756


The weighted average price on option exercised in the 12 months
ended September 30, 2012 was $10.00.

The following table reflects the actual stock options issued
and outstanding as of December 31, 2013:

37

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

|                 |  | Options
      outstanding |  |  | Options
      Exercisable | 
|---------------- |  | ------------------------- |  |  | ------------------------- | 
|                 |  |                           |  |  | Weighted average          | 
|Exercise price   |  |                           |  |  | remaining                 | 
|(Cdn$)           |  | Quantity                  |  |  | contractual life          | 
|$0.00 to $9.99   |  | 215,915                   |  |  | 4.80                      | 
|$10.00 to $19.99 |  | 506,190                   |  |  | 3.21                      | 
|$20.00 to $29.99 |  | 44,618                    |  |  | 1.93                      | 
|$30.00 to $39.99 |  | 13,819                    |  |  | 1.95                      | 
|$40.00 to $49.99 |  | 14,776                    |  |  | 1.70                      | 
|                 |  | 795,318                   |  |  |                           | 

21. INCOME TAXES

A reconciliation of income tax expense (recovery) and the
product of accounting income before income tax, multiplied by the combined
Canadian federal and provincial statutory income tax rate for the 15 months
ended December 31, 2013 and the 12 months ended September 30, 2012 is as
follows:

|                                             |   | 15 months ended |   |   | 12 months ended |  
|-------------------------------------------- | - | --------------- | - | - | --------------- | -
|                                             |   | December 31,    |   |   | September 30,   |  
|                                             |   | 2013            |   |   | 2012            |  
|Income (loss) before income taxes            | $ | (87,325         | ) | $ | 16,973          |  
|Combined federal and provincial rate         |   | 26.50%          |   |   | 26.88%          |  
|                                             |   |                 |   |   |                 |  
|Expected income tax expense (recovery)       |   | (23,141         | ) |   | 4,562           |  
|                                             |   | -               |   |   |                 |  
|Stock based compensation                     |   | 317             |   |   | 979             |  
|Non-taxable items                            |   | (59             | ) |   | (15,220         | )
|Non-deductible items                         |   | 58              |   |   |                 |  
|Foreign tax rate
      differences           |   | (9,147          | ) |   | 2,972           |  
|Change in unrecognized temporary differences |   | 31,972          |   |   | 6,707           |  
|Income tax expense (recovery)                | $ | -               |   | $ | -               |  

38

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The significant components of the Company's deferred income tax
assets (liabilities) are as follows:

December 31,
    
    
    September 30,2013
    
    
    2012Deferred tax asset:Other
    $
    -
    
    $
    -Net operating losses
    
    3,772
    
    $
    9,307Deferred income tax asset
    $
    3,772
    
    $
    9,307


Deferred tax liabilities:

Intangibles
    
    (2,924
    )
    
    (5,696
    )Convertible debentures
    
    (848
    )Property, plant and equipment
    
    -
    
    
    (1,896
    )Inventories
      and short-term investments
    
    -
    
    
    (1,715
    )Deferred tax liabilities:
    $
    (3,772
    )
    $
    (9,307
    )Deferred tax
      assets - net
    $
    -
    
    $
    -


The aggregate amount of taxable temporary differences
associated with investments in subsidiaries, for which deferred tax liabilities
have not been recognized, as of December 31, 2013 is $3,100 (September 30, 2012,
$55,773).

Unrecognized Deferred Tax Assets

Deferred tax assets have not been recognized in respect of the
following deductible temporary differences:

**December 31,**
    
    
    September 30,2013
    
    
    2012Loss Carryforwards
    
    168,392
    
    $
    164,173Mineral properties and deferred costs
    
    67,926
    
    
    28,959Reclamation and remediation
      obligations
    
    13,016
    
    
    15,724Inventories, Investments & Other
    
    3,740
    
    
    6,405Property, plant and equipment
    
    5,321
    
    
    -$
    
    258,395
    
    $
    215,261


At December 31, 2013 and September 30, 2012 the Company did not
recognize the benefit related to the deferred tax assets for the above related
items in the financial statements as management did not consider it probable
that the Company will be able to realize the deferred tax assets in the
future.

The following table summarizes the Company's non-capital losses
and net operating losses that can be applied against future taxable profit.

|Country       |  | Type                     |  |   | Amount  |  |  | Expiry Date | 
|------------- |  | ------------------------ |  | - | ------- |  |  | ----------- | 
|Canada        |  | Non-capital
      losses |  | $ | 36,178  |  |  | 2014 - 2033 | 
|United States |  | Net operating losses     |  |   | 143,187 |  |  | 2026 - 2033 | 

39

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

22. SUPPLEMENTAL FINANCIAL INFORMATION

The components of revenues are as follows:

|                                              |   | 15 months ended |  |   | 12 months ended | 
|--------------------------------------------- | - | --------------- |  | - | --------------- | 
|                                              |   | December 31,    |  |   | September 30,   | 
|                                              |   | 2013            |  |   | 2012            | 
|Uranium concentrates                          | $ | 63,732          |  | $ | 24,939          | 
|Vanadium concentrates                         |   | 9,194           |  |   | -               | 
|Alternate feed materials processing and other |   | 322             |  |   | 89              | 
|Revenues                                      | $ | 73,248          |  | $ | 25,028          | 

The Company has three major customers to which its sales for
the year were as follows: $26,935; $10,409; $26,389; (2012-$6,949; $5,183;
nil).

The Companys revenues by country of customer for the current
year were as follows: $46,313 - U.S.;$26,935 - South Korea (2012 - $18,079 -
U.S.;$6,949 - South Korea).

The components of selling, general and administrative expenses
are as follows:

|                                             |   | 15 months ended |  |   | 12 months ended | 
|-------------------------------------------- | - | --------------- |  | - | --------------- | 
|                                             |   | December 31,    |  |   | September 30,   | 
|                                             |   | 2013            |  |   | 2012            | 
|                                             |   |                 |  |   |                 | 
|Intangible asset
      amortization          | $ | 6,137           |  | $ | 1,943           | 
|Selling expenses                             |   | 1,252           |  |   | 130             | 
|Strathmore
      termination payments        |   | 2,418           |  |   | -               | 
|General and administrative                   |   | 15,090          |  |   | 9,369           | 
|Selling, general and administrative expenses | $ | 24,897          |  | $ | 11,442          | 

The components of finance income (expense) are as follows:

|                                          |   | 15 months ended |   |   | 12 months ended |  
|----------------------------------------- | - | --------------- | - | - | --------------- | -
|                                          |   | December 31,    |   |   | September 30,   |  
|                                          |   | 2013            |   |   | 2012            |  
|Accretion expense                         | $ | (416            | ) | $ | (108            | )
|Change in value of marketable securities  |   | (539            | ) |   | (1,787          | )
|Foreign exchange                          |   | 497             |   |   | (295            | )
|Change in value of convertible debentures |   | 2,744           |   |   | 601             |  
|Interest expense                          |   | (1,971          | ) |   | (463            | )
|Interest income                           |   | 645             |   |   | 183             |  
|Finance income (expense)                  | $ | 960             |   | $ | (1,869          | )

A summary of depreciation, depletion and amortization expense
recognized in the consolidated financial statements is as follows:

|                                                  |   | 15 months ended |  |   | 12 months ended | 
|------------------------------------------------- | - | --------------- |  | - | --------------- | 
|                                                  |   | December 31,    |  |   | September 30,   | 
|                                                  |   | 2013            |  |   | 2012            | 
|Recognized in production cost
      of sales      | $ | 7,710           |  | $ | 617             | 
|Recognized in care and maintenance expenses       |   | 2,544           |  |   | -               | 
|Recognized in selling, general and administrative |   | 6,139           |  |   | 2,017           | 
|Depreciation, depletion and amortization          | $ | 16,393          |  | $ | 2,634           | 

40

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

A summary of employee benefits expense recognized in the
consolidated financial statements is as follows:

|                                                                  |  | 15 months ended |  |  | 12 months ended | 
|----------------------------------------------------------------- |  | --------------- |  |  | --------------- | 
|                                                                  |  | December 31,    |  |  | September 30,   | 
|                                                                  |  | 2013            |  |  | 2012            | 
|Recognized in property, plant and equipment
      and inventories |  |                 |  |  |                 | 
|Salaries and short-term employee benefits                         |  | 22,462          |  |  | 6,248           | 
|Share-based compensation                                          |  | -               |  |  | 457             | 
|                                                                  |  | 22,462          |  |  | 6,705           | 
|Recognized in selling, general and
      administration           |  |                 |  |  |                 | 
|Salaries and short-term employee benefits                         |  | 5,654           |  |  | 2,596           | 
|Share-based compensation                                          |  | 1,201           |  |  | 3,642           | 
|                                                                  |  | 6,855           |  |  | 6,238           | 
|Employee benefits expenses                                        |  | 29,317          |  |  | 12,943          | 

The change in non-cash working capital items in the
consolidated statements of cash flows is as follows:

|                                                   |   | 15 months ended |   |   | 12 months ended |  
|-------------------------------------------------- | - | --------------- | - | - | --------------- | -
|                                                   |   | December 31,    |   |   | September 30,   |  
|                                                   |   | 2013            |   |   | 2012            |  
|Change in non-cash working
      capital items:    |   |                 |   |   |                 |  
|Change in trade and other
      receivables        | $ | 14,471          |   | $ | 5,988           |  
|Change in
      inventories                        |   | (9,819          | ) |   | (15,520         | )
|Change in prepaid expenses and
      other assets  |   | (285            | ) |   | 742             |  
|Change in accounts payable and accrued liabilities |   | (1,477          | ) |   | (112            | )
|Change in non-cash working capital items           | $ | 2,890           |   | $ | (8,902          | )

A summary of other income (expense) recognized in the
consolidated financial statements is as follows:

|                                             |   | 15 months ended |   |   | 12 months ended |  
|-------------------------------------------- | - | --------------- | - | - | --------------- | -
|                                             |   | December 31,    |   |   | September 30,   |  
|                                             |   | 2013            |   |   | 2012            |  
|Transaction costs                            | $ | -               |   | $ | (4,893          | )
|Share of equity-accounted investees (Note 6) |   | (1,286          | ) |   | -               |  
|Other                                        |   | 31              |   |   | (189            | )
|Other Income (expense)                       | $ | (1,255          | ) | $ | (5,082          | )

The Companys loss from operations included the following
expenses presented by function:

|                           |   | 15 months ended |  |   | 12 months ended | 
|-------------------------- | - | --------------- |  | - | --------------- | 
|                           |   | December 31,    |  |   | September 30,   | 
|                           |   | 2013            |  |   | 2012            | 
|Cost of sales              | $ | 133,440         |  | $ | 45,732          | 
|General and administrative |   | 24,897          |  |   | 11,442          | 
|                           | $ | 158,337         |  | $ | 57,174          | 

Cost of sales for the 15 month period ended December 31, 2013
includes impairment charges of $60,257 related to its US operating and
non-operating properties (12 month period ended September 30, 2012 - $24,022
related to the impairment of the  Pińon Ridge mill and exploration
properties).

41

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

23. COMMITMENTS AND CONTINGENCIES

General legal matters

The Company is involved, from time to time, in various legal
actions and claims in the ordinary course of business. In the opinion of
management, the aggregate amount of any potential liability is not expected to
have a material adverse effect on the Companys financial position or results.

One of the Companys subsidiaries, Energy Fuels Resources (USA)
Inc. (EFRI), entered into a fixed price construction contract with KGL
Associates, Inc. (KGL) in 2009 relating to the construction of tailings cell
4B at the Companys White Mesa Mill. The performance by KGL of its obligations
under this contract was under dispute. In the dispute: (a) EFRI sought
approximately $3.25 million in damages from KGL, including project completion
costs as well as indemnity and reimbursement from KGL for monies paid by EFRI to
KGL subcontractors or suppliers unpaid when KGL abandoned the project; (b) KGL
sought payment of approximately $1.65 million for alleged project labor and/or
equipment inefficiencies allegedly caused by EFRI and foregone profits and to
enforce its lien against the Mill property; and (c) both parties
sought pre-judgment interest, attorney fees and costs. The parties agreed to
settle this matter in binding arbitration. Under the Arrangement Agreement dated
May 23, 2012 between the Company and Denison Mines Corp., which was entered into
in connection with the acquisition by the Company of the Denison US Mining
Division in June 2012, Denison agreed to fully indemnify the Company in
connection with this litigation and will receive any proceeds from arbitration.
On January 10, 2014 the arbitrator issued his decision, awarding damages in
favor of Denison. This matter is now concluded.

On November 26, 2012, the Company was served with a Plaintiffs
Original Petition and Jury Demand claiming an unspecified amount of damages from
the disease and injuries resulting from mesothelioma from exposure to asbestos,
which the Plaintiff claims was contributed to by being exposed to asbestos
products and dust from asbestos products while working at the White Mesa Mill.
The Plaintiff has also named a number of manufacturers of asbestos and
asbestos-related products in the law suit. The Company does not consider this
claim to have any merit and therefore does not believe it will material affect
the Companys financial position, results of operations or cash flows. On
January 28, 2013, the Company filed a Special Appearance to Challenge Personal
Jurisdiction, Motion to Transfer Venue, Motion to Dismiss for Forum Non Conveniens and Original Answer Subject Thereto.

On March 7, 2013, the Center for Biological Diversity, the
Grand Canyon Trust, the Sierra Club and the Havasupai Tribe (the Plaintiffs)
filed a complaint in the U.S. District Court for the District of Arizona (the
District Court) against the Forest Supervisor for the Kaibab National Forest
and the U.S. Forest Service (USFS, collectively, the Defendants) seeking an
order declaring that the USFS failed to comply with environmental, mining,
public land, and historic preservation laws in relation to the Companys Canyon
mine, and setting aside and vacating any approvals and authorizations regarding
exploration and mining operations at the Canyon mine. In addition, the
Plaintiffs seek injunctive relief directing operations to cease at the mine and
enjoining the USFS from authorizing or allowing any further exploration or
mining-related activities at the Canyon mine until the USFS fully complies with
all applicable laws. In April 2013, the Plaintiffs filed a Motion for
Preliminary Injunction to enjoin the Defendants from allowing construction
and/or mining activities to occur at the Canyon mine and suspending all USFS
approvals. This motion was denied by the District Court on September 9, 2013. In
October 2013 Plaintiffs appealed the District Courts Order to the 9th Circuit
Court of Appeals (the Court of Appeals), and filed two Emergency Motions for
an Injunction Pending Appeal. In November 2013, the Company decided to place
shaft sinking operations on standby at the Canyon Mine, due to market
conditions, and to simplify and lessen the expense of the litigation at the
mine. At the same time, the Company entered into a stipulation agreement with
Plaintiffs under which the Company agreed to keep shaft sinking operations on
standby until the earlier of the date the District Court issues a final appealable order on the merits of Plaintiffs claims, or December 31, 2014. In
return, Plaintiffs agreed to stay their appeal of the District Courts denial of
their Motion for Preliminary Injunction in the Court of Appeals, and the
emergency motions related thereto. As a result of this stipulation agreement,
the Court of Appeals stayed Plaintiffs appeal and emergency motions.
Proceedings on the merits of the case are ongoing. If the Plaintiffs are
successful on the merits, the Company may be required to maintain activities at
the mine on standby for longer than otherwise planned, pending resolution of the
matter. Such a required prolonged stoppage of mine development and mining
activities could have a significant impact on the Company.

42

---

|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Mineral property commitments

The Company enters into commitments with federal and state
agencies and private individuals to lease mineral rights. These leases are
renewable annually and are expected to total $1.2 million for the 15 months
ended December 31, 2014.

The following table reflects the operating commitments on an
undiscounted basis as of December 31, 2013:

2014
    
    
    2015
    
    
    2016
    
    
    2017
    
    
    2018
    
    
    Thereafter
    
    
    TotalAs at December 31,
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Rent
    
    297
    
    
    304
    
    
    311
    
    
    291
    
    
    -
    
    
    -
    
    
    1,203Office expenses
    
    40
    
    
    31
    
    
    15
    
    
    -
    
    
    -
    
    
    -
    
    
    86Consumable materials
      contracts
    
    4,125
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    4,125Reclamation expenditures
    
    1,876
    
    
    761
    
    
    -
    
    
    -
    
    
    -
    
    
    25,326
    
    
    27,9636,338
    
    
    1,096
    
    
    326
    
    
    291
    
    
    -
    
    
    25,326
    
    
    33,377


24. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

(a) Fair value hierarchy:

Financial instruments recorded at fair value on the balance
sheet are classified using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. The three levels of fair value
hierarchy are:

Level 1  Reflects inputs based on
quoted prices in active markets for identical assets or liabilities.Level 2
 Reflects inputs other than quoted prices that are observable for the asset or
liability either directly or indirectly.Level 3  Reflects inputs that are
not based on observable market data.

The following table illustrates the classification of the
Companys financial instruments carried at fair value within the fair value
hierarchy as of December 31, 2013:

Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalMarketable securities
    
    409
    
    
    -
    
    
    -
    
    
    409Convertible
      debentures
    
    17,478
    
    
    -
    
    
    -
    
    
    17,478$
    17,887
    
    $
    -
    
    $
    -
    
    $
    17,887


(b) Fair values:

As at December 31, 2013, the fair values of cash and cash
equivalents, restricted cash, short-term deposits, receivables, accounts payable
and accrued liabilities approximate their carrying values because of the
short-term nature of these instruments.

(c) Credit risk:

Credit risk relates to cash and cash equivalents and trade and
other receivables and arises from the possibility that any counterparty to an
instrument fails to perform. The Company only transacts with highly-rated
counterparties and a limit on contingent exposure has been established for any
counterparty based on that counterpartys credit rating. The Companys sales are
attributable mainly to three multinational utilities. As at December 31, 2013,
the Companys maximum exposure to credit risk was the carrying value of cash and
cash equivalents, trade receivables and taxes recoverable.

43

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|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

The aging of trade and other receivables at the reporting date
that were not impaired were as follows:

|                             |   | December 31, |  |   | September 30, | 
|---------------------------- | - | ------------ |  | - | ------------- | 
|                             |   | 2013         |  |   | 2012          | 
|                             | $ |              |  | $ |               | 
|Neither past due or impaired |   | 593          |  |   | 15,268        | 
|Past due 1-30 days           |   | 38           |  |   | -             | 
|Past due 31-90
      days    |   | 20           |  |   | -             | 
|Past due 91-120 days         |   | 2            |  |   | -             | 
|                             |   | 653          |  |   | 15,268        | 

(d) Liquidity risk:

Liquidity risk is the risk the Company will not be able to meet
the obligations associated with its financial liabilities. The Company manages
liquidity risk through the management of its capital structure as outlined in
Note 17 and 19. The Company has $33,481 of working capital as at December 31,
2013 (September 30, 2012 - $41,934). Accounts payable and accrued liabilities,
current portion of notes payable and current taxes payable are due within the
current operating year. The Companys financial liabilities and other
commitments are listed in Notes 15 and20.

The following are the contractual maturities of financial
liabilities (undiscounted) outstanding as at December 31, 2013:

< 1 year
    
    
    1 to 2 years
    
    
    2 to 5 years
    
    
    Thereafter
    
    
    TotalAccounts payable and accrued
      liabilities
    $
    5,441
    
    $
    -
    
    $
    -
    
    $
    -
    
    $
    5,441Loans and borrowings
    $
    2,033
    
    $
    2,033
    
    $
    23,652
    
    $
    -
    
    
    27,835$
    7,474
    
    $
    2,033
    
    $
    23,652
    
    $
    -
    
    $
    33,276


(e) Foreign Currency Risk:

The foreign exchange risk relates to the risk that the value of
financial commitments, recognized assets or liabilities will fluctuate due to
changes in foreign currency rates. The Company does not use any derivative
instruments to reduce its exposure to fluctuations in foreign currency exchange
rates.

The following table summarizes, in United States dollar
equivalents, the Companys major foreign currency (Cdn$) exposures as of
December 31, 2013:

|Cash and cash equivalents                | $ | 5,490   |  
|---------------------------------------- | - | ------- | -
|Accounts payable and accrued liabilities |   | (907    | )
|Loans and borrowings                     |   | (17,478 | )
|Total                                    | $ | (12,895 | )

The table below summarizes a sensitivity analysis for
significant unsettled currency risk exposure with respect to the Companys
financial instruments as at December 31, 2013 with all other variables held
constant. It shows how net income would have been affected by changes in the
relevant risk variable that were reasonably possible at that date.

|                           |  | Change for           |  |       | Increase (decrease) in other | 
|-------------------------- |  | -------------------- |  | ----- | ---------------------------- | 
|                           |  | Sensitivity Analysis |  |       | comprehensive income         | 
|                           |  | +1% change in U.S.   |  |       |                              | 
|Strengthening net earnings |  | dollar               |  | $     | 254                          | 
|                           |  | -1% change in U.S.   |  |       |                              | 
|Weakening net earnings     |  | dollar               |  | **$** | (254)                        | 

44

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|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

(f) Interest rate risk:

The Company is also exposed to an interest rate risk associated
with the convertible debentures which is based on the spot market price of
U3O8. The Company does not use derivatives to manage
interest rate risk. The following chart displays the interest rate at various
U3O8 price levels.

|UxC U3O8 Weekly
      Indicator Price |  | Annual Interest
      Rate | 
|------------------------------------- |  | -------------------------- | 
|                                      |  |                            | 
|Up to $54.99                          |  | 8.50%                      | 
|$55.00  $59.99                       |  | 9.00%                      | 
|$60.00 
      $64.99                 |  | 9.50%                      | 
|$65.00  $69.99                       |  | 10.00%                     | 
|$70.00 
      $74.99                 |  | 10.50%                     | 
|$75.00  $79.99                       |  | 11.00%                     | 
|$80.00 
      $84.99                 |  | 11.50%                     | 
|$85.00  $89.99                       |  | 12.00%                     | 
|$90.00 
      $94.99                 |  | 12.50%                     | 
|$95.00  $99.99                       |  | 13.00%                     | 
|$100 and
      above                  |  | 13.50%                     | 

(g) Capital management:

The Companys objectives, when managing capital, are to
safeguard cash as well as maintain financial liquidity and flexibility in order
to preserve its ability to meet financial obligations and deploy capital to
develop its mining properties into production and to maintain investor, creditor
and market confidence to sustain the future development of the business. The
Company considers its capital structure to include share capital and working
capital.

The Companys financial strategy is designed to maintain a
flexible capital structure consistent with the objectives stated above and to
respond to business growth opportunities and changes in economic conditions. In
order to maintain or adjust its capital structure, the Company may, from time to
time, issue new shares, issue new debt (secured, unsecured, convertible and/or
other types of debt instruments), acquire or dispose of assets or adjust its
capital spending to manage its ability to continue as a going concern.

As of December 31, 2013, the Company is not subject to any
externally imposed capital requirements.

25. SUBSEQUENT EVENTS

Issuance of stock options

On January 23, 2014 the Company granted 307,250 stock options
to its employees, directors and consultants at a price of $Cdn9.05 ($8.28) .
These options carry a five year life and are vested as follows: 50% immediately;
25% on January 23, 2015; 25% on January 23, 2016.

Restructuring of regulatory bonding portfolio

On March 3, 2014, the Company completed the replacement of its
$28,167 regulatory bonding portfolio, utilizing three different qualified
sureties. As a result of replacing the bonds, the Company released $12,336 of
previously restricted cash. Prior bonding arrangements, covering all of the
Companys mines and mills, required the Company to post 100% cash collateral to
back the currently outstanding $27,963 undiscounted decommissioning liability.

45

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|ENERGY FUELS INC.                                                                     
|--------------------------------------------------------------------------------------
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                                        
|FOR THE 15 MONTHS ENDED DECEMBER 31, 2013 and 12 MONTHS
      ENDED SEPTEMBER 30, 2012
|(Expressed in thousands of U.S. Dollars except share and
      per share amounts)     
|                                                                                      

Update of industry price forecast

The Company utilizes various industry forecasts to assist in
its valuation of long-lived assets. Subsequent to year end, one such forecast
was issued that predicts lower future uranium prices than the expected future
uranium prices used by the Company for its assessment of valuation of long-lived
assets for the year ended December 31, 2013. Uranium pricing is one of many
assumptions used by the Company in assessing the recoverable amount of
long-lived assets. Any changes to assumptions subsequent to December 31, 2013
will be utilized on a prospective basis within any future impairment analyses.

46

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