Energy Fuel -- summary under Convertible Debentures

Interest and conversion rights

The Energy Fuel subordinated debentures will bear interest at a floating rate ranging from 8.50% (if the average uranium (U308) spot price during the applicable semi-annual interest period is under US$55) up to 13.50% (if the average is US$100 or higher). The debentures (having an aggregate principal of $22 million) are convertible into Energy Fuel common shares at a conversion price of $0.30 per common share (as compared to the closing price on the TSX on June 29, 2012 of $0.19 per share). Energy Fuels may redeem the debentures at their $1000 principal amount on or after July 24, 2015 if the average VWAP during the specified 20-trading day period was at least 125% of the conversion price.

There is a typical "Additional Amounts" provision for grossing-up interest payments. Also, a typical Common Share Interest Payment Election provision.

Business

Eagle Fuels (TSX) is an Ontario corporation engaged through US subsidiaries in uranium and vanadium exploration, development and mining operations with its principal place of business in Colorado. "The Company has no history of earnings other than nominal interest income earned on financial assets" (p.31).

Change of control

In the event of a Change of Control (as defined and including a sale of substantially all the assets), the debenture holders may elect to have their debentures paid in cash at par or (at their option) may convert using a discounted conversion price based on prorating a conversion premium of 30% for the number of days from issue to that event (so that, for example, if the Change of Control occurred 1/3 (or 2/3) of the way through the term, the conversion price of $0.30 would be divided by 120% (or 110%).)

Canadian income taxation

Conversions generally occur without realization of capital gain or loss. Reference is made to the possibility of the debentures becoming investment contracts (presumably based on an interest subordination clause.) Generally, interest payments made to non-resident holders will be subject to Part XIII tax "since interest payable on the Debentures will be computed by reference to the price of uranium and be "participating debt interest." In the case of US residents entitled to Treaty benefits ("US Holders"), Part XIII tax should only apply to debenture interest

which is determined with reference to the change in the value of any property of the Company. In the case of U.S. Holders, the 8.5% minimum rate of interest should not be subject to Canadian withholding tax under the U.S. Treaty. Any interest paid or credited above the 8.5% minimum rate (including any Additional Amounts payable by the Company) and based on the price of uranium will be subject to withholding tax at a reduced rate of 15%.

Non-residents who dispose of their debentures to a Canadian resident for more than the $1000 issue amount should consult their tax advisors respecting any withholding tax under the s. 214(7) rule.