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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of May 1999
International Uranium Corporation
(Translation of registrant's name into English)
Independence Plaza, Suite 950, 1050 Seventeenth Street, Denver, CO 80265
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): 82- ----------------.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
International Uranium Corporation
(Registrant)
Date: May 27, 1999 By: /s/ Earl E. Hoellen
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Earl E. Hoellen, President
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REPORT TO SHAREHOLDERS
International Uranium Corporation (the "Company") continued to successfully
develop its alternate feed business through the first six months of fiscal year
1999. This contrasted with a re-evaluation of the Company's mining operations
and a $3.46 million write-down of ore stockpiles due to weakened commodity
prices, resulting in a net loss of $3,788,029 through the period ending March
31, 1999. Details on the Company's financial performance are discussed below.
Through March 31, 1999, the Company received and successfully processed for
uranium recovery and disposal approximately 41,000 tons of uranium-bearing soil
materials excavated from the Ashland 2 former defense site near Buffalo, New
York. The Ashland 2 site, as well as other former defense sites, are being
remediated by the U.S. Army Corps of Engineers under the Formerly Utilized
Sites Remedial Action Program ("FUSRAP"). There are potentially millions of
tons of uranium-bearing soils and materials located at these FUSRAP sites. The
Company generally receives a recycling fee in addition to retaining the uranium
recovered from processing these materials. The Company continues to believe
that the processing of these FUSRAP materials through the White Mesa Mill (the
"Mill") will be a major contributor to the Company's earnings in the future. To
that end, the Company has recently been awarded a contract to recycle material
from the Ashland 1 FUSRAP site. The Ashland 1 project could provide over
100,000 tons of material for processing at the Mill.
In addition to the pursuit of FUSRAP materials, the Company continues to
develop other commercial sources of uranium-bearing alternate feeds to process
for uranium recovery. During the second fiscal quarter, the Company continued
to receive deliveries of alternate feeds from another uranium processor under a
long-term arrangement and commenced processing this material for uranium
recovery. While the Company will not receive a processing fee for this
particular alternate feed, it does anticipate producing uranium from these
materials at a cost less than current market prices, which will then be sold in
later periods. It is anticipated that this material will be processed
throughout most of the third fiscal quarter.
The Company processes alternate feeds under the auspices of the Nuclear
Regulatory Commission ("NRC"). The State of Utah has challenged the Company's
right to process certain alternate feeds, in particular FUSRAP materials. In
February, the Company received a favorable ruling from the Atomic Safety and
Licensing Board regarding its right to process FUSRAP alternate feeds. Utah has
appealed this decision to the full NRC Commission. This appeal is currently
pending. While litigation is never certain, the Company remains confident that
the NRC Commissioners will also rule in favor of the Company, which is expected
to occur later this summer. Therefore, the Company remains optimistic that it
will be successful with the development of its alternate feed business,
although considerable personnel and outside legal resources will continue to be
required in order to do so. These costs to date have been reflected in the
general and administrative costs referred to below.
The Company continued to produce uranium/vanadium ore from its Sunday Mine
Complex during the quarter. As of March 31, 1999, the Company had mined and
stockpiled 74,000 tons
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of ore containing approximately 350,000 pounds of recoverable U308 and
2,000,000 pounds of recoverable V205. Production from the Sunday Mine during
this fiscal year has exceeded forecasted levels. However, the Company
anticipates discontinuing operations at the Sunday Mine during the third
quarter, primarily because of weak commodity prices. The Company had previously
discontinued mining operations at the Rim Mine and development of the Topaz
Mine for this same reason. The Company will continue to evaluate market
conditions and could restart these operations, if warranted. The Company is
currently planning to commence processing the uranium/vanadium ores in June,
after completing the current alternate feed run. Based on projected ore
stockpile levels, it is anticipated that this conventional mill run will
continue through October.
The Company continued its licensing efforts for the Reno Creek in situ leach
project during the second quarter. The successful conclusion of these
activities is anticipated by the end of calendar year 1999, although the
project is not expected to be put into production for several years. The Gurvan
Saihan Joint Venture, the Company's uranium development and exploration program
in Mongolia, will continue to conduct limited exploration work during 1999,
focusing on data analysis and production cost modeling for future mining
operations.
Uranium spot market prices recovered slightly since the start of the fiscal
year on increased spot and long-term demand. Prices started the year at $9.70
per pound U3O8, fell to $8.75 in December, but ended the quarter at $10.85 per
pound. The most significant industry event occurred during March, when three
western companies and the commercial arm of Russia's Ministry of Atomic Energy
signed an agreement governing the purchase of natural uranium derived from
highly enriched uranium contained in Russian nuclear weapons. Analysts are
still debating how this agreement will affect future uranium prices, but they
generally believe that this transaction will remove some of the market
uncertainties relating to Russia's uranium stockpiles and should help stabilize
market prices. The vanadium market continued to weaken during the quarter.
Prices began the year at $5.70 per pound V2O5, falling to $2.80 in December,
and continuing to decline to approximately $2.25 per pound by the end of the
quarter. Industry analysts do not expect any appreciable price recovery for
vanadium through the remainder of the year. The sales value of the Company's
ore stockpiles is dependent on these future commodity prices, particularly the
spot V205 price, since the stockpiles contain approximately six pounds of
vanadium for every one pound of uranium. As a result, the Company elected to
write-down the value of its ore stockpiles by $3.46 million as of the end of
the fiscal quarter.
The Company is not anticipating the receipt of significant processing revenues
during its third fiscal quarter. The Mill will be processing alternate feeds
and conventional ores that will result in the production of uranium and
vanadium that will be included in inventories at cost. Additionally, the
Company has no scheduled sales of uranium during the third quarter. Therefore,
the Company is not anticipating a profitable third quarter. The Company will
continue its current marketing efforts, as it arranges for future long-term and
spot sales of its available inventories.
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FINANCIAL REVIEW
The Company had a net loss of $3,788,029 through the six-month period ending
March 31, 1999, due in large part to a write-down of $3,460,000 of the value of
the Company's uranium/vanadium ore stockpiles. The market price for vanadium
had decreased by over 60% since the start of the fiscal year, and the outlook
at this time is for vanadium prices to remain relatively flat for the remainder
of the year.
Total revenues for the six-month period were $11,544,624. Uranium sales were
$7,520,450, while process milling fees relating to the Company's alternate feed
activities totaled $4,024,174. These revenues were approximately 50% less than
those realized over the same period last year when the Company had uranium
sales of $14,542,800 and process milling fees of $8,613,961 for total revenues
of $23,156,761.
Through March 31, 1999, 550,000 pounds of uranium were sold compared to
1,050,000 pounds that were sold during the same period last year. However,
gross profits from uranium sales in 1999 were $1,103,102, compared to gross
profits of $879,234 in 1998. This was attributable to lower purchase prices of
material sold in 1999 due to market price declines.
Gross profits from process milling (alternate feed) activities were $865,164 in
1999, compared to $2,304,007 in 1998. The alternate feed run in 1998 was
substantially more complex and more fully utilized the Mill facilities during
the corresponding period than the 1999 alternate feed activities. This year's
alternate feed operations have consisted of the processing of 41,000 tons of
FUSRAP material and the commencement of the processing of alternate feeds from
another uranium processor. The Company received a processing fee relating to
the FUSRAP material; however, will not receive a fee regarding the alternate
feed run presently in process. Revenues regarding this run will be entirely
recognized as the material produced from this run is sold in subsequent
periods. This coupled with corresponding standby and shutdown expenditures have
contributed to the Company's decrease in 1999 gross profits from processing
activities.
Selling, general and administrative expenses were $2,316,118 through March 31,
1999. This was an increase of $674,964 from 1998 levels due primarily to
increases in personnel and outside legal costs relating to the Company's
development of the alternate feed business.
When combined with the write-down of the Company's ore stockpiles, the decrease
in recognized alternate feed profits along with increases in selling, general
and administrative costs resulted in a net loss of $3,788,029 for the current
six-month period ending March 31, 1999, compared to a net profit of $1,555,003
for the corresponding period ending March 31, 1998.
Through the second fiscal quarter, the Company provided $1,866,925 of cash from
operations compared to $932,090 used in operations during the same period last
year. This was due primarily to changes in inventory levels and changes in
liabilities for inventory purchases from the corresponding time period last
year. Investment in properties, plant and equipment were $1,469,894 in 1999
compared to $2,040,100 in 1998. Mongolia property investment has been reduced
to $655,799 for the 1999 period from $1,157,311 in 1998.
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During March 1999, in order to provide the Company with more short-term cash
flexibility, a $10,000,000 working capital loan agreement was negotiated and
executed with Norwest Bank Colorado, N.A. The one-year facility provides for
advances based on receivable levels and finished goods inventories. As of March
31, 1999, no advances were outstanding under this new facility, although the
Company expects to utilize this facility during the third quarter as it
commences the conventional mill run.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
International Uranium Corporation wishes to caution readers that disclosures
made in the foregoing Report to Shareholders, which are not historical facts,
are forward-looking statements that involve risks, uncertainties and other
factors that could cause actual results to differ materially from those
expressed or implied by such forward-looking statements. Such factors include,
but are not limited to, volatility and sensitivity to market prices for uranium
and vanadium, competition, environmental regulations, the impact of changes in
foreign currencies' exchange rates, political risk arising from operating in
Mongolia, changes in government regulation and policies including trade laws
and policies, demand for nuclear power, dependence on a limited number of
customers, replacement of reserves and production, receipt of permits and
approvals from governmental authorities (including amendments for each
alternate feed transaction) and other operating and development risks. As a
result of the foregoing and other factors, no assurance can be given as to the
future results, levels of activity and achievement.
ON BEHALF OF THE BOARD
Earl E. Hoellen
President and Chief Executive Officer
May 25, 1999
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INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(United States Dollars) (Unaudited)
<TABLE>
<CAPTION>
MARCH 31, 1999 SEPTEMBER 30, 1998
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,198,611 $ 6,282,275
Marketable securities -- 11,731
Trade and other receivables 487,463 2,979,600
Inventories 9,423,840 11,035,474
Supplies and prepaid expenses 1,738,571 1,634,771
Favorable uranium sales contracts -- 729,730
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17,848,485 22,673,581
Properties, plant and equipment, net 14,086,889 13,516,937
Mongolia mineral properties 10,213,107 9,500,932
Notes receivable 203,262 203,538
Restricted marketable securities 8,104,120 8,300,375
Goodwill and other, net 560,377 575,351
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$ 51,016,240 $ 54,770,714
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LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities $ 2,139,718 $ 1,761,841
Notes payable 31,769 37,963
Deferred revenue 252,712 575,611
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2,424,199 2,375,415
Notes payable, net of current portion 38,943 54,172
Reclamation obligations 13,265,700 13,265,700
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15,728,842 15,695,287
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SHAREHOLDERS' EQUITY
Share capital 37,439,402 37,439,402
Retained earnings (2,152,004) 1,636,025
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35,287,398 39,075,427
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$ 51,016,240 $ 54,770,714
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</TABLE>
On behalf of the Board
Earl E. Hoellen, Director Lukas H. Lundin, Director
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INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(United States Dollars) (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
MARCH 31 MARCH 31
1999 1998
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<S> <C> <C>
OPERATIONS
Revenue
Uranium sales $ 7,520,450 $14,542,800
Process milling 4,024,174 8,613,961
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Total revenue 11,544,624 23,156,761
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Costs and expenses
Uranium cost of sales 6,417,348 13,663,566
Process milling expenditures 3,159,010 6,309,954
Selling, general and administrative 2,316,118 1,641,154
Depreciation 423,298 183,018
Write-down of ore stockpiles 3,460,000 --
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15,775,774 21,797,692
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Operating income (loss) (4,231,150) 1,359,069
Net interest and other income 443,121 686,990
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Net income (loss) before taxes (3,788,029) 2,046,059
Provision for income taxes -- 491,056
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Net income (loss) for the period $ (3,788,029) $ 1,555,003
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Net income (loss) per common share $ (0.06) $ 0.02
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RETAINED EARNINGS
Retained earnings, beginning of period 1,636,025 18,694
Net income (loss) (3,788,029) 1,555,003
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Retained earnings, end of period $ (2,152,004) $ 1,573,697
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</TABLE>
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INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(United States Dollars) (Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
MARCH 31 MARCH 31
1999 1998
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CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) for the period $(3,788,029) $ 1,555,003
Items not affecting cash
Depreciation and amortization 423,298 183,018
Amortization of uranium sales contract purchase cost 729,730 1,270,270
Write-down of ore stockpiles 3,460,000 --
Decrease in deferred revenue (322,899) (210,185)
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502,100 2,798,106
Changes in non-cash working capital items
Decrease in marketable securities 11,731 7,576
Decrease (increase) in trade and other receivables 2,492,138 (1,096,834)
(Increase) decrease in inventories (1,412,698) 2,006,990
Increase in supplies and prepaid expenses (104,224) (817,242)
Decrease in liability for inventory purchases -- (5,050,000)
Increase in other accounts payable and accrued liabilities 377,878 1,369,713
Decrease in due to related parties -- (150,399)
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Net cash provided by (used in) operations 1,866,925 (932,090)
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INVESTING ACTIVITIES
Properties, plant and equipment (1,469,894) (2,040,100)
Mongolia mineral properties (655,799) (1,157,311)
Collection of notes receivable 276 3,608,115
Decrease (increase) in restricted marketable securities 196,255 (212,053)
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Net cash (used in) provided by investment activities (1,929,162) 198,651
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FINANCING ACTIVITIES
Decrease in notes payable (21,427) (7,232)
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Net cash used in financing activities (21,427) (7,232)
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Decrease in cash and cash equivalents (83,664) (740,671)
Cash and cash equivalents, beginning of period 6,282,275 13,953,355
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Cash and cash equivalents, end of period $ 6,198,611 $ 13,212,684
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</TABLE>
