<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the quarterly period ended September 30, 1997 or
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 0-17171
URANIUM RESOURCES, INC.
(exact name of Registrant as specified in its Charter)
DELAWARE 75-2212772
(State of Incorporation) (I.R.S. Employer Identification No.)
12750 MERIT DRIVE, SUITE 1020, DALLAS, TEXAS 75251
(Address of principal executive offices, including zip code)
(972) 387-7777
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of Each Class of Common Stock Number of Shares Outstanding
Common Stock, $.001 par value 12,053,027 as of November 10, 1997
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URANIUM RESOURCES, INC.
1997 SECOND QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1997 (Unaudited) and
December 31, 1996 3
Consolidated Statements of Operations -
Nine Months and Three Months Ended
September 30, 1997 and 1996 (Unaudited) 5
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1997
and 1996 (Unaudited) 6
Notes to Consolidated Financial
Statements - September 30, 1997 (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II -- OTHER INFORMATION 12
SIGNATURES 13
INDEX TO EXHIBITS E-1
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 (NOTE 1)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1997 1996
------------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,095,567 $ 16,934,276
Short-term investment:
Certificate of deposit, restricted 3,220,132 2,779,840
Receivables, net 5,925,981 1,829,539
Uranium inventory 1,171,735 3,575,285
Materials and supplies inventory 78,371 88,483
Prepaid and other current assets 280,689 239,435
------------ ------------
Total current assets 11,772,475 25,446,858
------------ ------------
Property, plant and equipment, at cost:
Uranium properties 90,831,648 71,364,561
Other property, plant and equipment 567,975 546,985
Less-accumulated depreciation and depletion (33,903,613) (29,335,818)
------------ ------------
Net property, plant and equipment 57,496,010 42,575,728
Other assets 666,097 771,084
------------ ------------
$ 69,934,582 $ 68,793,670
============ ============
</TABLE>
The accompanying notes to financial statements are
an integral part of these consolidated balance sheets.
3
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URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 (NOTE 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
September 30, December 31,
------------- ------------
1997 1996
------------- ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 3,189,382 $ 2,201,145
Notes payable -- 5,440,000
Accrued interest payable 102,479 185,186
Current portion of long-term debt 6,004,000 730,074
Royalties payable 720,398 746,113
Current portion of restoration reserve 350,000 368,000
Other accrued liabilities 543,272 507,117
------------ ------------
Total current liabilities 10,909,531 10,177,635
------------ ------------
Other long-term liabilities and deferred credits 4,680,323 4,279,289
Long-term debt, less current portion 459,144 6,407,054
Deferred federal income taxes 2,247,000 2,633,000
Shareholders' equity:
Common stock, $.001 par value, shares authorized:
25,000,000 shares issued and outstanding
(net of treasury shares): 1997 - 12,037,527;
1996 - 10,813,027 12,190 10,966
Paid-in capital 40,176,804 32,290,630
Retained earnings 11,459,008 13,004,514
Less: Treasury stock (152,500 shares), at cost (9,418) (9,418)
------------ ------------
Total shareholders' equity 51,638,584 45,296,692
------------ ------------
$ 69,934,582 $ 68,793,670
============ ============
</TABLE>
The accompanying notes to financial statements are
an integral part of these consolidated balance sheets.
4
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URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS AND THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (NOTE 1)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Uranium sales -
Produced uranium $ 5,297,730 $ 6,575,673 $ 12,278,910 $ 13,361,203
Purchased uranium 4,201,550 4,494,000 4,204,963 5,479,167
------------ ------------ ------------ ------------
Uranium sales 9,499,280 11,069,673 16,483,873 18,840,370
Costs and expenses:
Cost of uranium sales -
Direct cost of purchased uranium 3,505,489 3,565,500 3,505,489 4,151,094
Royalties 292,977 514,823 683,525 949,597
Operating expenses 3,156,980 1,801,669 5,645,615 3,692,830
Provision for restoration and reclamation costs 424,840 738,637 864,343 1,150,930
Depreciation and depletion 2,926,816 3,335,886 6,261,738 5,759,369
------------ ------------ ------------ ------------
Total cost of uranium sales 10,307,102 9,956,515 16,960,710 15,703,820
------------ ------------ ------------ ------------
Earnings (loss) from operations before corporate expenses (807,822) 1,113,158 (476,837) 3,136,550
Corporate expenses -
General and administrative 744,313 716,601 2,236,225 2,243,929
Depreciation 5,749 5,136 17,410 15,442
------------ ------------ ------------ ------------
Total corporate expenses 750,062 721,737 2,253,635 2,259,371
------------ ------------ ------------ ------------
Earnings (loss) from operations (1,557,884) 391,421 (2,730,472) 877,179
Other income (expense):
Interest expense, net of capitalized interest (34,391) (182,022) (134,013) (418,836)
Interest and other income, net 75,462 39,622 932,754 162,741
------------ ------------ ------------ ------------
Total other income (expense) 41,071 (142,400) 798,741 (256,095)
------------ ------------ ------------ ------------
Earnings (loss) before federal income taxes (1,516,813) 249,021 (1,931,731) 621,084
Federal income tax expense (benefit):
Current -- -- (225) --
Deferred (303,000) 50,000 (386,000) 124,000
------------ ------------ ------------ ------------
Net earnings (loss) $ (1,213,813) $ 199,021 $ (1,545,506) $ 497,084
============ ============ ============ ============
Net earnings (loss) per common share and
common equivalent $ (0.10) $ 0.02 $ (0.13) $ 0.05
============ ============ ============ ============
Weighted average common shares and common
equivalent shares per share data
Primary 12,028,288 10,068,333 11,661,904 10,023,608
============ ============ ============ ============
Fully Diluted 12,028,288 10,084,993 11,661,904 10,046,838
============ ============ ============ ============
</TABLE>
The accompanying notes to financial statements are
an integral part of these consolidated statements.
5
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URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (NOTE 1)
(UNAUDITED)
<TABLE>
<CAPTION>
September 30,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operations:
Net earnings (loss) $ (1,545,506) $ 497,084
Reconciliation of net earnings to cash provided by operations-
Provision for restoration and reclamation costs 864,343 1,150,930
Depreciation and depletion 6,279,148 5,774,811
Provision (credit) for deferred income taxes (386,000) 124,000
Decrease in restoration and reclamation accrual (292,443) (375,221)
Other non-cash items, net 69,966 267,135
------------ ------------
Cash flow provided by operations, before changes in
operating working capital items 4,989,508 7,438,739
Effect of changes in operating working capital items-
Increase in receivables (4,096,442) (4,588,687)
Increase (decrease) in inventories 478,976 (478,222)
Increase in prepaid and other current assets (357,758) (350,634)
Increase in payables and accrued liabilities 958,916 1,705,519
------------ ------------
Net cash provided by operations 1,973,200 3,726,715
------------ ------------
Investing activities:
Increase in investments (440,292) (1,973,398)
Additions to property, plant and equipment -
Kingsville Dome (7,241,321) (4,872,161)
Rosita (1,896,291) (1,628,929)
Alta Mesa (210,157) (4,207,633)
Churchrock (607,060) (385,907)
Crownpoint (845,732) (528,605)
Other property (466,991) (178,982)
Increase in other assets (20,472) (96,260)
------------ ------------
Net cash used in investing activities (11,728,316) (13,871,875)
------------ ------------
Financing activities:
Payments and refinancings of principal (6,170,992) (3,715,869)
Proceeds from other borrowings -- 9,429,000
Issuance of common stock and warrants, net 87,399 633,339
------------ ------------
Net cash provided by (used in) financing activities (6,083,593) 6,346,470
------------ ------------
Net decrease in cash and cash equivalents (15,838,709) (3,798,690)
Cash and cash equivalents, beginning of period 16,934,276 4,715,942
------------ ------------
Cash and cash equivalents, end of period $ 1,095,567 $ 917,252
============ ============
</TABLE>
The accompanying notes to financial statements are
an integral part of these consolidated statements.
6
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1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying statements should be read in conjunction
with the audited financial statements included in the Company's 1996 Annual
Report on Form 10-K. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended September 30, 1997
are not necessarily indicative of the results that may be expected for the full
calendar year ending December 31, 1997.
2. URANIUM PROPERTIES
On March 25, 1997, the Company completed the acquisition of certain uranium
mineral interests in New Mexico from Santa Fe Pacific Gold Corporation in
exchange for 1,200,000 shares of the Company's common stock and a commitment to
expend certain amounts on exploration. The mineral interests acquired cover
approximately 500,000 acres and include approximately 14.7 million pounds of
proven in-place uranium reserves on 37,000 acres of the property on which it
acquired the entire mineral estate (excluding coal). Also included in the
500,000 acres is the fee interest in uranium on approximately 140,000 acres and
the exclusive uranium exploration rights for 17 years on approximately 346,000
acres.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward Looking Statements
This Item 2 contains "forward-looking statements" which are made pursuant
to the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. These statements include, without limitation, statements relating to
liquidity, financing of operations, continued volatility of uranium prices,
estimates of future capital expenditures, proved undeveloped reserves and other
such matters. The words "believes," "expects," "projects," "targets," or
"estimates" and similar expressions identify forward-looking statements. The
Company does not undertake to update, revise or correct any of the
forward-looking information. Readers are cautioned that such forward-looking
statements should be read in conjunction with the Company's disclosures under
the heading: "Cautionary Statement for the Purposes of the `Safe Harbor'
Provisions of the Private Securities Litigation Reform Act of 1995" in the
Company's 1996 Annual Report on Form 10-K.
CAPITAL RESOURCES AND LIQUIDITY
Operating Cash Flows
For the quarter ended September 30, 1997, the Company's cash and cash
equivalents were $1,096,000, a decrease of $2,761,000 for the three month
period. In comparison, cash and cash equivalents in the third quarter of 1996
decreased by $588,000. Cash and cash equivalents decreased by $15,839,000 for
the nine months ended September 30, 1997 compared to a decrease of $3,799,000
for the same period in 1996. The Company's uranium operations generated cash
flow from operations of $1,839,000 for the quarter ended September 30, 1997, in
comparison to a cash flow from operations in the same period in 1996 of
$2,853,000. Net cash provided by uranium operations for the nine months ended
September 30, 1997 was $1,973,000 compared to cash flow from operations of
$3,727,000 for the same period in 1996. The Company's net working capital at
September 30, 1997 was $863,000 and included $6.0 million from the current
portion of long-term debt from a convertible debenture issued in May 1995
(exercise price $4.00 per share). The convertible debenture is scheduled to
mature under its original terms in May 1998.
7
<PAGE> 8
Investing Cash Flows
South Texas Producing Properties
During the nine months ending September 30, 1997, development expenditures
totaling $7,241,000 and $1,896,000 were incurred at the Company's Kingsville
Dome and Rosita sites, respectively. Expenditures to be incurred for the
remainder of 1997 at Kingsville Dome and Rosita are expected to be approximately
$3,100,000 and $1,100,000, respectively. These costs will be incurred primarily
for additional wellfield capital and operations at both locations. In the fourth
quarter of 1997, the Company projects to begin pre-restoration on its original
wellfield at Kingsville Dome (PAA #1). The Company expects to begin full
restoration in PAA #1 in the first quarter of 1998 once mining operations have
begun in its next production area (PAA #3). The Company expects to fund its 1997
operating and capital expenditures at its Kingsville Dome and Rosita projects
from cash on hand, sales proceeds under 1997 uranium deliveries and through
existing financing arrangements.
The capital expenditures projected for the remainder of 1997 at Kingsville
Dome includes significant wellfield drilling and development activity in the
Company's next production area (PAA #3). Prior to the commencement of mining in
PAA #3, the Company must have regulatory approval from the Texas Natural
Resources Conservation Commission (the "TNRCC"). Similar approval was required
before mining operations could commence in the first two PAA's that are
currently being operated at the Kingsville Dome site. As part of the TNRCC's
process, there is the opportunity for parties affected by the proposed mining
operations to request a public hearing. Several parties have requested a public
hearing but the TNRCC has not determined if such a hearing will be granted. The
public hearing process is a formal procedure which depending upon its scope, can
take from approximately six months to two years to complete.
While the Company does not believe the expansion of mining into PAA #3
should warrant a public hearing, there is the possibility that the TNRCC may
hold a public hearing. Should a public hearing be held, this could delay the
Company's ability to begin production from this next production area. The
Company had projected to begin mining in PAA #3 early in the first quarter of
1998. A delay in the Company's ability to begin mining from PAA #3 may require
it to continue its mining operations in its current wellfields longer than
previously planned. This could result in less efficient production output and
higher production costs than were previously projected and could adversely
impact the cashflow and operating results of the Company in 1998.
South Texas Development Properties
In June 1996, the Company acquired the rights to a significant uranium
deposit in South Texas known as the Alta Mesa project. The Company spent
$4,000,000 to acquire the uranium rights to the property which is estimated to
contain approximately 6.2 million pounds of in-place proven and probable
reserves. Capital expenditures incurred on the Alta Mesa project for the nine
months ended September 30, 1997 were approximately $210,000 and were related
primarily to permitting and licensing activities. Additional capital costs for
permitting, licensing and land holding costs on Alta Mesa are expected to be
approximately $350,000 for the remainder of 1997. The Company projects to
commence with plant and wellfield activities in 1998 provided the necessary
regulatory permits and licenses are secured. Progress towards fulfilling the
regulatory requirements is continuing but the timing of actual construction and
wellfield development is being evaluated with respect to the economic assessment
of the project when compared to the current uranium market prices (spot price of
$12.75 at November 4, 1997), the ability of the Company to secure the requisite
capital for the project and the Company's current and prospective contracted
sales portfolios.
The initial funds to acquire the rights to the Alta Mesa property were
obtained through a one-year $4.0 million note from the Lindner Dividend Fund.
This note was repaid in January 1997.
At the Company's Vasquez project, plant and wellfield activities are
projected to begin in 1998 provided permitting and licensing are completed. The
Company is investigating the options for accelerating development activity at
Vasquez to maintain its South Texas production levels in the event the TNRCC
holds a public hearing on the expansion of mining on PAA #3 at Kingsville Dome.
In the event that production activity at Vasquez is not utilized to replace
production from PAA #3 at Kingsville Dome, the timing of mining at this project
will be evaluated based on the economic assessment of the project compared to
the uranium market prices, the Company's ability to secure capital for the
project, and the Company's current and prospective contracted sales portfolios.
8
<PAGE> 9
New Mexico Development Properties
Capital expenditures at the Company's Churchrock and Crownpoint projects
for permitting and land holding costs totaled approximately $1,453,000 for the
nine months ending September 30, 1997 and expenditures for these activities are
expected to amount to approximately $250,000 for the remainder of 1997. The
Company anticipated expenditures for plant and wellfield activities at the
Churchrock project to begin in 1998 or 1999 provided the necessary regulatory
permits and licenses are obtained. Progress towards fulfilling the regulatory
requirements is continuing but the timing of actual construction and wellfield
development is being evaluated with respect to the economic assessment of the
project when compared to the current uranium market prices, the Company's
ability to secure capital for the project, and the Company's current and
prospective contracted sales portfolios. Capital requirements for 1997 and
beyond for these projects are expected to be met through future sales proceeds
from current and additional uranium delivery contracts and through future
sources of debt and/or equity financing.
Financing Cash Flows
In July 1997, the Company renewed its revolving credit facility with
NationsBank of Texas, N.A. The amount of available credit was increased from
$3.0 million to $5.0 million and was extended for an additional two years. This
facility is secured by the Company's uranium inventory and receivables from its
uranium sales. Principal and interest payments under the loan are due monthly,
with interest on the loan accruing at the prime rate plus 1%. Repayments under
this facility amounted to $1,440,000 in the nine months ending September 30,
1997.
In June 1996, the Company received $4.0 million in proceeds from the
one-year note entered into with the Lindner Dividend Fund, noted previously. The
terms of the note provided for the payment of both the principal and accrued
interest by June 1997 with interest on the note accruing at a rate of 6.5% per
annum. The $4.0 million principal amount and accrued interest on this note was
paid in January 1997.
The Company was obligated to pay a production payment royalty of $1.00 per
pound on the first three million pounds of uranium produced and sold from either
Kingsville Dome or Rosita. The Company made the final payment of approximately
$730,000 on this obligation in January 1997.
In the first nine months of 1997 the Company generated $87,000 from the
issuance of 25,500 shares of common stock associated with the exercise of
certain stock warrants. In the same period in 1996, approximately $633,000 was
generated from the issuance of approximately 167,000 shares of common stock upon
the exercise of certain stock options.
Other Non-Cash Transactions
In March 1997, the Company acquired from Santa Fe Pacific Gold Corporation
("Santa Fe") certain mineral interests covering approximately 500,000 acres in
northwestern New Mexico in exchange for 1.2 million shares of the Company's
common stock and a commitment for certain exploration expenditures.
Approximately one-third of the acreage comprises uranium mineral rights and the
remaining acreage comprises exploration rights with rights to purchase and
develop any uranium mineral interests found. Included in the purchase is an
existing royalty obligation from the Company to Santa Fe on certain properties
currently under lease from Santa Fe. The Company estimates that there is
approximately 14.7 million pounds of proven in-place uranium reserves on 37,000
acres of the property on which it acquired the entire mineral estate (excluding
coal). Also included in the 500,000 acres is the fee interest in uranium on
approximately 140,000 acres and the exclusive uranium rights, for 17 years, on
approximately 346,000 acres.
9
<PAGE> 10
ENVIRONMENTAL ASPECTS
The Company utilizes ISL solution mining technology as its only mining
method. Unlike conventional uranium mining companies, the Company's mining
technology does not create "tailings". Nevertheless, the Company is highly
regulated. Its primary environmental costs to date have been related to
obtaining and complying with environmental mining permits and, once mining is
completed, the reclamation and restoration of the surface areas and underground
water quality to a condition consistent with applicable requirements. Accruals
for the estimated future cost of such activities are made on a per-pound basis
as part of production costs. See the Consolidated Statements of Operations for
the applicable provisions for such future costs. See also Note 1 - "Restoration
and Reclamation Costs" of Notes to Consolidated Financial Statements in the
Company's Form 10-K as of December 31, 1996.
RESULTS OF OPERATIONS
Revenues, earnings from operations and net income for the Company can
fluctuate significantly on a quarter to quarter basis during the year because of
the timing of deliveries requested by its utility customers. The Company's
customers have generally elected, where possible, to take delivery of the bulk
of the annual deliveries under their long-term sales contracts later in each
year. Accordingly, operating results for any quarter or year-to-date period are
not necessarily comparable and may not be indicative of the results which may be
expected for future quarters or for the entire year.
Three Months and Nine Months Ended September 30, 1997 and 1996
The following is a summary of the key operational and financial statistics
related to the Results of Operations:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------ -------------------------
1997 1996 1997 1996
------- ------- ------- ---------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Uranium sales revenue(1) $ 9,499 $11,070 $16,484 $ 18,840
Total pounds delivered 730 869 1,165 1,358
Average sales price/pound(2) $ 14.62 $ 15.67 $ 15.30 $ 15.78
Pounds produced 165 411 588 1,025
Pounds purchased 415 390 415 439
Average cost of purchased pounds $ 9.93 $ 9.14 $ 9.93 $ 9.46
Average cost of produced pounds sold $ 17.17 $ 11.79 $ 15.66 $ 10.93
Average cost of purchased pounds sold $ 9.86 $ 9.14 $ 9.86 $ 9.46
</TABLE>
(1) Revenues for the three and nine months ended September 30, 1997
include approximately $2.8 million for the sales of Russian uranium
sold under the matched sales Amendment. The same periods in 1996
include approximately $4.5 million in revenue from sales of similar
Russian material.
(2) Average sales price does not include the sale of Russian material
which is considered as a "pass through" sale under the matched sales
Amendment.
Revenue from uranium sales in the third quarter of 1997 decreased by
$1,570,000 from the same period in 1996. This difference resulted from a
decrease in deliveries of approximately 139,000 pounds and lower average sales
prices for the quarter ended September 30, 1997 compared to the same quarter in
1996.
10
<PAGE> 11
Revenue from uranium sales in the first nine months of 1997 decreased by
$2,356,000 from 1996 levels. This reduction resulted from approximately 193,000
fewer pounds delivered this year compared to 1996. The Company's 1997 contract
portfolio includes contracts with sales prices containing base price escalated
contracts, market price related contracts and Russian matched sales contracts.
This portfolio mix contrasts with the 1996 contract portfolio which consisted of
only base price escalated contracts and Russian matched sales contracts. Changes
in the market price of uranium can result in a significant impact on the average
sales price received under the Company's sales contracts and on the Company's
results of operations.
Details of the cost of uranium sales were as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
------- -------- ------- -------
(In thousands) (In thousands)
<S> <C> <C> <C> <C>
Cost of purchased uranium $ 3,505 $ 3,565 $ 3,505 $ 4,151
Royalties 293 515 684 950
Operating expenses 3,157 1,802 5,646 3,693
Provision for restoration and reclamation costs 425 739 864 1,151
Depreciation and depletion of uranium properties 2,927 3,336 6,262 5,789
------- ------- ------- -------
Total cost of uranium sales $10,307 $ 9,957 $16,961 $15,704
======= ======= ======= =======
</TABLE>
During the first nine months of 1997, and more specifically the second and
third quarters, the Company experienced certain severe production challenges
associated with weather, operating techniques and subsurface geochemical
conditions. As a result, the Company produced only 165,000 pounds of uranium
from the Rosita and Kingsville Dome facilities in the three months ending
September 30, 1997, compared to 411,000 pounds in the same quarter of 1996. For
the nine month period ending September 30, 1997, the Company produced 588,000
pounds compared to 1,025,000 pounds in the same period during 1996.
The reduced production output for both the quarter and the nine months
ended September 30, 1997 resulted in per pound production costs which increased
significantly compared to 1996. Adverse wet weather conditions submerged a
majority of the production areas and resulted in the loss of over 30 days of
development and production drilling during the second quarter of 1997 alone.
This inability to drill and develop new production areas was a major factor in
the downturn in third quarter production. During the first nine months of 1997,
the Company experienced inefficiencies related to operating and management
techniques coupled with operating constraints resulting from plant design.
During the second and third quarter of 1997, the Company reorganized its
operating group and redesigned certain plant and wellfield systems to address
these inefficiencies and to facilitate future operations. The Rosita facility
was downsized in June 1997 in order to concentrate on maximizing production from
its newest wellfield (wellfield #7), while strategically continuing to produce
from those wellfields that are in the latter stages of their production decline
curves. Staffing at Rosita was reduced during this period from 47 employees to
20.
At both operating facilities, decreased production from the leach fields
relating to water quality has forced the Company to undertake certain redesign
of the facilities in order to mitigate the chemical effects of the continuously
recycled ground water . During the second quarter, a temporary partial shutdown
of the Rosita facility was undertaken to effect these changes. The Kingsville
Dome facility underwent a three-day shutdown in July 1997 to re-pipe the
facility to allow new wellfields to be mined primarily with the groundwater
native to each wellfield. During the transition to the new operating techniques,
the Company saw lower production levels and correspondingly higher per pound
production costs in the second and third quarter of 1997. However, production
levels in October 1997 have demonstrated positive results from these changes.
Production from the Kingsville Dome and Rosita projects for the remainder of
1997 is expected to approximate the Company's remaining delivery obligations.
11
<PAGE> 12
Operating expenses attributable directly to the sale of Kingsville Dome and
Rosita produced pounds totaled $5,646,000 ($6.98 per pound) in the first nine
months of 1997 compared to $3,401,000 ($3.70 per pound) for produced pounds that
were sold in the same period in 1996. The increases in the per pound operating
costs for the third quarter and the nine months ended September 30, 1997
resulted primarily from the decreased production experienced in those periods
compared to the same periods in 1996. The fixed operating costs incurred in
connection with the lower production levels resulted in a higher per pound
absorption of these costs over the reduced production volume. Total operating
expenses and depreciation and depletion in the first nine months ended September
30, 1996 also include $313,000 in standby costs for the Kingsville Dome
facility. Such standby costs were recorded as direct charges to operations.
The provision for restoration and reclamation in the first nine months
ended September 30, 1997 consists of $765,000 ($0.95 per pound) for production
sold during 1997 and $99,700 for costs associated with reclamation activities
related to the Benavides and Bruni projects (previous mining locations). The
provision for restoration and reclamation in the nine months ended September 30,
1996 consists of the provision for production sold of $864,000 ($0.94 per pound)
and $287,000 for costs associated with reclamation activities related to the
Benavides project.
The depreciation and depletion provision for the first nine months ended
September 30, 1997 consisted of $6,262,000 ($7.74 per pound) for Rosita and
Kingsville Dome production sold. The depreciation and depletion provision in the
same period of 1996 consisted of $5,781,000 ($6.29 per pound) for production
sold and Kingsville Dome depreciation while on standby of $21,000.
Royalties in the first nine months of 1997 totaled $684,000 compared to
$950,000 in 1996. The decrease in 1997 is directly attributable to the reduction
in sales of produced uranium and a lower spot market price compared to 1996.
The average cost of uranium purchases made in the first nine months of 1997
was $9.93 compared to $9.46 for the same period in 1996. Total deliveries in the
first nine months of 1997 consisted of 355,000 purchased pounds, at an average
cost per pound of $9.86, and 809,000 produced pounds at an average cost per
pound of $15.66. During the same period in 1996, the Company delivered 439,000
purchased pounds, at an average cost per pound of $9.46 and 920,000 produced
pounds at an average cost of $10.93 per pound.
Corporate expenses consisting of general and administrative ("G&A")
expenses were comparable in the first nine months of 1997 ($2,254,000) to the
first nine months of 1996 ($2,259,000).
Total interest costs, net of capitalized amounts decreased to $134,000 in
the first nine months of 1997 from $419,000 in the first nine months of 1996.
This decrease resulted from the repayment of the additional $4.0 million
borrowed in June 1996 to finance the purchase of the Alta Mesa property and
because of advances received under the Company's credit facility in 1996.
Total other income for the first nine months of 1997 increased by $770,000
from the same period in 1996. This increase resulted from the settlement in June
1997 of the Company's lawsuit against The Professional Bank of Denver, Colorado
($575,000) and an increase in interest income ($195,000) for the nine months.
The higher interest income resulted from higher average available cash and
investment balances which were generated from the Company's equity placement in
December 1996.
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Financial Data Schedule
13
<PAGE> 14
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.
URANIUM RESOURCES, INC.
Dated: November 14, 1997 By: /S/ Paul K. Willmott
-------------------------
Paul K. Willmott
Director, President and
Chief Executive Officer
Dated: November 14, 1997 By: /S/ Thomas H. Ehrlich
--------------------------
Thomas H. Ehrlich
Vice President - Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
14
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
27 FINANCIAL DATA SCHEDULE
</TABLE>
E-1
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,096,567
<SECURITIES> 3,220,132
<RECEIVABLES> 5,925,981
<ALLOWANCES> 0
<INVENTORY> 1,171,735
<CURRENT-ASSETS> 11,772,475
<PP&E> 90,831,648
<DEPRECIATION> (33,903,613)
<TOTAL-ASSETS> 69,934,582
<CURRENT-LIABILITIES> 10,909,531
<BONDS> 459,144
0
0
<COMMON> 12,190
<OTHER-SE> 51,638,584
<TOTAL-LIABILITY-AND-EQUITY> 69,934,582
<SALES> 16,483,873
<TOTAL-REVENUES> 16,483,873
<CGS> 16,960,710
<TOTAL-COSTS> 19,214,345
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (134,013)
<INCOME-PRETAX> (1,931,731)
<INCOME-TAX> (386,225)
<INCOME-CONTINUING> (1,545,506)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,545,506)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
