#2 - Financing Agreement

TABLE OF CONTENTS

(This Table of Contents is not a part of this Financing Agreement
and is only for convenience of reference.)

FINANCING AGREEMENT

             THIS FINANCING AGREEMENT dated as of November 26, 2013 (the “Financing Agreement”), by and between JOHNSON COUNTY, WYOMING (the “Issuer” or the “County”), a political subdivision of the State of Wyoming (the “State”), and URANERZ ENERGY CORPORATION , a Nevada corporation (the “Borrower”).

P R E F A C E

            All capitalized terms used herein will have the meanings ascribed to them in ARTICLE 1 of this Financing Agreement. Terms not defined herein shall have the meanings provided in the Indenture, the Mortgage, the Bond and the Note, in the priority set forth.

W I T N E S S E T H:

             WHEREAS , the Issuer is authorized by the Act to finance one or more projects or parts thereof in order to facilitate and promote the sound economic growth of the State of Wyoming, and the development of natural resources and employment opportunities for the citizens of the State by encouraging the expansion of all kinds of business which contribute payrolls and tax base to the State, upon such conditions as the governing body of the Issuer may deem advisable; and

             WHEREAS, pursuant to the Act, the Issuer is authorized to issue revenue bonds for the purposes of providing funds for the construction of the Nichols Ranch ISR Processing Facility in order to produce U ₃ O ₈ (yellowcake), for sale to utilities within the United States and elsewhere and to pay the Costs of Issuance; and

             WHEREAS, in order to provide for the payment of the Project Costs, simultaneously with the execution and delivery of this Financing Agreement, the Issuer and UMB BANK, n.a. will execute and deliver an Indenture of Trust, dated as of the date hereof, pursuant to which the Issuer will issue and sell its $20,000,000 Taxable Industrial Development Revenue Bond (Uranerz Energy Corporation Project), Series 2013, and the Issuer will lend the proceeds thereof to the Borrower (the “Loan”), all upon the terms and conditions of this Financing Agreement, for the sole and exclusive purpose of financing the Nichols Ranch Project (as described in EXHIBIT A attached hereto) and paying the Costs of Issuance, such Loan and Borrower’s Obligations to be evidenced by that certain promissory note in the principal amount of $20,000,000, dated as of the date of delivery of the Bond and due on October 1, 2020, from the Borrower to the Issuer, issued pursuant to this Financing Agreement and made payable to the Issuer, or registered assigns, and endorsed and assigned by the Issuer to the Trustee and in substantially the form attached hereto as EXHIBIT B; and

             WHEREAS, the Bond shall be issued under and pursuant to the Indenture, pursuant to which the Issuer shall pledge and assign to the Trustee certain rights of the Issuer thereunder; and

             WHEREAS, the State of Wyoming, acting by and through the Wyoming State Treasurer is authorized to purchase the Bond, subject to the terms and conditions specified under Wyo. Stat. § 9-4-715(m); and

             WHEREAS, the Borrower will pledge and grant a security interest in, among other things, the Collateral, the Mortgaged Property and all Loan Payments (as set forth in ARTICLE 4 hereof) to the Trustee to secure the full and prompt payment of the principal of and interest on the Bond;

             NOW, THEREFORE, the Issuer and the Borrower, each in consideration of the representations, covenants and agreements of the other as set forth herein, mutually represent, covenant and agree as follows:

ARTICLE 1
DEFINITIONS

             Section 1.01.         Definitions.

             “Act” means the Industrial Development Projects Act, Title 15, Chapter 1, Article 7, Wyo. Stat.

             “Additional Charges” means those charges set forth in Section 4.03 of this Financing Agreement.

             “Arkose Mining Venture” means the contractual relationship of Borrower and United Nuclear, LLC, a Wyoming limited liability company, under the Arkose Mining Venture Agreement.

             “Arkose Mining Venture Agreement” means that certain agreement dated January 15, 2008, between the Borrower (81%) and United Nuclear, LLC, a Wyoming limited liability company (19%), establishing the Arkose Mining Venture.

             “Assignment of Product Sales Contracts and Processing Agreement” means that certain Assignment of Product Sales Contracts and Processing Agreement, dated as of the date of delivery of the Bond, by and between the Borrower and the Trustee.

             “Bond” means the $20,000,000 Taxable Industrial Development Revenue Bond (Uranerz Energy Corporation Project), Series 2013, dated as of the date of delivery thereof, issued by Johnson County, Wyoming, pursuant to the Indenture.

             “Bond Purchase Agreement” means that certain agreement, to be dated as of the date of delivery of the Bond, by and among the Issuer, the Borrower and the Purchaser.

             “Bond Resolution” means the resolution finally passed and adopted by the Commissioners on November 12, 2013, authorizing the issuance of the Bond.

             “Borrower” means Uranerz Energy Corporation, a Nevada corporation (including any permitted successor under Section 7.05 of this Financing Agreement).

             “Borrower’s Obligations” means all obligations of the Borrower to the Issuer, the Trustee and the Purchaser, whether now existing or hereafter arising, relating to or in connection with the financing of the Nichols Ranch Project herein provided for, including, without limitation, Borrower's obligations, representations, covenants and agreements under the Bond Purchase Agreement, this Financing Agreement, the Indenture and the Security Documents.

             “Borrower’s Representative” means the person (who may be an employee of the Borrower) at the time designated to act on behalf of the Borrower by written certificate furnished to the Issuer, the Trustee and the Purchaser containing the specimen signature of such person and signed on behalf of the Borrower by one of its officers. A certificate may designate an alternate or alternates.

             “Business Day” means any day other than a Saturday, Sunday or holiday or a day (a) on which banks located in the city in which the designated corporate trust office of the Trustee is located are required or authorized to close for general banking business or (b) on which the Federal Reserve System is closed.

             “Certificate of Completion” has the meaning set forth in Section 3.03 of this Financing Agreement.

             “Closing Date” means November 26, 2013, the date of execution and delivery of this Financing Agreement and the Bond.

             “Collateral” means the Collateral described and defined in the Mortgage.

             “Commissioners” means the Board of County Commissioners as the governing body of the Issuer.

             “Completion Date” means the date established pursuant to Section 3.03 hereof.

             “Costs of Issuance” means any and all costs and expenses incurred in connection with the issuance, sale and delivery of the Bond, including, but not limited to (i) all fees and expenses of the Issuer; (ii) all fees and expenses of legal counsel, financial consultants, feasibility consultants and accountants (including fees payable under the Bond Purchase Agreement pursuant to which the Bond was sold); (iii) any agreed upon initial fee payable to the Trustee for acting in such capacity in connection with the issuance, sale and delivery of the Bond; and (iv) all other costs and expenses relating to the preparation, printing, reproduction, execution, filing and recording, as the case may be, of the Bond Purchase Agreement, the Indenture, this Financing Agreement, the Security Documents and any other related documents entered into or prepared in connection with the issuance, sale and delivery of the Bond and the financing of the Nichols Ranch Project.

             “County” means Johnson County, Wyoming (including any successor hereunder), a political subdivision organized and existing under the laws of the State.

             “Debt Service Fund” means the fund created by Section 5.03 of the Indenture.

             “Electronic Means” or “ electronic means ” means telecopy, facsimile transmission, e-mail transmission or other electronic means of communication providing evidence of transmission.

             "Encumbrance" includes any assignment, mortgage, charge, pledge, lien, hypothecation, encumbrance, security interest or insurance securing or in effect securing any obligation, conditional sale or title retention agreement, contractual deposit, trust deposit, escrow arrangement or other preferential arrangement whatsoever, howsoever created or arising, whether absolute or contingent, fixed or floating, legal or equitable, perfected or not, and includes the rights of a lessor pursuant to an operating lease, capitalized lease or sale leaseback arrangement, any right of set-off and any guarantees or indemnities.

            “ Environmental Laws ” means all federal, state, and local laws, statutes, rules, regulations, orders, ordinances, legally enforceable requirements, or requirements under the common law, now or hereafter in effect in any and all jurisdictions where Borrower conducts business or operations, relating to the protection of the environment or human health or safety including, without limitation, the Wyoming Environmental Quality Act, the National Environmental Policy Act (NEPA), the Endangered Species Act (ESA), the National Historic Preservation Act (NHPA), the Atomic Energy Act, the Uranium Mill Tailings Radiation Control Act, the Safe Drinking Water Act (SDWA), the Clean Water Act and Federal Pollution Control Act, the Occupational Safety and Health Act (OSHA) and all applicable laws and regulations issued by the Nuclear Regulatory Commission (NRC), the Wyoming Department of Environmental Quality (WDEQ), the Bureau of Land Management (BLM), the U.S. Environmental Protection Agency (EPA), the U.S. Department of Transportation (DOT), and all other federal, state, and local governmental authorities that regulate the mining, extraction, and processing of uranium, including in-situ recovery operations, including all transportation operations in conjunction therewith.

             “Equipment” has the meaning given such term in the Uniform Commercial Code and the Mortgage, and includes every piece of equipment used in the operation of the Nichols Ranch Project.

             “Event of Default” means those defaults under this Financing Agreement and as specified and defined by Section 9.01 hereof.

             “Financing Agreement” means this Financing Agreement dated as of the Closing Date, including any amendments or supplements hereto, by and between the Issuer and the Borrower.

             “Fiscal Year” means the fiscal year of the Borrower and shall be the annual period ending each year on December 31.

             “Force Majeure” means any one or more of the following: acts of God, strikes, lockouts or other industrial disturbances; acts of public enemies; orders or restraints of any kind of the government of the United States or of the State of Wyoming or any other state or jurisdiction or any of their departments, agencies, or officials, or any civil or military authority; insurrections; riots; landslides; earthquakes; fires; storms; droughts, floods or other adverse weather conditions; explosions; breakages or accident to machinery, transmission pipes or canals; temporary inability to obtain supplies or materials or governmental permits or licenses (other than licenses and permits necessary to commence the Nichols Ranch Project); or any other cause or event not reasonably within the control of the Borrower.

             “Goods” has the meaning given such term in the Uniform Commercial Code and the Mortgage.

            “ Hazardous Substances ” means any hazardous substance, hazardous material, hazardous waste, waste, pollutant, chemical contaminant, toxic chemical, or any other material that is listed, regulated, or controlled under any Environmental Laws, including any cleanup or remedial statute or regulation including the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et seq ., and the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. § 6901 et seq . The term “Hazardous Substances” also includes any petroleum, crude oil, or fraction thereof, and any radioactive material, including any source, special nuclear or by-product material as defined in Environmental Laws, as well as any asbestos-containing material or polychlorinated biphenyls.

             “Improvements” means all buildings, structures, replacements, furnishings, fixtures, fittings and other improvements and property of every kind and character now or hereafter located or erected on the Lands, together with all building or construction materials, equipment, appliances, machinery, plant equipment, fittings, apparati, fixtures and other articles of any kind or nature whatsoever now or hereafter found on, affixed to or attached to the Lands, including (without limitation) all motors, boilers, engines and devices for the operation of pumps, and all heating, electrical, lighting, power, plumbing, air conditioning, refrigeration and ventilation equipment. The term “Improvements” also includes every improvement set forth in the Mortgage and every improvement on the Lands.

             “Indenture” means an Indenture of Trust dated the date hereof (including any amendments or supplements thereto).

             “Interests in Real Estate” means all of the Lands, mineral rights and Unpatented Mining Claims currently owned, held or leased or to be acquired by the Borrower with proceeds of the Loan and described in EXHIBIT A to the Mortgage.

             “Inventory” has the meaning given such term in the Uniform Commercial Code.

             “Issuer” means the County.

             “Issuer’s Representative” means the County Clerk, or any other person at the time designated to act on behalf of the Issuer, as evidenced by a written certificate furnished to the Trustee, the Borrower and the Purchaser containing the specimen signature of such person and signed on behalf of the Issuer by the Chairman of the Commissioners. A certificate may designate an alternate or alternates.

             “Lands” means all lands and interests which are either described in EXHIBIT A of the Mortgage or the description of which is incorporated in EXHIBIT A of the Mortgage by reference to another instrument or document.

             “Leases” means all rights of the Borrower under all leases, licenses, occupancy agreements, concessions or other arrangements, whether written or oral, whether now existing or entered into at any time hereafter, whereby any person agrees to pay money or any consideration for the use, possession or occupancy of, or any estate in, the Lands, the Nichols Ranch Project or any part thereof, and all rents, income, profits, benefits, avails, advantages and claims against guarantors under any thereof.

             “Loan” means the loan made pursuant to ARTICLE 4 hereof.

             “Loan Payments” means those amounts necessary to repay the Loan made hereunder as provided in ARTICLE 4 hereof.

             “Loan Payment Dates” means not later than the first Business Day of each January, April, July and October, commencing January 1, 2014 through October 1, 2020, or such earlier date as the Principal Balance of the Note with interest thereon shall have been paid in full.

             “Maturity Date” means October 15, 2020, or such earlier date as the Principal Balance of the Bond shall be due and payable.

             “Mortgage” means the Mortgage, Assignment of Revenues, Security Agreement, Fixture Filing and Financing Statement between Borrower and the Trustee, dated of even date herewith, by which Borrower has mortgaged, assigned, and secured to the Trustee, the Collateral and the Mortgaged Property.

             “Mortgaged Property” means the Mortgagor’s interests subject to the Mortgage.

             “Nichols Ranch ISR Processing Facility” means the Johnson County, Wyoming, and Campbell County, Wyoming, lands in the area shown on the plan attached to the Mortgage as Schedule 1 and described on EXHIBIT A to the Mortgage.

             “Nichols Ranch Project” means the acquisition, construction, development and equipping of the Nichols Ranch ISR Processing Facility to extract uranium located within Johnson County, Wyoming and Campbell County, Wyoming (as described in EXHIBIT A attached hereto).

             “Note” means that certain promissory note in the principal amount of $20,000,000, dated as of the date of delivery of the Bond and due on October 1, 2020, from the Borrower to the Issuer, in the form attached hereto as EXHIBIT B.

             “Ore” means all processed and unprocessed metallic and nonmetallic ore, including uranium and uranium ore minerals, and all other minerals and hydrocarbons located in, on or under all or any part of the Lands or otherwise produced therefrom.

             “Permitted Encumbrances” means the Encumbrances of the type referred to in EXHIBIT E attached hereto.

             "Person" means any individual, firm, partnership, company, corporation or other body corporate, government, governmental body, agency, instrumentality, unincorporated body or association and the heirs, executors, administrators or other legal representatives of an individual.

             “Principal Balance,” as it relates to the Bond, the Note or the Loan, means $20,000,000 or so much thereof as remains unpaid thereon from time to time.

             “Processing Agreement” means that certain “Processing Agreement for Uranium Concentrates,” dated November 28, 2011, entered into between the Borrower and a third party for the processing of uranium resins produced by the Borrower, as more fully described in EXHIBIT F attached hereto.

             “Product Sales Contracts” means those contracts between the Borrower and third parties for the sale and purchase of Ore, which contracts are listed in EXHIBIT F attached hereto.

             “Project” means the Nichols Ranch Project.

             “Project Costs” means any and all costs, expenses, fees and charges paid or incurred in connection with the completion of the Nichols Ranch Project and the issuance of the Bond, including:

            A.        all Costs of Issuance and Administration Expenses;

            B.        all advances, payments and expenditures in connection with the preparation of plans and specifications for the Nichols Ranch Project (including any preliminary study or planning of the Nichols Ranch Project or any aspect thereof);

            C.        all costs and fees for architectural, engineering, environmental, consulting, testing, design, appraisal, legal, accounting, financial, statistical and other technical and supervisory services necessary or incident to the acquisition, construction, development and equipping of the Nichols Ranch Project (including, without limitation, the costs of all licenses and permits employed or obtained in connection therewith);

            D.        all costs incurred in connection with the acquisition and installation of Equipment, machinery or furnishings included within or constituting a part of the Nichols Ranch Project;

            E.        payment or reimbursement for labor, services, materials, Equipment and supplies (including, without limitation, water, electricity, transportation and utility services) used, furnished or installed in the acquisition, construction, development and equipping of the Nichols Ranch Project, and payment of amounts due under contracts for the acquisition, construction, development and equipping of the Nichols Ranch Project;

            F.        to the extent not paid by any contractor or subcontractor engaged to construct or install any part of the Nichols Ranch Project, payment of premiums on all insurance required to be taken out and maintained with respect to construction prior to the Completion Date;

            G.        all expenses incurred in seeking to enforce any remedy against any contractor, subcontractor or other Person in respect of any default under a contract or other liability or obligation relating to the Nichols Ranch Project;

            H.        payment of taxes, assessments and other charges, if any, that may become payable prior to the Completion Date with respect to the Nichols Ranch Project;

            I.        all interest and financing fees accruing on money borrowed or to be borrowed by the Borrower for financing of Project Costs during acquisition, construction, development and equipping of the Nichols Ranch Project;

            J.        without limitation by the foregoing, all other expenses which constitute necessary capital expenditures for the completion of the Nichols Ranch Project authorized by the Act and Wyo. Stat. 9-4-715(m) to be paid from the proceeds of the Bond; and

            K.        reimbursement for all advances, payments and expenditures made or to be made by the Borrower, the Issuer, and any other Person with respect to any of the foregoing expenses.

             “Purchaser” means the State of Wyoming acting by and through the Wyoming State Treasurer.

             “Release Price” means the amount necessary to redeem or cause a portion of the Principal Balance of the Bond to be “deemed paid” within the meaning of Section 5.06 of this Financing Agreement and Section 3.02 of the Indenture in a principal amount authorized by the Purchaser of the Bond.

             “Security Documents” means the Mortgage, the Assignment of Product Sales Contracts and Processing Agreement and any other instruments or documents securing the Borrower’s Obligations.

             “State” means the State of Wyoming.

             “State Treasurer” or “Wyoming State Treasurer” means the duly elected and qualified Treasurer of the State of Wyoming.

             “Term of the Financing Agreement” or “Term” means the term of this Financing Agreement as specified in Section 12.01 hereof.

             “Trustee” means UMB BANK, n.a., a national banking association duly organized and validly existing under the laws of the United States (including any successor trustee or co-trustee hereunder).

             “United Nuclear” means United Nuclear, LLC, a Wyoming limited liability company, the address of which is 120 South Durbin, Casper, Wyoming 82601.

             “Unpatented Mining Claims” means the locations and appropriations of tracts of federal public lands containing a valuable mineral deposit. “Unpatented Mining Claims” shall include all rights incident thereto as recognized under Applicable Law relating to mining and shall include any and all appurtenant rights established by or accruing to the owner thereof, including, to the extent applicable to any individual Unpatented Mining Claim, the right of access, use of water and the right to conduct mineral exploration, development and exploitation activities.

             “WBC” means the Wyoming Business Council.

             Section 1.02.         Rules of Interpretation.

            (1)        This Financing Agreement shall be interpreted in accordance with and governed by the laws of the State of Wyoming.

            (2)        The words “herein,” “hereof,” and “hereunder” and words of similar import, without reference to any particular article, section or subdivision, refer to this Financing Agreement as a whole rather than to any particular article, section or subdivision hereof.

            (3)        References in this instrument to any particular article, section or subdivision hereof are to the designated article, section or subdivision of this instrument as originally executed.

            (4)        Any terms not defined herein but defined in the Bond Purchase Agreement, the Indenture, the Security Documents or other related documents shall have the same meaning herein unless the context hereof requires otherwise.

            (5)        The Table of Contents and titles of articles and sections herein are for convenience only and are not a part of this Financing Agreement.

            (6)        Unless the context hereof clearly requires otherwise, the singular shall include the plural and vice versa and the masculine shall include the feminine and vice versa.

            (7)        Unless the context hereof clearly requires otherwise, “or” is not exclusive, but is intended to permit or encompass one or more or all of the alternatives combined.

            (8)        All accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles, and all computations provided for herein shall be made in accordance with generally accepted accounting principles.

             Section 1.03.         Limitation on Issuer Liability. No agreements or provisions contained in this Financing Agreement nor any agreement, covenant or undertaking by the Issuer contained in any document executed by the Issuer in connection with the Project shall give rise to any pecuniary liability of the Issuer or a charge against its general credit or taxing powers, or shall obligate the Issuer financially in any way except with respect to the Project and the application of revenues therefrom and the proceeds of the Bond. No failure of the Issuer to comply with any term, condition, covenant or agreement herein shall subject the Issuer to liability for any claim for damages, costs or other financial or pecuniary charge except to the extent that the same can be paid or recovered from the Project or revenues therefrom or proceeds of the Bond; and no execution on any claim, demand, cause of action or judgment shall be levied upon or collected from the general credit, general funds or taxing powers of the Issuer. Nothing herein shall preclude a proper party in interest from seeking and obtaining specific performance against the Issuer for any failure to comply with any term, conditions, covenant or agreement herein; provided, that no costs, expenses or other monetary relief shall be recoverable from the Issuer except as may be payable from the Project or its revenues.

             Section 1.04.         Sovereign Immunity. The Issuer, the State of Wyoming, the Wyoming State Loan and Investment Board and the Treasurer do not waive sovereign immunity by entering into this Financing Agreement and specifically retain immunity and all defenses available to them as sovereigns pursuant to Wyo. Stat. § 1-39-104(a) and all other State law.

             Section 1.05.         Exhibits. The following Exhibits are attached to and by reference made a part of this Financing Agreement:

* * * * * * * * * *

ARTICLE 2
REPRESENTATIONS AND COVENANTS

             Section 2.01.         Representations and Covenants of the Issuer. The Issuer makes the following representations as the basis for its covenants herein:

            (1)        The Issuer is a body corporate and politic and public instrumentality duly organized and validly existing as such under the laws of the State of Wyoming. Under the provisions of the Act, the Issuer is authorized to enter into the Bond Purchase Agreement, the Indenture and this Financing Agreement and to carry out its obligations thereunder and hereunder. The Issuer has duly authorized the execution and delivery of the Bond Purchase Agreement, the Indenture and this Financing Agreement.

            (2)        The Issuer will not pledge any of its rights under this Financing Agreement other than for purposes of transferring and/or assigning its rights and interest to the Trustee as contemplated by the Bond Purchase Agreement, the Indenture and the Security Documents.

            (3)        The Bond will be issued, mature, bear interest, be redeemable and have other terms and provisions as provided for in the Bond Purchase Agreement, the Indenture and the Bond.

            (4)        The acquisition, construction, development and equipping of the Project, the issuance and sale of the Bond, the execution and delivery of this Financing Agreement, and the performance of all covenants and agreements of the Issuer contained in the Bond, this Financing Agreement, the Bond Purchase Agreement and the Indenture, as well as the performance of all other acts and things required under the constitution and laws of the State of Wyoming to make the Bond, the Financing Agreement, the Bond Purchase Agreement and the Indenture valid and binding obligations of the Issuer in accordance with their terms are authorized by the Act and have been duly authorized by a Bond Resolution of the Issuer finally passed and adopted on November 12, 2013, by the affirmative vote of not less than a majority of the Commissioners.

            (5)        The Issuer has not made, done, executed or suffered, and it warrants that it will not make, do, execute or suffer any act or thing whereby its interest in any property now or hereafter included in the Project, shall or may be impaired, charged or encumbered in any manner whatsoever except as expressly permitted by the terms of this Financing Agreement, the Bond Purchase Agreement and the Indenture.

            (6)        To finance the Project, as presently estimated, in anticipation of the collection of the revenues thereof, the Issuer has duly authorized the Bond in the principal amount of $20,000,000 to be issued upon the terms set forth in the Bond Resolution, under the provisions of which the Issuer has agreed to assign its interest in this Financing Agreement and the payments hereunder and its interest in the Project to the Trustee as security for the payment of the principal of and interest on the Bond.

             Section 2.02.         Representations and Covenants of the Borrower. The Borrower makes the following representations as the basis for its covenants herein:

            (1)        The Borrower (i) is a Nevada corporation, validly existing and in good standing under the laws of the State of Nevada, (ii) is qualified to do business in the State of Wyoming, and (iii) is either qualified to do business and is in good standing in each jurisdiction where the ownership of its properties or the conduct of its business requires such qualification or is subject to no material liability or disability by reason of the failure to be so qualified in any such jurisdiction.

            (2)        The Borrower, a uranium company principally focused on commercial in-situ recovery (ISR) uranium production of its properties in the Powder River Basin area of Wyoming, operates in two segments: Arkose Mining Venture and the Corporation’s remaining operations.

            The Arkose Mining Venture was formed pursuant to the Arkose Mining Venture Agreement. United Nuclear (19% participating interest) and the Borrower (81% participating interest) are the participants in the Arkose Mining Venture (collectively the “Participants”) and the Borrower is the Manager. United Nuclear and the Borrower both own or control certain properties in Campbell and Johnson Counties, State of Wyoming. Pursuant to Section 3.4 of the Arkose Mining Venture Agreement, title to the Assets (as defined therein) of the Arkose Mining Venture is held in the name of the Borrower, beneficially on behalf of each Participant, as their participating interests are determined pursuant to the Arkose Mining Venture Agreement.

            The Borrower is currently constructing its Nichols Ranch Project, as described in EXHIBIT A hereto. Arkose Mining Venture Unpatented Mining Claims (in the name of the Borrower) and the Borrower’s Unpatented Mining Claims relating to the Nichols Ranch Project, located in Johnson County, Wyoming, and Campbell County, Wyoming, are set forth in EXHIBIT A of the Mortgage.

            (3)        Borrower is in full compliance with applicable Environmental Laws and Borrower has obtained all permits, licenses, mining claims, leases, surface rights, agreements, and approvals from federal, state, and local authorities as necessary (as listed in EXHIBIT G hereto) for the operations of the Project and for the mining, extraction, processing and transportation of uranium and all Hazardous Substances related to the Project.

            (4)        There are no citations, notices of violation, investigations, or inquiries, by any governmental authority, nor any pending or threatened claims, demands, actions, administrative proceedings or lawsuits arising under any Environmental Laws (collectively “Environmental Actions”) against the Borrower and if such Environmental Actions arise the Borrower shall provide notice to the Issuer, Trustee and Purchaser within five (5) Business Days of receipt of any such Environmental Actions.

            (5)        To the Borrower’s knowledge, there are no environmental conditions existing on any of Borrower’s mining, extraction, or processing properties or where the Borrower conducts operations, including the Project, that would give rise to any onsite or off-site remedial or cleanup obligations and there has been no release of Hazardous Substances on any such property.

            (6)        All reclamation performance bonds required by the State of Wyoming, Department of Environmental Quality and all other necessary agencies and governmental authorities, for the Nichols Ranch Project have been obtained and copies of all documentation relating thereto are attached to this Financing Agreement as EXHIBIT C.

            (7)        The Borrower is in full compliance with all financial assurance and asset retirement obligations for mine reclamation, remediation, and cleanup activities. Further, Borrower represents that the reclamation performance bonds and related financial assurance bonds it has secured are in the amounts required by the governing regulatory authorities and sufficient to cover all costs of reclamation, remediation, and cleanup. Borrower also represents that its reclamation performance bonds and financial assurance bonds are reviewed annually to ensure the amounts and terms thereof are acceptable to the governing regulatory authorities.

            (8)        The Borrower has full power to enter into and perform its obligations under this Financing Agreement, the Bond Purchase Agreement, the Security Documents and all other documents contemplated hereby or executed pursuant hereto. The execution and delivery of this Financing Agreement, the Bond Purchase Agreement, the Security Documents and all other documents contemplated hereby or executed pursuant hereto and the performance and observance of their terms, conditions and obligations have been duly authorized by all necessary action on the part of Borrower. This Financing Agreement, the Bond Purchase Agreement and the Security Documents, and any other agreement required hereby will constitute, when duly executed and delivered by Borrower to the Issuer, the Trustee or the Purchaser, valid and binding obligations of Borrower enforceable in accordance with their terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and the application of general principles of equity.

            (9)        The execution and delivery of this Financing Agreement, the Bond Purchase Agreement and the Security Documents and the consummation of all the transactions contemplated hereby and thereby, do not and will not conflict with, or be in contravention of, any law, order, rule or regulation applicable to Borrower or any agreement or instrument to which Borrower is a party or by which the Project is bound or affected, and will not result in the creation of any lien, charge or encumbrance of any nature upon the Project other than that contemplated hereby.

            (10)        Any financial statements of Borrower, or any consolidated financial statements of which Borrower is a subsidiary, heretofore delivered to Issuer or the Purchaser are accurate and complete in all respects, have been prepared in accordance with generally accepted accounting principles, fairly represent the financial condition of Borrower, as of the respective dates of such financial statements and no material adverse change has occurred in the conditions reflected therein since their respective dates. No additional material obligations other than those contemplated by this Financing Agreement have been entered into by Borrower since the date of its financial statements, other than as disclosed to Issuer and the Purchaser in writing.

            (11)        All information furnished in any document required to be furnished by Borrower under or in connection with the Bond, this Financing Agreement and the Bond Purchase Agreement is accurate and complete in all respects.

            (12)        The Borrower hereby represents and warrants to the Issuer and the Purchaser that there is no material action, suit, legal proceeding, administrative action or other proceeding pending or threatened (or, to the best knowledge of Borrower, any basis therefor) against Borrower or affecting the properties or assets of Borrower, including any matters relating to or arising under any Environmental Laws in any court or before any arbitrator of any kind or before or by any governmental body. Borrower is not in default with respect to any order of any court, arbitrator or governmental body, and Borrower is not subject to or a party to any order of any court or governmental body arising out of any action, suit or proceeding under any statute or other law respecting antitrust, monopoly, restraint of trade, unfair competition or similar matters. For the purposes of this subsection, the term “governmental body” includes any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, and the term “order” includes any order, writ, injunction, decree, judgment, award, determination, direction or demand.

            (13)        Borrower (on behalf of itself and as Manager for the Arkose Mining Venture) has filed all federal, state and local tax returns which are required to be filed and has paid all taxes shown on such returns and on all assessment notices received by it to the extent that such taxes and assessments have become due, except to the extent the same are being contested in good faith in appropriate proceedings, have been disclosed in writing to the Issuer and the Purchaser, and for which adequate reserves have been provided. All federal and state income taxes and all other taxes and assessments of any nature with respect to which Borrower (on behalf of itself and as Manager for the Arkose Mining Venture) is obligated have been paid or adequate accruals have been set up therefor.

            (14)        Other than Collateral that is subject to liens, Encumbrances or mortgages that will be paid on the date of Closing from proceeds of the Bond, Interests in Real Estate described in the Security Documents and related documents are (or will be, with respect to Collateral hereafter acquired) vested solely in Borrower, free and clear of all liens, encumbrances and other claims whatsoever, except as granted by the Security Documents or as have been approved in writing by Issuer and the Purchaser. Other than as disclosed to the Issuer and the Purchaser in EXHIBIT H attached hereto, as it relates to the liens that Borrower will be paying on the date of Closing with the proceeds of the Bond, Borrower has made no contract or arrangement of any kind, the performance of which contract or arrangement by another party does or could give rise to a lien on the Project.

            (15)        Borrower has not received any other financing for any purpose secured by the Project or any other Collateral securing the Loan, the security for which is superior to that for the Loan.

            (16)        After the date of this Financing Agreement, Borrower shall not enter into any financing arrangement for any purpose secured by the Project or any other Collateral securing the Loan without the written approval of the Purchaser.

            (17)        There is no default on the part of Borrower under this Financing Agreement or any document executed by Borrower in connection herewith and no event has occurred which with notice or the passage of time or both would constitute a default hereunder or under any such document.

            (18)        The Issuer has not made any representations, either express or implied, that the Project will be suitable to the needs of the Borrower and the Borrower recognizes that under the Act the Issuer is not authorized to expend any funds on the Project other than the revenues received by it therefrom or the proceeds of the Bond, or other funds granted to it for purposes contemplated in the Act.

            (19)        To the best knowledge of the Borrower (i) no officer or member of the Issuer has either a direct or indirect financial interest in or will personally benefit financially from this Financing Agreement, the Bond Purchase Agreement, the Security Documents, the Bond or the Project or any contract, agreement or job hereby contemplated to be entered into or hereby undertaken, (ii) no official or employee of the Issuer has any personal interest, direct or indirect, in this Financing Agreement, and (iii) the Borrower has not paid or given any official or employee of the Issuer, any money or other consideration for obtaining this Financing Agreement.

             Section 2.03.         Purchaser May Rely on Representations. The Issuer and the Borrower agree that the representations contained in this ARTICLE 2 are for the use and benefit of the Purchaser, and the Purchaser shall be entitled to rely thereon.

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ARTICLE 3
THE PROJECT; COLLATERAL; ISSUANCE OF THE BOND;
APPLICATION OF BOND PROCEEDS; COMPLETION OF THE
PROJECT

             Section 3.01.         The Project; Collateral.

            (1)        Borrower covenants and warrants that it has and will continue to acquire, construct, develop and equip the Project in accordance with the provisions of its Application for Industrial Development Bonds submitted to the WBC.

            (2)        Borrower has advanced at least twenty-five percent (25%) of the total cost of the Project, as required by Wyo. Stat. § 9-4-715(m).

            (3)        Subject to the terms of this Financing Agreement, the Bond Purchase Agreement, the Indenture, the Security Documents and the Arkose Mining Venture Agreement, the Collateral and the Mortgaged Property (other than the Arkose Mining Venture property set forth in EXHIBIT A of the Mortgage) securing the Bond shall be the sole and exclusive property of, and title thereto shall continue to be vested in, the Borrower.

            (4)        Borrower will not dispose of or remove or permit the disposal or removal of any portion of the Project or the Collateral except in accordance with the provisions of this Section:

            (a)        In any instance where the Borrower in its sound discretion determines that any portion of the Project or the Collateral has become inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary for the operation of the Project or security for the Bond, the Borrower may, at its expense, dispose, or remove and dispose of a part of the Project or the Collateral and substitute or install other items of machinery, Equipment or other personal property, not necessarily having the same function, provided that such removal and substitution shall not impair the operating utility and unity of the Project or the security for the Bond. All substituted items shall be acquired or installed free and clear of all liens or encumbrances, and shall become part of the Project and the Collateral and be subject to the Security Documents.

            (b)        Upon the written approval of the Purchaser, the Borrower may also enter into leases for real property related to the Project and include within the Project any improvements thereon that are owned by the Borrower.

            (c)        The Borrower will obtain the written consent of the Purchaser, will cooperate with the Trustee and the Purchaser and will pay all costs, including reasonable counsel fees, incurred in subjecting to the lien of the Security Documents all items of property or leasehold interests so substituted and the Issuer, the Trustee and the Purchaser will cooperate with the Borrower in securing, if necessary, release of property for which the substitution is made under the Security Documents and in providing such documents as may be required to facilitate the removal or substitution.

            (d)        Prior to the abandonment, disposition or release of part of the Interests in Real Estate, including Unpatented Mining Claims, which form part of the Collateral, the Borrower shall report to the Trustee and the Purchaser, by Borrower’s certificate, a description of the Interests in Real Estate to be abandoned or disposed of, the reasons for such abandonment or disposal, including the proposed value of such Collateral and obtain prior written consent of Purchaser before abandoning or disposing of such Interests in Real Estate. If Borrower or any affiliated entity should reacquire any of the Interests in Real Estate during the term of the Loan, such reacquired Unpatented Mining Claims shall become Collateral and subject to the lien of the Security Documents.

            (e)        Subject to the provisions of subsections (a) and (d), in the case of the disposition of any part of the Collateral, the Borrower shall report to the Trustee and the Purchaser, by Borrower’s certificate, a description of the Collateral to be disposed of and the proposed value of such Collateral. If the Purchaser does not agree with the amount that the Borrower proposes to receive from such disposition, the Purchaser may engage a consultant, at the Borrower’s expense, to obtain verification of value. Upon disposal of part of the Project or Collateral as described in subsections (a) and (d) above, and provided the operating utility and unity of the Project are not impaired, the Borrower may decide not to make any substitution and installation of other items of property; provided, however, in the case of the sale, trade-in or other disposition of part of the Project or Collateral for which no substitution is to be made, the Borrower shall pay to the Trustee for deposit in the Debt Service Fund the sale proceeds, the credit received upon trade-in, or an amount equal to the value of the part of the Project or Collateral (in the case of another disposition) as determined by the Borrower (or the consultant, as the case may be). Nothing in this Section 3.01 is intended or shall be deemed to qualify or otherwise limit the Borrower*s Obligations under Section 4.02 hereof. Nothing contained in this Section shall relieve the Borrower from making all Loan Payments payable as provided in this Agreement.

             Section 3.02.         Issuance of the Bond; Application of Bond Proceeds. The Issuer shall make the Loan to Borrower from the proceeds of the Bond, which Issuer shall sell and cause to be delivered to the Purchaser in accordance with the Bond Purchase Agreement and the Indenture. The Borrower hereby approves the issuance of the Bond and all terms and conditions of the Bond, the Bond Purchase Agreement, the Indenture and the Security Documents.

            Issuer shall cause the proceeds of the Bond to be expended and deposited by the Trustee as follows:

$20,000,000 shall be deposited into the Project Fund. All Bond proceeds deposited in the Project Fund shall be available for the payment of Project Costs upon receipt by the Trustee of a completed Disbursement Requisition in the form set forth in EXHIBIT D hereto. Borrower shall obtain from the Purchaser the written approval of the disbursements prior to the submission of the form to the Trustee for payment.

            For purposes of complying with the requirements of this Section, the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon the certified requisition of the Borrower, as approved by the Purchaser. The Trustee shall not be bound to make any investigation into the facts or matters stated in any certificate or requisition. The Trustee shall not be responsible for determining whether the funds on hand in the Project Fund are sufficient to complete the acquisition, construction, development or equipping of the Project. The Trustee shall not be responsible to collect lien waivers, and it is acknowledged that the Trustee has no responsibility to verify or confirm that any lien waivers attached by the Borrower on any requisition are accurate or complete.

             Section 3.03.         Certificate of Completion. The Completion Date for the Project shall be the date on which acquisition, construction, development and equipping of the Project have been completed substantially in accordance with the plans and specifications therefor, as determined by the Borrower and as set forth in the certificate furnished by the Borrower to the Trustee in accordance with this Section 3.03. As soon as reasonably practicable after completion of acquisition, construction, development and equipping of the Project, and in any event not more than ninety (90) days thereafter, the Borrower shall furnish to the Trustee a Borrower’s Representative certificate (the “Certificate of Completion”) (i) stating that the Borrower has determined that the acquisition, construction, development and equipping of all portions of the Project have been completed substantially in accordance with the plans and specifications therefor as of the Completion Date specified in such Certificate; and (ii) stating that, except for any amounts that are subject to a bona fide dispute, all Project Costs have been paid. Such Certificate of Completion may state that it is given without prejudice to any rights against third parties which exist at the date thereof or which may subsequently come into being.

            If on the Completion Date there are Bond proceeds which exceed funds required to pay Project Costs, such excess Bond proceeds shall be transferred by the Trustee to the Debt Service Fund to be applied toward payment of principal amounts due on the Bond.

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ARTICLE 4
LOAN PROVISIONS

             Section 4.01.         The Loan . The Issuer agrees, upon the terms and conditions herein specified, to lend to the Borrower the proceeds received by the Issuer from the sale of the Bond, by causing such proceeds to be deposited with the Trustee for disposition as provided herein and in the Indenture; and the obligation of the Issuer to make the Loan shall be deemed fully discharged upon so depositing the proceeds of the Bond with the Trustee.

             Section 4.02.         Loan Payments . Subject to the Borrower’s right of prepayment granted in Section 10.01, the Borrower agrees to repay the Loan in installments of Loan Payments as follows:

            (1)        During the Term of the Financing Agreement, the Borrower shall make Loan Payments in immediately available funds as follows:

            (2)        In any event the sum of the Loan Payments payable under this Section shall be sufficient to pay all principal and interest on the Bond as such principal and interest become due, on the Maturity Date, upon redemption, acceleration or otherwise; and accordingly if on the Business Day immediately preceding any Loan Payment Dates or Maturity Date the balance in the Debt Service Fund is not sufficient for this purpose, the Borrower will make a Loan Payment to cure the deficiency.

            (3)        All Loan Payments shall be made directly to the Trustee at its designated corporate trust office in Denver, Colorado, for the account of the Issuer, and shall be deposited by the Trustee in the Debt Service Fund. In the event the Borrower should fail to make any of the payments required in this Section 4.02, the item so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid, and the Borrower agrees to pay the same with interest thereon (including to the extent permitted by law, interest on overdue installments of interest) at the rate borne by the Bond.

            (4)        Sums set aside in the Debt Service Fund to prepay a portion of the Principal Balance of the Bond shall be deemed available as a credit against Loan Payments required to be made hereunder.

            (5)        Loan Payments shall be made in the form of wire transfer.

            (6)        On December 1 of each year, commencing December 1, 2013, the Trustee shall provide the Borrower a schedule of the Loan Payment amounts for the next calendar year.

             Section 4.03.         Additional Charges . The Borrower agrees to pay, when due, each and all of the following:

            (1)        to or upon the order of the Trustee, when due, all fees and expenses of the Trustee for services rendered under the Indenture and all fees and charges of legal counsel, accountants, public agencies and others incurred in the performance, on request of the Trustee, of services required under the Indenture for which the Trustee and such other persons are entitled to payment or reimbursement; provided that the Borrower may, without creating a default hereunder, contest in good faith the necessity or reasonableness of any such services, fees or expenses other than the Trustee's fees for ordinary services as set forth in the Indenture and any fees or charges of public agencies;

            (2)        to the Issuer, all reasonable expenses directly incurred by the Issuer to perform its obligations or exercise its rights under this Financing Agreement, and all other reasonable expenses incurred by the Issuer in relation to the Project which are not otherwise required to be paid by the Borrower under the terms of this Financing Agreement;

            (3)        to the Purchaser, all reasonable expenses directly incurred by the Purchaser to perform its obligations or exercise its rights under this Financing Agreement, and all other reasonable expenses incurred by the Purchaser in relation to the Project which are not otherwise required to be paid by the Borrower under the terms of this Financing Agreement;

            4)        to the Trustee or the Purchaser the amount of all advances made by the Trustee or the Purchaser, with interest thereon, as provided in Section 5.04 of this Financing Agreement; and

            (5)        to the Issuer, the Trustee or the Purchaser, as the case may be, interest at a rate per annum equal to eighteen percentum (18.00%), on each payment commencing on the date when due and required in this Section to be made to the Issuer, the Trustee or the Purchaser, if not made when due and if not advanced by the Trustee under the Indenture or the Security Documents.

             Section 4.04.         Borrower’s Obligations Unconditional . All Loan Payments, Additional Charges and all other payments required of the Borrower hereunder shall be paid without notice or demand and without setoff, counterclaim, or defense for any reason and without abatement or deduction or defense (except as provided in Section 7.04). The Borrower will not suspend or discontinue any such payments, and will perform and observe all of its other agreements in this Financing Agreement, and will not terminate this Financing Agreement for any cause, including but not limited to any acts or circumstances that may constitute failure of consideration, destruction or damage to the Collateral, the Mortgaged Property or the Borrower’s business, the taking of the Mortgaged Property or the Borrower’s business by condemnation or otherwise, the lawful prohibition of the Borrower’s use of the Project, or Borrower’s business, the interference with such use by any private person or corporation, the invalidity or unenforceability or lack of due authorization or other infirmity of this Financing Agreement, or lack of right, power or authority of the Issuer to enter into this Financing Agreement, eviction by paramount title, commercial frustration of purpose, bankruptcy or insolvency of the Issuer or the Trustee, change in the laws or administrative rulings or actions of the United States of America or of the State or any political subdivision thereof, or failure of the Issuer to perform and observe any agreement, whether express or implied or any duty, liability or obligation arising out of or connected with this Financing Agreement, or for any other cause whether similar or dissimilar to the foregoing, any present or future law to the contrary notwithstanding, it being the intention of the parties hereto that the Loan Payments and other amounts payable by the Borrower hereunder shall be paid in full when due without any delay or diminution whatever.

             Section 4.05.         Borrower’s Remedies . Nothing contained in this ARTICLE shall be construed to release the Issuer from the performance of any of its agreements herein, and if the Issuer should fail to perform any such agreements, the Borrower may institute such action against the Issuer as the Borrower may deem necessary to compel the performance so long as such action shall not violate the Borrower’s agreements in Section 4.04 or diminish or delay the amounts required to be paid by the Borrower pursuant to Section 4.02 of this FinancingAgreement. The Borrower acknowledges however and agrees that any pecuniary obligation of the Issuer created by or arising out of this Financing Agreement shall be payable solely out of the proceeds derived from this Financing Agreement, the sale of the Bond, any insurance and condemnation awards received pursuant to the Mortgage or upon the sale or other disposition of the Collateral and the Mortgaged Property upon a default by the Borrower or otherwise.

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ARTICLE 5
PROJECT, COLLATERAL AND MORTGAGED PROPERTY COVENANTS

             Section 5.01.         Possession of the Project, Collateral and Mortgaged Property. The Issuer acknowledges that as between the Issuer and the Borrower, the Borrower is entitled to sole and exclusive possession of the Project, the Collateral and the Mortgaged Property.

             Section 5.02.         Operation and Maintenance . The Borrower shall pay all expenses of the operation and maintenance of the Project, the Collateral and the Mortgaged Property including, but without limitation, adequate insurance thereon in such amounts and with such deductible provisions as set forth in the Mortgage and approved by the Purchaser, and as are customarily carried in connection with the operation of an in-situ uranium mining operation and business and related facilities of the type and size comparable to the Project, the Collateral and the Mortgaged Property, and insurance against all liability for injury to persons or property arising from the operation thereof as set forth in the Mortgage and approved by the Purchaser, and all taxes and special assessments levied upon or with respect to the Project, the Collateral and the Mortgaged Property and payable during the Term of the Financing Agreement, all in conformance with and subject to any good faith contest provisions provided in the Mortgage.

             Section 5.03.         Mortgage and Assignment of Product Sales Contracts and Processing Agreement. In consideration of the Loan, and as security for the Loan Payments to be made by the Borrower for the payment of the Bond, and as security for the performance of all of the other obligations, agreements and covenants of the Borrower to be performed and observed hereunder, the Borrower shall execute and cause to be recorded the Mortgage and the Assignment of Product Sales Contracts and Processing Agreement and shall keep, perform and observe each of its obligations thereunder. The Mortgage and the Assignment of Product Sales Contracts and Processing Agreement may be released by the Trustee upon certain prepayments of the Borrower as described herein and as the Trustee is directed in the Indenture.

             Section 5.04.         Advances. The Borrower acknowledges and agrees that, under the Indenture, the Mortgage and the Assignment of Product Sales Contracts and Processing Agreement, the Trustee and the Purchaser may take certain action and make certain advances relating to the Collateral and the Mortgaged Property or to certain other matters as expressly provided therein, and the Borrower shall be obligated to repay all such advances on demand, with interest from the date of each such advance, at the rate and under the conditions set forth in the Indenture, the Mortgage or the Assignment of Product Sales Contracts and Processing Agreement, as the case may be or, in the absence of any provision therein, under Section 4.03(5) hereof.

             Section 5.05.         Alterations to and Removal of Collateral or Mortgaged Property. The Borrower shall, subject to the terms and conditions of the Mortgage and Section 3.01 of this Financing Agreement and the written approval of the Purchaser of the Bond, have the right from time to time at its cost and expense, to remodel and make additions, modifications, alterations, improvements and changes (collectively referred to as “alterations”) in or to the Project, the Collateral or the Mortgaged Property or to remove any Equipment therefrom as the Borrower may deem to be desirable for its uses and purposes, provided such alterations or removal do not impair the character of the Project within the meaning of the Act or the security for the payment of the Bond.

             Section 5.06.         Sale or Lease of Collateral and Mortgaged Property; Assignment and Transfer. With the written consent of the Purchaser, the Borrower may obtain the release of all or a portion of the Collateral or Mortgaged Property by paying the applicable Release Price to the Trustee. On the date of such payment of the Release Price, a closing shall be held at the designated office of the Trustee, or any other office mutually agreed upon. At the closing the Issuer and the Trustee shall, upon acknowledgment of receipt of the Release Price, execute and deliver to the Borrower such release or amendment of the Mortgage and the Assignment of Product Sales Contracts and Processing Agreement and other instruments as the Borrower reasonably determines are necessary to terminate the lien or other effect thereof.

            The Borrower will not otherwise lease the Collateral or the Mortgaged Property, in whole or in part, nor assign its rights under this Financing Agreement, nor sell, mortgage, transfer or otherwise encumber its interests in the Project, the Collateral or the Mortgaged Property, in whole or in part, except as provided in the Mortgage or the Assignment of Product Sales Contracts and Processing Agreement and unless and except as provided below:

            (1)        The Borrower shall have received written permission of the Purchaser, which permission shall be granted at the sole discretion of the Purchaser;

            (2)        The assignee-transferee of the Collateral must be an organization experienced and properly licensed in the operation of in-situ uranium mining operations similar to those operated by the Borrower;

            (3)        Unless the assignee-transferee is a surviving, resulting or transferee entity as permitted under Section 7.05, no such assignment and transfer shall relieve the Borrower from liability for all Loan Payments, Additional Charges, Administration Expenses and other payments due and for the performance of all other obligations required under this Financing Agreement and the Indenture; and

            (4)        Any assignee-transferee shall expressly assume the Borrower’s Obligations under this Financing Agreement, the Mortgage and the Assignment of Product Sales Contracts and Processing Agreement by instruments in writing delivered to the Trustee and the Purchaser.

            The Borrower shall promptly notify the Trustee and the Purchaser of any such sale, assignment or Lease.

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ARTICLE 6
DAMAGE AND DESTRUCTION; MATERIAL CHANGE IN MINING LAW;
AND CONDEMNATION

             Section 6.01.         Damage and Destruction of Project. If any Principal Balance of the Bond remains Outstanding when Collateral or Mortgaged Property is damaged or destroyed by fire or other casualty, the Borrower shall either restore such Collateral or Mortgaged Property as required by the Indenture, or if Section 10.02 of this Financing Agreement is applicable, prepay the Loan pursuant to said Section.

             Section 6.02.         Change in General Mining Law of 1872. In the event of the repeal or material modification of the current General Mining Law of 1872 during the Term of the Financing Agreement, such that the Interests in Real Estate of the Borrower which are material to the exploration, development or operation of the Project are affected, modified or transformed, the Borrower will use its best efforts to retain its Interests in Real Estate and will consult with the Trustee to determine how best to preserve the interest of the Borrower and the interest of the Trustee in the affected Collateral or Mortgaged Property, and the Borrower shall take no action, which in the reasonable opinion of the Trustee or its counsel could adversely affect or impair their interest in the Collateral or Mortgaged Property or under this Financing Agreement or the Mortgage. If, however, Section 10.02 of this Financing Agreement becomes applicable, Borrower shall prepay the Loan pursuant to said Section.

             Section 6.03.         Condemnation. If any Principal Balance of the Bond remains Outstanding when Collateral or Mortgaged Property is taken by condemnation, the Borrower shall either restore such Collateral or Mortgaged Property as provided in the Indenture or if Section 10.02 of this Financing Agreement is applicable, prepay the Loan pursuant to said Section.

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ARTICLE 7
SPECIAL COVENANTS

             Section 7.01.         No Warranty of Condition or Suitability by Issuer. THE ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE DESIGN OR CAPACITY OF THE PROJECT TO THE SUITABILITY FOR OPERATION OF THE PROJECT OR AS TO THE CONDITION OF THE PROJECT OR ITS SUITABILITY FOR THE BORROWER’S PURPOSES OR NEEDS. THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, THAT THE BORROWER WILL HAVE QUIET AND PEACEFUL POSSESSION OF THE PROJECT. THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED WITH RESPECT TO THE VIABILITY OR PROFITABILITY OF THE PROJECT.

             Section 7.02.         Further Assurances and Corrective Instruments. The Issuer and the Borrower agree that they will, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered such supplements hereto and such further instruments as may reasonably be required for carrying out the expressed intention of this Financing Agreement, all at the sole expense of the Borrower.

             Section 7.03.         Financial Information. The Borrower agrees to furnish any financial information and certifications required by the Issuer, the Trustee or the Purchaser.

             Section 7.04.         Taxes and Other Governmental Charges. During the Term of this Financing Agreement, the Borrower shall not allow any state or county assessed taxes on the Project, the Collateral or the Mortgaged Property to become delinquent and shall pay all property and/or excise taxes within the time frames required by Title 39 of the Wyoming Statutes. With respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, with or without interest, the Borrower shall be obligated to pay only such installments and interest as are required to be paid during the Term of the Financing Agreement.

            Borrower’s tax or assessment liabilities may, however, be deemed delinquent, and a tax lien or assessment lien may be imposed, but only if Borrower has contested, or is actively contesting, tax liabilities, tax liens or assessments in good faith before Wyoming administrative agencies and/or courts as expressly permitted in Title 39 of the Wyoming Statutes. Any contest by Borrower shall be at its own expense, in good faith, but only with the written consent of the Purchaser, which consent will not be unreasonably denied or delayed. During the course of such contest, however, Borrower will continue to make or cause to be made any required yearly maintenance or rental fees applicable to its Unpatented Mining Claims or perform any required assessment work or improvements annually on each claim and to pay required rental and other fees on its Leases.

            Within ten (10) days of administrative or judicial resolution of any dispute, Borrower shall pay taxes or assessments adjudicated as due and owing.

             Section 7.05.         Consolidation, Merger, Disposition of Assets. Nothing contained in this Financing Agreement shall prevent any consolidation or merger of the Borrower, or any company or group of companies in which it is a subsidiary or affiliated company, with or into any other corporation or corporations (whether or not affiliated with the Borrower), limited liability company, or successive consolidations or mergers in which the Borrower or its successor or successors shall be a party or parties, or shall prevent any sale or conveyance of all or substantially all the property of the Borrower or any company or group of companies in which it is a subsidiary or affiliated company, to any other corporation (whether or not affiliated with the Borrower), authorized to acquire and operate the same; provided, however, and the Borrower hereby covenants and agrees, that any such consolidation, merger, sale or conveyance, other than a consolidation or merger in which the Borrower or any company or group of companies in which it is a subsidiary or affiliated company is the continuing corporation shall be approved in writing by the Issuer and the Purchaser, and the due and punctual performance and observance of all of the covenants and conditions of this Financing Agreement to be performed and observed by the Borrower, shall be expressly assumed by instrument satisfactory in form and substance to the Issuer and the Purchaser and executed and delivered to the Issuer, the Trustee and the Purchaser by the corporation or limited liability company (if other than the Borrower) formed by such consolidation or into which the Borrower shall have been merged or by the corporation or the limited liability company which shall have acquired such property. Upon any such consolidation, merger, sale or conveyance, the Borrower shall deliver to the Issuer, the Trustee and the Purchaser a Borrower’s certificate to the effect that, after giving effect to such action, no default hereunder shall have occurred and be continuing, and an Opinion of Counsel that the instrument of assumption referred to in the preceding sentence is a legal, valid and binding obligation of the corporation or limited liability company signing it.

             Section 7.06.         Qualification in Wyoming. The Borrower agrees that throughout the Term of the Financing Agreement, it will be in good standing and qualified to do business in the State of Wyoming.

             Section 7.07.         Updated Valuations of Collateral. On or before the second and fifth anniversaries of this Financing Agreement, Borrower shall provide to the Issuer, the Trustee and the Purchaser, updated valuations of all Collateral securing the Loan made hereunder, in a form and from such appraisers as the Issuer, the Trustee and the Purchaser deem acceptable.

             Section 7.08.         Notification of Event of Default. Borrower shall promptly notify the Issuer, the Trustee and the Purchaser in writing of the occurrence of (a) any Event of Default or any event which would become an Event of Default upon notice or lapse of time or both, (b) any material adverse change in the business, property, assets, operations or conditions, financial or otherwise, of Borrower, and (c) the pendency or threat of any material litigation or arbitration or other proceeding before any governmental body or official affecting the Borrower or the Project.

             Section 7.09.         Issuer and Borrower Representatives. Whenever under the provisions of this Financing Agreement the approval of the Issuer or the Borrower is required or the Issuer or the Borrower is required to take some action at the request of the other, such approval or such request may be given for the Issuer by an Issuer’s Representative and for the Borrower by a Borrower’s Representative. Either party shall be authorized to act and rely on any such approval or request.

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ARTICLE 8
ASSIGNMENT OF FINANCING AGREEMENT; INDEMNIFICATION

             Section 8.01.         Assignment of Financing Agreement.

            (a)        This Financing Agreement may not be assigned, in whole or in part, by the Issuer without the prior consent of the Borrower and the Purchaser, except that the Issuer shall grant a security interest in this Financing Agreement to the Trustee as provided in Section 8.03 hereof.

            (b)        This Financing Agreement may not be assigned, in whole or in part, by the Borrower without the consent of the Issuer and the Purchaser; however, the Trustee may assign this Financing Agreement, in whole or in part, and sell, convey, transfer or otherwise dispose of the Collateral and the Mortgaged Property, or any part thereof, provided that any such assignment, sale, conveyance, transfer or disposal shall be on the following conditions:

(i)         no such assignment, sale, conveyance, transfer or disposal (other than an assignment, sale, conveyance, transfer or disposal pursuant to the provisions of Section 7.05 hereof) shall relieve the Borrower from primary liability for any of Borrower’s Obligations hereunder, and

(ii)        in the case of an assignment, the assignee shall assume the Borrower’s Obligations hereunder to the extent of the interest assigned by an instrument satisfactory in form and substance to the Purchaser.

             Section 8.02.         Release and Indemnification Covenants.

            (a)        The Borrower shall and hereby agrees to indemnify and save the Issuer, the Trustee and the Purchaser harmless against and from all claims by or on behalf of any Person arising from the conduct or management of, or from any work or thing done on, the Collateral and the Mortgaged Property, including without limitation, (i) any condition of the Collateral and the Mortgaged Property, (ii) any breach or default on the part of the Borrower in the performance of any of its Borrower’s Obligations under this Financing Agreement, (iii) any act or negligence of the Borrower or of any of its agents, contractors, servants, employees or licensees, or (iv) any act or negligence of any assignee or lessee of the Borrower, or of any agents, contractors, servants, employees or licensees of any assignee or lessee of the Borrower. The Borrower shall indemnify and save the Issuer, the Trustee and the Purchaser harmless from any such claim arising as aforesaid, or in connection with any action or proceeding brought thereon, and upon notice from the Issuer, the Trustee or the Purchaser, the Borrower shall defend them or any of them in any such action or proceeding.

            (b)        Notwithstanding the fact that it is the intention of the parties hereto that the Issuer shall not incur any pecuniary liability by reason of the terms of this Financing Agreement or the undertakings required of the Issuer hereunder, by reason of the issuance of the Bond, by reason of the execution of the Bond Purchase Agreement, the Indenture or this Financing Agreement, or by reason of the performance of any act requested of the Issuer by the Borrower or the Purchaser, including all claims, liabilities or losses arising in connection with the violation of any statutes or regulations pertaining to the foregoing; nevertheless, if the Issuer should incur any such pecuniary liability, then in such event the Borrower shall indemnify and hold the Issuer harmless against all claims, demands or causes of action whatsoever, by or on behalf of any Person arising out of the same or out of any offering statement or lack of offering statement in connection with the sale or resale of the Bond and all costs and expenses incurred in connection with any such claim or in connection with any action or proceeding brought thereon, and upon notice from the Issuer, the Borrower shall defend the Issuer in any such action or proceeding.

All references to the Issuer or the Trustee in this Section 8.02 shall be deemed to include their members, directors, trustees, officers, employees, and agents.

            (c)        Notwithstanding anything to the contrary contained herein, the Borrower shall have no liability to indemnify the Issuer, the Trustee or the Purchaser against claims or damages resulting from the Issuer’s, the Trustee’s or the Purchaser’s own gross negligence, willful misconduct or bad faith.

             Section 8.03.         Issuer to Assign and Subordinate Interest to Trustee. The parties hereto agree that the Issuer shall assign and grant a security interest in this Financing Agreement to the Trustee. In order to secure payment of the Principal Balance of the Bond and interest thereon, the Issuer shall grant to the Trustee a security interest in all of the Issuer’s right, title, and interest in and to this Financing Agreement, except for the Issuer’s rights under Sections 4.03, 8.02 and 9.04 hereof.

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ARTICLE 9
DEFAULTS AND REMEDIES

             Section 9.01.         Event of Default Defined. Any of t he fol l o wi ng event s i s hereby defined as and declared to be and to constitute an Event of Default (whatever the reason for such an Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

            (1)        If default shall be made in the due and punctual payment of any installment of interest on the Note when it becomes due and payable; or

            (2)        If default shall be made in the due and punctual payment of any installment of principal on the Note when it becomes due and payable; or

            (3)        If default shall be made in the due and punctual payment of any other money required to be paid to the Issuer under the provisions hereof and such default shall have continued for a period of ten (10) days after written notice thereof, specifying such default, shall have been given by the Issuer or the Trustee to the Borrower; or

            (4)        If default shall be made in the performance or observance of any other of the covenants, agreements or conditions on the part of the Borrower contained in this Financing Agreement or the Note, and such default shall have continued for a period of thirty (30) days after written notice thereof given in the manner provided in clause (3) above, without Borrower’s commencing to cure the default where permitted; or

            (5)        If any representation or warranty by the Borrower is found, by the Issuer, the Trustee or the Purchaser, to be false or misleading; or

            (6)        If Borrower makes a contract or arrangement of any kind, the performance of which contract or arrangement by another party does or could give rise to a lien on the Project, without first obtaining the written authorization of the Purchaser; or

            (7)        If an Event of Default as defined in the Indenture, or any breach of any provision of the Mortgage has occurred and is continuing, taking into account any applicable cure or grace period as may be provided in the Indenture or the Mortgage; or

            (8)        If the Borrower shall file a petition in bankruptcy or is adjudicated as bankrupt or insolvent, or makes an assignment for the benefit of its creditors or consents to the appointment of a receiver of itself or of its property, or institutes proceedings for its reorganization, or proceedings instituted by others for its reorganization are not dismissed within thirty (30) days after the institution thereof, or a receiver or liquidator of the Borrower of any substantial portion of its property is appointed and the order appointing such receiver or liquidator shall not be vacated within thirty (30) days after the entry thereof.

            Notwithstanding the foregoing, so long as an event of Force Majeure is occurring and the Borrower is unable to perform or observe any agreement, term or condition hereof which would give rise to an Event of Default under subsection (4) above, the Borrower shall not be deemed in default during the continuance of such inability. However, the Borrower shall immediately notify the Trustee and the Issuer of the extent and nature of any problem created by an event of Force Majeure and limit delays in performance to that required by the event and take all reasonable steps to minimize delays. This provision is not effective, however, unless the failure to perform is beyond the control and without the fault or negligence of the Borrower.

            Once the event of Force Majeure is over, the Borrower must make all reasonable efforts to become in compliance as soon as possible. If the Borrower does not proceed diligently and come into compliance within 30 days after the event is over, it is then in default.

             Section 9.02.         Remedies. Whenever an Event of Default shall have occurred and be continuing, the Issuer, the Trustee, or the Purchaser as provided in Section 8.08 of the Indenture, may take one or any combination of the following remedial steps:

            (a)        if and only if the Trustee has declared the Principal Balance of the Bond immediately due and payable by written notice to the Borrower, declare an amount equal to all amounts then due and payable on the Note, whether by acceleration of maturity (as provided in the Security Documents) or otherwise, to be immediately due and payable under this Financing Agreement, whereupon the same shall become immediately due and payable; or

            (b)        take whatever action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due, or to enforce performance and observance of any obligation, agreement or covenant of the Borrower under this Financing Agreement.

            Any amounts collected pursuant to action taken under this Section shall, subject to Sections 8.06 and 9.02 of the Indenture, first be applied, on a parity basis, to pay costs incurred by the Issuer, the Trustee and the Purchaser in connection therewith and the remainder shall be applied to the interest or the Principal Balance due and payable under the Bond, as determined by the Purchaser.

            The Borrower and the Issuer agree that monetary damages may not be an adequate remedy for default in compliance with non-monetary covenants in this Financing Agreement and, therefore, the Issuer or Trustee, with the written approval of the Purchaser, may seek the remedy of specific enforcement.

             Section 9.03.         No Remedy Exclusive. No remedy herein conferred upon or reserved to the Issuer, the Trustee or the Purchaser is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Financing Agreement or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon an Event of Default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right or power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the Issuer, the Trustee or the Purchaser to exercise any remedy reserved to it in this ARTICLE, it shall not be necessary to give any notice, other than such notice as may be required in this ARTICLE; provided that the failure to provide any such notice shall not result in a waiver of any such Event of Default or a loss of any such remedy. Such rights and remedies as are given the Issuer hereunder shall also extend to the Trustee and the Purchaser, subject to the provisions of the Security Documents, who shall be entitled to the benefit of all covenants and agreements herein contained.

             Section 9.04.         Agreement to Pay Attorneys’ Fees and Expenses. In the event the Borrower should default under any of the provisions of this Financing Agreement and the Issuer, the Trustee or the Purchaser should employ attorneys or incur other expenses for the collection of payments required hereunder or the enforcement of performance or observance of any Borrower’s Obligation or agreement on the part of the Borrower herein contained, the Borrower agrees that it will on demand therefor pay to the Issuer, the Trustee or the Purchaser the reasonable fees and expenses of such attorneys and, such other reasonable out-of-pocket expenses so incurred by the Issuer, the Trustee or the Purchaser.

             Section 9.05.         No Additional Waiver Implied by One Waiver. In the event any agreement contained in this Financing Agreement should be breached by either party and thereafter waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder.

             Section 9.06.         Trustee May File Proof of Claim. If an Event of Default shall have occurred and be continuing under Section 9.01(7) hereof, the Trustee and the Purchaser shall be entitled and empowered by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this Financing Agreement, irrespective of whether the Principal Balance of the Note or any amount hereunder shall then be due and payable as therein or herein expressed or by declaration or otherwise, and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of the Security Documents, and, in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Purchaser allowed in such judicial proceedings relative to the Borrower, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction, on a parity, of the charges and expenses of the Trustee and the Purchaser, and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized to make such payments to the Trustee and the Purchaser, and to pay to the Trustee and the Purchaser, any amount due for compensation and expenses, including reasonable counsel fees and expenses incurred by them up to the date of such distribution.

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ARTICLE 10
PREPAYMENT OF THE LOAN

             Section 10.01.         Optional Prepayment of the Loan. The Issuer hereby grants Borrower the option to prepay all or any portion of the Loan in accordance with the terms and conditions of the Bond.

             Section 10.02.         Mandatory Prepayment of the Loan. Borrower shall prepay the Loan in full prior to the expiration of this Financing Agreement if (i) as a result of any changes in the constitution of the State of Wyoming or the Constitution of the United States of America or of legislative or administrative action (whether state or federal) or in the event of the repeal or material modification of the current General Mining Law of 1872 during the Term of the Financing Agreement or of final decree, judgment or order of any court or administrative body (whether state or federal), this Financing Agreement becomes void or unenforceable or impossible to perform in accordance with the intent and purpose of the parties as expressed in this Financing Agreement, or (ii) all or substantially all of the Collateral shall have been damaged or destroyed or there occurs condemnation of all or substantially all of the Mortgaged Property or the taking by eminent domain of such use or control of the Mortgaged Property as in each case renders the Collateral and the Mortgaged Property unsatisfactory to the Purchaser as security on the Bond and Borrower has not elected, as expressed in a certificate delivered to the Trustee within thirty (30) days after the occurrence of such event, to restore or replace the Collateral and the Mortgaged Property with other property of similar value that is acceptable to the Purchaser.

             Section 10.03.         Prepayment Price.

            (a)        In the case of a partial prepayment pursuant to Section 10.01 hereof, the prepayment price shall equal the principal amount so redeemed plus accrued interest thereon to the date of redemption, without penalty or premium. The principal so redeemed shall be applied so as to reduce the Principal Balance of the Note but there shall be no reduction in the quarterly payments of principal and interest that are due thereon.

            (b)        In the case of prepayment of the entire Loan pursuant to Sections 10.01 or 10.02 hereof, the prepayment price shall be a sum sufficient, together with any other funds available for that purpose, to pay, or redeem and pay the Principal Balance of the Bond then Outstanding at the applicable payment price, as to principal and interest to said payment date all as set forth in the Bond, and to pay all Additional Charges and Administration Expenses accrued and to accrue through final payment of the Bond and all other liabilities of Borrower accrued and to accrue hereunder through final payment of the Bond.

             Section. 10.04.         Notice of Prepayment. In order to exercise a prepayment option granted in, or to consummate a mandatory prepayment required by, this Article, Borrower shall give notice to the Trustee which shall specify therein the date of closing of the prepayment which date shall be not less than thirty (30) days nor more than sixty (60) days from the date the notice is mailed. The failure to give notice of a mandatory prepayment required by Section 10.02 hereof shall not relieve Borrower of its obligation to make such a prepayment and the date of closing of such prepayment shall be not less than ten (10) days nor more than thirty (30) days after the event giving rise to such prepayment, as determined by the Borrower or, if the Borrower shall fail or refuse to make such a determination, by the Trustee after consultation with the Purchaser.

            Section 10.05.         Effect of Events of Default on Optional Prepayment. The option to prepay granted to Borrower in Section 10.01 hereof may be exercised whether or not Borrower is in default hereunder, provided that such default is cured on the date of closing of such prepayment. Further, any and all costs and expenses incurred by the Issuer, the Trustee or the Purchaser relating to or as a result of such default, including attorney fees, shall be reimbursed to the Issuer, the Trustee or the Purchaser by the Borrower on or before the date of closing of such prepayment.

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ARTICLE 11
BORROWER’S OPTIONS

             Section 11.01.         Direction of Investments . Except during the continuance of an Event of Default, the Borrower, with the written approval of the Purchaser, shall have the right during the Term of the Financing Agreement to direct the Trustee to invest or reinvest all monies held for the credit of Funds established by ARTICLE FIVE of the Indenture, subject, however, to the further conditions of ARTICLE SIX of the Indenture.

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ARTICLE 12
MISCELLANEOUS

             Section 12.01.         Term of the Financing Agreement. This Financing Agreement shall remain in full force and effect from the date hereof to and including such time as (a) the Principal Balance of the Bond and interest accrued thereon and the fees and expenses of the Issuer, the Trustee and the Purchaser shall have been fully paid or provision satisfactory to the Person to whom such amounts are payable have been made for such payments, or (b) the Trustee shall no longer hold any moneys under ARTICLE SEVEN of the Indenture, whichever is later.

The Issuer, the Borrower, the Trustee and the Purchaser may, by written notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.

             Section 12.03.         Binding Effect. Except as provided herein, this Financing Agreement shall inure to the benefit of and shall be binding upon the Issuer, the Borrower and their respective successors and assigns and is intended to be the entire agreement between the parties hereto.

             Section 12.04.         Severability. In the event any provision of this Financing Agreement shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof and this Financing Agreement shall remain in full force and effect.

             Section 12.05.         Amount Remaining in Debt Service Fund. Subject to Section 12.08 of the Indenture, it is agreed by the parties hereto that any amounts remaining in the Debt Service Fund upon expiration of this Financing Agreement, and after payment in full of the fees, charges and expenses of the Issuer, the Trustee and the Purchaser in accordance with the Indenture, the Administration Expenses and all other amounts required to be paid under this Financing Agreement and the Indenture, shall belong to and be paid to Borrower by Trustee.

             Section 12.06.         Authority of Borrower’s Representative . Whenever under the provisions of this Financing Agreement the approval of Borrower is required, or Issuer is required to take some action at the request of Borrower, such approval or such request shall be made by Borrower’s Representative unless otherwise specified in this Financing Agreement, and the Issuer or the Trustee shall be authorized to act on any such approval or request.

             Section 12.07.         Authority of Issuer’s Representative. Whenever under the provisions of this Financing Agreement the approval of Issuer is required, or Borrower is required to take some action at the request of Issuer, such approval or such request shall be made by the Issuer’s Representative unless otherwise specified in this Financing Agreement, and the Borrower or the Trustee shall be authorized to act on such approval or request.

             Section 12.08.         Indemnity. The Borrower will pay, and will protect, indemnify and save the Issuer and Trustee harmless from and against all liabilities, losses, damages, costs, expenses (including reasonable attorneys’ fees), causes of action, suits, claims, demands and judgments of any nature arising from:

(a)        any injury to or death of any person or damage to property in or upon the Project and the Mortgaged Property or growing out of or connected with the use, nonuse, condition or occupancy of the Project and the Mortgaged Property or a part thereof;

(b)        violation of any agreement or condition of this Financing Agreement, except by the Issuer;

(c)        violation of any contract, agreement or restriction by the Borrower relating to the Project and the Mortgaged Property which shall have existed at the time of the making of the Loan; and

(d)        violation of any law, ordinance or regulation affecting the Project, the Collateral, the Mortgaged Property or a part thereof or the ownership, occupancy or use thereof.

             Section 12.09.         Amendments. No term or provision of this Financing Agreement may be amended, modified, revoked, supplemented, waived or otherwise changed except by a written instrument executed by the party to be charged with such amendment, modification, revocation, supplement, waiver or change.

             Section 12.10.         Execution in Counterparts. This Financing Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

             Section 12.11.         Governing Law. This Financing Agreement shall be governed and construed in accordance with the laws of the State of Wyoming.

             Section 12.12.         Captions. The captions and headings in this Financing Agreement are for convenience only and no way define, limit or describe the scope or intent of any provisions or sections of this Financing Agreement.

             Section 12.13.         No Pecuniary Liability of Issuer. No provision, covenant or agreement contained in this Financing Agreement or any obligations herein imposed upon Issuer, or the breach thereof, shall constitute or give rise to a pecuniary liability of Issuer or a charge against its general credit or taxing powers. In making the agreements, provisions and covenants set forth in this Financing Agreement, Issuer has not obligated itself except with respect to the application of the revenues, income and all other property derived pursuant to this Financing Agreement.

             Section 12.14.         Counting of Days. Unless otherwise expressly stated, the term “days” when used herein means calendar days. If any time period ends on a Saturday, Sunday or holiday, officially recognized by the State of Wyoming or Trustee, the period shall be deemed to end on the next succeeding Business Day.

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ARTICLE 13
DISCLOSURE OF INFORMATION

             Section 13.01.         Disclosure of Information. Borrower shall provide to the Issuer and the Purchaser the following items within the time lines noted: (1) within one hundred and eighty (180) days after the end of its tax year, copies of audited annual financial statements for the preceding tax year, for Borrower or any consolidated financial statements of which Borrower is a subsidiary; (2) on or before October 15 of each year, copies of federal income tax returns for Borrower or any tax filing organization of which Borrower is a subsidiary, as filed with the Internal Revenue Service, including any amendments or audit adjustments with respect thereto; and (3) within one hundred and eighty (180) days after the end of its tax year, projected financial statements for its current tax year, and the next two succeeding tax years. The Issuer and the Purchaser reserve the right to request, and the Borrower agrees to provide to the requesting party, additional information and documentation with respect to all information provided by Borrower pursuant to this Financing Agreement.

            All documents provided to the Issuer and the Purchaser by any party are subject to the provisions of the Wyoming Public Records Act (Wyo. Stat. §§ 16-4-201 through 16-4-304).

             IN WITNESS WHEREOF, the Issuer has caused this Financing Agreement to be executed in its name and the Borrower has caused this Financing Agreement to be executed in its name all as of the date first above written.

[Counterpart Signature Page to Financing Agreement for Borrower]

URANERZ ENERGY CORPORATION
a Nevada corporation

By:      /s/ "Glenn Catchpole"                                                  
Its:     Glenn Catchpole

By:      ____________________________________
Its:      ____________________________________

EXHIBIT A

DESCRIPTION OF THE NICHOLS RANCH PROJECT

            Uranerz Energy Corporation (“Uranerz” or the “Corporation”) is a corporation domiciled in the State of Nevada and registered to do business in the State of Wyoming. The Corporation is a publically traded enterprise with primary listing on the NYSE MKT stock exchange and is also listed on the Toronto stock exchange, both under the symbol “URZ.” The Corporation’s corporate and operational office is located in Casper, Wyoming.

            Uranerz is currently developing a uranium mine in the central Powder River Basin of Wyoming in what is sometimes referred to as the historic Pumpkin Buttes uranium mining district. Currently the Corporation is in the last stage of constructing its Nichols Ranch Project, which consists of a central processing facility at the Nichols Ranch property and a satellite facility at the Hank property. The central processing facility is being licensed for a capacity of 2 million pounds per year of uranium (as U3O8). It is planned that this facility will process uranium-bearing well field solutions from Nichols Ranch, as well as uranium-loaded resin transported from the Hank satellite facility, plus uranium-loaded resin from any additional satellite deposits that may be developed on the Corporation's other Powder River Basin properties. The earth work is complete, the buildings are up, the processing equipment has been installed inside the main building and the well field is nearly complete. The Corporation has all the state and federal permits needed to build and operate an ISR uranium mine in Wyoming. Construction is scheduled to be completed in 2013. The Corporation estimates the life of the mine to be between 10 and 20 years.

            Funding for all Corporation operations and mine construction from start-up in 2005 to May 2013 has been raised though equity financing. Proceeds of the $20 million Series 2013 Bond will be used to pay the Corporation’s outstanding construction loan and costs of completion of the construction.

            The Corporation has contracts in-place to sell about half of its planned production to two of the largest U.S. nuclear utilities and is focusing its sales efforts on getting more contracts with U.S. nuclear utilities as the U.S. has 104 nuclear reactors; the largest nuclear fleet in the world.

            Part of the Uranerz mission is to provide quality and rewarding employment in a workplace that is safe and healthy, and, through training and leadership, establish and maintain a highly productive, motivated and ethical workforce with worker and public safety, and protection of the environment paramount. Currently the Corporation has 38 Wyoming employees with 10 working in the Casper office and 28 working at the mine site. The Corporation also routinely has 15 to 25 contractors working at the mine on any given day. Once in production these numbers will in increase by about 50%. The Corporation’s management team has extensive experience in ISR uranium mining (125 man-years), mostly in Wyoming.

EXHIBIT B

FORM OF PROMISSORY NOTE

THIS SERIES 2013 NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED

             FOR VALUE RECEIVED, URANERZ ENERGY CORPORATION , a Nevada corporation (the “Borrower”), for value received, promises to pay to the order of JOHNSON COUNTY, WYOMING (the “Issuer”), or registered assigns, the principal sum of TWENTY MILLION DOLLARS ($20,000,000) , or so much thereof as remains unpaid from time to time (the “Principal Balance”), together with interest thereon from the date hereof (computed on the basis of a 360-day year of twelve 30-day months), at an annual fixed rate of five and three-quarters percent (5.75%). Interest only on this Note shall be paid in arrears in quarterly installments not later than the first Business Day of January 2014, April 2014, July 2014 and October 2014. Thereafter, principal and interest on this Note shall be fully amortized over six (6) years and paid in quarterly installments not later than the first Business Day of each January, April, July and October, commencing January 1, 2015 through October 1, 2020, or such earlier date as the Principal Balance hereof with interest thereon shall have been paid in full.

            This Note has been executed and delivered by the Borrower pursuant to that certain Financing Agreement dated as of November 26, 2013 (the “Financing Agreement”), by and between the Issuer and the Borrower and assigned and endorsed by the Issuer to UMB BANK, n.a., as trustee (the “Trustee”) under an Indenture of Trust defined below. Terms used but not defined herein shall have the meanings ascribed to such terms in the Financing Agreement and the Indenture of Trust.

            Under the Financing Agreement, the Issuer has loaned to the Borrower the proceeds received from the sale of its $20,000,000 Johnson County, Wyoming, Taxable Industrial Development Revenue Bond (Uranerz Energy Corporation Project), Series 2013, dated as of the date of delivery thereof (the “Bond”), to be applied by the Borrower to pay the cost of a Project as defined in the Financing Agreement. The Borrower has agreed to repay such Loan by making Loan Payments (as defined in the Financing Agreement) at the times and in the amounts set forth in this Note. The Bond has been issued, concurrently with the execution and delivery of this Note, pursuant to Title 15, Chapter 1, Article 7, Wyo. Stat. and a Resolution passed and adopted by the Board of County Commissioners of the Issuer on November 12, 2013, and is secured by an Indenture of Trust dated as of November 26, 2013 (the “Indenture”), by and between the Issuer and the Trustee. The Bond has been additionally secured by a Mortgage, Assignment of Revenues, Security Agreement, Fixture Filing and Financing Statement dated as of 22, 2013 (the “Mortgage”), executed and delivered by the Borrower, as grantor and debtor, to the Trustee, as beneficiary and secured party, and an Assignment of Product Sales Contracts and Processing Agreement dated as of November 26, 2013 (the “Assignment”), by the Borrower to the Trustee.

            To provide funds to pay the interest on and principal of the Bond as and when due, the Borrower hereby agrees to and shall make Loan Payments as follows: Interest only on this Note shall be paid in quarterly installments not later than the first Business Day of January 2014, April 2014, July 2014 and October 2014. Thereafter, principal and interest on this Note shall be fully amortized over six (6) years and paid in quarterly installments not later than the first Business Day of each January, April, July and October, commencing January 1, 2015 through October 1, 2020 (the “Maturity Date”), or such earlier date as the Principal Balance thereof with interest thereon shall have been paid in full. Payments shall be applied first to interest due on the Principal Balance and thereafter to reduction of the Principal Balance. In addition, to provide funds to pay the interest on and principal of the Bond as and when due at any other time, the Borrower hereby agrees to and shall make Loan Payments on any other date on which any interest on and principal of the Bond shall be due and payable, whether upon acceleration, call for redemption or otherwise.

            If payment or provision for payment in accordance with the Indenture is made in respect of the interest on and principal of the Bond from moneys other than Loan Payments, this Note shall be deemed paid to the extent such payments or provision for payment of interest on and principal of the Bond have been made. The Borrower shall receive a credit against its obligation to make Loan Payments hereunder to the extent of the moneys delivered to the Trustee for the payment of interest on and principal of the Bond and any other amounts on deposit in the Debt Service Fund and available to pay interest on and principal of the Bond pursuant to the Indenture. Subject to the foregoing, all Loan Payments shall be in the full amount required hereunder.

            All Loan Payments shall be payable in lawful money of the United States of America, in immediately available funds, and shall be made to the Trustee at its designated corporate trust office for the account of the Issuer, deposited in the Debt Service Fund and used as provided in the Indenture.

            The obligation of the Borrower to make the payments required hereunder shall be absolute and unconditional and the Borrower shall make such payments without abatement, diminution or deduction regardless of any cause or circumstances whatsoever including, without limitation, any defense, set-off, recoupment or counterclaim which the Borrower may have or assert against the Issuer, the Trustee or any other person.

            This Note is subject to optional redemption and special redemption upon certain events of casualty and condemnation, in whole or in part, upon the terms and conditions set forth in the Financing Agreement. Any optional, special or mandatory prepayment is also subject to satisfaction of any applicable notice, deposit or other requirements set forth in the Financing Agreement or the Indenture.

            Whenever an Event of Default under Section 9.01 of the Financing Agreement shall have occurred, the unpaid Principal Balance of and accrued interest on this Note may be declared or may become due and payable as provided in Section 9.02 of the Financing Agreement; provided that any annulment of a declaration of acceleration with respect to the Bond under the Indenture shall also constitute an annulment of any corresponding declaration with respect to this Note.

            The Borrower hereby waives presentment for payment, demand, protest, notice of protest, notice of dishonor and all defenses on the grounds of extension of time for the payment hereof which may be given (other than in writing) by the Trustee.

            The Borrower hereby certifies that all conditions, acts and things required to exist, happen and be performed precedent to and in the issuance of this Note, exist, have happened and have been performed, and that the issuance of this Note has been duly authorized by the Borrower.

(Balance of the page intentionally left blank.)

             IN WITNESS WHEREOF, the Borrower has executed this Note as of the date first above written.

           URANERZ ENERGY CORPORATION

By:     /s/ "Glenn Catchpole"                             
Name: Glenn Catchpole
Title:   President and Chief Executive Officer

ENDORSEMENT AND ASSIGNMENT

             FOR VALUE RECEIVED, the undersigned, on behalf of Johnson County, Wyoming (the “Issuer”), hereby endorses and sells, assigns and transfers unto UMB BANK, n.a., as Trustee under the Indenture of Trust dated as of November 26, 2013, by and between said Trustee and the Issuer, the within Note and all rights thereunder, and hereby constitutes and appoints said Trustee to transfer the within Note on the books kept for registration thereof, with full power of substitution in the premises.

             IN WITNESS WHEREOF, the undersigned have set their hands as of the 26th day of November, 2013.

           JOHNSON COUNTY, WYOMING

By:      /s/ "Delbert Eitel"                                   
            Chairman, Board of County Commissioners

Attest:

/s/ "Vicki Edelman"                            
County Clerk

EXHIBIT D

FORM OF BORROWER’S CERTIFICATE AND REQUEST NO. ____
FOR DISBURSEMENT OF FUNDS FROM PROJECT FUND

            The undersigned, _________________, Borrower’s Representative under that certain Financing Agreement dated as of _____________, 2013 (the “Financing Agreement”) between Johnson County, Wyoming (the “County”) and Uranerz Energy Corporation (the “Borrower”), hereby certifies pursuant to Section 3.02 of the Financing Agreement as follows:

(1)        I have read the Financing Agreement and definitions relating thereto and have reviewed appropriate records and documents of the Borrower relating to the matters covered by this Certificate and Request. No event has occurred and is continuing which constitutes an Event of Default under the Financing Agreement or would constitute an Event of Default thereunder but for the requirement that notice be given or time lapse or both. The insurance required under Section 3.9 of the Mortgage, Assignment of Revenues, Security Agreement, Fixture Filing and Financing Statement remains in full force and effect;

(2)        The amount and nature of each item of Costs of Issuance or Project Costs due and payable and hereby requested to be paid to a person other than the Borrower or to the Borrower are shown on Schedule A attached hereto;

(3)        Each item of Costs of Issuance or Project Costs, for which payment or reimbursement is hereby requested, is or was necessary in connection with the Project and qualifies as such an item under the Financing Agreement;

(4)        No item of Costs of Issuance or Project Costs hereby requested to be paid or reimbursed has formed the basis for any previous payment or, except as noted, request therefor, from the Project Fund;

(5)        Neither the Collateral nor the Mortgaged Property have been injured or damaged by any casualty in a manner which, if not repaired or replaced, would materially impair the ability of the Borrower to meet its obligations under the Financing Agreement and the Indenture;

(6)        To the best knowledge of the Borrower the current General Mining Law of 1872 has not been repealed or modified in any way which would materially impair the ability of the Borrower to meet its obligations under the Financing Agreement and the Indenture, since the adoption of the Bond Resolution by the Issuer;

(7)        There has not been filed with or served upon the Borrower any notice of any lien, right to a lien or attachment upon or claim affecting the right of any person, firm or corporation to receive payment of the respective amounts stated in this request which has not been released or will not be released simultaneously with the payment of such obligation;

(8)        No liens exist other than those that will be released upon payment by the Borrower or the Trustee for construction contracts or other persons to whom it was owed of the amounts requested under this Request;

(9)        All payments paid to the Borrower or the contractors/payees under previous Requests have been paid to the respective contractors or other Persons entitled thereto;

(10)      Accompanying this Certificate and Request are full, true and correct copies of lien waivers relating to the work completed and paid pursuant to the Request immediately prior to this Request, and invoices or statements for the costs requested to be paid hereby.

            You are hereby requested to disburse from the Project Fund the amounts shown on Schedule A and make payments to the Borrower or to the persons entitled to receipt thereof as shown on said Schedule.

            WITNESSETH my hand this ____ day of ___________, ____.

APPROVED:

THE STATE OF WYOMING, ACTING
BY AND THROUGH THE WYOMING
STATE TREASURER

By:     _________________________________
Title:  _________________________________
Date:  _________________________________

NOTE RE FINAL REQUEST: If this is the final Request to be submitted to the Trustee under the Indenture and the Financing Agreement, please read the following paragraph and initial as applicable.

Borrower further certifies that:

EXHIBIT E

PERMITTED ENCUMBRANCES

Permitted Encumbrances

Subject to the terms of this Financing Agreement, the Bond Purchase Agreement, the Indenture, the Security Documents and the Arkose Mining Venture Agreement, the Collateral and the Mortgaged Property (other than the Arkose Mining Venture property set forth in EXHIBIT A of the Mortgage) securing the Bond shall be the sole and exclusive property of, and title thereto shall continue to be vested in, the Borrower.

Permitted Encumbrances shall include: (a) any security interest granted to or held by Johnson County, Wyoming (the “Issuer”), UMB BANK, n.a. (the “Trustee”) or the State of Wyoming acting by and through the Wyoming state Treasurer (the “Purchaser”) under the Loan Documents; (b) any other encumbrance in favor of the Issuer, the Trustee or the Purchaser; (c) any encumbrance which is approved in writing by the Purchaser; (d) any encumbrance created under the agreement entitled the “Processing Agreement for Uranium Concentrates,” dated November 28, 2011, entered into between the Borrower and a third party for the processing of uranium resins produced by the Borrower, which contains an obligation of the Borrower which might exceed $200,000 or more per period of 12 months if the Borrower does not tender for processing a specified minimum quantity of resins to Power Resources in any of the calendar years 2013, 2014 and 2015; (e) any operating lease of personal property entered into in the ordinary course of business and having a term (including renewals) of greater than one year that is deemed to be an encumbrance under applicable law; (f) any security interest in cash or cash equivalent on deposit with any person or entity as collateral for reclamation obligations pertaining to the Properties identified in the Mortgage; (g) any encumbrance for purchase money mortgages and other security interests on equipment acquired, leased or held by Borrower (including equipment held by Borrower as lessee under leveraged leases) in the ordinary course of business to secure the purchase price of or rental payments with respect to the equipment or to secure indebtedness incurred solely for the purpose of financing the acquisition (including acquisition as lessee under leveraged leases), construction or improvement of any of the equipment, as long as the property secured by that encumbrance is limited to the relevant equipment; (h) encumbrances of a collecting bank arising in the ordinary course of business under Section 4-210 of the Uniform Commercial Code in effect in the relevant jurisdiction; (i) any encumbrance arising by operation of law in the ordinary course of business in good faith including (1) workman’s, contractor’s, subscontractor’s, mechanic’s, materialman’s, supplier’s, solicitor’s or other similar statutory liens, (2) liens in favor of any government agency, (3) liens for taxes, assessments and governmental charges or levies not yet due and payable, (4) the terms and conditions of mineral leases under which Borrower is a lessee, and liens affecting the interests of any third party lessor as the property owner under the relevant lease, (5) the terms and conditions of the Leases, and (6) liens of pledges or deposits under workers’ compensation laws or similar legislation, unemployment insurance or other types of social security or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, governmental contracts, performance and return of money bonds and similar obligations; (j) any zoning or similar law or right reserved to or vested in any government agency to control or regulate the use of any real property; (k) registered restrictions, covenants, land use contracts, building schemes, declarations of covenants, conditions and restrictions, servicing agreements in favor of any government agency, easements, rights-of-ways, servitudes or other similar rights in or with respect to real property (including open space and conservation easements, restrictions or similar agreements and rights of way and servitudes for railways, water, sewer, drainage, gas and oil pipelines, electricity, light, power, telephone, telegraph, internet or cable television services and utilities) granted to or reserved by third parties; and (l) any right reserved to or vested in any government agency, by the terms of any permit, license, certificate, order, grant, classification (including any zoning laws and ordinances and similar legal requirements), registration or other consent, approval or authorization acquired from any government agency, to terminate any permit, license, certificate, order, grant, classification, registration or other consent, approval, or authorization or to require annual or other payments as a condition to the continuance of that right.

(Royalty Burdens on URANERZ Properties
Unpatented Mining Claims and Surface Use Agreements)

Without modifying the representations and warranties contained within this Financing Agreement or any of the exceptions thereto, the following are instruments under which third parties may currently have contractual or statutory rights to the surface or sub-surface covered by Unpatented Mining Claims, and those and any similar existing or future instruments shall also constitute Permitted Encumbrances:

Nichols Ranch Project:

North Reno Creek Project:

(Royalty Burdens on URANERZ Properties
Unpatented Mining Claims and Surface Use Agreements)

(Balance of the page intentionally left blank.)

(Royalty Burdens on URANERZ Properties
Unpatented Mining Claims and Surface Use Agreements)

(Royalty Burdens on ARKOSE Properties
Fee Leases and Surface Use Agreements)

Jane Dough Project:

(Royalty Burdens on ARKOSE Properties
Fee Leases and Surface Use Agreements)

(Royalty Burdens on ARKOSE Properties
Fee Leases and Surface Use Agreements)

(URANERZ and ARKOSE Unpatented Mining Claims Subject to Royalty Burdens)

EXHIBIT F

PRODUCT SALES CONTRACTS AND PROCESSING AGREEMENT

Product Sales Contracts

Processing Agreement

EXHIBIT H

LIENS TO BE PAID ON THE DATE OF CLOSING ON THE BOND

Mortgage, Security Agreement, Assignment, Financing Statement and Fixture Filing dated June 4, 2013 (the “June 2013 Mortgage”), which was filed in the official records of Johnson County, Wyoming, on June 4, 2013, at Book 88A-235, Pages 136-170, Reception No. 129917, and in the official records of Campbell County, Wyoming, on June 4, 2013, at Book 2798 of Photos, Pages 1- 35, Reception No. 983972, from the Borrower, as mortgagor, to and for the benefit of Deans Knight Capital Management LTD (“Deans Knight”), with mailing address of 1500-999 West Hastings Street, Vancouver, British Columbia V5C 2W2, as mortgagee, as Portfolio Manager for each of the Deans Knight Investors under that certain Note Purchase Agreement dated as of the 31 ^st   day of May, 2013.

This Mortgage, Assignment of Revenues, Security Agreement, Fixture Filing and
Financing Statement contains after-acquired property provisions.

THIS INSTRUMENT COVERS THE INTEREST OF MORTGAGOR IN MINERALS OR THE LIKE BEFORE EXTRACTION AND THE SECURITY INTEREST CREATED BY THIS INSTRUMENT ATTACHES TO SUCH MINERALS IN-PLACE, AS EXTRACTED AND TO THE ACCOUNTS RESULTING FROM THE SALE THEREOF. THIS INSTRUMENT COVERS THE INTEREST OF MORTGAGOR IN FIXTURES, EQUIPMENT AND COLLATERAL SUBJECT TO THE UNIFORM COMMERCIAL CODE. THIS INSTRUMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OF JOHNSON COUNTY, WYOMING, AND CAMPBELL COUNTY, WYOMING. PRODUCTS OF THE COLLATERAL ARE ALSO COVERED.

______________________________________________________________________

This instrument was prepared by and
when recorded should be returned to:

Freudenthal & Bonds, P.C.
129 East Carlson
Cheyenne, WY 82009

#6 - Mortgage

             THIS MORTGAGE, ASSIGNMENT OF REVENUES, SECURITY AGREEMENT, FIXTURE FILING AND FINANCING STATEMENT (herein sometimes called the “Mortgage”) is made as of November 26, 2013, by and between URANERZ ENERGY CORPORATION , a Nevada corporation, with mailing address of 1701 East “E” Street, P.O. Box 50850, Casper, Wyoming 82605 (herein, together with its successors and assigns, the “Mortgagor”), and UMB BANK, n.a., a national banking association duly organized and validly existing under the laws of the United States, with a corporate trust office located at 1670 Broadway, Denver CO 80202, as trustee and mortgagee hereunder (herein, together with its successors and assigns, the “Trustee” or the “Mortgagee”);

RECITALS AND DEFINITIONS

(Terms not defined herein shall have the meaning provided in the Indenture, the Financing Agreement, the Bond and the Note, in the priority just set forth.)

            Mortgagor hereby represents, covenants and warrants to the Mortgagee, as follows:

             A.         Properties. Except as set forth on EXHIBIT D attached hereto, the Mortgagor owns, leases or holds, certain properties consisting of Unpatented Mining Claims, mineral rights, leasehold and other rights and interests in Johnson County, Wyoming, and Campbell County, Wyoming, as further described herein, including EXHIBIT A incorporated herein by reference, which are collectively referred to herein as the “Properties;” subject only to the paramount title of the United States as to the Unpatented Mining Claims and the rights, if any, of third parties to the Lands within such Unpatented Mining Claims pursuant to the Multiple Mineral Development Act of 1954, the Surface Resources and Multiple Use Act of 1955 and the Federal Land Policy and Management Act of 1976. With respect to the Unpatented Mining Claims listed on the attached EXHIBIT A, except as disclosed in EXHIBIT D and subject to the paramount title of the United States and the statutory rights of third parties as described above, the Mortgagor is in exclusive possession thereof. Nothing herein shall be deemed a representation that any Unpatented Mining Claim contains a discovery of valuable minerals, or that Mortgagor has established or is maintaining pedis possessio rights with respect to any such claim.

             B.         The Nichols Ranch Project. Mortgagor has begun the acquisition, construction, development and equipping of an in situ recovery (“ISR”) processing facility to extract uranium located within Johnson County, Wyoming and Campbell County, Wyoming (as described in EXHIBIT A to the Financing Agreement).

             C.         The Bond; Indenture; and Financing Agreement. For the purpose of financing a portion of the Nichols Ranch Project and to pay the costs incidental to the issuance and delivery of the hereinafter described Bond (the “Costs of Issuance”), Johnson County, Wyoming (with its successor or assigns, the “Issuer”), a political subdivision organized and existing under the constitution and laws of the State of Wyoming (the “State”), will issue and deliver its $20,000,000 Taxable Industrial Development Revenue Bond (Uranerz Energy Corporation Project), Series 2013, dated November 26, 2013 (the “Bond”), pursuant to the Industrial Development Projects Act, Title 15, Chapter 1, Article 7, Wyo. Stat. (the “Act”), under and secured by an Indenture of Trust, of even date herewith, between the Issuer and the Trustee (the “Indenture”), and loan the proceeds thereof to the Mortgagor (the “Loan”) pursuant to a Financing Agreement, of even date herewith, between the Issuer and the Mortgagor, as Borrower (the “Financing Agreement”). Pursuant to ARTICLE 4 of the Financing Agreement, the Mortgagor has covenanted, among other things, to make payments on the Loan in amounts sufficient to pay the principal of and interest on the Bond when due (the “Loan Payments”). The Issuer has, by the Indenture, pledged and granted to the Mortgagee a security interest in all of its right, title and interest in the Financing Agreement (except for certain rights to payment of certain expenses and indemnification), including, but not limited to its right to receive such Loan Payments, in order to secure the full and prompt payment of the principal of and interest on the Bond.

            The Bond will be sold and privately placed with the State of Wyoming, acting by and through the Wyoming State Treasurer (the “Purchaser”), in accordance with Wyo. Stat. § 9-4-715(m) and pursuant to the provisions of a Bond Purchase Agreement by and among the Issuer, the Borrower and the Purchaser, of even date herewith (the “Bond Purchase Agreement”), in order to provide funds to pay the Project Costs and the Costs of Issuance.

             D.         Promissory Note, Principal and Interest. Pursuant to the Financing Agreement, the Mortgagor has covenanted, among other things, to make Loan Payments and has executed one (1) promissory note in favor of the Issuer, which has been assigned to the Trustee, in the principal amount of $20,000,000, dated as of the date of delivery of the Bond and due on October 1, 2020 (the “Note”). The Note and the Bond bear interest at a fixed rate of 5.75%. Pursuant to the Indenture, the Mortgagor is to pay on the Note such amounts as are required to meet the obligations on the Bond. The Mortgagor is or will become justly indebted to the Trustee in the amount of the Bond in accordance with the terms of the Financing Agreement and the Note.

             E.         Loan Documents. The term “Loan Documents” shall mean and include the Bond Purchase Agreement, the Indenture, the Financing Agreement, this Mortgage, the Assignment of Revenues contained within this Mortgage, the Security Agreement contained within this Mortgage, the Fixture Filing contained within this Mortgage, the Financing Statement contained within this Mortgage, the Bond, the Note, and any other documents executed and delivered by the Mortgagor in connection therewith, or otherwise evidencing or securing any indebtedness of the Mortgagor to the Mortgagee.

             F.         The Liabilities. As used in this Mortgage, the term “Liabilities” means and includes all of the following: the principal of and interest on the Note, the Bond and any and all other amounts which may at any time be or become due or owing under this Mortgage, the Indenture and the Financing Agreement; all indebtedness of any kind arising under, and all amounts of any kind which may at any time be or become due or owing to the Mortgagee under or with respect to any of the Loan Documents; all of the covenants, obligations and agreements (and the truth of all representations and warranties) of the Mortgagor in, under or pursuant to the Loan Documents; any and all advances, costs or expenses paid or incurred by the Mortgagee to protect any or all of the Collateral (hereinafter defined), performance of any obligation of the Mortgagor hereunder or collection of any amount owing to the Mortgagee which is secured hereby; any and all other liabilities, obligations and indebtedness, howsoever created, arising or evidenced, direct or indirect, absolute or contingent, recourse or “nonrecourse,” now or hereafter existing or due or to become due, owing by the Mortgagor to the Mortgagee; interest on all of the foregoing; all costs (including, without limitation, attorneys’ fees and expenses) incurred by the Mortgagee or the Trustee in the enforcement and collection of the amounts due under the Loan Documents, and the other documents, instruments, obligations and liabilities described hereinabove; and all renewals, extensions, amendments, and substitutions of the above whether or not Mortgagor executes any renewal or extension agreement.

             G.         The Collateral. For purposes of this Mortgage, the term “Collateral” means all of the following, including any after-acquired property of a like kind or nature. Without prejudice to its obligations contained in the Loan Documents, the Mortgagor shall advise the Mortgagee, within forty-five (45) days after June 30 and December 31 of each calendar year after the date of this Mortgage, as to any additional interests in the Mortgaged Property it has acquired and any other material assets acquired by the Mortgagor during such preceding six-month period and shall, at the request of the Mortgagee or the Purchaser of the Bond, execute, acknowledge and deliver such other and further instruments and agreements necessary or desirable to include such interests and assets as a part of the Mortgaged Property hereunder.

            (a)        All lands and real property, including all leasehold, option rights, mineral interests, Unpatented Mining Claims (lode), amended claims, relocated claims, royalties and other real property interests (whether surface, underground, mineral, or other), as more particularly described on EXHIBIT A attached hereto and incorporated herein by reference (collectively, the “Lands”). The term Lands also includes all rights of the Mortgagor under all Leases, licenses, occupancy agreements, concessions or other arrangements, whether written or oral, whether now existing or entered into at any time hereafter, whereby any person agrees to pay money or any consideration for the use, possession or occupancy of, or any estate in, the Lands, the Nichols Ranch Project or any part thereof, and all rents, income, profits, benefits, avails, advantages and claims against guarantors under any thereof (all of the foregoing is herein referred to collectively as the “Leases”).

            (b)        All processed and unprocessed metallic and nonmetallic ore, including uranium and uranium ore minerals, and all other locatable minerals located in or under all or any part of the Lands or otherwise produced therefrom (the “Ore”), including “As-Extracted Collateral” as defined in Wyo. Stat. § 34.1 -9-102(a)(vi) of the Wyoming Uniform Commercial Code (the “UCC”), all whether in-place, extracted, produced, processed, stored or otherwise severed (collectively, the “Minerals”).

            (c)        All surface or subsurface machinery, equipment, facilities, supplies or other property of whatsoever kind or nature of Mortgagor (excluding drilling rigs, trucks, automotive equipment or other property taken to the premises for temporary uses) now or hereafter located on any of the Lands which are required, used or useful for the production, treatment, storage or transportation of Minerals, including, without limitation, the in situ solution mining facilities now existing or hereafter acquired or constructed, consisting of processing plants, process machinery, and equipment used in connection with such processing plants (the “Equipment”), including all instruments, accounts and chattel paper arising therefrom (including Leases and conditional sales contracts); and the proceeds of all of the foregoing, including proceeds in the form of goods, accounts, chattel paper, documents, instruments and general intangibles. EXHIBIT B, attached hereto, is a listing of all titled Equipment.

            (d)        All Goods, personal property and/or Equipment of Mortgagor that have become so related to the Land that an interest in them arises under Wyoming real estate law (the “Fixtures”).

            (e)        All of Mortgagor's interest now owned or hereafter acquired in and to all Fixtures and all proceeds, products, renewals, increases, profits, substitutions, replacements, additions, amendments and accessions thereof, thereto or therefor.

            (f)        All buildings, structures, replacements, furnishings, fixtures, fittings and other improvements and property of every kind and character now or hereafter located or erected on the Lands, together with all building or construction materials, equipment, appliances, machinery, plant equipment, fittings, apparati, fixtures and other articles of any kind or nature whatsoever now or hereafter found on, affixed to or attached to the Lands, including (without limitation) all motors, boilers, engines and devices for the operation of pumps, and all heating, electrical, lighting, power, plumbing, air conditioning, refrigeration and ventilation equipment (all of the foregoing is herein referred to collectively as the “Improvements”).

            (g)        All building materials, goods, construction materials, appliances (including stoves, refrigerators, water fountains and coolers, fans, heaters, incinerators, compactors, dishwashers, clothes washers and dryers, water heaters and similar equipment), supplies, blinds, window shades, carpeting, floor coverings, elevators, office equipment, growing plants, fire sprinklers and alarms, control devices, equipment (including motor vehicles and all window cleaning, building cleaning, swimming pool, recreational, monitoring, garbage, air conditioning, pest control and other equipment), tools, furnishings, furniture, light fixtures, non-structural additions to the Lands, and all other tangible property of any kind or character now or hereafter owned by the Mortgagor and used or useful in connection with the Lands, any construction undertaken in or on the Lands, any trade, business or other activity (whether or not engaged in for profit) for which the Lands are used, the maintenance of the Lands or the convenience of any guests, licensees or invitees of the Mortgagor, all regardless of whether located in or on the Lands or located elsewhere for purposes of fabrication, storage or otherwise (all of the foregoing is herein referred to collectively as the “Goods”).

            (h)        To the extent assignable, all goodwill, trademarks, trade names, option rights, purchase contracts, contract rights, books and records, Goods and general intangibles of the Mortgagor relating to the Lands, and all accounts, contract rights, instruments, chattel paper and other rights of the Mortgagor for payment of money for property sold or lent, for services rendered, for money lent, or for advances or deposits made, all building permits, governmental permits, licenses and authorizations related to the Lands, any other agreements now or in the future existing respecting the management and operations of the Project, all amendments or modifications to any of the foregoing, and any other management agreements, leasing agreements and any maintenance and service contracts, and any other intangible property of the Mortgagor related to the Lands (all of the foregoing is herein referred to collectively as the “General Intangibles”).

            (i)        To the extent assignable, all building permits, governmental permits, licenses and authorizations related to the Project, as set forth in EXHIBIT F attached hereto.

            (j)        To the extent assignable, all accounts receivable, contract rights, notes receivable, revenues, rents, issues, profits, royalties, avails, income and other benefits derived or owned by the Mortgagor directly or indirectly from the Lands and the Project (all of the foregoing is herein collectively called the “Revenues”).

            (k)        All rights of the Mortgagor to plans and specifications, designs, drawings and other matters prepared for any construction or improvements in or on the Lands (all of the foregoing is herein called the “Plans”).

            (l)        All rights of the Mortgagor under any contracts executed by the Mortgagor as owner with any provider of goods or services for or in connection with any construction undertaken on, or services performed or to be performed in connection with, the Lands and the Project, and any other agreements now or in the future existing respecting the construction and equipping of the Project (including any agreements with soil, mechanical and structural engineers, landscape architects, and other contractors or consultants, and any subcontracts to the construction contract) (all of the foregoing is herein referred to collectively as the “Contracts for Construction”).

            (m)        All contracts for the sale of Ore produced by the Mortgagor (the “Product Sales Contracts”) which have been assigned to the Mortgagee by the Mortgagor, pursuant to that certain Assignment of Product Sales Contracts and Processing Agreement dated as of the date hereof.

            (n)        All contracts, if any, now in effect or hereafter entered into by the Mortgagor, for the sale, purchase, exchange, supply, handling, processing, refining, beneficiation and/or transportation of Ore produced from all or any part of the Lands or from any other lands any production from which, or profits or proceeds from such production, is attributable to any interest in the Lands (all of the foregoing are herein referred to collectively as the “Post-Production Contracts”); provided, however, that Post-Production Contracts excludes Product Sales Contracts.

            (o)        All refunds, rebates, reimbursements, reserves, deferred payments, deposits, cost savings, governmental subsidy payments, governmentally-registered credits (such as emissions reduction credits) and payments of any kind due from or payable by (i) any federal, state, municipal or other governmental or quasi-governmental agency, authority or district (a “Governmental Agency”) or (ii) any insurance or utility company relating to any or all of the Lands and the Project.

            (p)        All refunds, rebates, reimbursements and payments of any kind due from or payable by any Governmental Agency for any taxes, assessments, or governmental or quasi-governmental charges or levies imposed upon Mortgagor with respect to the Collateral or upon any or all of the Collateral.

            (q)        All goods held for sale or lease or furnished under contracts of service, raw materials, works in progress and materials used or consumed in operation of the Project (all of the foregoing are herein collectively called the “Inventory”).

            (r)        All other property or rights of the Mortgagor of any kind or character related to the Lands and the Project, and all proceeds (including, without limitation, insurance and condemnation proceeds) and products of any of the foregoing. (The Lands and the Improvements described herein, and any other property which is real estate under applicable law, is sometimes referred to collectively herein as the “Mortgaged Property”.)

GRANT

             NOW THEREFORE , for and in consideration of the various agreements contained herein and in the Financing Agreement and the Loan Documents, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged by the Mortgagor, and in order to secure the full, timely and proper payment and performance of each and every one of the Liabilities:

THE MORTGAGOR HEREBY MORTGAGES, CONVEYS, GRANTS, BARGAINS, SELLS, TRANSFERS AND ASSIGNS TO THE MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS FOREVER, AND GRANTS TO THE MORTGAGEE A CONTINUING SECURITY INTEREST IN AND TO, ALL OF THE COLLATERAL

             TO HAVE AND TO HOLD the Collateral unto the Mortgagee and its successors and assigns forever, hereby expressly waiving and releasing any and all right, benefit, privilege, advantage or exemption under and by virtue of any and all statutes and laws of the State of Wyoming or other jurisdiction in which the Collateral is located providing for the exemption of homesteads from sale on execution or otherwise.

            Except as set forth in EXHIBIT D, the Mortgagor hereby covenants with and warrants to the Mortgagee and with the purchaser at any foreclosure sale: that at the execution and delivery hereof it (i) is the record owner of and holds an exclusive possessory interest in the Unpatented Mining Claims comprising a portion of the Lands, subject only to the paramount title of the United States of America as to those Unpatented Mining Claims and the rights, if any, of third parties to the lands within such Unpatented Mining Claims pursuant to the Multiple Mineral Development Act of 1954, the Surface Resources and Multiple Use Act of 1955 and the Federal Land Policy and Management Act of 1976; and (ii) holds a good and valid leasehold interest in the Leases; that the Collateral is free from all encumbrances arising by, through or under Mortgagor, or, to Mortgagor’s knowledge, any third party (and any claim of any other person thereto) other than the encumbrances set forth on EXHIBIT D attached hereto and made a part hereof (the “Permitted Encumbrances”); that it has good and lawful right to sell, mortgage and convey the Collateral; that it has the authority to pledge pursuant to this Mortgage a security interest to Mortgagee in the property described herein in EXHIBIT A, which is owned pursuant to the Arkose Mining Venture Agreement and that it has the knowledge to make all representations and warranties contained herein with regards to the Arkose Mining Venture Agreement property; and that, subject to the exceptions and limitations set forth in this paragraph, it and its successors and assigns will forever warrant and defend its right, title and interest in and to the Collateral against all claims and demands whatsoever. Nothing herein shall be deemed a representation that any Unpatented Mining Claim contains a discovery of valuable minerals, or that Mortgagor has established or is maintaining pedis possessio rights with respect to any such claim.

             SUBJECT, HOWEVER , to (i) the condition that the Mortgagee shall not be liable in any respect for the performance of any covenant or obligation (including measures required to comply with any Environmental Laws) of the Mortgagor in respect of the Mortgaged Property, and (ii) the Permitted Encumbrances.

             TO HAVE AND TO HOLD the Mortgaged Property unto the Mortgagee forever to secure the payment and performance in full of the Collateralized Obligations and to secure the performance of all of the obligations of the Mortgagor herein contained.

ARTICLE ONE
DEFINITIONS; INTERPRETATION

             SECTION 1.1.         Defined Terms. In this Mortgage (including its preamble and recitals), the following terms shall have the following meanings:

             “Accounts” has the meaning given such term in the Uniform Commercial Code.

             “Act” means the Industrial Development Projects Act, Title 15, Chapter 1, Article 7, Wyo. Stat.

             “Applicable Law” means, with respect to any Person or matter, any supranational, national, federal, state, regional, tribal or local statute, law, code, rule, treaty, convention, regulation, order, decree, consent decree, injunction, directive, determination or other requirement (whether or not they have the force of law but, if not having the force of law, the compliance with which statute, etc. would be prudent for a Person subject to such statute, etc.) relating to such Person or matter and, where applicable, any interpretation thereof by any Governmental Authority having jurisdiction with respect thereto or charged with the administration or interpretation thereof.

             “Approvals” means each and every approval, authorization, license, permit, consent, variance, land use entitlement, franchise, agreement, filing or registration by or with any Governmental Authority or other Person.

             “Arkose Mining Venture” means the contractual relationship of Borrower and United Nuclear, LLC, a Wyoming limited liability company, under the Arkose Mining Venture Agreement.

             “Arkose Mining Venture Agreement” means that certain agreement dated January 15, 2008, between the Borrower (81%) and United Nuclear, LLC, a Wyoming limited liability company (19%), establishing the Arkose Mining Venture.

             “As-Extracted Collateral” has the meaning given to such term in the Uniform Commercial Code, and shall include the Ore.

             “Assignment of Product Sales Contracts and Processing Agreement” means that certain Assignment of Product Sales Contracts and Processing Agreement, dated as of the date of delivery of the Bond, by and between the Mortgagor and the Mortgagee.

             “Bond” means the $20,000,000 Johnson County, Wyoming, Taxable Industrial Development Revenue Bond (Uranerz Energy Corporation Project), Series 2013, dated as of the date of delivery thereof, issued by Johnson County, Wyoming, pursuant to the Indenture.

             “Bond Purchase Agreement” means the Bond Purchase Agreement, dated as of the date of delivery of the Bond, by and among the Issuer, the Borrower and the Purchaser of the Bond.

             “Claims” is defined in Section 4.6.

             “Collateralized Obligations” is defined in Section 2.1.

             “Contract” means any contract, agreement, license, franchise, lease, arrangement, commitment, understanding or other right or obligation (written or oral).

             “Contract Rights ” has the meaning given such term in the Uniform Commercial Code.

             "Encumbrance" includes any assignment, mortgage, charge, pledge, lien, hypothecation, encumbrance, security interest or insurance securing or in effect securing any obligation, conditional sale or title retention agreement, contractual deposit, trust deposit, escrow arrangement or other preferential arrangement whatsoever, howsoever created or arising, whether absolute or contingent, fixed or floating, legal or equitable, perfected or not, and includes the rights of a lessor pursuant to an operating lease, capitalized lease or sale leaseback arrangement, any right of set-off and any guarantees or indemnities.

             “Equipment” has the meaning given such term in the Uniform Commercial Code and Recital G(c) of this Mortgage and includes every piece of equipment used in the operation of the Nichols Ranch Project.

             “Event of Default ” or “Default” means any breach or default by Mortgagee in the terms and conditions of any or all of the Loan Documents, including, but not limited to the definition of an “Event of Default” as that term is used in the Note.

             “Financing Agreement” means the Financing Agreement dated as of the date of this Mortgage, including any amendments or supplements thereto, by and between the Issuer and the Mortgagee.

             “Fixtures” has the meaning given such term in the Uniform Commercial Code and Recital G(d) of this Mortgage.

             “General Intangibles” has the meaning given such term in the Uniform Commercial Code and Recital G(h) of this Mortgage.

             “Goods” has the meaning given such term in the Uniform Commercial Code and Recital G(g) of this Mortgage.

             "Governmental Authority" means any (i) multinational, federal, provincial, territorial, state, regional, municipal, local or other government or any governmental or public department, (ii) court, tribunal, arbitral body, statutory body, commission, board, bureau or agency, (iii) self-regulatory organization or authority including any stock exchange on which any securities of the Corporation are listed, (iv) subdivision, agent, commission, board or authority of any of the foregoing, or (v) quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing and includes a Securities Regulatory Authority.

             “Improvements” has the meaning given such term in Recital G(f) of this Mortgage.

             “Indebtedness” means all present and future obligations, indebtedness, liabilities, covenants, agreements and undertakings of a Person howsoever arising, whether direct or indirect, absolute or contingent, matured or not, extended or renewed, wheresoever and howsoever incurred, including all future advances and re-advances, and whether the same is from time to time reduced and thereafter increased or entirely extinguished and thereafter incurred again and whether such Person be bound alone or with others and whether as principal or surety, including all interest, fees, expenses, indemnities and costs.

             “Indenture” means the Indenture of Trust, dated as of the date of delivery of the Bond, between the Issuer and the Trustee, including any indentures supplemental thereto, pursuant to which the Bond is authorized to be issued and secured.

             “Inventory” has the meaning given such term in the Uniform Commercial Code.

             “Issuer” means Johnson County, Wyoming, and any successor hereunder.

             “Lands” means all lands and interests which are either described in EXHIBIT A hereto or the description of which is incorporated in EXHIBIT A hereto by reference to another instrument or document.

             “Lien” means any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on jurisprudence, statute or contract, and including, but not limited to, the lien or security interest arising from a deed of trust, mortgage, Encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term “Lien” shall include reservations, exceptions, encroachments, easements, servitudes, usufructs, rights-of-way, covenants, conditions, restrictions, leases and other title exceptions and Encumbrances affecting property. For the purposes of this Mortgage, the Mortgagor shall be deemed to be the owner of any property which it has accrued or holds subject to a conditional sale agreement, financing lease or other arrangement pursuant to which title to the property has been retained by or vested in some other Person for security purposes.

             “Loan” means the loan of Bond proceeds by the Issuer to the Mortgagor described in Section 4.01 of the Financing Agreement.

             “Loan Documents” means the Bond Purchase Agreement, the Indenture, the Financing Agreement, this Mortgage, the Assignment of Revenues contained within this Mortgage, the Security Agreement contained within this Mortgage, the Fixture Filing contained within this Mortgage, the Bond, the Note and any other documents executed and delivered by the Mortgagor in connection therewith, or otherwise evidencing or securing any indebtedness of the Mortgagor to the Mortgagee.

             “Mortgage” is defined in the preamble.

             “Mortgaged Property” means the Mortgagor’s interests subject to this Mortgage.

             “Mortgagee” is defined in the preamble.

             “Mortgagor” is defined in the preamble.

             “Nichols Ranch ISR Processing Facility” means the Campbell County, Wyoming, and Johnson County, Wyoming, lands in the area shown on the plan attached hereto as SCHEDULE 1 and described on EXHIBIT A of the Financing Agreement.

             “Note” means that certain promissory note in the principal amount of $20,000,000, dated as of the date of delivery of the Bond and due on October 1, 2020, from the Mortgagor to the Issuer, and assigned by the Issuer to the Mortgagee, in the form attached to the Financing Agreement as EXHIBIT B.

             “Ore” means all processed and unprocessed metallic and nonmetallic ore, including uranium and uranium ore minerals, and all other locatable minerals located in, on or under all or any part of the Lands or otherwise produced therefrom.

             “Permitted Encumbrances” means the Encumbrances of the type referred to in EXHIBIT D attached to this Mortgage.

             "Person" means any individual, firm, partnership, company, corporation or other body corporate, government, governmental body, agency, instrumentality, unincorporated body or association and the heirs, executors, administrators or other legal representatives of an individual.

             “Post-Production Contracts” means contracts, if any, now in effect or hereafter entered into by the Mortgagor, or entered into by the Mortgagor’s predecessors-in-interest (if any), for the sale, purchase, exchange, supply, handling, processing, refining, beneficiation, marketing and/or transportation of Ore produced from all or any part of the Lands or from any other lands any production from which, or profits or proceeds from such production, is attributable to any interest in the Lands or to any interest described in EXHIBIT A hereto; provided however that Post-Production Contracts excludes Product Sales Contracts.

             “Post Production Contract Payments” is defined in Section 5.1.

             “Proceeds” has the meaning given such term in the Uniform Commercial Code.

             “Processing Agreement” means the Processing Agreement for Uranium Concentrates dated November 28, 2011, between the Mortgagor and Power Resources, Inc., d/b/a Cameco Resources, a Wyoming corporation with its head office located at 2020 Carey Avenue, Suite 600, Cheyenne, Wyoming 82001.

             “Product Sales Contracts” means the Contracts for the sale of Ore produced by the Mortgagor described in EXHIBIT E of this Mortgage.

             “Purchaser” means the State of Wyoming, acting by and through the Wyoming State Treasurer.

             “Requirement of Law” means, with respect to any Person, its constating documents and any Applicable Law or contractual obligation binding on such Person or its property.

             “Trustee” means UMB BANK, n.a., a national banking association duly organized and validly existing under the laws of the United States, with a corporate trust office located in Denver, Colorado, as trustee and mortgagee hereunder (herein, together with its successors and assigns, the “Trustee” or the “Mortgagee”);

             “Uniform Commercial Code” means the Uniform Commercial Code as in effect from time to time in the State of Wyoming.

             “Unpatented Mining Claim” means the location and appropriation of tracts of federal public lands containing a valuable mineral deposit.

             SECTION 1.2.         Interpretation. Unless a clear contrary intention appears, this Mortgage shall be construed and interpreted in accordance with the provisions set forth below:

            (a)        the singular number includes the plural number and vice versa;

            (b)        reference to any Person includes such Person’s successors, executors, administrators, substitutes and assigns but, if applicable, only if such successors, executors, administrators, substitutes and assigns are permitted by this Mortgage, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;

            (c)        reference to any gender includes any other gender;

            (d)        reference to any agreement (including this Mortgage and all Schedules and Exhibits hereto), document or instrument means such agreement, document or instrument as amended, supplemented, novated, refinanced, replaced, waived, restated or modified, and in effect from time to time in accordance with the terms thereof and, if applicable, the terms hereof;

            (e)        reference to any promissory note includes any promissory note which is an extension or renewal thereof or a substitute or replacement therefor;

            (f)        reference to any Applicable Law means such Applicable Law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder;

            (g)        “hereunder,” “hereof,” “hereto,” “herein” and words of similar import shall be deemed references to this Mortgage, as the case may be, as a whole and not to any particular Article, Section, clause or other provision hereof or thereof;

            (h)        any reference to any particular Article, Section or clause shall be to such Article, Section or clause of this Mortgage;

            (i)        “including” (and with correlative meaning “include”) means including without limiting the generality of any description preceding such term;

            (j)        relative to the determination of any period of time, “from” means “from (and including)” and “to” means “to (but excluding)”;

            (k)        reference to a “company” or “corporation” shall be construed as a reference to the analogous form of business entity used in any relevant jurisdiction; and

            (l)        when an expression is defined, another part of speech or grammatical form of that expression has a corresponding meaning.

* * * * * * * * * *

ARTICLE TWO
COLLATERALIZED OBLIGATIONS

             SECTION 2.1.         Collateralized Obligations. The lien and security interest in the Mortgaged Property and the Collateral granted hereunder secures the timely performance and full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise of:

            (a)        The Note from the Mortgagor to the Issuer (assigned by the Issuer to the Mortgagee, in connection with the Loan and the Financing Agreement), and any and all Indebtedness now or hereafter existing or arising under or in connection with the Loan and the Loan Documents, whether for principal, interest, fees, expenses or otherwise (including all such amounts which would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. §502(b) and §506(b) and any other similar provisions arising under Applicable Law.)

            (b)        Any sums advanced or expenses or costs incurred (including all attorneys’ fees and other legal, management and consulting expenses) by the Mortgagee (or any receiver appointed hereunder) which are made or incurred pursuant to, or permitted by, the terms hereof or any of the Loan Documents, plus interest thereon at the rate specified or otherwise agreed upon in the Loan Documents, from the date of such advances or the incurring of such expenses or costs until reimbursed.

            (c)        The timely performance of any and all of Mortgagee’s obligations under the Loan Documents.

            (d)        Any extensions or renewals of all such obligations described in clauses (a) and (c) above, whether or not the Mortgagor executes any extension agreement or renewal instruments.

            All the above obligations of the Mortgagor are hereinafter collectively referred to as the “Collateralized Obligations”.

* * * * * * * * * *

ARTICLE THREE
COVENANTS AND AGREEMENTS OF MORTGAGOR

            The Mortgagor agrees with the Mortgagee that, until the Liabilities have been paid and performed in full, it shall perform its obligations set forth in this ARTICLE.

             SECTION 3.1.         Payment and Performance of Liabilities. The Mortgagor will duly pay and perform its obligations hereunder and under and in connection with the Loan Documents to which it is a party as and when required by their terms.

             SECTION 3.2.         Warrant and Defend Title. The Mortgagor will warrant and forever defend its right, title and interest in and to the Unpatented Mining Claims related to the Lands and Post-Production Contracts (except to the extent such Mortgagor is permitted to encumber, abandon or dispose of the same pursuant to this Mortgage or the Loan Documents without resulting in an Event of Default) unto the Mortgagee against every Person whomsoever lawfully claiming the same or any part thereof and the Mortgagor will maintain and preserve the Lien hereby created.

             SECTION 3.3.         Further Assurances. Upon the request of the Mortgagee, the Mortgagor will execute and deliver such other and further instruments and will do such other and further acts as in the reasonable opinion of the Mortgagee may be necessary or desirable to carry out more effectually the purposes of this Mortgage, including (a) prompt correction of any defect which may hereafter be discovered in the execution and acknowledgment of this Mortgage or any other document executed in connection herewith, and (b) supplements to this Mortgage as reasonably required from time to time by the Mortgagee.

             SECTION 3.4.         Payment of Taxes and Fees. The Mortgagor will pay and discharge, as the same may become due and payable, all taxes, assessments, fees and other governmental charges or levies against it or on any of its property, as well as claims of any kind or character (including claims for sums due for labor, material, supplies, Goods, General Intangibles and services); provided, however, that the foregoing shall not require the Mortgagor to pay or discharge any such tax assessment, fee, charge, levy or claim so long as it shall be diligently contesting the validity or amount thereof in good faith by appropriate proceedings and shall have set aside on its books adequate reserves in accordance with generally accepted accounting principles with respect thereto.

             SECTION 3.5.         Maintenance of Collateral. Subject to the provisions and rights set forth in the Financing Agreement, the Mortgagor will: not abandon the Collateral; not do or suffer anything to be done which would depreciate or impair the value of the Collateral or the security of this Mortgage; not remove or demolish any of the Improvements; pay promptly for all labor and materials for all construction, repairs and improvements to or on the Collateral; not make any changes, additions or alterations to the Collateral or the Improvements except as required by any applicable governmental requirement or as otherwise approved in writing by the Mortgagee and Purchaser; maintain, preserve and keep the Goods and the Improvements in good, safe and insurable condition and repair and promptly make any needful and proper repairs, replacements, renewals, additions or substitutions required by wear, damage, obsolescence or destruction; promptly restore and replace any of the Improvements, Goods or Equipment which are destroyed or damaged; not commit, suffer, or permit waste of any part of the Mortgaged Property, except for the anticipated and permitted recovery of Minerals; and maintain all grounds and abutting streets, sidewalks and roads in good and neat order and repair. The Mortgagor will (i) cause each of the Lands owned, held or hereafter acquired by or for the Mortgagor and necessary or appropriate to the operation of an in-situ recovery operation, or mine or mines upon the Lands to be kept in full force and effect by the payment of whatever sums may become payable and by the fulfillment of whatever other obligations, and the performance of whatever other acts may be required to the end that forfeiture or termination of each such interest shall be prevented unless the termination, forfeiture or other relinquishment of the interest is authorized by any operating plan or plan of operations then in effect thereunder, (ii) conduct all drilling, mining, exploratory work and related operations and activities in compliance with applicable federal, state and local laws and good and miner-like practice, (iii) maintain the Mortgagor as the sole owner of, and retain its exclusive possession of, all Unpatented Mining Claims, free and clear of all Liens, subject only to the paramount title of the United States, statutory rights of third parties, and Permitted Encumbrances, (iv) timely pay all required federal claim maintenance fees, and timely record and file in the appropriate county and federal offices adequate affidavits and notices of timely payment of such fees, and amend, relocate, and locate new mining claims with respect to those Unpatented Mining Claims as reasonably necessary to protect the Mortgagor’s and the Mortgagee’s interest in the Collateral, (v) timely make all payments and perform all obligations to prevent the forfeiture or termination of any portion of the Lands, and (vi) do all other things necessary to preserve and maintain the right, title and interest of the Mortgagee and the Purchaser in the Collateral. Subject to the rights set forth in Section 3.01 of the Financing Agreement, the Mortgagor shall not abandon all or any portion of the Lands that is producing or capable of commercial production or forfeit, surrender or release any Leases, sublease, operating agreement or other agreement or instrument comprising or affecting the Collateral.

             SECTION 3.6.         Maintenance of Unpatented Mining Claims and Payment of Leases. To the extent not otherwise addressed herein, the Mortgagor covenants and agrees to timely pay all claim maintenance fees, to timely make all filings and recordings, including affidavits of payment, and to otherwise timely take all other necessary actions and pay such amounts relating to the preservation, maintenance, continuance and validity of Unpatented Mining Claims as may be required by any federal, state or local governmental authority. The Mortgagor shall pay all fees and expenses relating to the Unpatented Mining Claims, including but not limited to annual maintenance fees, on or before July 15 ^th of each year, and provide an “Affidavit of Payment of Maintenance Fees and of Intention to Hold Mining Claims” (with list attached) to the Purchaser within five (5) days of payment or by August 1 ^st of each year, whichever shall occur first. In the event that the Purchaser has not received the notice and evidence described in the preceding sentence by August 1, the Purchaser may, on behalf of the Mortgagor, make and pay any claim maintenance fees, in which event the Mortgagor shall promptly reimburse the Purchaser for any such fees, with interest at the rate set forth in the Financing Agreement, in addition to any costs and expenses incurred in making such payments, and all such amounts shall be Liabilities hereunder.

             SECTION 3.7.         Access by Mortgagor and Purchaser. The Mortgagor will at all times: deliver to the Purchaser either all of its executed originals or certified copies of all certificates of location and amendments thereto, Leases, agreements creating or evidencing Goods, General Intangibles, Plans, Contracts for Sale, all amendments and supplements thereto, and any other document which is, or which evidences, governs, or creates, Collateral; permit access by the Mortgagee and the Purchaser to its books and records, development and operations progress reports, sales records, offices, insurance policies and other papers for examination and the making of copies and extracts; prepare such schedules, summaries, reports and progress schedules as the Purchaser may request; and permit the Mortgagee and the Purchaser, through their employees, representatives and agents, to enter upon the Lands at any time, subject to appropriate safety training and procedures, for the purpose of investigating and inspecting the condition and operation of the Collateral, and do all other things necessary or proper to enable the Mortgagee and the Purchaser to exercise this right upon reasonable notice at such times as the Mortgagee or the Purchaser may reasonably request. For clarity, if Mortgagee or Purchaser or anyone on the behalf of either visits the site as part of an inspection, audit or otherwise, those representatives will participate in required training and adhere to all site safety and environmental rules and regulations during the course of the visit or work on site.

             SECTION 3.8.         Insurance Requirements.

            (a)        Insurance. Mortgagor, at its sole cost and expense, shall insure and keep insured the Collateral against such perils and hazards, and in such amounts and with such limits, as Purchaser may from time to time require, and, in any event, including:

            (i)        All Risk. Insurance against loss to the Collateral which shall be on an "all risk" policy form, covering insurance risks no less broad than those covered under a Standard Multi Peril (SMP) policy form, which contains a Commercial ISO "Causes of Loss-Special Form," in the then current form, including theft and insurance against such other risks as Purchaser may reasonably require, including, but not limited to, insurance covering the cost of demolition of undamaged portions of any portion of the Collateral when required by code or ordinance, the increased cost of reconstruction to conform with current code or ordinance requirements and the cost of debris removal;

            (ii)        Boiler and Machinery. Broad form boiler and machinery insurance including business interruption/extra expense and rent and rental value insurance, on all equipment and objects customarily covered by such insurance and/or involved in the heating, cooling, electrical and mechanical systems of the Mortgaged Property (if any are located at the Mortgaged Property), providing for full repair and replacement cost coverage, and other insurance of the types and in amounts as Purchaser may reasonably require, but in no event less than that customarily carried by persons owning or operating like properties;

            (iii)        Flood. Insurance against loss or damage by flood or mud slide in compliance with the Flood Disaster Protection Act of 1973, as amended from time to time, if the Mortgaged Property is now, or at any time while the Liabilities remain outstanding shall be, situated in any area which an appropriate Governmental Authority designates as a special flood hazard area, Zone A, in amounts equal to the full replacement value of all above grade structures on the Mortgaged Property;

            (iv)        Earthquake . Insurance against loss or damage by earthquake, if the Mortgaged Property is now, or at any time while the Liabilities remain outstanding shall be, situated in any area which is classified as a Major Damage Zone and Zone 1, by the International Conference of Building Officials, in an amount equal to the probable maximum loss for the Mortgaged Property, Fixtures and Equipment, plus the cost of debris removal;

            (v)        Public Liability. Commercial general public liability insurance against death, bodily injury and property damage arising in connection with the Mortgaged Property or the transportation of any materials related to the Mortgaged Property. Such policy shall be written on an occurrence basis, shall list Mortgagor as the named insured, shall designate thereon the location of the Mortgaged Property and have such limits as Purchaser may reasonably require, but in no event less than $1,000,000 per occurrence and $2,000,000 aggregate. Mortgagor shall also obtain excess umbrella liability insurance with such limits as the Purchaser may reasonably require, but in no event less than $5,000,000 once production has commenced;

            (vi)        Business Interruption Insurance. Business interruption insurance against loss of income suffered after a disaster while the Nichols Ranch ISR Processing Facility is either closed because of the disaster or in the process of being rebuilt after the disaster; and

            (vii)        Other Insurance . Such other insurance relating to the Collateral and the use and operation thereof, as Purchaser may, from time to time, reasonably require, including, but not limited to, products liability.

            (b)        Policy Requirements. All insurance shall: (i) be carried in companies acceptable to Purchaser; (ii) be in form and content acceptable to Purchaser; (iii) provide thirty (30) days’ advance written notice to Mortgagee and Purchaser before any cancellation, adverse material modification or notice of non-renewal; and (iv) to the extent limits are not otherwise specified herein, contain deductibles which are in amounts acceptable to Purchaser.

            All physical damage policies and renewals shall contain a standard mortgage clause naming the Mortgagee as beneficiary, which clause shall expressly state that any breach of any condition or warranty by Mortgagor shall not prejudice the rights of Mortgagee under such insurance; and a loss payable clause in favor of the Mortgagee for Goods, General Intangibles, contents, inventory, Equipment, loss of rents and business interruption. All liability policies and renewals shall name the Mortgagee as an additional insured. No additional parties shall appear in the mortgage or loss payable clause without Mortgagee’s and Purchaser’s prior written consent. All deductibles shall be in amounts acceptable to Purchaser. In the event of the foreclosure of this Mortgage or any other transfer of title to the Mortgaged Property in full or partial satisfaction of the Liabilities, all right, title and interest of Mortgagor in and to all insurance policies and renewals thereof then in force shall pass to the Mortgagee or grantee.

            (c)        Delivery of Policies. Any notice pertaining to insurance and required pursuant to this Section 3.8 shall be given in the manner provided in ARTICLE EIGHT, Section 8.19 below to the Mortgagee and the Purchaser. The insurance shall be evidenced by the original policy or a true and certified copy of the original policy, or in the case of liability insurance, by certificates of insurance. Mortgagor shall deliver the originals, certified copies, certificates of coverage or certificates of insurance, along with evidence of payment for the policies and continuing coverage, to Mortgagee and Purchaser at least fifteen (15) days before the expiration of existing policies. If Mortgagee and Purchaser have not received satisfactory evidence of such renewal or substitute insurance in the time frame herein specified, Mortgagee and/or Purchaser shall have the right, but not the obligation, to purchase such insurance for Mortgagee’s interest only. Any amounts so disbursed by Mortgagee and/or Purchaser pursuant to this Section shall be a part of the Liabilities and shall bear interest at the interest rate stated in Section 4.03(5) of the Financing Agreement. Nothing contained in this Section shall require Mortgagee or Purchaser to incur any expense or take any action hereunder, and inaction by Mortgagee or Purchaser shall not be considered a waiver of any right accruing to Mortgagee on account of this Section.

            (d)        Separate Insurance. Mortgagor shall not carry any separate insurance on the Collateral concurrent in kind or form with any insurance required hereunder or contributing in the event of loss without Purchaser’s prior written consent, and any such policy shall have attached a standard non-contributing mortgagee clause, with loss payable to Mortgagee, and shall otherwise meet all other requirements set forth herein.

            (e)        Notice of Casualty. Mortgagor shall give immediate notice of any loss to Mortgagee and Purchaser. In case of loss covered by any of such policies, Mortgagee is authorized to adjust, collect and compromise, with Purchaser’s written approval, all claims thereunder and in such case, Mortgagor covenants to sign upon demand, or Mortgagee may sign or endorse on Mortgagor’s behalf, all necessary proofs of loss, receipts, releases and other papers required by the insurance companies to be signed by Mortgagor. Mortgagor hereby irrevocably appoints Mortgagee as its attorney-in-fact for the purposes set forth in the preceding sentence. Mortgagee may deduct from such insurance proceeds any expenses incurred by Mortgagee in the collection and settlement thereof, including, but not limited to, attorneys’ and adjusters’ fees and charges.

            (f)        Application of Proceeds.

            If all or any part of the Collateral shall be damaged or destroyed by fire or other casualty or shall be damaged or taken through the exercise of the power of eminent domain or other cause described in this Section 3.8, and if the conditions for prepayment of the Loan under ARTICLE 6 of the Financing Agreement do not exist or the prepayment option is not exercised, the Mortgagor is required to restore the Collateral and the Mortgaged Property. Otherwise, if the cost of restoration is reasonably estimated to exceed the proceeds of any insurance (including the deductible amount for which the Mortgagor is self-insured) or condemnation award, the following items shall be deposited with the Purchaser (A, B and C below) or the Mortgagee (D below) before any disbursement is made from the Property Insurance and Award Fund under the Indenture to pay such cost:

            (i)        a contract or contracts for the furnishing of all work and materials required for restoration in accordance with the plans and specifications, with a payment and performance bond or bonds (if requested by the Trustee) in aggregate amount equal to the total cost of restoration under the contract or contracts, conditioned for the completion thereof in accordance with the plans and specifications and for the payment of all claims for labor and materials to be incorporated in the Collateral or the Mortgaged Property in the course of restoration, or

            (ii)        a certificate of a Borrower’s Representative stating that restoration has been substantially completed in accordance with the plans and specifications and stating that all costs thereof have been paid, with the exception of ten percent (10%) of the amount payable under any contract not certified as finally completed; and

            (D)        cash or a certified check for any amount by which the total unpaid cost of restoration, as then ascertained or estimated, exceeds the balance then on hand in the Property Insurance and Award Fund held by the Mortgagee under the Indenture.

            After compliance with this subsection, where applicable, the Mortgagee shall disburse money from the Property Insurance and Award Fund to or upon the order of the Mortgagor in payment of the costs of restoration, subject, however, to approval of the Purchaser, provided that not more than ninety percent (90%) of the total cost of restoration certified for payment shall be disbursed until receipt by the Mortgagee of an opinion of Independent Counsel (as defined in the Indenture) stating that all filings and other steps necessary to perfect the lien created by this Mortgage in all property, real, personal or mixed, which constitutes part of the Collateral or the Mortgaged Property as a result of such restoration, as against third party creditors of or purchasers for value from the Mortgagor, have been completed, and that the lien of this Mortgage is subject to no liens and encumbrances of record except permitted encumbrances. In the event that the restoration of the Collateral or the Mortgaged Property to substantially the condition existing before a taking by eminent domain would require the acquisition of land or rights or interests in land additional to or in substitution for any part or all of that described in EXHIBIT A of this Mortgage, the cost thereof may be added to the cost of restoration to be reimbursed to the Mortgagor under the provisions of the Indenture.

            The balance of net proceeds remaining after restoration of the Collateral or the Mortgaged Property as hereinabove provided shall be deposited by the Mortgagor into the Debt Service Fund held by the Mortgagee.

            If the Mortgagor should within a reasonable period of time fail to restore the Collateral or the Mortgaged Property or elect to prepay the Loan as hereinabove provided, any net proceeds remaining in the Property Insurance and Award Fund shall be retained in the Fund for the purposes set forth herein, provided that the Mortgagee may also use such net proceeds to make any advances authorized to be made under Section 5.04 of the Financing Agreement.

             SECTION 3.9.           Eminent Domain. In case the Collateral, or any part or interest in any thereof, is taken by condemnation, the Mortgagee is hereby irrevocably authorized and empowered to collect and receive all compensation and awards of any kind whatsoever (referred to collectively herein as “Condemnation Awards”) which may be paid for any property taken or for damages to any property not taken (all of which the Mortgagor hereby assigns to the Mortgagee), and all Condemnation Awards so received shall be forthwith applied by the Mortgagee, as provided in Section 3.8 .

             SECTION 3.10.         Governmental Requirements. The Mortgagor will at all times cause the Collateral and the use and condition thereof to comply with all federal, state, county, municipal, local and other governmental statutes, ordinances, requirements, regulations, rules, orders and decrees of any kind whatsoever that apply or relate to the Collateral or the use thereof, and will observe and comply with all conditions and requirements necessary to preserve and extend any and all rights, licenses, permits, privileges, franchises and concessions (including, without limitation, those relating to land use and development, landmark preservation, construction, access, water rights and use, noise and pollution) which are applicable to or have been granted for the Collateral or the use thereof.

             SECTION 3.11.         No Mechanics’ Liens. The Mortgagor will not do or permit to be done any act or thing, and no person shall have any right or power to do any act or thing, whereby any mechanics’ lien under the laws of the State of Wyoming can arise against or attach to the Collateral or any part thereof unless such lien shall first be wholly waived as against this Mortgage. In addition, it is further expressly made a covenant and condition hereof that the lien of this Mortgage shall extend to any and all Improvements and Fixtures now or hereafter on the Mortgaged Property, prior to any other lien thereon that may be claimed by any person, so that subsequently accruing claims to a lien on the Mortgaged Property shall be junior and subordinate to this Mortgage. All contractors, subcontractors, and other parties dealing with the Mortgaged Property, or with any parties interested therein, are hereby required to take notice of the above provisions.

             SECTION 3.12.         Continuing Priority. Subject to the provisions and rights set forth in the Financing Agreement, the Mortgagor will: pay such fees, taxes and charges, execute and file (at the Mortgagor’s expense) such financing statements, obtain such acknowledgments or consents, notify such obligors or providers of services and materials and do all such other acts and things as the Mortgagee or the Purchaser may from time to time request to establish and maintain a valid and perfected first and prior lien on and security interest in the Collateral and to provide for payment to the Mortgagee directly of all cash proceeds thereof, with the Mortgagee in possession of the Collateral to the extent it requests; maintain its executive office at all times at the address shown herein or provide thirty days written notice prior to moving; keep all of its books and records relating to the Collateral on the Mortgaged Property or at such address; keep all tangible Collateral on the premises and the Lands except as the Mortgagee may otherwise consent in writing; make notations on its books and records sufficient to enable the Mortgagee, as well as third parties, to determine the interest of the Mortgagee hereunder; and not collect any rents or the proceeds of any of the Goods or General Intangibles more than thirty (30) days before the same shall be due and payable except as the Mortgagee may otherwise consent in writing.

             SECTION 3.13.         Utilities. The Mortgagor will pay all utility charges incurred in connection with the Collateral and maintain all utility services available for use at the Mortgaged Property.

             SECTION 3.14.         Contract Maintenance: Other Agreements. The Mortgagor will, for the benefit of the Mortgagee and the Purchaser, fully and promptly perform each obligation and satisfy each condition imposed on it under any Contract for Sale, Contract for Construction, General Intangible, exploration contract or other agreement so that there will be no default thereunder and so that the persons (other than the Mortgagor) obligated thereon shall be and remain at all times obligated to perform for the benefit of the Mortgagee; and the Mortgagor will not permit to exist any condition, event or fact which could allow or serve as a basis or justification for any such person to avoid such performance.

             SECTION 3.15.         Agreements Affecting the Collateral. The Mortgagor shall keep, observe, perform and comply with all covenants, conditions and restrictions affecting the Collateral, any operating agreements or other writings relating to the Collateral, and all Leases, instruments and documents relating thereto or evidencing or securing any indebtedness secured thereby.

             SECTION 3.16.         No Assignments; Future Leases. Subject to the provisions of the Financing Agreement, the Mortgagor will not cause or permit any Revenues, issues, profits, Leases, Contracts for Sale, Product Sales Contracts or other contracts relating to the Collateral, or any interest in any thereof, to be assigned, transferred, conveyed, pledged or disposed of, to any party other than the Mortgagee or the Purchaser without first obtaining the express written consent of the Purchaser thereto. In addition, the Mortgagor shall not cause or permit all or any portion of or interest in the Collateral to be leased directly or indirectly to any Person, except pursuant to written leases approved by the Purchaser. Each such lease shall contain, at the Purchaser’s election, either (i) a provision to the effect that the tenant shall, at the request of the Purchaser, deliver to the Mortgagee an instrument, in form and substance satisfactory to the Purchaser, in which the tenant agrees that no action taken by the Mortgagee to enforce this Mortgage by foreclosure, or by accepting a deed in lieu of foreclosure, or by resorting to any other remedies available to the Mortgagee, shall terminate the lease or invalidate any of the terms thereof and that tenant will attorn to the Mortgagee, to the purchaser at a foreclosure sale, or to a grantee in a voluntary conveyance, and will recognize such entity as landlord for the balance of the term of the lease, providing that the Mortgagee will agree with the tenant that, as long as the tenant is not in default under any of the terms of its lease, the tenant’s possession will not be disturbed by the Mortgagee, or (ii) a subordination clause providing that the lease and the interest of the lessee in the demised real estate are in all respects subject and subordinate to this Mortgage; provided, however, that in the event any such lease fails for any reason to contain either of such provisions, no proceeding by the Mortgagee to foreclose this Mortgage, or action by way of its entry into possession after any Event of Default hereunder, shall in or of itself operate to terminate such lease unless the Mortgagee or the Purchaser expressly requests such relief in writing, but the preceding provisions of this Section 3.16 shall never be construed as subordinating this Mortgage to any such lease or any other lease.

             SECTION 3.17.         Financial Reporting. The Mortgagor will at all times comply (or cause to be complied with) the financial reporting requirements of the Financing Agreement and will comply with all covenants contained therein.

             SECTION 3.18.         Collections. Until such time as the Mortgagee shall notify the Mortgagor of the revocation of such power and authority, the Mortgagor will, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any of the Revenues, leases, Contracts for Sale, Product Sales Contracts, Post- Production Contracts, Goods, General Intangibles and other Collateral, including the taking of such action with respect to such collection as the Mortgagee may reasonably request, or, in the absence of such request, as the Mortgagor may deem advisable. (While reserving the right to revoke such power and authority at any time, it is the Mortgagee’s present intention not to revoke such authority unless an Event of Default should occur or the Mortgagee is made to feel insecure concerning any of the Liabilities or performance under any of the Loan Documents.) The Mortgagee, however, may, at any time, after the occurrence and during the continuance of an Event of Default, whether before or after any revocation of such power and authority or the maturity of any of the Liabilities, notify any parties obligated on any of the Revenues, leases, Contracts for Sale, Product Sales Contracts, Goods, General Intangibles and other Collateral to make payment to the Mortgagee of any amounts due or to become due thereunder and enforce collection of any of the Revenues, leases, Contracts for Sale, Product Sales Contracts, Goods, General Intangibles or other Collateral by suit or otherwise and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. Upon request of the Mortgagee or the Purchaser, after the occurrence and during the continuance of an Event of Default, the Mortgagor will, at its own expense, notify any parties obligated on any of the Revenues, leases, Contracts for Sale, Product Sales Contracts, Goods, General Intangibles or other Collateral to make payment to the Mortgagee of the amounts due or to become due thereunder.

             SECTION 3.19.         Mortgagee’s Performance. If the Mortgagor fails to pay or perform any of its obligations herein contained (including payment of expenses of foreclosure and court costs), the Mortgagee may (but need not), as agent or attorney-in-fact of the Mortgagor, after the occurrence and during the continuance of an Event of Default, after giving the Mortgagor notice of its intention to do so (no such notice need be given after the occurrence of an Event of Default), make any payment or perform (or cause to be performed) any obligation of the Mortgagor hereunder, in any form and manner deemed expedient by the Mortgagee, and any amount so paid or expended (plus reasonable compensation to the Mortgagee for its out-of-pocket and other expenses for each matter for which it acts under this Mortgage), with interest thereon at the rate provided in Section 4.03(5) of the Financing Agreement, shall be added to the principal debt hereby secured and shall be repaid to the Mortgagee upon demand. By way of illustration and not in limitation of the foregoing, the Mortgagee may (but need not) do all or any of the following: make payments of principal or interest or other amounts on any lien, encumbrance or charge on any of the Collateral; complete construction; make repairs; collect rents, prosecute collection of the Collateral or proceeds thereof; purchase, discharge, compromise or settle any tax lien or any other lien, encumbrance, suit, proceeding, title or claim thereof, contest any tax or assessment; and redeem from any tax sale or forfeiture affecting the Mortgaged Property. In making any payment or securing any performance relating to any obligation of the Mortgagor hereunder, the Mortgagee shall (as long as it acts in good faith) be the judge of the legality, validity and amount of any lien or encumbrance and of all other matters necessary to be determined in satisfaction thereof. No such action of the Mortgagee shall ever be considered as a waiver of any right accruing to it on account of the occurrence of any matter which constitutes an Event of Default.

             SECTION 3.20.         Subrogation. To the extent that the Mortgagee, on or after the date hereof pays any sum due under any provision of law or any instrument or document creating any lien prior or superior to the lien of this Mortgage, or the Mortgagor or any other Person pays any such sum with the proceeds of the Loan to the Mortgagor, the Mortgagee shall have and be entitled to a lien on the Collateral equal in priority to the lien discharged, and the Mortgagee shall be subrogated to, and receive and enjoy all rights and liens possessed, held or enjoyed by, the holder of such lien, which shall remain in existence and benefit the Mortgagee in securing the Liabilities.

             SECTION 3.21.         Mortgagor’s Right to Contest. Mortgagor may contest or object to the legal validity or amount of any mechanics or materialmen’s lien on the Collateral provided that: (a) Mortgagor contests such unpaid item by appropriate proceedings diligently and in good faith, and (b) Mortgagor procures and maintains a stay of any proceedings to enforce any judgment for collection of the mechanic’s or materialmen’s lien.

            Mortgagor’s tax or assessment liabilities may be deemed delinquent, and a tax lien or assessment lien may be imposed, but only if Mortgagor has contested, or is actively contesting, tax liabilities, tax liens or assessments in good faith before Wyoming administrative agencies and/or courts as expressly permitted in Title 39 of the Wyoming Statutes.

            Any contest by Mortgagor shall be at its own expense, in good faith, but only with the written consent of the Purchaser, which consent will not be unreasonably denied or delayed (except with respect to State taxes where Mortgagor will need to obtain the written consent of the Mortgagee, which consent will not be unreasonably denied or delayed). During the course of such contest, however, Mortgagor will continue to make or cause to be made any required yearly maintenance or rental fees applicable to its Unpatented Mining Claims or perform any required assessment work or improvements annually on each claim and to pay required rental and other fees on its Leases. Mortgagor may also be required to furnish Mortgagee with any such other security or assurances as may be requested by the Purchaser.

            Within ten (10) Business Days of final administrative or judicial resolution of any dispute, Mortgagor shall pay liens, taxes or assessments adjudicated as due and owing.

             SECTION 3.22.         Change in General Mining Law. In the event of the repeal or modification of the current General Mining Law of 1872 during the term of this Mortgage, such that the interest of the Mortgagor in those lands which are material to the exploration, development or operation of the Lands is adversely affected, modified or transformed, the Mortgagor will use its best efforts to retain its interest in those Lands and will consult with the Mortgagee and the Purchaser to determine how best to preserve the interest of the Mortgagor and the interest of the Mortgagee and the Purchaser in the affected Collateral, and the Mortgagor shall take no action in relation thereto, which in the reasonable opinion of the Mortgagee or the Purchaser or their counsel, could adversely affect or impair their interest in the Collateral or under this Mortgage. An increase in the annual claim maintenance fee applicable to the Unpatented Mining Claims from time to time in accordance with the General Mining Law of 1872 and applicable regulations shall not constitute a modification of the General Mining Law of 1872 for the purposes of the application of this Section 3.22.

             SECTION 3.23.         Recording and Filing. The Purchaser, at the expense of the Mortgagor, shall be responsible for the original filing of all (i) Security Documents and related filing statements, and (ii) mortgage releases and termination statements, and any other documents required to effect the issuance of the Bond and the Loan. Thereafter the Mortgagee, at the Mortgagor’s expense, shall pay all fees, taxes and charges and file continuations thereof, in such offices and places and at such times and as often as may be reasonably necessary to preserve, protect and renew the lien as a valid, first lien on and prior perfected security interest in real property, Goods or General Intangibles (except as otherwise permitted pursuant to this Mortgage), as the case may be, and the rights and remedies of the Mortgagee, obtain such acknowledgments or consents, notify all obligors or providers of services and materials and otherwise do and observe all things or matters necessary or expedient to be done or observed by reason of any applicable Law, or as the Purchaser reasonably may request from time to time, for the purpose of effectively, maintaining and preserving the lien hereof on and in the Mortgaged Property.

             SECTION 3.24.         Sale or Mortgage of the Mortgaged Property. Except in the ordinary course of business and subject to Section 3.01(4)(d) of the Financing Agreement, the Mortgagor will not, without the prior consent of the Purchaser, sell, assign, transfer, convey, lease or otherwise dispose of or encumber the Mortgaged Property nor any portion thereof, nor any of the Mortgagor’s right, title or interest therein, nor contract to do nor permit to occur any of the foregoing, without first securing the written consent of the Purchaser. Upon the disposition of any Mortgaged Property permitted pursuant to this Mortgage or the Loan Documents, the Mortgagee shall, at the Mortgagor’s expense, execute and deliver to the Mortgagor all instruments and other documents as may be necessary or proper to release the lien on and security interest in such Mortgaged Property which has been granted hereunder.

             SECTION 3.25.         Records, Statements and Reports. The Mortgagor will keep financial records and statements reflecting all of its business affairs and transactions in accordance with generally accepted accounting principles and will furnish or cause to be furnished to the Mortgagee and the Purchaser such information concerning the business, affairs and financial condition of the Mortgagor as the Mortgagee or the Purchaser may from time to time reasonably request.

             SECTION 3.26. A        fter-Acquired Properties. Without prejudice to its obligations contained in the Loan Documents, the Mortgagor shall advise the Mortgagee and Purchaser, within forty-five (45) days after June 30 and December 31 of each calendar year after the date of this Mortgage, as to any additional interests in the Mortgaged Property it has acquired and any other material assets acquired by the Mortgagor during such preceding six-month period and, at the request of the Purchaser shall execute, acknowledge and deliver such other and further instruments and agreements necessary or desirable to include such interests and assets as a part of the Mortgaged Property hereunder. In no manner limiting the provisions of this Section 3.26, Mortgagor agrees to inform the Mortgagee and Purchaser of any Post-Production Contracts Mortgagor enters into after the date hereof, including, without limitation, any transportation agreements and any additional processing or conversion agreements, and shall execute and deliver any amendments hereto subjecting such agreements to the terms hereof as Collateral hereunder.

             SECTION 3.27.         Performance of Post-Production Contracts; Notices. The Mortgagor shall:

            (a)        perform and observe all the material terms and provisions of the Post-Production Contracts to be performed or observed by it, maintain the Post-Production Contracts in full force and effect, enforce the Post-Production Contracts in accordance with their terms, and

            (b)        upon the reasonable request of the Mortgagee or the Purchaser: (i) furnish such information and reports regarding the Post-Production Contracts as the Mortgagee or the Purchaser may request, and (ii) make upon each relevant Post-Production Contract counterparty such demands and requests for information and reports or for action as the Mortgagor is entitled to make under the Post-Production Contracts.

             SECTION 3.28.         Actions Under Post-Production Contracts. Without the prior written consent of the Purchaser, which consent will not be unreasonably denied or delayed, the Mortgagor shall not:

            (a)        cancel or terminate any Post-Production Contracts or consent to or accept any cancellation or termination thereof, except in accordance with their terms,

            (b)        amend or otherwise modify any Post-Production Contracts or give any consent, waiver or approval thereunder,

            (c)        waive any default under or breach of any Post-Production Contracts, or

            (d)        take any other action in connection with the Post-Production Contracts,

which would, in each case, impair the value of the interest or rights of the Mortgagor thereunder or which would impair the interest or rights of the Mortgagee. Mortgager shall give Purchaser advance notice of any actions to be taken under (a), (b), (c) or (d) and provide any information requested by Purchaser.

             SECTION 3.29.         Mortgagor Remains Liable. Anything herein to the contrary with respect to the Post-Production Contracts notwithstanding:

            (a)        the Mortgagor shall remain liable under the Post-Production Contracts to the extent set forth therein, and shall perform all of its duties and obligations under such Post-Production Contracts to the same extent as if this Mortgage had not been executed;

            (b)        the exercise by the Mortgagee of any of its rights hereunder shall not release the Mortgagor from any of its duties or obligations under any such Post-Production Contracts; and

            (c)        the Mortgagee shall not have any obligation or liability under any Post-Production Contracts by reason of this Mortgage, nor shall it be obligated to perform any of the obligations and liabilities or duties of the Mortgagor thereunder or to take any action to collect or enforce any claim for payment assigned thereunder.

             SECTION 3.30.         Perfected Lien. Upon the recording and filing of this Mortgage and all financing statements or similar instruments relating hereto with all appropriate offices, this Mortgage will created a valid, first priority, perfected security interest in the Mortgaged Property, securing payment of the obligations stated to be secured hereby.

             SECTION 3.31.         Operation of the Mortgaged Property. In addition to any similar obligations binding on it pursuant to the Loan Documents, the Mortgagor shall, at the Mortgagor’s own expense:

            (a)        do or cause to be done all things necessary to keep unimpaired the Mortgagor’s rights in the Mortgaged Property;

            (b)        cause the Mortgaged Property to be kept free and clear of Liens, other than (i) the Lien created by this Mortgage, and (ii) Permitted Encumbrances;

            (c)        Mortgagor will obtain and maintain for the benefit of the Mortgagee, as Trustee for the Purchaser, original paid-up insurance policies against such liabilities, casualties, risks and contingencies, in such amounts and form and substance, with such financially sound and reputable companies, and with such expiration dates, as are acceptable to the Mortgagee, and containing a non-contributory standard mortgagee clause or its equivalent in favor of the Mortgagee. Each policy shall contain an agreement by the insurer not to cancel or amend the policy without giving the Mortgagee at least thirty (30) days prior written notice of its intention to do so. Upon request of the Mortgagee, the Mortgagor will furnish or cause to be furnished to the Mortgagee from time to time a summary of the insurance coverage of the Mortgagor in form and substance satisfactory to the Mortgagee and if requested will furnish the Mortgagee original certificates of insurance and/or copies of the applicable policies and all renewals thereof. In the event the Mortgagor should, for any reason whatsoever, fail to keep the corporeal (tangible) Mortgaged Property or any part thereof so insured, or to keep said policies so payable, or fail to deliver to the Mortgagee the original or certified policies of insurance and the renewals therefor upon demand, then the Mortgagee, if it so elects, may itself have such insurance effected in such amounts and with such companies as it may deem proper and may pay the premiums therefor, which premiums shall become part of Liabilities secured hereby. The Mortgagor will notify the Mortgagee immediately in writing of any material fire or other casualty to or accident involving the Mortgaged Property, whether or not such fire, casualty or accident is covered by insurance. The Mortgagor will promptly further notify the Mortgagor’s insurance company and submit an appropriate claim and proof of claim to the insurance company if such a casualty or accident occurs. In the event of any loss or any of such policies, the Mortgagee may, at its election, either apply the net proceeds thereof toward the payment of the Collateralized Obligations or pay the net proceeds thereof to the Mortgagor, either wholly or in part, and under such conditions as the Mortgagee may determine to enable the Mortgagor to repair or restore the Mortgaged Property;

            (d)        furnish to the Mortgagee prior to the occurrence of any change in the address of the Mortgagor’s location (as described on the signature page hereto) or in the name of the Mortgagor, notice in writing of such change;

            (e)        comply in all material respects with all conditions and requirements arising under Applicable Law necessary to preserve and extend any and all rights, licenses, permits, claims, patents, privileges, franchises and concessions necessary in order to use, own, develop, occupy, operate and conduct production operations on the Mortgaged Property which are applicable to the Mortgagor or have been granted for the Mortgaged Property or the use thereof;

            (f)        not initiate or acquiesce in any change in any material zoning or other land use or water rights classification now or hereafter in effect and affecting the Mortgaged Property or any part thereof;

            (g)        appear in and defend, with counsel reasonably acceptable to the Mortgagee, any action or proceeding purporting to affect the security hereof or the rights or powers of the Mortgagee; and pay all reasonable costs and expenses, including cost of evidence of title and reasonable attorneys’ fees, in any such action or proceeding in which the Mortgagee may appear.

             SECTION 3.32.         Right of Entry. Mortgagor will permit the Mortgagee, its officers and employees and such other persons or entities as the Mortgagee may in its discretion designate, at the cost and expense of the Mortgagor, reasonable access to the Mortgaged Property and to the field offices and other offices, including the principal place of business, of the Mortgagor to inspect and examine the Mortgaged Property and to inspect, review and reproduce as necessary any books, records, accounts, contracts or other documents of the Mortgagor. This Section shall not be construed to affect or limit the obligations or rights of the Mortgagor pursuant to the Loan Documents or Section 6.10 or Section 6.11 of this Mortgage in any manner whatsoever.

            SECTION 3.33.         Entire Interest. The Mortgaged Property comprises the entirety of the Mortgagor’s interest in the Unpatented and Patented Mining Claims related to the Lands as described in EXHIBIT A.

             SECTION 3.34.         Approvals. Other than the filing of this Mortgage and similar instruments in favor of the Mortgagee pursuant to Section 3.36, no approval is necessary or advisable either for:

            (i)        the granting by the Mortgagor of any Lien over any Mortgaged Property pursuant to this Mortgage; or

            (ii)        the exercise by the Mortgagee of its rights and remedies in respect of the Mortgaged Property (other than in respect of nonassignable governmental permits in which the Mortgagor may not lawfully grant a security interest) pursuant to this Mortgage, subject to any limitations on such exercise set forth in any such Approval.

             SECTION 3.35.         Correct Names, etc.

            (a)        The cover page to this Mortgage lists the correct legal name of the Mortgagor and the Mortgagor is not now and has not been known by any trade name.

            (b)        The Mortgagor has not been known by any legal name different from the one set forth on the cover page of this Mortgage, nor has the Mortgagor been the subject of any merger or other corporate reorganization.

             SECTION 3.36.         Filings . All recordings, filings and other actions (other than the recording and filing of this Mortgage and any financing statements or similar instruments relating hereto with all appropriate offices as described below) necessary and desirable to perfect and protect the Lien over the Mortgaged Property have been duly made and taken. No effective deed of trust, mortgage, financing statement or other instrument similar in effect covering all or any part of the Mortgaged Property is recorded or on file in any recording or filing office, except such as may have been expressly disclosed in writing to the Mortgagee. Immediately following the execution hereof, the Mortgagor shall cause this Mortgage and any financing statements or similar instruments relating hereto to be recorded and filed with all appropriate offices necessary and desirable to perfect and protect the Lien over the Mortgaged Property.

* * * * * * * * * *

ARTICLE FOUR
COVENANTS

RESERVED

* * * * * * * * * *

ARTICLE FIVE
ASSIGNMENT OF POST- PRODUCTION CONTRACTS

             SECTION 5.1.            Assignment. The Mortgagor hereby absolutely and irrevocably (a) transfers, assigns, warrants and conveys to the Mortgagee, effective as of the date hereof, at 12:01 A.M., local time, the Post-Production Contracts, and (b) gives to and confers upon the Mortgagee the right, power and authority to collect all payments, monies, Ore, or other in-kind transfers accruing to Mortgagor under the Post-Production Contracts (the “Post-Production Contract Payments”). The Mortgagor irrevocably appoints the Mortgagee its true and lawful attorney-in-fact, with full authority in the place and stead of the Mortgagor and in the name of the Mortgagor or otherwise, from time to time in the Mortgagee’s discretion, to demand, receive and enforce payment, to give receipts, releases and satisfactions, and to sue, in the name of the Mortgagor or the Mortgagee, for the Post-Production Contracts and apply the Post-Production Contract Payments to the payment of the Collateralized Obligations. Subject to the foregoing, all parties responsible for the payment of the Post-Production Contract Payments to the Mortgagor are authorized and directed to treat and regard the Mortgagee as the assignee and transferee of the Mortgagor and entitled in the Mortgagor’s place and stead to receive such Post-Production Contract Payments; and said parties and each of them shall be fully protected in so treating and regarding the Mortgagee and shall be under no obligation to see to the application by the Mortgagee of any such proceeds or payments received by it. The assignment of the Post-Production Contracts and the Post-Production Contract Payments in this Section is intended to be an absolute assignment from the Mortgagor to the Mortgagee and not merely the granting or passing of a security interest. Such Post-Production Contracts and Post-Production Contract Payments are hereby assigned absolutely by the Mortgagor to the Mortgagee contingent with respect to collection only upon the occurrence of an Event of Default hereunder.

             SECTION 5.2.           Collection Upon Event of Default. Upon the occurrence of any Event of Default, the Mortgagee may, at any time without notice, either in person, by trustee or by a receiver appointed by a court, and without regard to the adequacy of any security for the Collateralized Obligations, in its own name or as Trustee or attorney in fact for the Mortgagor, enter upon and take possession of the Mortgaged Property, or any part thereof, and sue for or otherwise collect the Post-Production Contract Payments, including those past due and unpaid and apply the same, less costs and expenses of operation and collection, including attorneys’ fees, upon any of the Collateralized Obligations in such order as the Mortgagee shall determine. The collection of the Post-Production Contract Payments, or the entering upon and taking possession of the Mortgaged Property, or the application thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any act done in response to such default or pursuant to notice of default

             SECTION 5.3.           No Liability of the Mortgagee in Collecting. The Mortgagee is hereby absolved from all liability for failure to enforce collection of any proceeds so assigned (and no such failure shall be deemed to be a waiver of any right of the Mortgagee under this Article) and from all other responsibility in connection therewith, except the responsibility to account to the Mortgagor for funds actually received.

             SECTION 5.4.           Assignment Not a Restriction on the Mortgagee’s Rights. Nothing herein contained shall detract from or limit the absolute obligation of the Mortgagor to make payment of the Collateralized Obligations regardless of whether the proceeds assigned by this ARTICLE are sufficient to pay the same, and the rights under this ARTICLE shall be in addition to all other security now or hereafter existing to secure the payment and performance of the Collateralized Obligations.

             SECTION 5.5.           Status of Assignment. Notwithstanding the other provisions of this ARTICLE, and in addition to the other rights hereunder, the Mortgagee or any receiver appointed in judicial proceedings for the enforcement of this Mortgage shall have the right to receive the Post-Production Contract Payments herein assigned and the proceeds therefrom after the Collateralized Obligations have been declared due and payable in accordance with the provisions of the Loan Documents and to apply all of said proceeds as provided in Section 5.2. Upon any sale of the Mortgaged Property or any part thereof pursuant to ARTICLE SEVEN, the Post-Production Contract Payments thereafter attributable to the property so sold, and the proceeds therefrom, shall be included in such sale and shall pass to the purchaser free and clear of the assignment contained in this ARTICLE.

             SECTION 5.6.           Indemnity. In addition to any similar obligations set forth in the Loan Documents to which it is a party, the Mortgagor shall indemnify the Mortgagee against all claims, actions, liabilities, judgments, costs, losses, damages, attorneys’ fees or other charges or expenses of whatsoever kind or nature (collectively, “Claims”) made against or incurred by it as a consequence of the assertion, either before or after the payment in full of the Collateralized Obligations, that it received the Post-Production Contracts herein assigned or the Post-Production Contract Payments claimed by third persons, the Mortgagor and the Mortgagee shall each, on its own behalf, have the right to defend against any such claims, employing attorneys therefor, and unless furnished with reasonable indemnity, they or any of them shall have the right to pay or compromise and adjust all such claims. The Mortgagor will indemnify and pay to the Mortgagee any and all such amounts as may be paid in respect thereof or as may be successfully adjudged against the Mortgagee, except to the extent such amounts arise for the account of the Mortgagee by reason of its gross negligence or wilful misconduct (as determined by a court of competent jurisdiction). If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Mortgagor hereby agrees to make the maximum contribution to the payment and satisfaction of the claims which is permissible under Applicable Law. The obligations of the Mortgagor as hereinabove set forth in this Section shall survive the release, termination, foreclosure or assignment of this Mortgage or any sale hereunder.

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ARTICLE SIX
ENVIRONMENTAL MATTERS

             SECTION 6.1.           Definitions. For purposes of this ARTICLE:

            (a)        “CERCLA” means: the Comprehensive Environmental Response, Compensation, and Liability Act, commonly known as Superfund (42. U.S.C. § 9601 et seq.).

            (b)        “CERCLIS” means: the Comprehensive Environmental Response, Compensation and Liability Information System, a database maintained by the U.S. Environmental Protection Agency (EPA) (http://www.epa.gov/superfund/sites/cursites/index.htm).

            (c)        “Environmental Actions” means:

            (i)        any notice of violation, complaint, claim, citation, demand, inquiry, report, action, assertion of potential responsibility, lien, encumbrance, or proceeding regarding the Mortgaged Property, whether formal or informal, absolute or contingent, matured or unmatured, brought or issued by any governmental unit, agency, or body, or any person or entity respecting:

(A)        Environmental Laws;

(B)        the environmental condition of the Mortgaged Property, or any portion thereof, or any property near the Mortgaged Property, including actual or alleged damage or injury to humans, public health, wildlife, biota, air, surface or subsurface soil or water, or other natural resources, including any reclamation, remediation, or cleanup obligation associated therewith; or

(C)        the use, exposure, release, emission, discharge, generation, manufacture, sale, transport, handling, storage, treatment, reuse, presence, disposal, or recycling of Hazardous Substances either on the Mortgaged Property or off-site;

            (ii)        any violation or claim of violation by Mortgagor of any Environmental Laws involving the Mortgaged Property, or any material violation or claim of violation by Mortgagor of any Environmental Laws not involving the Mortgaged Property;

            (iii)        any pending or threatened claims, demands, actions, administrative proceedings or lawsuits involving the Mortgaged Property arising under any Environmental Laws;

            (iv)        any lien for damages caused by, or the recovery of any costs incurred by any person or governmental entity for the investigation, remediation or cleanup of any release or threatened release of Hazardous Substances; or

            (v)        the destruction or loss of use of property, or the injury, illness or death of any officer, director, employee, agent, representative, tenant or invitee of Mortgagor or any other person alleged to be or possibly to be, arising from or caused by the environmental condition of the Mortgaged Property or the release, emission or discharge of Hazardous Substances from the Mortgaged Property.

            (d)        “Environmental Laws” means: any and all statutes, regulations, rules, ordinances or resolutions now or hereafter in effect, and any judicial or administrative interpretation thereof, including any judicial or administrative order, consent decree or judgment, relating to the environment, human health or safety, or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or toxic or hazardous substances or wastes into the environment including, without limitation, ambient air, surface water, groundwater, or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or toxic or hazardous substances or wastes, including, without limitation, the Wyoming Environmental Quality Act, the National Environmental Policy Act (NEPA), the Endangered Species Act (ESA), the National Historic Preservation Act (NHPA), the Atomic Energy Act, the Uranium Mill Tailings Radiation Control Act, the Safe Drinking Water Act (SDWA), the Clean Water Act and Federal Pollution Control Act, the Occupational Safety and Health Act (OSHA) and all applicable laws and regulations issued by the Nuclear Regulatory Commission (NRC), the Wyoming Department of Environmental Quality (WDEQ), the Bureau of Land Management (BLM), the U.S. Environmental Protection Agency (EPA), the U.S. Department of Transportation (DOT), and all other federal, state, and local governmental authorities that regulate the mining, extraction, and processing of uranium, including in-situ recovery operations, including all transportation operations in conjunction therewith.

            (e)        “Hazardous Substances” means:

            (i)        “hazardous substances” as defined by CERCLA;

            (ii)        “hazardous wastes” as defined by RCRA;

            (iii)        any hazardous, dangerous or toxic chemical, material, waste, pollutant, contaminant or substance (“pollutant”) within the meaning of any Environmental Law prohibiting, limiting or otherwise regulating the use, exposure, release, emission, discharge, generation, manufacture, sale, transport, handling, storage, treatment, reuse, presence, disposal or recycling of such pollutant;

            (iv)        any petroleum, crude oil or fraction thereof;

            (v)        any radioactive material, including any source, special nuclear or by-product material as defined at 42 U.S.C. Section 2011 et seq., and amendments thereto and reauthorizations thereof;

            (vi)        asbestos-containing materials in any form or condition; and

            (vii)        polychlorinated biphenyls (“PCBs”) in any form or condition.

            (f)        “ Mortgaged Property ” means: The Mortgagor’s entire estate and interest in and to the Lands, including, Improvements presently and hereafter situated thereon or thereunder, construction material used in such Improvements, surface and subsurface soil and water, areas leased to tenants, and all business, uses, and operations thereon.

            (g)        “RCRA” means the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.)

             SECTION 6.2.           Representations and Warranties. Mortgagor hereby represents and warrants to Mortgagee that:

            (a)        Compliance. The Mortgaged Property is not listed on any local, state and/or federal lists of potentially contaminated sites, including, but not limited to, the National Priorities List (NPL), CERCLIS or any state or federal hazardous waste site or leaking underground storage tank lists, and the Mortgaged Property and Mortgagor have been and are currently in full compliance with all applicable Environmental Laws. Other than as disclosed to Mortgagee in writing, a copy of which is attached hereto as EXHIBIT F, there are no pending or threatened, Environmental Actions to which Mortgagor is a party or which relate to the Mortgaged Property, there have been no past Environmental Actions to which Mortgagor is a party and, to the Mortgagor’s knowledge, there have been no past Environmental Actions which relate to the Mortgaged Property. All required governmental permits and licenses are in effect regarding the Mortgaged Property and Mortgagor’s operations, and Mortgagor is in compliance therewith. Mortgagor has not received any notice of any Environmental Action respecting Mortgagor, the Mortgaged Property or any off-site facility to which has been sent any Hazardous Substances for off-site treatment, recycling, reclamation, reuse, handling, storage, sale or disposal.

            (b)        Absence of Hazardous Substances . No use, exposure, release, emission, discharge, generation, manufacture, sale, handling, reuse, presence, storage, treatment, transport, recycling or disposal of Hazardous Substances has occurred or is occurring on or from the Mortgaged Property except in full compliance with applicable Environmental Laws or as described in EXHIBIT F hereto (“Disclosed Materials”). The term “release” shall include but not be limited to any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment (including the abandonment or discarding of barrels, containers and other receptacles containing any Hazardous Substances). All Hazardous Substances used, treated, stored, transported to or from, generated or handled on the Mortgaged Property have been handled, managed, transported, and disposed of on or off the Mortgaged Property in a lawful manner. There are no environmental, public health or safety hazards that currently exist with respect to the Mortgaged Property, including any conditions that would give rise to any onsite or offsite remedial or cleanup obligations. To Mortgagor’s knowledge, no underground storage tanks (including but not limited to petroleum or heating oil storage tanks) are present on or under the Mortgaged Property, or have been on or under the Mortgaged Property except as has been disclosed in writing to Mortgagee, a copy of which is attached hereto as EXHIBIT F (“Disclosed Tanks”).

            (c)        Mortgagor’s Compliance and Reclamation Performance Bonds and Financial Assurance Requirements. Mortgagor is in full compliance with all financial assurance and asset retirement obligations for mine reclamation, remediation, and cleanup activities. Further, Mortgagor represents that the reclamation performance bonds and financial assurance bonds it has secured are in the amounts required by the governing regulatory authorities and sufficient to cover all costs of reclamation, remediation and cleanup as may be necessary. Mortgagor also represents that its reclamation performance bonds and financial assurance bonds are reviewed annually to ensure the amount and terms thereof are acceptable to the governing regulatory authorities.

             SECTION 6.3.           Mortgagor’s Covenants. Mortgagor hereby covenants and agrees with Mortgagee as follows:

            (a)        Compliance. The Mortgaged Property shall be operated and maintained in full compliance with all applicable Environmental Laws. All required governmental permits and licenses for the Mortgaged Property and the transportation of any materials related to the Mortgaged Property and the Project shall be obtained and maintained, and Mortgagor shall remain in compliance therewith. All Hazardous Substances on the Mortgaged Property will be handled, managed, transported and disposed of in a lawful manner without giving rise to liability under any applicable Environmental Laws. Mortgagor will satisfy all requirements of applicable Environmental Laws for the registration, operation, maintenance, reclamation and closure of the operations of the Mortgaged Property, including removal of all Hazardous Substances and underground storage tanks, if any.

            (b)        Absence of Hazardous Substances. Other than that permitted by the licenses and permits applicable to the Project or Disclosed Materials, or as otherwise conducted in full compliance with applicable Environmental Laws, no Hazardous Substances shall be introduced to or used, exposed, released, emitted, discharged, generated, manufactured, sold, transported, handled, stored, treated, reused, presented, disposed of or recycled on the Mortgaged Property without thirty (30) days prior written notice to Mortgagee.

            (c)        Environmental Actions and Right to Consent. There are no Environmental Actions relating to the Mortgaged Property or the Project. Mortgagor shall immediately notify Mortgagee of all Environmental Actions and provide copies of all written notices, complaints, correspondence and other documents relating thereto within five (5) business days of receipt, and Mortgagor shall keep Mortgagee informed of all responses thereto. Mortgagor shall promptly commence efforts to cure and have dismissed with prejudice all Environmental Actions in a manner satisfactory to Mortgagee and Mortgagor shall keep the Mortgaged Property free of any encumbrance arising from any judgment, liability or lien imposed pursuant to any Environmental Actions. Notwithstanding the foregoing sentence, Mortgagor may, diligently, in good faith and by appropriate legal proceedings, contest such proceedings provided: (i) Mortgagor first furnishes to Mortgagee such deposits as Mortgagee reasonably deems sufficient to fully protect Mortgagee’s interests; (ii) such contest shall have the effect of preventing any threatened or pending sale or forfeiture of all or any portion of the Mortgaged Property or the loss or impairment of Mortgagee’s lien and security interests in and to the Mortgaged Property; and (iii) such contest will not cause Mortgagee to incur any liability, in Mortgagee’s reasonable judgment. Mortgagor shall permit Mortgagee, at Mortgagee’s option, to appear in and to be represented in any such contest and shall pay upon demand all expenses incurred by Mortgagee in so doing, including attorneys’ fees.

            (d)        Future Environmental Audits. Mortgagor shall provide such information and certifications which Mortgagee may reasonably request from time to time to monitor Mortgagor’s compliance with this ARTICLE SIX for the sole purpose of protecting Mortgagee’s security interest. To protect its security interest, Mortgagee shall have the right, but not the obligation, at any time to enter upon the Mortgaged Property, take samples, review Mortgagor’s books and records, interview Mortgagor’s employees and officers, and conduct such other activities as Mortgagee, at its reasonable discretion, deems appropriate and is permitted by applicable Environmental Laws and the permits and licenses applicable to the Project. If Mortgagee visits the site as part of an audit or to sample, the Mortgagee will participate in required training and adhere to all site safety and environmental rules and regulations during the course of the visit or work on site. Samples which may contain source or byproduct material must be sent to a commercial lab with a U.S. Nuclear Regulatory Commission license. Mortgagor shall cooperate fully in the conduct of such an audit. If Mortgagee decides to conduct such an audit because of (i) an Environmental Action; (ii) Mortgagee’s considering taking possession of or title to the Mortgaged Property after default by Mortgagor; (iii) a material change in the use of the Mortgaged Property, which in Mortgagee’s opinion, increases the risk to its security interest; or (iv) the introduction of Hazardous Substances other than those permitted by permits and licenses applicable to the Project and Disclosed Materials to the Mortgaged Property; then Mortgagor shall pay upon demand all costs and expenses connected with such audit, which, until paid, shall become additional indebtedness secured by the Loan Documents and shall bear interest at the rate of interest set forth in the Bond. Nothing in this ARTICLE SIX shall give or be construed as giving Mortgagee the right to direct or control Mortgagor’s actions in complying with applicable Environmental Laws. or otherwise be considered “Participation in Management” by Mortgagee as that term is defined in applicable Environmental Laws.

            (e)        Event of Default and Opportunity to Cure . If Mortgagor fails to comply with any of its covenants contained in this ARTICLE SIX within thirty (30) days after notice by Mortgagee to Mortgagor, Mortgagee may, at its option, declare an Event of Default. If, however, the noncompliance cannot, in Mortgagee’s reasonable determination, be corrected within such thirty (30) day period, and if Mortgagor has promptly commenced and diligently pursues action to cure such noncompliance to Mortgagee’s satisfaction, then Mortgagor shall have such additional time as is reasonably necessary to correct such noncompliance, provided Mortgagor continues to diligently pursue corrective action, but in no event more than a total of one hundred eighty (180) days after the initial notice of noncompliance by Mortgagee.

             SECTION 6.4.           Mortgagee’s Right to Rely. Mortgagee is entitled to rely upon Mortgagor’s representations, warranties and covenants contained in this Article despite any independent investigations by Mortgagee or its consultants. Mortgagor shall take all necessary actions to determine, and to remain aware of, the environmental condition of the Mortgaged Property. Mortgagor shall have the right to rely upon any independent environmental investigations or findings made by Mortgagee or its consultants.

             SECTION 6.5.           Indemnification. The term “Mortgagee’s Environmental Liability” shall mean any and all losses, liabilities, obligations, penalties, claims, fines, lost profits, demands, litigation, defenses, costs, judgments, suits, proceedings, damages (including consequential, punitive and exemplary damages), remediation and cleanup costs, disbursements or expenses of any kind or nature whatsoever (including attorneys’ fees at trial and appellate levels and experts’ fees and disbursements and expenses incurred in investigating, defending against, settling or prosecuting any suit, litigation, claim or proceeding) which may at any time be either directly or indirectly imposed upon, incurred by or asserted or awarded against Mortgagee or any of Mortgagee’s parent and subsidiary corporations and their affiliates, shareholders, directors, officers, employees, and agents (collectively, Mortgagee’s “Affiliates”) in connection with or arising from:

            (a)        any Hazardous Substances used, exposed, emitted, released, discharged, generated, manufactured, sold, transported, handled, stored, treated, reused, presented, disposed of or recycled on, in or under all or any portion of the Mortgaged Property, or any surrounding areas, excepting therefrom any such actions caused by, or during any period in which the Mortgaged Property were owned by or under the control of, Mortgagee (collectively, such actions are referred to as the “Mortgagee’s Actions”);

            (b)        any misrepresentation, inaccuracy or breach of any warranty, covenant or agreement contained or referred to in this Article;

            (c)        any violation, liability or claim of violation or liability, under any applicable Environmental Laws;

            (d)        the imposition of any lien for damages caused by, or the recovery of any costs incurred for the cleanup of, any release or threatened release of Hazardous Substances; or

            (e)        any Environmental Actions.

            Mortgagor shall indemnify, defend (at trial and appellate levels and with counsel, experts and consultants acceptable to Mortgagee and at Mortgagor’s sole cost) and hold Mortgagee and its Affiliates free and harmless from and against Mortgagee’s Environmental Liability (collectively, “Mortgagor’s Indemnification Obligations”). Mortgagor’s Indemnification Obligations shall survive in perpetuity with respect to any Mortgagee’s Environmental Liability.

            Mortgagor and its successors and assigns hereby waive, release and agree not to make any claim or bring any cost recovery or contribution action against Mortgagee under or with respect to any Environmental Laws. Mortgagor’s obligation to Mortgagee under this indemnity shall, excepT as set forth herein, be without regard to fault on the part of Mortgagor or Mortgagee with respect to the violation or condition that results in liability to Mortgagee.

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ARTICLE SEVEN
ENFORCEMENT OF THE SECURITY

             SECTION 7.1.           Waiver of Notice and Demand Upon Acceleration. Upon the occurrence of an Event of Default, the Mortgagee, at its option, may declare the Collateralized Obligations to be forthwith due and payable, without any notice or demand of any kind, both of which are hereby expressly waived.

             SECTION 7.2.           Power of Sale of Real Property Constituting a Part of the Mortgaged Property. Mortgagor hereby grants to Mortgagee a power of sale to foreclose this Mortgage by advertisement and sale under Wyoming Statutes. Upon the occurrence of an Event of Default, the Mortgagee shall have the right and power to sell without the necessity of judicial proceedings, to the extent permitted by Applicable Law, at one or more sales, as an entirety or in parcels, as it may elect, the real property constituting a part of the Mortgaged Property, at such place or places and otherwise in such manner and upon such notice as may be required by Applicable Law, or, in the absence of any such requirement, as the Mortgagee may deem appropriate, and to make conveyance to the purchaser or purchasers; and the Mortgagor shall warrant title (to the extent, but subject to the exceptions, warranted to the Mortgagee herein) to such real property to such purchaser or purchasers. The Mortgagee may postpone the sale of all or any portion of such real property by public announcement at the time and place of such sale, and from time to time thereafter may further postpone such sale by public announcement made at the time of sale fixed by the preceding postponement, as allowed by Applicable Law. The right of sale hereunder shall not be exhausted by one or any sale, and the Mortgagee may make other and successive sales until all of the Mortgaged Property shall have been legally sold.

             SECTION 7.3.           Rights of the Mortgagee with Respect to Goods and General Intangibles Constituting a Part of the Mortgaged Property. Upon the occurrence of an Event of Default, the Mortgagee will have all rights and remedies granted by Applicable Law, and particularly by the Uniform Commercial Code, including the right to take possession of all Goods and General Intangibles constituting a part of the Mortgaged Property, and for this purpose the Mortgagee may enter upon any premises on which any or all of such Goods and General Intangibles are situated and take possession of and operate such Goods and General Intangibles (or any portion thereof) or remove them therefrom. The Mortgagee may require the Mortgagor to assemble such Goods and General Intangibles and make them available to the Mortgagee at a place to be designated by the Mortgagee. Unless such Goods and General Intangibles are perishable or threaten to decline speedily in value or are of a type customarily sold on a recognized market, the Mortgagee will give the Mortgagor reasonable notice of the time and place of any public sale or of the time after which any private sale or other disposition of such Goods and General Intangibles is to be made. This requirement of sending reasonable notice will be met if the notice is mailed by first-class mail, postage prepaid, to the Mortgagor at the address shown herein at least ten (10) days before the time of the sale or disposition.

             SECTION 7.4.           Judicial Proceedings. Upon the occurrence of an Event of Default, the Mortgagee, in lieu of or in addition to exercising any power of sale hereinabove given, may proceed by a suit or suits in equity or at law, whether for a foreclosure hereunder, or for the sale of the Mortgaged Property, or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure hereunder or the sale of the Mortgaged Property, or for the enforcement of any other appropriate legal or equitable remedy.

             SECTION 7.5.           Possession of the Mortgaged Property. It shall not be necessary for the Mortgagee to have physically present or constructively in its possession at any sale held by the Mortgagee or by any court, receiver or public officer any or all of the Mortgaged Property; and the Mortgagor shall deliver to the purchasers at such sale on the date of sale the Mortgaged Property purchased by such purchasers at such sale, and if it should be impossible or impracticable for any of such purchasers to take actual delivery of the Mortgaged Property, then the title and right of possession to the Mortgaged Property shall pass to such purchaser at such sale as completely as if the same had been actually present and delivered.

             SECTION 7.6.           Certain Aspects of a Sale. The Mortgagee shall have the right to become the purchaser at any sale held by the Mortgagee or by any court, receiver or public officer, and the Mortgagee shall have the right to credit upon the amount of the bid made therefor the amount payable out of the net proceeds of such sale to it. Recitals contained in any conveyance made to any purchaser at any sale made hereunder shall conclusively establish the truth and accuracy of the matters therein stated, including nonpayment of the unpaid portion of, and the interest accrued on, the Collateralized Obligations after the same have become due and payable, advertisement and conduct of such sale in the manner provided herein.

             SECTION 7.7.           Receipt to Purchaser. Upon any sale, whether made under the power of sale herein granted and conferred or by virtue of judicial proceedings, the receipt of the Mortgagee, or of the officer making sale under judicial proceedings, shall be sufficient discharge to the purchaser or purchasers at any sale for his or their purchase money, and such purchaser or purchasers, or his or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of the Mortgagee or of such officer therefor, be obliged to see to the application of such purchase money, or be in anywise answerable for any loss, misapplication or nonapplication thereof.

             SECTION 7.8.           Effect of Sale. Any sale or sales of the Mortgaged Property, whether under the power of sale herein granted and conferred or by virtue of judicial proceedings, shall operate to divest all right, title, interest, claim and demand whatsoever either at law or in equity, of the Mortgagor of, in and to the premises and the property sold, and shall be a perpetual bar, both at law and in equity, against the Mortgagor, and the Mortgagor’s successors or assigns, and against any and all persons claiming or who shall thereafter claim all or any of the property sold from, through or under the Mortgagor or the Mortgagor’s successors or assigns. Nevertheless, the Mortgagor, if requested by the Mortgagee so to do, shall join in the execution and delivery of all proper conveyances, assignments and transfers of the properties so sold.

             SECTION 7.9.           Application of Proceeds. All proceeds received by the Mortgagee in respect of any sale of the Mortgaged Property, or any part thereof, (whether granted and conferred herein, or by virtue of judicial proceeding) of, collection from, or other realization upon, all or any part of the Mortgaged Property (after payment and satisfaction of all costs and expenses incurred by the Mortgagee in the performance of its rights or duties, and of any amounts payable pursuant to the Loan Documents and SECTION 7.12 of this Mortgage) shall be applied as provided in SECTION 8.06 of the Indenture.

             SECTION 7.10.         Liability for Deficiency. The Mortgagor will remain liable for any deficiency owing to the Mortgagee and be entitled to surplus, if any, after application of the proceeds of any sale of the Mortgaged Property as set forth in SECTION 7.9, to the fullest extent permitted by Applicable Law.

             SECTION 7.11.         The Mortgagor’s Waiver of Appraisement, Marshalling, and Other Rights. The Mortgagor agrees, to the fullest extent that the Mortgagor may lawfully so agree, that the Mortgagor will not at any time insist upon or plead or in any manner whatever claim the benefit of any appraisement, moratorium, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the absolute sale of the Mortgaged Property or the possession thereof by any purchaser at any sale made pursuant to any provision hereof, or pursuant to the decree of any court of competent jurisdiction; and the Mortgagor, for the Mortgagor and all who may claim by, through or under the Mortgagor, so far as the Mortgagor or those claiming by, through or under the Mortgagor now or hereafter lawfully may, hereby waives the benefit of all such laws. The Mortgagor, for the Mortgagor and all who may claim by, through or under the Mortgagor, waives, to the extent that the Mortgagor may lawfully do so, any and all right to the exemption of homesteads, and to have the Mortgaged Property marshalled upon any foreclosure of the Lien hereof, or sold in inverse order of alienation, and agrees that the Mortgagee or any court having jurisdiction to foreclose such Lien may sell the Mortgaged Property as an entirety or in separate parts. The Mortgagor, for the Mortgagor and all who may claim by, through or under the Mortgagor, further waives, to the fullest extent that the Mortgagor may lawfully do so, any requirement for posting a receiver’s bond or replevin bond or other similar type of bond if the Mortgagee commences an action for appointment of a receiver or an action for replevin to recover possession of any of the Mortgaged Property. The Mortgagor hereby further waives the pleading of any statute of limitations as a defense to any and all Collateralized Obligations, and the Mortgagor agrees that no defense, claim or right based on any thereof will be asserted, or may be enforced, in any action enforcing or relating to this Mortgage or any of the Mortgaged Property. The Mortgagor, for itself and for all persons and entities hereafter claiming by, through or under the Mortgagor or who may at any time hereafter become holders of Liens junior to the Lien of this Mortgage, hereby expressly waives and releases all rights to direct the order in which any of the Mortgaged Property shall be sold in the event of any sale or sales pursuant hereto and to have any of the Mortgaged Property and/or any other property now or hereafter constituting security or any of the Collateralized Obligations marshalled upon foreclosure of this Mortgage or of any other security or any of such Collateralized Obligations. If any Applicable Law in this Section referred to and now in force, of which the Mortgagor or the Mortgagor’s successor or successors might take advantage despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the operation or application of the provisions of this Section.

            SECTION 7.12.         Costs and Expenses. All reasonable costs and expenses (including reasonable attorneys’ fees and other legal, management and consulting expenses) incurred by the Mortgagee in protecting and enforcing its rights hereunder (including (i) any and all such costs and expenses which are incurred in connection with any state or federal action or proceeding concerning bankruptcy, debt relief, or protection from creditors, and in connection with any and all appellate actions or proceedings and (ii) any and all costs and expenses of any entry or taking of possession of, or any sale or conveyance of, any Mortgaged Property (including, advertisement costs, court costs, compensation of any employees and reasonable legal fees)), shall constitute a demand obligation owing by the Mortgagor to the party incurring such costs and expenses and shall draw interest at an annual rate equal to the highest rate of interest from time to time accruing under and as provided in the Loan Documents until paid, all of which shall constitute a portion of the Collateralized Obligations.

             SECTION 7.13.         Operation of the Mortgaged Property by the Mortgagee. Upon the occurrence of an Event of Default and in addition to all other rights herein conferred on the Mortgagee, the Mortgagee (or any Person designated by the Mortgagee) shall have the right and power to the fullest extent allowed under Applicable Law, but shall not be obligated, to enter upon and take possession of any of the Mortgaged Property, and to exclude the Mortgagor, and the Mortgagor’s trustees or servants, wholly therefrom, and to hold, use, administer, manage and operate the same to the extent that the Mortgagor shall be at the time entitled and in its place and stead, in any form and manner deemed expedient by the Mortgagee. Mortgagee, or any Person designated by the Mortgagee, may operate the same without any liability to the Mortgagor in connection with such operations, except to use ordinary care in the operation of such properties, and the Mortgagee or any Person designated by the Mortgagee shall have the right to collect, receive and receipt for the Post-Production Contracts and the Post-Production Contract Payments (as described in SECTION 5.2), to make repairs, purchase machinery and equipment, conduct operations and to exercise every power, right and privilege of the Mortgagor with respect to the Mortgaged Property. All amounts paid or expended by the Mortgagee in exercising its rights under this SECTION (plus reasonable compensation to the Mortgagee for its out-of-pocket and other expenses for each matter for which it acts under this Mortgage), along with interest thereon at the highest rate of interest from time to time accruing under and as provided in the Loan Documents until paid, all of which shall constitute a portion of the Collateralized Obligations, shall be added to the Collateralized Obligations and shall be repaid to the Mortgagee upon demand. When and if the expenses of such operation and development (including costs of unsuccessful operations) have been paid and the Collateralized Obligations paid, said properties shall, if there has been no sale or foreclosure, be returned to the Mortgagor.

             SECTION 7.14.         Consents. In the event the validity and effectiveness of the mortgage, assignment or charge upon or security interest in any of the Mortgaged Property (collectively, a “Charge”) requires the consent, approval or waiver of a third Person in order to be effective as against such third Person, the Charge with respect to any such Mortgaged Property shall be effective as against the Mortgagor and all Persons other than such third Person and shall be effective as against such third Person when the applicable consent, approval or waiver is obtained, retroactively, to the fullest extent legally possible, to the later of the date hereof or the date such consent, approval or waiver is obtained or becomes effective, as applicable, and until such consent, approval or waiver is obtained, the Mortgagor shall (subject to the other terms hereof) stand possessed of such Mortgaged Property upon trust to assign and dispose thereof as the Trustee shall for such purposes direct.

* * * * * * * * * *

ARTICLE EIGHT
OTHER PROVISIONS

             SECTION 8.1.         Right to Perform the Mortgagor’s Collateralized Obligations.  Each and every covenant herein contained shall be performed and kept by the Mortgagor solely at the Mortgagor’s expense. If the Mortgagor shall fail to perform or keep any of the covenants of whatsoever kind or nature contained in this Mortgage, the Mortgagee or any receiver appointed hereunder, may, but shall not be obligated to, perform or keep, or cause to be performed or kept, the same in the Mortgagor’s behalf, and the Mortgagor hereby agrees to reimburse the Mortgagee or such receiver (as the case may be) on demand for all reasonable expenses incurred in connection therewith plus interest thereon at an annual rate equal to the highest rate of interest from time to time accruing under and as provided in the Loan Documents until paid. The undertaking of such performance by the Mortgagee or such receiver (as the case may be) as aforesaid shall not obligate the Mortgagee or such receiver (as the case may be) to continue such performance or to engage in such performance or performance of any other act in the future, shall not obligate the Mortgagee or such receiver (as the case may be) to take any necessary steps to preserve rights against prior parties or any other rights in connection with any agreements, shall not relieve the Mortgagor from the observance or performance of any covenant or agreement contained in this Mortgage or constitute a waiver of default hereunder and shall not affect the right of the Mortgagee to accelerate the payment of the Collateralized Obligations or to resort to any other of its rights or remedies hereunder or under Applicable Law.

             SECTION 8.2.         Defense of Claims. The Mortgagor will notify the Mortgagee, in writing, promptly of the commencement of any legal proceedings affecting the Lien hereof or the Mortgaged Property, or any part thereof, and will take such action, employing attorneys agreeable to the Mortgagee, as may be necessary or appropriate to preserve the Mortgagor’s and the Mortgagee’s rights affected thereby and/or to hold harmless the Mortgagee in respect of such proceedings; and should the Mortgagor fail or refuse to take any such action, the Mortgagee may, upon giving prior written notice thereof to the Mortgagor, take such action in behalf and in the name of the Mortgagor and at the Mortgagor’s expense. Moreover, the Mortgagee may take such independent action in connection therewith as it may in its discretion deem proper, the Mortgagor hereby agreeing that all sums advanced or all reasonable expenses incurred in such actions plus interest at an annual rate equal to the highest rate of interest from time to time accruing under and as provided in the Loan Documents until paid, will, on demand, be reimbursed, as appropriate, to the Mortgagee or any receiver appointed hereunder. The obligations of the Mortgagor as hereinabove set forth in this Section shall survive the release, termination, foreclosure or assignment of this Mortgage or any sale hereunder.

             SECTION 8.3.         The Mortgaged Property to Revert. If the Collateralized Obligations shall be fully paid in cash and the covenants herein contained shall be well and truly performed, then all of the Mortgaged Property shall revert to the Mortgagor and the entire estate, right, title and interest of the Mortgagee shall thereupon cease; and the Mortgagee in such case shall, upon the request of the Mortgagor and at the Mortgagor’s cost and expense, deliver to the Mortgagor proper instruments acknowledging satisfaction of this Mortgage without warranty or recourse of any kind, to the person or persons legally entitled thereto.

             SECTION 8.4.         Renewals, Amendments and Other Security. Renewals and extensions of the Collateralized Obligations may be given at any time and amendments may be made to agreements relating to any part of such Collateralized Obligations or the Mortgaged Property and the Mortgagee may take or may now hold other security for the Collateralized Obligations, all without notice to or consent of the Mortgagor. The Mortgagee may resort first to such other security or any part thereof or first to the security herein given or any part thereof, or from time to time to either or both, even to the partial or complete abandonment of either security, and such action shall not be a waiver of any rights conferred by this Mortgage, which shall continue as a first-priority, perfected Lien (subject to the exceptions set forth herein) in the Mortgaged Property not expressly released until the Collateralized Obligations are fully paid and performed.

             SECTION 8.5.         Construction of Mortgage as an Assignment, etc. This Mortgage shall be deemed to be and may be enforced from time to time as an assignment, chattel mortgage, contract, mortgage, deed of trust, financing statement or security agreement, and from time to time as any one or more thereof.

             SECTION 8.6.         Limitation on Interest. Notwithstanding any other provision of this Mortgage, the Loan Documents, or any other documents entered into in connection with the transactions contemplated herein, the Mortgagor does not agree, and shall not be charged with, or obligated to pay, any amount of interest that would render the Loan Documents usurious. It is the intention of the Mortgagee and the Purchaser to conform strictly to the applicable usury laws presently in force, and any agreement for taking, receiving, reserving or charging interest shall be held to be subject to reduction to the amount allowed under said usury laws, so that if from any circumstances any interest is in excess of the maximum permitted by Applicable Law, such excess shall be cancelled automatically, and if theretofore paid, shall be refunded or credited on the principal amount of the obligation secured thereby. All sums paid or agreed to be paid to the Mortgagee and the Purchaser for the use, forbearance or detention of the Collateralized Obligations shall, to the extent permitted by Applicable Law, be amortized, prorated, allocated and spread throughout the full stated term of the Collateralized Obligations until payment in full so that the rate or amount of interest does not exceed the maximum lawful rate in effect and applicable to the Collateralized Obligations for so long as the Collateralized Obligations are outstanding. This provision shall control any provision of this Mortgage, the Loan Documents, or any other instruments in connection therewith which are inconsistent with this paragraph.

             SECTION 8.7.         Unenforceable or Inapplicable Provisions. If any provision hereof or of any other Loan Documents is invalid or unenforceable in any jurisdiction, the other provisions hereof or of such Loan Documents shall remain in full force and effect in such jurisdiction, and the remaining provisions hereof shall be liberally construed in favor of the Mortgagee in order to effectuate the provisions hereof or thereof, and the invalidity of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other jurisdiction. Any reference herein contained to a statute or law of a state in which no part of the Mortgaged Property is situated shall be deemed inapplicable to, and not used in, the interpretation hereof.

             SECTION 8.8.         Rights Cumulative; Waiver.

            (a)        Each and every right, power and remedy herein given to the Mortgagee shall be cumulative and not exclusive; and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient. No failure or delay by or on the part of the Mortgagee or the exercise, or the beginning of the exercise, of any such right, power or remedy shall be deemed a waiver of the right to exercise, at the same time or thereafter, any other right, power or remedy in exercising any power or right under this Mortgage. No such failure or delay shall operate as a waiver of any right hereunder, nor shall any single or partial exercise of any power, right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other power, right or remedy. No notice to or demand on the Mortgagor in any case shall entitle it to any notice or demand in similar or other circumstances. No delay or omission by the Mortgagee in the exercise of any right, power or remedy shall impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing. No waiver or approval under this Mortgage shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder.

            (b)        Any and all covenants in this Mortgage may from time to time be waived by Mortgagee in writing signed by the Mortgagee to such extent and in such manner as the Mortgagee may desire, but no such waiver shall ever affect or impair the Mortgagee’s rights or Liens hereunder, except to the extent specifically stated in such written instrument .

             SECTION 8.9.           Indemnification . In addition to any similar obligations contained in this Mortgage and each other Loan Documents to which it is or may become a party, the Mortgagor hereby indemnifies and holds harmless the Mortgagee and the Purchaser from and against any and all claims, actions, judgments, costs, fees (including reasonable attorneys’ fees), expenses, damages, charges, losses and liabilities arising out of or resulting from this Mortgage (including the enforcement hereof), except claims, losses or liabilities resulting from the Mortgagee’s gross negligence or wilful misconduct (as determined by a court of competent jurisdiction). Without limiting the generality of the foregoing, upon demand, the Mortgagor will pay to the Mortgagee the amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and trustees, which the Mortgagee may incur in connection with:

            (a)        the administration of this Mortgage and the Loan Documents;

            (b)        the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Mortgaged Property;

            (c)        the exercise or enforcement of any of the rights of the Mortgagee hereunder; or

            (d)        the failure by the Mortgagor to perform or observe any of the provisions hereof.

If and to the extent that the foregoing undertaking may be unenforceable for any reason, the Mortgagor hereby agrees to make the maximum contribution to the payment and satisfaction of such claims, actions, judgments, costs, fees (including reasonable attorneys’ fees), expenses, damages, charges, losses and liabilities which is permissible under Applicable Law. The obligations of the Mortgagor as hereinabove set forth in this SECTION shall survive the release, termination, foreclosure or assignment of this Mortgage or any sale hereunder.

             SECTION 8.10.         Release and Waiver. The Mortgagor hereby waives and releases any and all rights of contribution, reimbursement or indemnity it has or may hereafter have against the Mortgagee arising from or relating to this Mortgage and/or the Mortgaged Property, including claims or liabilities relating to Environmental Laws.

             SECTION 8.11.         No Partnership. Nothing contained in this Mortgage is intended to, or shall be construed as, creating to any extent and in any manner whatsoever, any partnership, mining partnership, joint venture or association among the Mortgagor and the Mortgagee, or in any way as to make the Mortgagee a co-principal with the Mortgagor with reference to the Mortgaged Property, and any inferences to the contrary are hereby expressly negated.

             SECTION 8.12.         Partial Releases. No partial release from the Lien of this Mortgage with respect to any part of the Mortgaged Property by the Mortgagee shall in any way alter, vary or diminish the force, effect or Lien of this Mortgage against the balance or remainder of the Mortgaged Property.

             SECTION 8.13.         Successors and Assigns. This Mortgage shall be binding upon the Mortgagor and the Mortgagor’s successors and assigns, and shall inure to the benefit of the Mortgagee, for the benefit of the Purchaser, and their respective successors and assigns; provided, however, that: the Mortgagor may not assign, delegate or transfer its rights or obligations hereunder without the prior written consent of the Mortgagee and the Purchaser pursuant to the terms of the Loan Documents.

            The provisions of this Mortgage shall be covenants running with the land.

             SECTION 8.14.         Amendments. The provisions of this Mortgage may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by the Mortgagor and the Mortgagee.

             SECTION 8.15.         Headings. The various headings of this Mortgage are inserted for convenience only and shall not affect the meaning or interpretation of this Mortgage.

             SECTION 8.16.         Execution in Counterparts. This Mortgage may be executed in any number of counterparts, each of which shall for all purposes be deemed to be an original and all of which are identical and together shall constitute one and the same instrument.

             SECTION 8.17.         Recording References in EXHIBIT A. All recording references in EXHIBIT A hereto, if any, are to the official real property records of the county in which the affected land is located.

            SECTION 8.18.         Special Filing as Financing Statement. This Mortgage shall likewise be a security agreement and a financing statement. This Mortgage shall be filed for record, among other places, in the official real property records of each county in which any portion of the real property covered by the Lands described in or referred to in EXHIBIT A hereto is situated, and, when filed in such counties, shall be effective as a financing statement covering Fixtures (including all property identified on EXHIBIT B hereto) and As-Extracted Collateral located thereon (including all Ore). The owner of record of an interest in the Lands is identified on EXHIBIT A hereto. At the option of the Mortgagee, a carbon, photographic or other reproduction of this Mortgage or of any financing statement covering the Mortgaged Property or any portion thereof shall be sufficient as a financing statement and may be filed as such.

             SECTION 8.19.         Notices. Except as otherwise provided herein, all notices, certificates or other communications hereunder shall be sufficiently given and shall be deemed given upon receipt by hand delivery, prepaid mail, overnight delivery by a nationally recognized express transportation company, telecopy or other means, with proper address as indicated below.

           A duplicate copy of each notice, certificate, or other communication given hereunder by the Mortgagor or the Mortgagee shall also be given to the Purchaser. The Mortgagor, the Mortgagee and the Purchaser may, by written notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.

             SECTION 8.20.         Request for Notice. The Mortgagor hereby requests a copy of any notice of default, and further requests that any notice of sale hereunder be mailed to it at the address above.

             SECTION 8.21.         Statement by the Mortgagor. The Mortgagor, within ten (10) days after being given notice by mail, will furnish to the Mortgagee a written statement stating the unpaid Collateralized Obligations and any other amounts secured by this Mortgage and stating whether any offset or defense exists against such principal and interest.

             SECTION 8.22.         Mortgagee Appointed Attorney-in-Fact. The Mortgagor hereby irrevocably appoints the Mortgagee the Mortgagor’s attorney-in-fact, with full authority in the place and stead of the Mortgagor and in the name of the Mortgagor or otherwise, from time to time in the Mortgagee’s discretion, to take any action (including any action under the Post-Production Contracts that the Mortgagor is entitled to take) and to execute any instrument which the Mortgagee may deem necessary or advisable to accomplish the purposes of this Mortgage, including:

            (a)        to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Post-Production Contracts;

            (b)        to receive, indorse and collect any drafts or other instruments or documents in connection with clause (a);

            (c)        to file any claims or take any action or institute any proceedings which the Mortgagee may deem to be necessary or desirable for the collection thereof or to enforce the rights of the Mortgagee with respect to any of the Post-Production Contracts or to enforce compliance with the terms and conditions of the Post-Production Contracts; and

            (d)        to perform the affirmative obligations of the Mortgagor hereunder.

            The Mortgagor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest.

             SECTION 8.23.         Principal Amount of Debt. The obligations secured by this Mortgage (exclusive of interest and the cost, expenses and all other obligations of Mortgagor to Mortgagee which are not required to be stated as part of the total principal amount of the indebtedness secured) shall not exceed at any one time $20,000,000.00 U.S., which shall also be deemed the stated principal amount of this Mortgage.

             SECTION 8.24.         Governing Law, Entire Agreement. THIS MORTGAGE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF WYOMING. THIS MORTGAGE AND ALL EXHIBITS HERETO SHALL CONSTITUTE THE SOLE AND ENTIRE AGREEMENT OF MORTGAGOR AND MORTGAGEE, AND SHALL SUPERSEDE ANY AND ALL PRIOR OR CONTEMPORANEOUS ORAL NEGOTIATIONS, REPRESENTATIONS OR UNDERSTANDING.

             SECTION 8.25.         Waiver of Jury Trial. THE MORTGAGEE AND THE MORTGAGOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS MORTGAGE OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE MORTGAGOR AND THE MORTGAGEE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE MORTGAGEE ENTERING INTO THIS MORTGAGE.

TABLE OF CONTENTS FOR EXHIBITS

EXHIBIT A to MORTGAGE

LANDS SUBJECT TO UNPATENTED MINING CLAIMS

(Lands upon which the Nichols Ranch ISR Processing Facility and the Goods, General Intangibles and Fixtures Described in EXHIBIT B are Located)

The Nichols Ranch ISR Processing Facility is located on the following described Campbell County, Wyoming and Johnson County, Wyoming, Lands:

(Lands Subject to Unpatented Mining Claims)

All Unpatented Mining Claims of Uranerz Energy Corporation and Arkose Mining Venture relating to the following described Campbell County, Wyoming and Johnson County, Wyoming, Lands: