Uranium Participation : Q1 Report for the Three Months Ended May 31, 2021

MANAGEMENT'S DISCUSSION & ANALYSIS

FOR THE THREE MONTHS ENDED

MAY 31, 2021

This Management's Discussion and Analysis ('MD&A') of Uranium Participation Corporation and its subsidiaries (collectively, 'UPC' or the 'Corporation') provides a detailed analysis of the Corporation's business and compares its financial condition and results of operations to those of the previous year. This MD&A is dated as of July 7, 2021 and should be read in conjunction with the Corporation's unaudited condensed interim consolidated financial statements and related notes for the three months ended May 31, 2021.

The unaudited condensed interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards ('IFRS') as issued by the International Accounting Standards Board ('IASB'), applicable to the preparation of the interim financial statements, including International Accounting Standards ('IAS') 34, Interim Financial Reporting. Readers are also encouraged to consult the audited consolidated financial statements and the MD&A for the year ended February 28, 2021. All dollar amounts are expressed in Canadian dollars, unless otherwise noted. All uranium prices are based on prices published by Ux Consulting Company LLC ('UxC'). For all references to the Net Asset Value ('NAV'), please refer to the 'Non-IFRS Financial Performance Measures' section.

Management's Discussion & Analysis

ABOUT URANIUM PARTICIPATION CORPORATION

The Corporation invests substantially all of its assets in uranium, either in the form of uranium oxide in concentrates ('U3O8') or uranium hexafluoride ('UF6') (collectively 'uranium'), with the primary investment objective of achieving appreciation in the value of its uranium holdings through increases in the uranium price. Denison Mines Inc. (the 'Manager'), under the direction of UPC's Board of Directors, provides general administration and management services to the Corporation. The common shares of UPC are listed and trade on the Toronto Stock Exchange ('TSX') under the symbol 'U'.

On April 28, 2021, UPC announced that the Corporation executed an arrangement agreement pursuant to which UPC shareholders will become unitholders of the Sprott Physical Uranium Trust (the "Trust"), a newly formed entity to be managed by Sprott Asset Management LP ('SAM LP'), a wholly owned subsidiary of Sprott Inc. ('Sprott') (NYSE/TSX: SII), (the 'Sprott Transaction'). At a special meeting of UPC's shareholders held on July 7, 2021, shareholders approved the Sprott Transaction.

The transactions completed or to be completed in connection with the Sprott Transaction are anticipated to include, among other things, the following:

1. UPC will become a subsidiary of the Trust;
2. The management services agreement between the Manager and UPC will be terminated and the ongoing operation of the Trust will be managed by SAM LP, pursuant to a new management agreement;
3. The estimated termination payment of $5,850,000 that will become due to the Manager under the management services agreement will be paid by SAM LP (see SUBSEQUENT EVENTS for further details).
4. SAM LP will make a cash contribution to the Trust of approximately $6.7 million, which is equal to 1% of UPC's NAV as of March 31, 2021; and
5. Under the management of SAM LP, the Trust is expected to continue to engage in substantively the same business, in all material respects, as UPC prior to the completion of the Sprott Transaction.

For further details regarding the Sprott Transaction, see the management information circular dated June 7, 2021 available on UPC's website and under its profile at www.sedar.com.

URANIUM INDUSTRY OVERVIEW

During the first quarter of fiscal 2022, the spot price of U3O8 increased from US$28.20 per pound U3O8 at February 28, 2021 to US$30.65 per pound U3O8 by the end of March 2021. The spot price retreated to US$28.65 per pound U3O8 at the end of April 2021, before rising yet again in May 2021 to end the quarter at US$31.40 per pound U3O8. The price has continued to rise after quarter end, to US$32.10 per pound U3O8 as of the end of June 2021.

Much of the price fluctuation during the quarter was driven by periods of increased demand in the spot market, arising from multiple secondary sources: investment entities (including UPC), uranium producers, and uranium exploration and development companies. Estimates suggest that more than 12.5 million pounds U3O8 were acquired by these sources in the first 125 days of 2021.

In many cases, the increase in purchasing by these non-end user entities appears to have been supported by a widespread increase in investor interest in the uranium sector, believed to have largely been driven by a renewed focus on global net-zero carbon emissions goals, and the potential role for nuclear energy in a post-COVID-19 pandemic "energy transition". In assessing the potential paths to reduce carbon emissions many nations, including the United States, have recognized the role of their existing, or future nuclear power plants, as a critical element necessary to achieve decarbonization objectives. This positive attention for the nuclear power sector builds on the well-established fundamental supply-demand analysis that has defined the uranium sector in recent years, where uranium prices are believed by many to be too low to sustain the production that will be necessary to fuel existing, let alone growing, future demand for nuclear power.

In April 2021, the U.S. President held a virtual Leaders Summit on Climate, which was attended by 40 world leaders. This summit was highlighted by many countries committing to new and more ambitious climate targets in order to meet an overall goal of limiting the increase in global temperatures to only 1.5oC by 2050. Among some of the ambitious new targets carbon emission reduction targets came from the U.S. (50-52% reduction in greenhouse gases ('GHG') from 2005 levels by 2030), Japan (46-50% reduction in emissions from 2013 levels by 2030); Canada (40-45% reduction in emissions from 2005 levels by 2030), UK (78% reduction in GHG from 1990 levels by 2035), and the European Union (55% reduction in GHG by 2030, net zero target by 2050).

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Management's Discussion & Analysis

In the U.S., the House Committee on Energy and Commerce tabled the Climate Leadership and Environmental Action for our Nation's (CLEAN) Future Act, which would require all retail electricity providers to generate 100% of their supplies from zero-emissions sources, including nuclear power, renewables, and hydropower, by 2035. The US budgetary proposal for fiscal year 2022, which was issued in late May 2021, included more than US$1 billion in funding dedicated to nuclear energy research, development, and demonstration programs.

The importance of the role of the US's current nuclear fleet in achieving the country's emissions targets has been publicly supported by several high-ranking members of the current U.S. Administration, including the Chairman of the U.S. Senate Committee on Energy and Natural Resources, the National Climate Adviser, and the U.S. Secretary of Energy, all of whom have been quoted stating that the nuclear fleet must be protected if the US is to meet its climate goals without sacrificing reliability. This support took concrete form in the U.S. budgetary proposal for fiscal year 2022, which included tax credits to support operating nuclear power plants that are in financial distress.

The push to protect embattled US nuclear power plants, which compete with cheap natural gas and subsidized renewables in deregulated markets, is evident in Illinois where legislators are currently advancing the Consumers and Climate First Act which, among other things, is expected to provide financial support for Exelon Energy's Byron and Dresden nuclear power plants, and other nuclear power facilities in the state. In addition, in New Jersey, the New Jersey Board of Public Utilities voted unanimously to extend Zero Emission Certificates for the state's three nuclear power plants.

This positive news for the future of the nuclear industry in the U.S. has been echoed recently in many other countries.

In China, the country's 14th Five Year Plan, which was published in March 2021, included the goal to increase nuclear capacity to 70 GWe by the end of 2025. China's Premier, Li Keqiang, reiterated that in order to reduce carbon emissions China must 'actively and orderly develop nuclear power'. It has been estimated that China must complete all 16 reactors currently in operation, and construct an estimated three additional reactors, to reach its 70 GWe target on time. Further, Party Secretary of the Chinese Academy of Atomic Energy, Secretary Luo Qi, stated that China would need to build six to eight nuclear reactors each year in order to meet the target of net-zero emissions by 2060.

In Japan, Japan Electric Power Development Co. announced it would reduce its CO2 emissions by 40% by 2030, and among its stated plans to reach this goal are plans to complete construction of its Ohma nuclear power plant, the construction of which was halted in 2011 due to the Fukushima Daiichi incident.

In France, EDF has submitted a final plan to construct an additional six reactors across the country to support France's future clean-energy mix.

In Canada, the Canadian Nuclear Association released a report in April 2021 studying the role of small modular reactors ('SMRs') in Canada's high-emitting heavy industries, which showed the potential for SMRs to reduce GHG emissions in Canadian heavy industry by 18% by 2050, to lower the cost of reaching net zero emissions by more than 5%, and to contribute up to $5 billion annually to Canada's gross domestic product. It was also announced in April 2021 that Alberta has joined with Ontario, New Brunswick, and Saskatchewan in signing a Memorandum of Understanding to cooperate on the development of SMRs.

As an outlier to these recent global announcements in favour of nuclear energy, news from South Korea, which remains one of the world's most successful nuclear power nations, suggests that, despite ambitious carbon reduction goals, the government continues to promote its plan to reduce the country's reliance on nuclear power - including a ban on reactor life extensions beyond their current 40 year terms and a ban on the building of any new units that had not commenced construction prior to the election of the government of President Moon Jae-in in 2017.

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Management's Discussion & Analysis

SUMMARY OF QUARTERLY FINANCIAL INFORMATION

1. The Net Asset Value or 'NAV' is calculated as the value of total assets less the value of total liabilities. See 'Non-IFRS Financial Performance Measures' section below.

The quarterly net gain or loss of the Corporation is primarily driven by unrealized net gains or losses on investments in uranium that are recognized in the period. Unrealized net gains or losses on investments in uranium are generally a result of changes in the spot price of uranium and the U.S. dollar to Canadian dollar exchange rate - both of which can fluctuate significantly between periods.

OVERALL PERFORMANCE

1. The Net Asset Value or 'NAV' is calculated as the value of total assets less the value of total liabilities. See 'Non-IFRS Financial Performance Measures' section below.

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Management's Discussion & Analysis

The net gain for the three months ended May 31, 2021 was mainly driven by unrealized net gains on the revaluation of investments in uranium of $35,894,000, slightly offset by operating expenses of $3,490,000.

Unrealized net gains on investments in uranium during the three months ended May 31, 2021 were mainly due to the increase in the spot price for uranium. The spot price increased during the quarter from US$28.20 per pound U3O8 and US$94.00 per KgU as UF6 at February 28, 2021, to US$31.40 per pound U3O8 and US$102.00 per KgU as UF6 at May 31, 2021. The impact of the increase in the spot price of uranium on the unrealized net gain on investments in uranium was slightly offset by a 5% decrease in the U.S. dollar to Canadian dollar foreign exchange rate in the quarter.

Total equity increased to $732,035,000 at May 31, 2021, from $622,729,000 at February 28, 2021.

The Corporation had an effective tax rate of nil for the three months ended May 31, 2021, primarily due to the low tax rate in the jurisdiction of its subsidiaries, as well as the fact that the Corporation's available tax shelter and cost basis related to its investments in uranium in Canada give rise to a net deductible temporary difference for which the Corporation does not recognize deferred tax assets.

Taken together, UPC's NAV per share at May 31, 2021 increased to $4.87 from $4.61 at February 28, 2021.

Operating Expenses

Operating expenses are comprised of storage costs, management fees, public company expenses, and general and administrative expenses.

Storage fees were $743,000 during the three months ended May 31, 2021 (May 31, 2020 - $658,000). The increase in storage fees was mainly due to an increase in storage costs related to the returned material from the UF6 relocation agreement (see Investment Portfolio below for more details). This material, which was returned in May 2020, had previously been stored at no cost to the Corporation for the duration of the relocation agreement.

Management fees were $697,000 during the three months ended May 31, 2021 (May 31, 2020 - $598,000). The increase in management fees during the three months ended May 31, 2020, as compared to the prior period, was predominantly due to an increase in discretionary fees paid to the Manager, slightly offset by a decrease in NAV-based fees due to a decrease in the average NAV during the first quarter of fiscal 2022 as compared to the prior year. During the three months ended May 31, 2021, the Corporation paid $210,000 in discretionary fees to the Manager related for work performed for the Sprott Transaction.

Public company and general, administrative, and miscellaneous expenses were $418,000 during the three months ended May 31, 2021 (May 31, 2020 - $149,000). These costs are mainly comprised of director fees, legal fees, investor relations expenses, project costs, and all other costs related to operating a public company. The increase in cost compared to the prior period is due to an increase in director expenses recognized in the quarter, as well as the cost related to the mailing of materials for a special meeting of the Corporation's shareholders related to the Sprott Transaction.

Legal and other professional fees were $809,000 during the three months ended May 31, 2021 (May 31, 2020 - $50,000). The increase in costs in the current year predominantly relates to legal and other costs related to the Sprott Transaction. SAM LP has agreed to reimburse UPC for up to $1,000,000 in direct transaction costs concurrent with the completion of the Sprott Transaction. SAM LP will also reimburse UPC for such costs if the transaction is terminated in accordance with certain provisions of the arrangement agreement for the Sprott Transaction.

A loss on derivative liabilities, recorded in the three months ended May 31, 2021, is also included in operating expenses. This loss relates to mark-to-market fair value adjustments on two foreign currency swaps entered into by the Corporation in May 2021 in connection with the May 2021 equity financing (see LIQUIDITY AND CAPITAL RESOURCES below for more details). As the proceeds of the equity financing are in Canadian dollars and the proceeds are used, in part, to fund the purchase of U.S. denominated uranium investments, the Corporation entered into foreign currency swaps in order to limit currency risk exposure arising from fluctuations in the Canadian dollar relative to the U.S. dollar in the time between the announcement of an equity financing, and the receipt of the Canadian dollar proceeds. In total, the Corporation entered into foreign currency swaps for $68,331,000 at a weighted average U.S. dollar to Canadian dollar foreign exchange rate of 1.2181. As at May 31, 2021, the equivalent weighted U.S. dollar to Canadian dollar rate for these foreign currency swaps was 1.2067, resulting in a mark-to-market fair value loss of $640,000. During the three months ended May 31, 2020, there where $nil gains or losses recorded on derivative instruments.

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