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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Fee required]
For the fiscal year ended December 31, 1996 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
[No fee required]
For the transition period from to
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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)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.001 par value per share
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 .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the Common Stock of the Registrant held by
nonaffiliates at March 19, 1997 was approximately $52,537,257.
Number of shares of Common Stock outstanding as of March 19, 1997: 10,827,527
shares.
Documents Incorporated by Reference:
Document Location in 10-K
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Proxy Statement for 1997 Annual Meeting of Stockholders Part III
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URANIUM RESOURCES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Marketing Strategy/Uranium Sales Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
The ISL Mining Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Environmental Considerations and Permitting; Water Rights . . . . . . . . . . . . . . . . . . . . . 6
The Uranium Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Supply and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Uranium Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ITEM 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
South Texas Producing Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
South Texas Development Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
New Mexico Development Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Santa Fe Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Reclaimed Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Reclamation and Restoration Costs and Bonding Requirements . . . . . . . . . . . . . . . . . . . . 19
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . . . . . . . . . . . . . . . . 20
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . 28
Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . 31
Forward Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Capital Resources and Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Environmental Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . 36
</TABLE>
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<TABLE>
<S> <C> <C>
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . . . . 37
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . 37
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . 37
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . 38
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Index to Consolidated Financial Statements,
Auditors' Report, Financial Statements
and Supplemental Data F-1 to F-23
Index to Exhibits E-1 to E-2
</TABLE>
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URANIUM RESOURCES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
PART I
The "Company" or "Registrant" is used in this report to refer to
Uranium Resources, Inc. and its consolidated subsidiaries. Items 1 and 2
contain "forward-looking statements" and 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 management's
expectations regarding the Company's reserve base, timing of receipt of mining
permits, production capacity of mining operations planned for properties in
South Texas and New Mexico and planned dates for commencement of production at
such properties, business strategies and other plans and objectives of the
Company's management for future operations and activities and other such
matters. The words "believes," "plans," "intends," "strategy," "projects,"
"targets," or "anticipates" 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" beginning
on page 21.
Certain terms used in this Form 10-K are defined in the "Glossary of
Certain Terms" appearing at the end of Part I hereto. As used herein, "Western
World" is a uranium industry term referring to the countries from which
statistics are available for the purpose of compilation of data relating to the
industry, and generally refers to those countries outside the Republics of the
Commonwealth of Independent States (the "CIS"), Eastern Europe and the Peoples
Republic of China.
ITEM 1. BUSINESS.
THE COMPANY
GENERAL
Uranium Resources, Inc., a Delaware corporation (the "Company"), was
formed in 1977 to acquire, explore and develop properties for the mining of
uranium in the United States using the in situ leach ("ISL") mining process.
The Company is recognized as a leader in the field of ISL mining.
In the ISL process, groundwater fortified with oxidizing agents is
pumped into the ore body causing the uranium contained in the ore to dissolve.
The resulting solution is pumped to the surface where it is further processed
to a dried form of uranium which is shipped to conversion facilities for sale
to the Company's customers. The ISL process is generally a more cost effective
and environmentally benign mining method than conventional mining techniques.
From March 1988 until September 1990 the Company produced a total of
approximately 1.5 million pounds of uranium from its Kingsville Dome property
in South Texas, and from October 1990 through March 1992 it produced a total of
approximately 1.1 million pounds of uranium from its Rosita property also
located in South Texas. The Kingsville Dome property was shut-in in September
1990 and the Rosita property in March 1992 due to the decline in the uranium
spot market price to below the Company's production costs.
Generally, the Company sells uranium to electric utilities under
long-term contracts that provide for minimum prices which escalate with
inflation. See "-Marketing Strategy/Uranium Sales Contracts." From 1988 through
March 1992 the Company's production of uranium from the Kingsville Dome and
Rosita facilities provided a portion of the uranium inventory required for such
sales while these sites were producing. The Company has also purchased a
significant amount of uranium through a combination of
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long-term and spot contracts to satisfy its obligations under such contracts.
From 1993 through June 1995 such uranium purchases comprised the major source
for the Company's uranium deliveries.
In anticipation of the firming and increase in the spot price of
uranium, in mid 1994 the Company began plans for the resumption of production
at its Rosita and Kingsville Dome properties. The spot price of uranium
increased from $9.25 per pound as of July 31, 1994, to $11.80 per pound as of
May 31, 1995. In June 1995 production was recommenced at the Rosita property
and preproduction activities were begun at the Kingsville Dome property with
production established in March 1996. Since the re-establishment of production
and through December 1996 the Company has produced approximately 1.1 million
pounds from Rosita and 860,000 pounds from Kingsville Dome at average
production costs of $10.86 and $12.31 per pound, respectively.
These production and cost levels establish the Company as the largest
and one of the lowest cost producers of uranium concentrates in the United
States. It is the only publicly-owned uranium production company in the United
States whose activities exclusively involve the commercial ISL production of
uranium.
As of February 28, 1997, the Company had 156 employees, including its
professional staff consisting of ten geologists, six engineers, one chemist,
two landmen and two certified public accountants. To support its production,
exploration and permitting activities, the Company maintains regional offices
in Corpus Christi, Texas and in Albuquerque, New Mexico, and field offices at
the Kingsville Dome site, the Rosita site and in Crownpoint, New Mexico.
BUSINESS STRATEGY
During 1995, the Company developed and began the implementation of a
multi-phase strategy to exploit its existing production base and technical
expertise and to identify, acquire, permit and develop additional ISL amenable
uranium properties that will allow the Company to be a significant uranium
producer in the Western World. The Company is implementing its strategy through
(i) resuming production at its existing production sites; (ii) making capital
expenditures for property exploration, acquisition and development; (iii)
permitting additional development sites, which are targeted to commence
production during 1998; and (iv) reviewing opportunities to sell uranium
outside the United States.
After ceasing uranium production in the early 1990s because of
depressed market prices, the Company resumed production at Rosita and
Kingsville Dome in June 1995 and March 1996, respectively. During the period
the Company was not producing uranium, it was able to purchase uranium to
fulfill its existing contracts at a price lower than its cost of production.
For the year ended December 31, 1996, the Company produced approximately 1.4
million pounds of uranium at an average cost of $12.12 per pound. This
production enabled the Company to take advantage of the significant imbalance
between the annual level of uranium production and consumption in the Western
World and the rise in the spot market price for uranium which at $13.65 per
pound as of February 28, 1997 was up approximately 42% over the spot price of
$9.65 per pound as of January 31, 1995. The Company estimates that for 1996,
its uranium production was approximately 20% of the total U.S. production and
approximately 2% of the total Western World production.
In June 1996, the Company acquired for $4 million (of which $1 million
is recoverable against one-half of future royalties) a mineral lease on the
Alta Mesa properties located in South Texas which are estimated by the Company
to contain 6.2 million pounds of in-place proven and probable uranium reserves
(estimated 4.0 million pounds recoverable).
In November 1996 the Company entered into a letter of intent with
Santa Fe Pacific Gold Corporation ("Santa Fe") pursuant to which the Company
would acquire for exploration and development potential certain uranium 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
to expend certain amounts on exploration. Approximately one-third of this
acreage comprises uranium mineral rights
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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. This transaction was completed in March
1997.
The Company has two development projects in South Texas, Vasquez and
Alta Mesa, both targeted to commence production in 1998. The Company also has
three development projects in two districts in New Mexico, the Churchrock
district and the Crownpoint district. Churchrock is targeted to commence
production in 1998. Permitting is in process at all such projects. Commencement
of production at these properties is subject to timely permitting and the
availability of capital.
When Alta Mesa, Vasquez and Churchrock reach full production, the
Company expects that, based on planned production rates, its total annual
production capacity from these operations plus Kingsville Dome will approximate
4.0 million pounds.
MARKETING STRATEGY/URANIUM SALES CONTRACTS
The Company is aggressively developing a portfolio of sales contracts
in support of its production expansion goals. Long-term contracts are a primary
focus of the Company. Spot sales will be utilized to manage inventories and
optimize revenues. The Company intends to use matched sales in amounts equal to
its available quotas through 2003 to maximize profitability. All contracts
together will result in a portfolio that is targeted to provide upside market
price participation while limiting down-side price risk.
As of December 31, 1996, based on prices escalated in accordance with
the contract terms through that date, the Company had long-term contracts for
approximately $73,359,000 of future sales for deliveries through 2002, as
compared with contracts for approximately $37,824,000 as of December 31, 1995,
based on prices escalated in accordance with contract terms through that date,
in each case excluding the revenue related to the sale of Russian uranium under
the matched sale program. The Company has contracts that have a market-related
price, with a price ceiling and price floor subject to escalation for between
80%-100% of future inflation. The Company also has contracts with fixed prices
which are also subject to escalation for between 80%-100% of future inflation.
One other contract is based upon 99% of market price without a floor or a
ceiling.
The following table provides information concerning the Company's
long-term sales contracts from January 1, 1997 through 2002 (excluding the
delivery of Russian uranium) with prices escalated through December 31, 1996 and
using the December 31, 1996 spot price of uranium for the market price related
contracts:
<TABLE>
<CAPTION>
1997 1998 1999 2000 2001 2002 Total
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<S> <C> <C> <C> <C> <C> <C> <C>
Number of customers 7 7 4 3 2 1 N/A
Total long-term
contracted
deliveries 1,423 1,395 704 584 484 150 4,740
(thousands of
pounds)
Total sales (thousands) $22,116 $22,198 $10,819 $ 8,783 $ 7,222 $2,221 $73,359
Average minimum sales
price per pound $ 15.54 $ 15.92 $ 15.36 $ 15.03 $ 14.91 $14.81 $15.47
</TABLE>
For deliveries in periods subsequent to 1997, certain buyers have the
option to adjust deliveries between 10% to 20%. In general, except for the
options of the buyers to decrease deliveries by a specified percentage, and
except for force majeure events, the buyers either must take delivery and pay
for the entire amount contracted for or, if delivery is refused on any portion
of the contract, pay to the Company the difference between the minimum contract
price and the amount received by the Company upon the sale of the uranium to a
third party. Certain of the contracts also provide the buyer with options to
renew beyond the periods reflected in the table.
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Should any of the Company's customers be unable to perform its
obligations to purchase and pay for the uranium because of force majeure or
otherwise, this could have a material adverse effect on the Company's results
of operations if the Company would not be able to sell such material under
another long-term contract or in a spot market sale.
A significant portion of the Company's contracted sales of uranium
from January 1, 1997 through December 31, 2002 are represented by eight
long-term contracts with seven different customers, five of which represented
20%, 16%, 15%, 12% and 11% of sales for the year ended December 31, 1996 and
four of which represented 23%, 14%, 10% and 10% of sales for the year ended
December 31, 1995.
As of December 31, 1996, the Company had two outstanding long-term
purchase contracts for Russian origin uranium totaling 270,000 pounds with
deliveries from 1997 through 1998. These contracts have a price escalation
factor related to future inflation.
RESERVES
The following table sets forth the Company's total in-place proven and
probable uranium reserves as of December 31, 1996. The reserves are based on an
estimated 65% recovery factor, certain cut-off grades and a price of $16 per
pound.
<TABLE>
<CAPTION> In-Place Reserves
as of Recoverable
December 31, 1996 Reserves as of
Producing (P)/ ---------------------- December 31,
Properties Development (D)Proven Probable 1996
- ---------- --------------- ------ -------- --------------
(Amounts in thousands of pounds of U3O8)
<S> <C> <C> <C> <C>
Texas
Kingsville Dome P 709 3,001 2,412
Rosita P 1,761 -- 1,144
Vasquez D 2,248 1,439 2,397
Alta Mesa D 4,346 1,863 4,036
New Mexico
Churchrock
Section 8 D 6,529 -- 4,244
Section 17 D 3,451 4,992 5,488
Mancos D 4,164 -- 2,707
Crownpoint D 30,758 8,201 25,323
---------- ---------- ----------
TOTALS 53,966 19,496 47,751
========== ========== ==========
</TABLE>
The foregoing table does not include approximately 14.7 million pounds
of proved and probable in-place reserves (estimated 9.6 million pounds
recoverable) related to the Santa Fe transaction and 27.0 million pounds of
proved and probable in-place reserves (estimated 17.6 million pounds
recoverable) contained on acreage adjoining the Crownpoint property for which
the Company executed leases with the landowners in 1992. These leases are
subject to approval by the U.S. Bureau of Indian Affairs (the "BIA"), with such
approval expected in 1997 as a result of the Company's receipt of the Final
Environmental Impact Statement (the "FEIS") in March 1997. See Item 2.
Properties - New Mexico Development Properties - Crownpoint District.
THE ISL MINING PROCESS
The ISL mining process, a form of solution mining, differs
dramatically from conventional mining techniques. The ISL technique avoids the
movement and milling of significant quantities of rock and ore as well as mill
tailings waste associated with more traditional mining methods and generally
results in a more cost-effective and more environmentally-benign extraction
operation in comparison to conventional uranium mining. Historically, the
majority of U.S. uranium production resulted from either open pit surface mines
or underground shaft operations. These conventional mining methods are, in many
cases,
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capital and labor intensive and are not cost competitive with the majority of
non-U.S. conventional producers. To the Company's knowledge, there are no
conventional U.S. producers today.
The ISL process was first tested for the production of uranium in the
mid-1960's and was first applied to a commercial-scale project in 1975 in South
Texas. The ISL process had become well established in the South Texas uranium
district by the late 1970's, where it was employed in connection with
approximately twenty commercial projects, including two operated by the
Company.
In the ISL process, groundwater fortified with oxygen and other
solubilizing agents is pumped into a permeable ore body causing the uranium
contained in the ore to dissolve. The resulting solution is pumped to the
surface where the uranium is removed from the solution and processed to a dried
form of uranium which is shipped to conversion facilities for sale to the
Company's customers.
An ISL project involves several major components:
ORE BODY EVALUATION
Ore bodies which are currently being mined by the ISL process are
associated with groundwater saturated permeable sandstone formations located
between 100 and 2,000 feet below the surface. The uranium ore is deposited in a
roll front configuration where the groundwater passing through the sandstone
passes from a natural environment which is oxidizing to a naturally occurring
reducing environment. This change causes the dissolved uranium in the
groundwater to become insoluble, and it then attaches to the grains of the
sandstone. Some important factors in evaluating an ore body for the ISL process
are permeability, the thickness of the ore zone, depth, size, grade of ore,
shape of the ore body, nature of uranium mineralization, host rock mineralogy,
and the hydrology. These factors are important in determining the design of the
wellfield, the type and flow of the leaching solution, and the nature of the
surface ISL facilities.
WELLFIELD DESIGN
The wellfield is the mechanism by which the leaching solution, or
lixiviant, is circulated through the ore body. The wellfield consists of a
series of injection, production (extraction) and monitoring wells drilled in
specified patterns. These patterns will vary primarily with the configuration
of the ore and the hydrologic characteristics of each deposit. Determining the
wellfield pattern is crucial to minimizing costs and maximizing efficiencies of
production. Injection and production wells vary in diameter from four to six
inches. Generally, these wells are drilled down to the bottom of the ore zone
(through which the lixiviant must be circulated to achieve production).
Injection and production wells are cased with polyvinyl chloride ("PVC") or
fiberglass casings which are cemented in place from the bottom of the ore zone
to the surface. The wells are then completed into the ore zone.
LIXIVIANT CHEMISTRY
The lixiviant, consisting of native groundwater fortified with an
oxidant and an anionic complexing agent, is introduced via the injection wells
to the ore bearing aquifer. The oxidant (gaseous oxygen) changes the uranium
valence state making the uranium soluble in the lixiviant. The lixiviant
(sodium bicarbonate) complexes the original uranium to a soluble ion, uranyl
dicarbonate, which dissolves the uranium. The dissolved uranium then flows to
the surface with the lixiviant fluid which is circulated through the ore body
until economic recovery is achieved.
URANIUM RECOVERY PROCESS
The uranium recovery process consists of a lixiviant circuit, an
elution/precipitation circuit and a drying and packaging process. The lixiviant
circuit flows from the ore body, where the uranium is dissolved. The lixiviant
stream is then circulated to an ion exchange column on the surface where
uranium is extracted from the lixiviant by absorption onto the resin beads of
the ion exchange columns. The lixiviant is then refortified and reinjected into
the ore body. When the ion exchange column's resin beads are loaded with
uranium, the column is removed and placed into the elution circuit where the
uranium is
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flushed with a salt water solution which precipitates the uranium from the
beads. This leaves the uranium in a slurry, which is then dried and packaged
for shipment as uranium powder.
WELLFIELD RESTORATION
At the conclusion of mining, the mine site is decommissioned and
decontaminated and the wellfield is restored and reclaimed. Wellfield
restoration involves returning the aquifer to a condition consistent with its
pre-mining use and removing evidences of surface disturbance. The restoration
of the wellfield can be accomplished by flushing the ore zone for a time with
native ground water and/or using reverse osmosis to remove ions, minerals and
salts to provide clean water for reinjection to flush the ore zone.
Decommissioning and decontamination entail decontamination, dismantling and
removal for disposal or reuse of the structures, equipment and materials used
at the site during the mining and restoration activities.
ENVIRONMENTAL CONSIDERATIONS AND PERMITTING; WATER RIGHTS
The production of uranium is subject to extensive regulations,
including federal and state (and potentially tribal) environmental regulations,
that have a material effect on the economics of the Company's operations and
the timing of project development. The Company's primary regulatory costs have
been related to obtaining and complying with the regulatory licenses and
permits that must be obtained from federal and state agencies prior to the
commencement of uranium mining activities.
Environmental considerations include the prevention of groundwater
contamination (through proper design and operation of the wellfield and
monitoring wells to prevent the vertical or horizontal escape of leaching
solution from the mining area) and the treatment and disposal of liquid and/or
solid discrete surface waste or by-product materials (so-called "11e. (2) by-
product material" under federal law). The majority of by-product material that
is generated is liquid and generally is disposed of through underground
injection wells, by a combination of reverse osmosis, brine concentration and
evaporation or, after treatment, by surface deposition or discharge. Any such
disposal must be approved by the governing authority having jurisdiction over
that aspect of the Company's activities. Once mining is completed, the Company
is required to reclaim the surface areas and restore underground water quality
to the level of quality mandated by applicable regulations or license
requirements. A small amount of solid discrete surface waste materials
generated by the ISL process is disposed of by delivery to a licensed by-
product material disposal site or to a licensed conventional uranium mill
tailings pile. While such sites may not be readily available in the future, the
Company believes that any increase in the cost of such disposal will continue
to be insignificant relative to total costs of production and will not be a
material portion of restoration/reclamation costs.
In both Texas and New Mexico there are two primary regulatory
authorizations required prior to operations: a radioactive material license and
underground injection control ("UIC") permits which relate both to the
injection of water for production purposes and to the disposal of by-product
material through underground injection wells. Uranium mining is subject to
regulation by the U.S. Nuclear Regulatory Commission ("NRC") under the federal
Atomic Energy Act ("AEA"); however, the AEA also allows for states with
regulatory programs deemed satisfactory by the NRC to take primary
responsibility for licensing and regulating certain activities, such as uranium
recovery operations. When a state seeks this responsibility, it enters into an
agreement with the NRC whereby the NRC agrees to recede from the exercise of
most of its counterpart jurisdiction, leaving the matters to be administered by
the state. Texas has entered into such an agreement; however, New Mexico is not
a party to such an agreement.
The federal Safe Drinking Water Act ("SDWA") creates a nationwide
regulatory program protecting groundwater which is administered by the U.S.
Environmental Protection Agency ("EPA"). To avoid the burden of dual federal
and state (or Indian tribal) regulation, the SDWA allows for the permits issued
by the UIC regulatory programs of states and Indian tribes determined eligible
for treatment as states to suffice in place of a UIC permit required under the
SDWA. A state whose UIC program has been determined sufficient for this purpose
is said to have been granted "primary enforcement responsibility" or "primacy,"
and a UIC permit from a state with primacy suffices in lieu of an EPA-issued
permit, provided
6
<PAGE> 10
the EPA grants, upon request by the permitting state, an "aquifer exemption" or
"temporary aquifer designation" modifying the permitting state's UIC program to
recognize the temporary placement of mining fluids into the intended mining
zone within the horizontal confines of the proposed mining area. Although the
EPA's consent to aquifer exemptions or temporary aquifer designations for
certain mineral deposits is often issued almost automatically, the EPA may
delay or decline to process the state's application if the EPA questions the
state's jurisdiction over the mine site. Both Texas and New Mexico have been
granted "primacy" for their UIC programs, and the Navajo Nation has been
determined eligible for treatment as a state but is not due to submit its
program for EPA approval for several years. Until such time as the Navajo
Nation has been granted "primacy," ISL uranium mining activities within Navajo
Nation jurisdiction will require a UIC permit from the EPA. Despite some
procedural differences, the substantive requirements of the Texas, New Mexico
and EPA UIC programs are very similar.
In addition to its radioactive materials licenses and UIC permit, the
Company is also required to obtain from appropriate governmental authorities a
number of other permits or exemptions, such as for waste water discharge, land
application of treated waste water, or for air emissions.
The current environmental regulatory program for the ISL industry is
well established. Many ISL mines have gone full cycle through the permit-
operating-restoration cycle without any significant environmental impact.
However, the public anti-nuclear lobby can make environmental permitting
difficult and permit timing less than predictable.
In Texas, both the radioactive materials license and the UIC permits
required for ISL uranium mining are granted by the Texas Natural Resource
Conservation Commission ("TNRCC"), with the concurrence of the NRC required for
the licensee's final release from further radioactive materials license
obligations after mining and all required decommissioning, decontamination,
restoration and reclamation have been completed at a site. The TNRCC also
regulates air quality and surface deposition or discharge of treated waste
water associated with the ISL mining process.
In New Mexico, radioactive materials licensing is handled directly by
the NRC, rather than by the State of New Mexico. Furthermore, depending upon
whether a site located within New Mexico falls under state or Navajo Nation
jurisdiction, the licensure of the UIC aspects of ISL mining may be conducted
by either the New Mexico Environmental Department ("NMED") or the EPA or
possibly both in case of jurisdictional conflict. The jurisdictional issue when
raised as to any development property, could result in litigation between the
state and the EPA, with the possibility of delays in the issuance of affected
UIC permits.
Water is essential to the ISL process. It is readily available in
South Texas for the Company's operations and obtaining water rights is not
required because water is subject to capture. In New Mexico the use of water
rights is administered through the New Mexico State Engineer subject to Indian
tribal jurisdictional claims as discussed below. Obtaining new water rights,
and the transfer or change in use of existing water rights are carefully and
strictly regulated by the State Engineer. The State Engineer may also grant an
application for a "temporary water right" which will not establish a vested
right but may provide sufficient acre feet per day to fulfill the applicant's
water needs. The State Engineer exercises jurisdiction over underground water
basins with "reasonably ascertainable boundaries." Accordingly, new
appropriations or changes in purpose or place of use or points of diversion of
existing water rights, such as those in the San Juan and Gallup Basins where
the Company's properties are located, must be obtained by permit from the State
Engineer. Applications are required to be published and are subject to hearing
if protested. There are three criteria for decision, that the application: (1)
not impair existing water rights, (2) not be contrary to the conservation of
water within New Mexico, and (3) not be detrimental to the public welfare.
Applications may be approved subject to conditions which govern exercise of the
water rights. Appeals from decisions of the State Engineer are to the district
court of the county in which the work or point of desired appropriation is
situated and from there to the New Mexico Court of Appeals. Finally,
jurisdiction over water rights may become an issue in New Mexico when an Indian
nation, such as the Navajo Nation, objects to the State Engineer's authority to
grant or transfer a water right or to award a temporary water right, claiming
tribal jurisdiction over Indian country. This issue could result in litigation
between the Indian nation and the state which may delay action on water right
applications, and, depending on who prevails as to any particular property,
could result in a requirement to make applications to the
7
<PAGE> 11
appropriate Indian nation and continuing jurisdiction by the Indian nation over
use of the water. All of the foregoing issues arise to a greater or lesser
extent in connection with the Company's New Mexico properties, as further
described below.
There can be no assurance that the regulatory permits or licenses in
Texas or New Mexico, or the applications for water rights in New Mexico,
required for any project of the Company will be approved by the necessary
governing authority in the form contemplated by management, or in any other
form, or within the time periods necessary to commence timely production.
Additionally, regulations and permit requirements are subject to revisions and
changes which may materially affect the Company's operations. Any delay or
failure in obtaining such permits or water rights could materially and
adversely affect the business and operations of the Company.
In addition to the costs and responsibilities associated with
obtaining and maintaining permits, and the regulation of production activities,
the Company is subject to those environmental laws and regulations applicable
to the ownership and operation of real property in general, including but not
limited to the potential responsibility for the activities of prior owners and
operators.
THE URANIUM INDUSTRY
GENERAL
The only significant commercial use for uranium is to fuel nuclear
power plants for the generation of electricity. Nuclear plants generated
approximately 17% of the world's electricity in 1995, up from less than 2% in
1970 and according to the Uranium Institute ("UI"), through the year 2000
nuclear generating capacity is expected to grow at 1% per annum, primarily as a
result of new reactor construction outside the United States and increased
efficiencies of existing reactors.
As of December 31, 1995 there were 363 nuclear reactors operating in
the Western World, 109 of which are in the United States, and another 32 under
construction outside of the United States. Uranium consumption by Western World
commercial reactors increased from about 60 million pounds in 1981 to
approximately 129 million pounds in 1995. Western World consumption is
estimated to reach approximately 135 to 150 million pounds by 2001.
SUPPLY AND DEMAND
1995 and 1996 were transition years in the uranium market place,
signaling the end of a ten year period of significantly depressed product
prices. There is no single event that caused this long-anticipated correction.
It is the result of numerous factors working in concert over a ten-year period
that finally re-established the move toward market equilibrium.
From the early 1970's through 1980, the Western World uranium industry
was characterized by increasing uranium production fueled by overly optimistic
projections of nuclear power growth. From 1970 to 1985, production exceeded
consumption by approximately 500 million pounds. By the end of 1985 enough
inventory had been amassed to fuel Western World reactor needs for over five
years. In response, sales of excess inventory followed and prices plummeted
from highs above $40 per pound in 1979 to below $8 per pound in 1992. As prices
fell, Western World production declined dramatically from a high of 115 million
pounds in 1980 to a low of 57 million pounds by 1994. Since 1985, consumption
of uranium in the Western World has exceeded Western World production by over
400 million pounds. In 1995, consumption of uranium in the Western World was
129 million pounds, nearly double the production of 66 million pounds by
Western World producers. Accordingly, by the end of 1995, excess inventory
levels in the Western World (inventory in excess of preferred levels) had been
reduced to less than two years of forward reactor requirements, and excess
inventories in the U.S. had been reduced to less than one year of projected
forward requirements.
Countering the drawdown of Western World inventories and contributing
directly to the downturn of market prices was the importation, starting in
1989, of uranium from the Commonwealth of Independent
8
<PAGE> 12
States (the "CIS"), and to a lesser extent, from Eastern Europe and mainland
China. As the result of an anti-dumping suit in 1991 by the U.S. ("CIS Anti-
dumping Suit") against some republics of the CIS, suspension agreements were
signed with six CIS republics (Russia, Ukraine, Kazakhstan, Uzbekistan,
Kyrgzstan and Tajikistan) in October 1992, which applied price related volume
quotas to CIS uranium permitted to be imported into the U.S.
The Russian Suspension Agreement was amended in March 1994 allowing
for up to 43 million pounds of Russian uranium to be imported into the U.S.
over the 10 years beginning March 1994, but only if it is matched with an equal
volume of new U.S. production. Based on U.S. consumption for the 1994-2003
period (as reported or projected by the Department of Energy), the matched
volumes could account for up to 18% of the supply to the U.S. market during
this period.
In 1995 the Republics of Kazakhstan and Uzbekistan concluded
negotiations to amend their respective suspension agreements. Both amendments
lowered initial prices relating to their respective import quotas allowing
imports to occur. Additionally, the amendments require that uranium mined in
those Republics and enriched in another country for importation in the U.S.
will count against their respective quotas. The Uzbekistan amendment replaces
the price-tied quota system with one based upon U.S. production rates after
October 1997. As U.S. rates increase, additional imports from Uzbekistan are
allowed.
Although these amendments to the suspension agreements may increase
the supply of uranium to the U.S. market, they provide increased predictability
concerning CIS imports into the U.S. Due to declining production levels in the
CIS republics, uranium from these sources has recently been difficult to
obtain. Consequently, the market impact of CIS primary production may be
diminishing.
In January 1994, the U.S. and Russia entered into an agreement (the
"Russian HEU Agreement") to convert highly enriched uranium ("HEU"), derived
from dismantling nuclear weapons, into low enriched uranium ("LEU") suitable
for use in nuclear power plants. At a projected maximum conversion rate for HEU
and LEU, approximately 24 million pounds of uranium will be available to
Western World markets, meeting up to 18% of annual requirements by 2001.
In 1996 the U.S. Congress passed legislation in compliance with the
suspension agreements which allows the converted HEU material to be sold in the
U.S. marketplace at an annual rate not to exceed 2 million pounds in 1998,
increasing gradually to 20 million pounds in 2009. At this maximum rate, HEU
material could supply approximately 40% of annual U.S. reactor requirements
projected for 2009. In addition, an uncertain amount of HEU material is allowed
to be used in the U.S. for the overfeeding of enrichment facilities and as a
source of Russian uranium for matching sales.
Industry analysts expect annual Western World consumption to increase
to between 135 and 150 million pounds by 2001. The Company estimates that
between 30 and 40 million pounds of this demand could be filled by a
combination of government stockpiles (including converted Russian and U.S. HEU
and inventory sold by the Department of Energy) and imports from CIS republics
and former East Bloc countries. To achieve market equilibrium by 2001 primary
production in the Western World will need to supply between 95 and 120 million
pounds on an annual basis subject to some adjustment for any remaining
inventory drawdown and limited uranium reprocessing. Production from existing
facilities in the Western World, however, is projected to decline from current
levels to approximately 57 million pounds by 2001 as reserves are depleted. New
production therefore will have to be brought online to fill a potential annual
gap of between 38 and 63 million pounds. While current price levels may sustain
1995 production levels, the Company believes that higher prices will be needed
to support the required investment in new higher cost production as lower cost
production reserves are depleted.
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<PAGE> 13
The following table shows U.S. production and Western World production
and consumption for the years presented.
PRODUCTION AND CONSUMPTION OF U(3)O(8)(1)
(Western World Countries)
(Amounts in millions of pounds of U(3)O(8))
<TABLE>
<CAPTION>
Total Western
Total U.S. Total U.S. Total Western World World
Year Production Consumption Production Consumption
---- ---------- ----------- ---------- --------------
<S> <C> <C> <C> <C>
1979 37.5 20.5 99.7 46.6
1980 43.7 18.8 115.0 41.0
1981 38.5 24.1 114.9 59.9
1982 26.9 24.3 107.8 69.8
1983 21.2 28.7 96.2 76.6
1984 14.9 27.0 101.0 78.4
1985 11.3 33.7 90.7 91.1
1986 13.5 34.9 96.7 97.9
1987 13.0 33.7 92.2 93.8
1988 13.1 39.9 95.5 108.2
1989 13.8 38.0 89.0 104.3
1990 8.9 44.2 73.8 114.0
1991 8.0 44.8 70.0 128.4
1992 5.6 45.2 60.9 123.3
1993 3.1 44.2 57.2 130.8
1994 3.4 40.4 57.8 135.7
1995 6.0 51.1 66.0 128.6
1996(est.) 7.2 45.3 72.9 134.9-143.1
</TABLE>
- ------------------
(1) Source: Industry - various publications of Department of Energy/Energy
Information Administration ("DOE/EIA"), Trade Tech, UxCo and the Uranium
Institute.
URANIUM PRICES
Spot prices reflect the price at which uranium may be purchased for
delivery within one year. Historically, spot prices have been more volatile
than long-term contract prices, increasing from $6.00 per pound in 1973 to
$43.00 per pound in 1978, then declining to a low of $7.25 per pound in October
1991. The spot price per pound as of February 28, 1997 was $13.65.
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<PAGE> 14
The following graph shows spot prices per pound from 1978 to December
31, 1996, as reported by Trade Tech.
[GRAPH]
- ----------------
All prices beginning in 1993 represent the nonrestricted origin U(3)O(8)
deliveries available to U.S. utilities. Trade Tech began reporting a two-tier
price structure soon after the United States and certain Republics of the CIS
agreed to import restrictions on uranium produced. The foregoing prices reflect
those prices available to U.S. utility consumers.
COMPETITION
The Company markets uranium to utilities in direct competition with
supplies available from various sources worldwide. The Company competes
primarily on the basis of price. The Company estimates that for 1996 its
uranium production was approximately 20% of the total U.S. production and
approximately 2% of the total Western World production.
According to the UI, in 1995, six companies, Cameco Corporation,
Compagnie Generales des Matieres Nucleaires, Energy Resources of Australia,
Ltd., the RTZ Corporation PLC, Uranerzbergbau-GmbH and WMC Limited, produced
almost 70% of total Western World output. Virtually all of Western World
production was from only eight nations: Canada, Niger, Australia, Namibia,
South Africa, United States, France and Gabon. In 1989 the CIS and mainland
China began to supply significant quantities of uranium annually into Western
World markets.
11
<PAGE> 15
ITEM 2. PROPERTIES.
SOUTH TEXAS PRODUCING PROPERTIES
The Company currently has two producing properties which are located
in South Texas, Rosita and Kingsville Dome. The following is a description of
those properties.
KINGSVILLE DOME
The Property. The Kingsville Dome property consists of mineral leases
from private landowners (and a small portion owned in fee) on 3,720 gross
(3,573 net) acres located in central Kleberg County, Texas. The leases provide
for royalties based upon uranium sales. The leases have expiration dates
ranging from February 1998 to 2004. With a few minor exceptions, all the leases
contain shut-in royalty clauses which permit the Company to extend the leases
not held by production by payment of a royalty. 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 has produced in excess of three million pounds of uranium from these
properties and made the final payment of approximately $730,000 on this
obligation in January 1997.
Reserves. As of December 31, 1996, the property contained
approximately 3.7 million pounds of in-place proven and probable uranium
reserves (estimated 2.4 million pounds recoverable).
Production History. Initial production commenced in May 1988. In May
1989, due to the continuing decline in the spot price of uranium, the Company
deferred development of the next wellfield, and the plant was shut-in in
September 1990. Total production from May 1988 through September 1990 was
approximately 1.5 million pounds.
Wellfield development activities resumed in December 1995, and
production commenced in March 1996. Annualized production levels at Kingsville
Dome are approximately 1 million pounds; and production was approximately
860,000 pounds from recommencement of production in March 1996 through December
31, 1996.
Further Development Potential. As part of the Company's ongoing
production activities, it is engaged in significant development and exploration
efforts at Kingsville Dome. Exploration is planned northwest of the current
production area in 1997. The Company anticipates spending approximately $10.1
million in 1997 and $3.4 million in 1998 for plant capital, permitting,
development and land holding costs.
Permitting Status. Radioactive material licensing and UIC permit
hearings for currently producing areas have been completed, and the necessary
permits have been issued. Some minor amendments to the license and permit for
further production within the permit area will be required as development
proceeds. The term of the license and UIC permit is effectively open-ended. The
UIC disposal permit will require renewal in mid-1998, and the Company is in the
process of applying for that renewal.
Restoration and Reclamation. Restoration of groundwater is planned to
commence in early 1997. The Company anticipates spending approximately $750,000
in 1997 and $600,000 in 1998 on such restoration activities.
ROSITA
The Property. The Rosita property consists of mineral leases on 3,377
gross and net acres located in northeastern Duval County, Texas. All the
leases, except minor leases, are held by production. The leases provide for
royalties based upon uranium sales. The Company was obligated to pay a
production
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<PAGE> 16
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 balance due of
approximately $730,000 under this obligation was paid in January 1997. See the
above discussion of Kingsville Dome.
Reserves. As of December 31, 1996, the property contained
approximately 1.8 million pounds of in-place proven and probable uranium
reserves (estimated 1.1 million pounds recoverable).
Production History. The Company began initial production at Rosita in
October 1990. Total production from Rosita for the eighteen months through
March 31, 1992 was approximately 1.1 million pounds. In March 1992, due to
depressed uranium prices, the Company shut-in production.
Wellfield development activities resumed at Rosita in March 1995, and
production recommenced in June 1995. From that date through year-end 1995
approximately 610,000 pounds were produced and production in 1996 totaled
500,000 pounds.
Further Development Potential. The Company estimates that there are
approximately 300,000 pounds of uranium remaining to be produced from existing
operating wellfields at Rosita. In addition, the Company believes that an
additional 840,000 pounds of uranium may be recovered from future wellfields at
Rosita. Preproduction activities for the new wellfields began in January 1997,
with expected production beginning in the first quarter of 1997. The Company
expects its existing reserves at Rosita to be fully depleted by mid-1998. The
Company anticipates spending approximately $2.1 million for development
activities, permitting and land holding costs in 1997 and $238,000 in 1998.
Permitting Status. Radioactive materials licensing and UIC permit
hearings for currently producing areas have been completed, and the necessary
permits have been issued. Some minor amendments for further production within
the permit area will be required as development proceeds. The term of the
license and UIC permit is effectively open-ended. The UIC disposal permit will
require renewal in mid-1997, and the Company has filed its application for such
renewal.
Restoration and Reclamation. The Company expects to commence initial
groundwater restoration in January 1997 and expects to expend approximately
$300,000 in 1997 and $345,000 in 1998 on such activities.
SOUTH TEXAS DEVELOPMENT PROPERTIES
VASQUEZ
The Property. The property consists of two mineral leases on 842 gross
and net acres located in southwestern Duval County, Texas. One lease expires in
January 1998, subject to extension for permitting delays, and the other lease
expires in February 2000. The leases provide for royalties based on uranium
sales. A potential conflict with respect to the mineral rights has arisen on
the Vasquez property. The Company's lease is with the owner of both the surface
of the land and 50% of the minerals. The Company believes the minable reserves
on this property are within 200 feet of the surface and are, therefore, under
Texas law owned by the surface estate. As a result of the surface lease alone,
the Company believes it has the right to mine 100% of the minerals under Texas
law. Another party, however, owns 50% of the mineral estate and may challenge
the Company's ownership of 50% of the minerals. The Company expects to file a
quiet title action to resolve this matter.
Reserves. As of December 31, 1996, the property contained
approximately 3.7 million pounds of in-place proven and probable uranium
reserves (estimated 2.4 million pounds recoverable).
Development Plan. Production is targeted to commence in 1998. The
Company anticipates spending approximately $1.1 million in 1997 and $5.3
million in 1998 for plant construction, permitting,
13
<PAGE> 17
development and land holding costs. The Company anticipates having to
demonstrate financial surety in connection with these activities of
approximately $3.0 million which it expects to meet by posting a bond
collaterized by cash in an amount equal to 50% of the bond.
Permitting Status. All of the required permit applications have been
completed and submitted to the TNRCC. The TNRCC is currently reviewing the
applications. The Company expects the permits to be in place in 1997.
ALTA MESA
The Property. The Alta Mesa property consists of 4,575 gross and net
acres located in Brooks County, Texas. The Company has a single mineral lease
from the private mineral owner. The lease provides for a royalty based upon
uranium sales and requires payment of minimum royalties if production does not
begin by certain specified times. The Company paid $4 million for the lease of
which $1 million is recoverable against one-half of future royalties. The lease
term ends in December 1999 unless production from the property commences by
that date (subject to extension for permitting delays).
Reserves. As of December 31, 1996, the property contained
approximately 6.2 million pounds of in-place proven and probable reserves
(estimated 4.0 million pounds recoverable).
Development Plan. Construction of the plant and wellfields is
projected to take eight months and is scheduled to begin as the various
licenses are issued by the TNRCC. Construction of the plant and wellfields is
anticipated to begin in the third or fourth quarter of 1997 depending on the
progress in licensing with the TNRCC. The Company anticipates spending
approximately $6.0 million in 1997 and $4.8 million in 1998 for plant
construction, permitting, development and land holding costs. The Company
anticipates having to demonstrate financial surety in connection with these
activities of approximately $3.0 million which it expects to meet by posting a
bond collaterized by cash in an amount equal to 50% of the bond.
Permitting Status. The Company filed license applications in the
fourth quarter of 1996 and anticipates having the final permits in place in
1998.
NEW MEXICO DEVELOPMENT PROPERTIES
GENERAL
The Company has various interests in properties located in the
Churchrock and Crownpoint districts in New Mexico. As to these properties, the
Company holds both patented and unpatented mining claims, mineral leases and
some surface leases from private parties, the Navajo Nation and Navajo
allottees. In addition, the Company signed a letter of intent in November 1996
to acquire from Santa Fe certain uranium mineral interests and exploration
rights for uranium on significant acreage in New Mexico, a small portion of
which falls within the Churchrock district. This agreement with Santa Fe was
finalized in March 1997.
In keeping with its overall corporate strategy, the Company's
development plan for its New Mexico properties will proceed incrementally,
subject to timely permitting, the availability of water rights and the
availability of capital. The Company plans to develop the Churchrock district
first, with production targeted for 1998, and the Crownpoint district next,
with production targeted for 1999.
REGULATORY FRAMEWORK
NRC License. In New Mexico, uranium production requires a radioactive
materials license issued by the NRC. The Company has applied for one NRC
license covering all properties located in both the
14
<PAGE> 18
Churchrock and Crownpoint districts (except the Mancos property) and has
included the properties in both districts (except the Mancos leases) under one
Final Environmental Impact Statement (FEIS) which is a prerequisite for the NRC
license.
The NRC has finalized and completed the publication of the FEIS in the
first quarter of 1997. The FEIS is subject to review and comment by the EPA and
any cooperating agencies and is available to the public. Upon publication, and
in the absence of any litigation concerning the FEIS, the NRC may issue the NRC
license. However, the NRC has published notice of an opportunity for a hearing
on the license which is currently planned for early 1997. Although the NRC may
defer a hearing on licensure until after a license is issued, it is unclear
whether the NRC will do so. There can be no assurance that the license will be
issued or, if issued, that it will allow for the Company's planned operations,
or that, if issued, the license would be issued on a timely basis to permit the
Company to meet its targeted production schedule for the Churchrock district.
UIC Permit. NMED has jurisdiction under the New Mexico Water Quality
Act to regulate UIC activities within the State of New Mexico, and the New
Mexico UIC program has received "primary enforcement responsibility" from the
EPA under the federal SDWA. However, by the terms of regulations issued by the
EPA and the primacy determination made for the State of New Mexico, New
Mexico's UIC primacy does not extend to New Mexico's exercise of UIC regulation
or permitting over facilities located on "Indian lands," a term whose
geographic reach the EPA has defined as coextensive with that of Indian
country. Because even a permit issued by a state holding UIC primacy cannot
suffice in lieu of a federal UIC permit issued under the SDWA unless the EPA
issued a corresponding aquifer exemption or temporary aquifer designation, the
EPA's opinion that a site lies within Indian country virtually compels a state
UIC applicant to secure an EPA UIC permit for UIC activities to be conducted on
such a site. The EPA has announced it may assert that all of the Company's New
Mexico development properties lie within Indian country and thus require UIC
permits issued by the EPA.
In addition to the EPA's assertions, the Navajo Nation claims
regulatory jurisdiction over all of the Company's New Mexico development
properties. These claims subject the development of the property to further
uncertainties, including a potential for delays in UIC permitting until and
unless a Navajo regulatory program is promulgated and accepted by the EPA for a
determination of primacy. Although a Navajo UIC program may adopt unique
application, permitting, and enforcement procedures, it would, nonetheless, be
required to impose virtually the same substantive requirements as the Company
is prepared to satisfy under existing New Mexico and EPA UIC programs.
This dispute over UIC jurisdiction is currently focused on a portion
of the Churchrock and Crownpoint properties. Despite this current
jurisdictional dispute among the EPA, the State of New Mexico, and the Navajo
Nation, the Company maintains good relations with the state of New Mexico, the
Navajo Nation, and the EPA. However, there can be no assurance that the
jurisdictional dispute will not have a material adverse effect on the Company's
development plans in New Mexico.
Water Rights. For general information on water rights in New Mexico,
see "Business-Environmental Considerations and Permitting; Water Rights."
CHURCHROCK DISTRICT
The Property. The Churchrock properties encompass 2,225 gross and net
acres and include mineral leases, patented mining claims and unpatented mining
claims. The properties are located in McKinley County, New Mexico, and consist
of three parcels, known as Section 8, Section 17 and Mancos. None of these
parcels lies within the area generally recognized as constituting the Navajo
Reservation. The Company owns mineral leases for both Sections 17 and the
Mancos properties. The surface estate on Section 17 is owned by the Navajo
Nation. The Company owns patented and unpatented mining claims on Section 8.
The Company is obligated to pay certain royalties based on uranium sales. The
unpatented claims currently require an annual payment of $100 per claim payable
to the Bureau of Land Management
15
<PAGE> 19
to remain in full force and effect and are subject to certain overrides. The
Mancos leases can be held indefinitely by paying certain annual royalties after
the primary term, which expired in 1994. The Section 17 leases expire in 1998.
Production at any time will hold the leases until production ceases. On March
25, 1997, the Company acquired from Santa Fe, the fee mineral interests in
Section 17 and Mancos thereby extinguishing certain of the royalty obligations
on those properties.
Reserves. As of December 31, 1996, Section 8 contained approximately
6.5 million pounds of in-place proven and probable uranium reserves (estimated
4.2 million pounds recoverable), Section 17 contained approximately 8.4 million
pounds of in-place proven and probable uranium reserves (estimated 5.5 million
pounds recoverable), and the Mancos property contained approximately 4.2
million pounds of in-place proven and probable uranium reserves (estimated 2.7
million pounds recoverable).
Development Plan. The New Mexico properties will be developed in
accordance with the licenses issued by the NRC. It is anticipated that the
first property to be licensed will be Churchrock. Costs related to permitting
activities and land holding costs were $600,000 in 1996. The Company
anticipates spending approximately $12.3 million in 1997 and $7.3 million in
1998 for plant construction, permitting, development and land holding costs.
The Company anticipates having to demonstrate financial surety in connection
with these activities of approximately $10.0 million which it expects to meet
by posting a bond collaterized by cash in an amount equal to 50% of the bond.
Exploration Potential. The measured in-place reserves in Sections 8
and 17 and Mancos encompass only a small portion of the properties owned by the
Company. The Company believes that substantial additional mineralization exists
on these properties. Because of greater depths, this mineralization is
estimated to be recoverable at a higher cost and accordingly require higher
uranium prices to make them economical to produce.
Water Rights. The Company originally acquired mineral leases on
Sections 8 and 17 from United Nuclear Corporation ("UNC") and, in connection
therewith, acquired certain rights to use water from UNC. An application to use
one of these rights has been the subject of extensive administrative
proceedings and litigation with the New Mexico State Engineer and the Navajo
Nation over the nature and extent of UNC's water rights. The State Engineer
determined that the consumptive use and diversion amount UNC originally sought
to transfer for use by the Company were in excess of the rights held by UNC and
denied the application on the grounds that the UNC rights were insufficient to
support the Company's mining operations. The Company has since revised its
water budget to be consistent with the rights of UNC as determined by the State
Engineer. The State Engineer has agreed to hear a revised application for the
transfer of the water rights within 180 days after the application is
submitted. The Company anticipates filing a revised application or applications
for new temporary appropriation of water. A claim by the Navajo Nation to
jurisdiction over these water rights was denied by the State Engineer and the
state district court. These decisions do not preclude such a claim from being
made in federal court.
Permitting Status. On June 21, 1989 the EPA issued its aquifer
exemption covering that portion of the Churchrock site known as Section 8, and
on November 1, 1989, NMED issued its permit, covering UIC activities on Section
8. On October 7, 1994, NMED issued an amended permit covering UIC activities on
both Section 8 and Section 17. The permit for Section 17 was contested by the
Navajo Nation which claimed UIC regulatory jurisdiction over the site, based on
the fact that the surface estate is owned by the Navajo Nation. The EPA, acting
as an advocate for the Navajo Nation, has asserted the Navajo Nation's claim
and has refused to amend its previously issued aquifer exemption covering
Section 8 to add the portion of the Churchrock facility on Section 17. The EPA
has subsequently announced it may reconsider its issuance of an aquifer
exemption covering the Section 8 portion of the Churchrock site. The Company
does not plan to pursue permits for Mancos until uranium prices rise.
In June 1996 the Company filed with the NMED two applications to renew
the permit in two distinct parts, one covering the Section 8 portion and the
other the Section 17 portion of Churchrock. This was to assure that the Company
maintained a "clear" UIC authorization on the Section 8 portion of the site.
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The surface estate on Section 8 is not owned by the Navajo Nation or Navajo
allottees. Because the renewal application was timely filed, the permit
covering the Section 8 property has remained continuously in effect pending
final determination on the renewal application by the NMED. The Navajo Nation
has recently asserted jurisdiction over the UIC for Section 8, claiming that
the land lies within a "dependent Indian community." The EPA has not yet taken
a position on this issue. This situation could potentially delay or obstruct
development of Section 8. The renewal application pertaining to the Section 17
property will be subject to a new administrative review which will ultimately
require EPA to re-examine the jurisdictional status. If the EPA does not find
the site within NMED jurisdiction, the Company believes the state will file
suit for a declaration of UIC jurisdiction over the site. The outcome of this
suit may ultimately affect UIC jurisdiction on all Indian lands.
CROWNPOINT DISTRICT
The Property. The Crownpoint properties are located in the San Juan
Basin, 22 miles northeast of the Company's Churchrock deposits and 35 miles
northeast of Gallup, New Mexico, adjacent to the town of Crownpoint. The
Properties consist of 1,578 gross and net acres, as follows:
(a) 162 gross and net acres on Section 24. The Company has
100% of the mineral estate on this acreage pursuant to a combination
of a 40% fee interest, a mineral lease on the other 60% of the mineral
estate (expiring in April 1997 unless the parties agree to an
extension) and unpatented mining claims. This acreage is subject to an
obligation of the Company to pay a production payment on the first
50,000 pounds of uranium produced and an override based on uranium
sales;
(b) 959 gross and net acres on Sections 19 and 29 pursuant to
a lease from private mineral owners (expiring August 2007) which
provides for royalties and an override based on uranium sales; and
(c) 457 gross and net acres of unpatented mining claims in
Sections 9, 24 and 25.
In addition to the foregoing, the Company has 1,440 gross and net
acres of mineral leases (hereinafter referred to as "Unit 1") from Navajo
allottees who are the beneficial owners of the surface and mineral rights. The
leases are subject to approval by the Bureau of Indian Affairs (the "BIA"). The
BIA Area Director is expected to approve the leases after completion of the
FEIS. Although not assured, this approval is expected in the second quarter of
1997. These leases expire 10 years after the approval by the BIA.
Reserves. With respect to all the Crownpoint acreage except Unit 1, as
of December 31, 1996, the property contained approximately 39.0 million pounds
of in-place proven and probable reserves (estimated 25.3 million pounds
recoverable). The Company estimates that Unit 1 contains approximately 27.0
million pounds of in-place proven and probable reserves (estimated 17.6 million
pounds recoverable). The Unit 1 reserves are not included as part of the
Company's reserve base.
Development Plan. The New Mexico properties will be developed
according to the licenses issued by the NRC. It is anticipated that the first
property to be licensed will be Churchrock followed by Unit 1 and Crownpoint
after 1998. Costs relating to permitting activities and land holding costs were
$710,000 in 1996, and are expected to total $200,000 in 1997 and $200,000 in
1998.
Water Rights. With respect to Crownpoint, the Company has acquired
three applications for appropriations of water which give the Company the first
three "positions in line" on the hearings list for the San Juan Basin. Certain
aspects of all three applications were protested and are subject to hearings.
Water rights relating to Unit 1 involve the issue of the jurisdiction of the
Navajo Nation, and this jurisdictional issue might also be present for other
parts of Crownpoint. The Company plans to proceed with water rights for
Crownpoint at a future date.
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Permitting Status. The application for the NRC license is part of the
overall application for both the Churchrock and Crownpoint districts discussed
above. The Company had previously submitted UIC permit applications for
Sections 19 and 24; however, because of Section 19's proximity to the town of
Crownpoint, the Company withdrew these previous applications. The Company has
recently submitted a revised UIC permit application for Section 24. There can
be no assurance that the UIC permit will be granted. The surface estate on
Section 19 and 29 is owned by the Navajo Nation and may be subject to the same
jurisdictional dispute as for Section 17 in Churchrock.
SANTA FE PROPERTIES
GENERAL
The Company signed a letter of intent in November 1996 to acquire
from Santa Fe certain uranium mineral interests and exploration rights for
uranium in New Mexico. This transaction closed in March 1997 and the major
components of the transaction include the following detail.
The Properties. The properties consist of: (a) 37,000 acres as to
which the Company has acquired a fee interest in the entire mineral estate,
excluding coal ("Category I Properties"); (b) approximately 140,000 acres as to
which the Company has acquired the fee interest in uranium (the "Category II
Properties"); and (c) approximately 346,000 acres as to which the Company has
acquired the exclusive right to explore for uranium (the "Category III
Properties").
The Company is obligated to spend on exploration (or pay to Santa Fe)
$200,000 per year for the ten year period starting in March 1997 and $400,000
per year for the seven year period starting in March 2007. This expenditure can
be made on any of the Category II or Category III properties.
The license is for 17 years, expiring in March 2014. In the event that
the sale price of uranium shall exceed $25 per pound for any twelve-month
period URI has committed to spend on exploration (or pay to Santa Fe) during
the following 5 years an aggregate of $5 million; and in the event that the
sale price of uranium shall exceed $30 per pound for any twelve-month period
URI has committed to spend on exploration (or pay to Santa Fe) during the
following 5 years an aggregate of $10 million.
With respect to Category II and Category III properties, at such time
as URI shall apply for a mining permit with respect to any such properties
Santa Fe has the right to put the remaining mineral interests owned by it
(excluding coal) to the Company at a price of $200 per acre for any acreage in
any section which is covered by the mining application. The acreage price shall
be increased by the same percentage as the percentage increase in the price of
uranium on the date of such application over $15.80 per pound. URI has the
option to purchase at any time the entire mineral estates (excluding coal) on
such properties on the same terms.
Reserves. The Company estimates that the Category I Properties contain
14.7 million pounds of proven in-place uranium reserves (estimated 9.6 million
pounds recoverable).
Development Plan. The planned development strategy is to dove-tail
qualified properties from the Santa Fe lands into the production plans for
Churchrock and Crownpoint.
Exploration Potential. There is significant exploration potential for
the Santa Fe properties. Numerous ore grade holes drilled on the properties
demonstrates this potential; however, because the depths of the deposits are
not delineated, development costs are uncertain.
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RECLAIMED PROPERTIES
The Company has completed production and groundwater restoration on
its Benavides and Longoria projects in South Texas. The Company is currently
completing the final stages of surface reclamation on these projects which the
Company believes will not involve material expenditures.
On August 28, 1995, Manuel T. Longoria, as owner of the ranch
containing the site of the Company's Longoria mine, brought suit against the
Company in state district court in Duval County, Texas, asserting claims said
to have arisen at various times over the last eighteen years. See "Business-
Legal Proceedings."
The Company acquired the Section 17 leases in the New Mexico
Churchrock district from United Nuclear Corporation ("UNC"). UNC had conducted
underground mining for uranium on Section 17 and had reclaimed these
properties. In connection with the acquisition, the Company assumed any
liability of UNC for any remaining remediation work that might be required.
NMED has not determined what, if any, additional remediation will be required
under the New Mexico Mining Act. If more remediation work is required, the
Company believes it will not involve material expenditures.
RECLAMATION AND RESTORATION COSTS AND BONDING REQUIREMENTS
Upon completion of production from a wellfield, the Company is
obligated under state and federal law to restore the aquifer to a condition
consistent with its pre-mining use. This involves restoration of the aquifer,
plugging and abandoning the injection and production wells and reclaiming the
surface. With respect to operations at Kingsville Dome and Rosita, as well as
reclamation and restoration of the Benavides and Longoria projects, the TNRCC
requires the Company to provide financial surety to cover the costs of such
restoration and reclamation. The surety bond requirement at December 31, 1996
was approximately $5.6 million. The Company fulfills this requirement through
the issuance of surety bonds from the United States Fidelity and Guaranty
Company ("USF&G") and has deposited as collateral for such bonds cash of
approximately $2.8 million. The Company is obligated to fund the cash
collateral account with an additional $0.50 for each pound of uranium
production until the account accumulates an additional $1.0 million. The
Company estimates that its future reclamation liabilities with respect to
current operations at December 31, 1996 approximates $4.0 million, which has
been charged to earnings. These financial surety obligations are reviewed and
revised annually by the TNRCC.
The Company anticipates that it will be required to provide financial
surety of approximately $3.0 million as a condition to receipt of the requisite
permits for the mining of each of the Alta Mesa and Vasquez projects. The
Company anticipates that USF&G or other bonding entities will provide the
requisite bond under arrangements similar to those in place for Rosita and
Kingsville Dome.
In New Mexico surety bonding will be required prior to development of
the properties. The Company anticipates that it will be required to provide
financial surety of approximately $10.0 million as a condition to receipt of
the requisite permits for the Churchrock project which it anticipates will be
provided by USF&G, or other bonding entities under arrangements similar to
those in place for Rosita and Kingsville Dome. The amount of the surety bond is
subject to annual review and revision by the NRC and State of New Mexico.
ITEM 3. LEGAL PROCEEDINGS
On August 28, 1995, Manuel T. Longoria, as owner of the ranch
containing the site of the Company's Longoria mine near Bruni in Duval County,
Texas, brought suit against the Company in state district court in Duval
County, Texas asserting claims said to have arisen at various times over the
last 18 years. In the action styled Longoria v. Uranium Resources, Inc., et
al., Longoria claims the Company has leased the site knowing that the proposed
mining would contaminate the site; that the Company had
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knowingly or negligently conducted mining operations in a manner which
contaminated the Longoria property with toxic and hazardous material which
present a serious health hazard. The suit asks for remediation of the Longoria
property and for unspecified actual and punitive damages.
With regard to the claim for remediation, the Company, upon the
conclusion of mining at the Longoria site and the nearby sites, began
reclamation in the manner required by its permits and by state and federal
regulations. Such reclamation is nearing completion.
The Company has made provisions for the costs of site reclamation and
does not believe the settlement of this lawsuit will result in damages that are
materially different than the costs already in the financial statements.
On July 12, 1995, the Company filed a lawsuit in the federal district
court in Colorado against Professional Bank, a Colorado chartered bank
("ProBank"). The Company believes that ProBank is owned or controlled by Oren
L. Benton, the former Chairman of the Company's Board of Directors. In the
action styled Uranium Resources, Inc. v. Professional Bank, the Company alleges
that ProBank transferred $1,080,000, without the Company's authorization, from
the Company's account at ProBank to the accounts maintained at ProBank of
various entities and an individual affiliated with Mr. Benton. The Company has
recovered $300,000 of the total and is seeking to recover the balance from
ProBank.
During 1994, the Company encountered liquidity problems that resulted
in the Company entering into certain transactions with companies controlled by
Mr. Benton (the "Benton Companies"). On February 23, 1995, Benton and various
of the Benton Companies filed for protection under Chapter 11 of the Federal
Bankruptcy Code (the "Benton Bankruptcy"). In connection with the Benton
Bankruptcy, the bankrupt estates have advised the Company that they are
reviewing certain transactions entered into by the Company with the Benton
Companies. Such a review could potentially result in claims against the Company
that could have a material adverse effect on the Company. The Company and the
bankrupt estates have entered into a tolling agreement with respect to the
possible assertion of such claims. The Company is unable to assess whether any
such claim will be asserted, and if asserted, what adverse consequences, if
any, might result from such assertion. No claims have been asserted to date.
The Company has asserted claims against Benton and the Benton Companies in the
bankruptcy proceedings.
The Company is subject to periodic inspection by certain regulatory
agencies for the purpose of determining compliance by the Company with the
conditions of its licenses. In the ordinary course of business, minor
violations may occur, however, these are not expected to cause material
expenditures.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The 1996 Annual Meeting of Stockholders was held on May 29, 1996, in
Corpus Christi, Texas. Shares representing 6,316,306 votes (72.1% of total
outstanding) were present in person or by proxy.
At the meeting, the Stockholders of the Company elected Leland O.
Erdahl, Paul K. Willmott, George R. Ireland and James B. Tompkins to the Board
of Directors for a one-year term. In addition, the Company's Stockholders
approved the amendment to the Company's restated Certificate of Incorporation
to increase the authorized shares of common stock from 12,500,000 shares to
25,000,000 shares and ratified Arthur Andersen LLP as independent accountants
for the Company for 1996. The proposal to increase the authorized shares of the
Company was approved by a vote of 6,221,019 shares in favor, 86,077 opposed and
9,300 abstaining. The ratification of Arthur Andersen LLP as independent
accountants was approved by a vote of 6,310,161 shares in favor, 2,645 opposed
and 3,500 abstaining.
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CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company is including the following cautionary statement to take
advantage of the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995 for any forward-looking statement made by, or on behalf of,
the Company. The factors identified in this cautionary statement are important
factors (but not necessarily all of the important factors) that could cause
actual results to differ materially from those expressed in any forward-looking
statement made by, or on behalf of, the Company. Where any such forward-
looking statement includes a statement of the assumptions or bases underlying
such forward-looking statement, the Company cautions that, while it believes
such assumptions or bases to be reasonable and makes them in good faith,
assumed facts or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can be material,
depending upon the circumstances. Where, in any forward-looking statement, the
Company, or its management, expresses an expectation or belief as to the future
results, such expectation or belief is expressed in good faith and believed to
have a reasonable basis, but there can be no assurance that the statement of
expectation or belief will result, or be achieved or accomplished. Taking into
account the foregoing, the following are identified as important risk factors
that could cause actual results to differ materially from those expressed in
any forward-looking statement made by, or on behalf of, the Company:
CONTINUING SIGNIFICANT CAPITAL REQUIREMENTS
An ISL mining operation requires a substantial amount of capital prior
to the commencement of, and in connection with, production of uranium,
including costs related to acquiring the rights to mine uranium, securing
regulatory permits and licenses, exploration and definitional drilling to
determine the underground configuration of the ore body, designing and
constructing the uranium processing plant, drilling and developing in order to
establish the infrastructure for the production wells for each wellfield and
complying with financial surety requirements established by various regulatory
agencies regarding the future restoration and reclamation activities for each
property.
The Company expects to fund some of its 1997 capital requirements from
cash flow from operations and the proceeds of the equity placement in December
1996. However, the majority of the capital requirements for new development
projects in 1997 and 1998 will require additional sources of capital. There can
be no assurance that the Company will raise sufficient capital to fund these
capital requirements.
POTENTIAL ADVERSE EFFECT OF FEDERAL AND STATE REGULATIONS
The development and production of uranium is subject to extensive
governmental regualtions that materially affect the economics of the Company's
operations and the timing of project development. To produce uranium, the
Company must secure and maintain multiple permits, obtain adequate water rights
and comply with extensive federal, state and potential tribal regulations for
environmental protection, including regulations relating to air and water
quality, the prevention of groundwater contamination, the reclamation and
restoration of wellfield aquifers and the treatment, transportation and
disposal of liquid and/or byproduct material and solid wastes generated by the
Company's uranium mining and processing activities. To date, the Company's
operations have not been materialy and adversely affected by the inability to
obtain or maintain required permits or water rights, or by any groundwater
contamination or the disposal of waste or byproduct material. However, should
the Company be unable to obtain or maintain permits or water rights for
development of its properties or otherwise fail to adequately handle future
environmental issues, the Company's operations could be materially and
adversely affected by expenditures or delays in the Company's ability to
initiate or continue production at its properties.
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The Company must obtain all necessary permits from the appropriate
governmental agency before it can commence production at any of its development
properties. The Company's future production is highly dependent on its ability
to bring these development properties into production. Applications for
permitting of certain of these properties have been filed. There can be no
assurances that all the necessary permits will be obtained or that such permits
will be obtained in a timely manner. Any significant delays in obtaining the
necessary permits could have a material adverse effect upon the Company and its
developmental plans for these properties.
The Company has expended significant resources, both financial and
managerial, to comply with environmental protection laws, regulations and
permitting requirements and anticipates that it will be required to continue to
do so in the future. Although the Company believes its producing properties
comply in all material respects will all relevant permits, licenses and
regulations pertaining to worker health and safety as well as those pertaining
to the environment, the historical trend toward stricter environmental
regulation may continue. The uranium industry is subject to not only the worker
health and safety and environmental risks associated with all mining
businesses, but also to additional risks uniquely associated with uranium
mining and processing. The possibility of more stringent regulations exists in
the areas of worker health and safety, the disposal of wastes and byproduct
material, the decommissioning, decontamination and reclamation of mining,
milling, refining and conversion sites, and other environmental matters, each
of which could have a material adverse effect on the costs or the viability of
a particular project.
The Company is required to provide financial surety to state
environmental agencies for plugging wells, groundwater restoration and site
decommissioning, decontamination and reclamation. The Company estimates that
its current restoration, decommissioning, decontamination and reclamation costs
are approximately $3.7 million, which amount the Company has accrued as a
liability on its financial statements. The Company satisfied its financial
surety requirements imposed by environmental regulators with surety bonds
totalling approximately $5.6 million at December 31, 1996, one-half of which is
collateralized by the Company with cash. The Company anticipates that its
future financial surety requirements will increase significantly as production
from the Company's producing sites continues and as future development and
production occurs at additional sites in Texas and New Mexico. The amount of
the financial surety for each producing property is subject to annual review
and revision by regulators. There can be no assurance that the Company will
have sufficient capital to meet these future finacial surety obligations.
RESERVE ESTIMATES
Reserve estimates are necessarily imprecise and depend to some extent
on statistical inferences drawn from limited drilling, which may prove
unreliable; and there can be no assurance that the indicated level of
recoveries will be realized. Should the Company encounter mineralization or
formations at any of its mines or projects different from those predicted by
drilling, sampling and similar examinations, uranium reserve estimates may have
to be adjusted and mining plans may have to be altered in a way that could
adversely affect the Company's operations. Moreover, short-term operating
factors relating to the uranium reserves, such as the need for sequential
development of ore bodies and the processing of new or different uranium
grades, may adversely affect the Company's profitability in any particular
accounting period.
NEED TO REPLACE RESERVES
The Company's producing uranium mines are, in general, characterized
by a series of individual wellfields that produce at differing declining
production rates. Each wellfield's production decline rate depends on ore
reserve characteristics, and, in the case of the Company, varies from a steep
decline rate of six months, to a relatively slow production decine rate of
eighteen months. The Company's future uranium reserves and production, and
therefore cash flow and income, are highly dependent upon the Company's level
of success in exploiting its current reserves and acquiring or developing
additional reserves. Reserves
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at the Company's currently producing sites are expected to be depleted in 1999,
although there is the potential for developing additional wellfields at
Kingsville Dome. There can be no assurance that the Company's development
properties will be placed into production or that the Company will be able to
continue to find and develop or acquire reserves.
COMPETITION
There is global competition in the uranium industry for mineral
properties, capital, customers and the employment and retention or qualified
personnel. In the production and marketing of uranium concentrates there are
approximately 15 major uranium-producing entities, some of which are government
controlled and some of which are significantly larger and better capitalized
than the Company.
The Company competes with larger producers in Canada, Australia and
Africa, as well as with other U.S. ISL producers of uranium and other producers
that recover uranium as a by-product of other mineral recovery processes. The
Company also expects to compete with uranium recovered from the de-enrichment
of highly enriched uranium obtained from the dismantlement of U.S. and Russian
nuclear weapons and sold in the market by the United States Enrichment
Corporation and/or the United States Department of Energy, as well as from
imports to the United States of uranium from the CIS. The amount of uranium
produced by competitors or imported into the United States may have a material
impact on uranium prices.
URANIUM PRICE VOLATILITY
The Company's earnings are dependent on the price of uranium, which is
determined primarily by global supply and demand and by the relationship of
that price to the Company's costs of production. Historically, uranium prices
have been subject to fluctuation, and the price of uranium has been and will
continue to be affected by numerous factors beyond the Company's control,
including the demand for nuclear power, political and economic conditions, and
governmental legislation in uranium producinng and consuming countries and
production levels and costs of production of other producing companies. Certain
of the Company's current long and medium-term contracts have pricing mechanisms
related to spot market prices. In recent year's, prior to 1996, imports of
uranium, including imports of uranium from the CIS, have resulted in
significant downward pressure on uranium prices.
The spot market price for uranium has strengthened appreciably since
January 1995. Prices have risen from $9.65 per pound as of January 31, 1995 to
a high of $16.50 per pound as of May 31, 1996. The spot price as of February
28, 1997 was $13.65 per pound. While the current spot prices of uranium have
increased to levels which exceed the Company's cost of uranium production,
there is no assurance that such price level will remain at the current level.
URANIUM CONTRACTS PROFITABILITY
As of December 31, 1996, the Company had contracts for delivery of an
estimated 4.7 million pounds of uranium (exclusive of 270,000 pounds of Russian
uranium sales made pursuant to the matched sales program) to domestic utilities
from January 1, 1997 through 2002. Profitability to the Company on these
deliveries will depend on the cost of producing uranium at the Company's mining
properties, the Company's ability to produce uranium to meet its sales
commitments and the spot market price of uranium.
LIMITED MARKET; DEPENDENCE ON A FEW CUSTOMERS
The Company's primary source of revenue is derived from its sale of
uranium to U.S. nuclear power plants. Uranium's only current commercial use is
as fuel for nuclear power reactors. Accordingly, the Company's present and
potential customers are electric utlities that operate nuclear power plants.
The United States is the world's largest producer of nuclear-generated
electricity. As of December 1996, there were 109 nuclear units in the U.S.
which generated approximately 22.5% of the country's total electricity
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in 1995. Currently, there are no new nuclear power plants under construction in
the U.S. As of December 31, 1995, there were 363 nuclear power plants in the
Western World, with 32 power plants being constructed in parts of the world
other than the U.S. There can be no assurance that the Company can continue to
compete successfully for such customers.
A significant portion of the Company's contracted sales of uranium
from January 1, 1997 through December 31, 2002 are represented by eight
long-term contracts with seven different customers, five of which represent
20%, 16%, 15%, 12% and 11% of sales for the year ended December 31, 1996 and
four of which represented 23%, 14%, 10% and 10% of sales for the year ended
December 31, 1995. The loss of any of these customers or curtailment of
purchases by such customers could have a material adverse effect on the
Company's financial condition and results of operations.
COMPETITION FROM ALTERNATIVE ENERGY SOURCES AND PUBLIC ACCEPTANCE OF NUCLEAR
ENERGY
Nuclear energy competes with other sources of energy, including oil
and gas, coal and hydro-electricity. These alternative energy sources are to
some extent interchangeable with nuclear energy, particularly over the longer
term. Lower prices of oil, gas, coal and hydro-electricity for an extended
period of time, as well as the possibility of developing in the future other
low cost sources for energy, have made and could continue to make nuclear power
a less attractive fuel source for the generation of electricity, thus resulting
in lower demand for uranium. Furthermore, the growth of the uranium and nuclear
power industry beyond or maintenance at its current will depend upon continued
and increased acceptance of nuclear technology as a means of generating
electricity. Because of unique political, technological and environmental
factors that affect the nuclear industry, the industry is subject to public
opinion risks which have and could continue to have an adverse impact on the
demand for nuclear power and increase the regulation of the nuclear power
industry.
POTENTIAL ADVERSE IMPACT OF LOSS OF KEY PERSONNEL
Certain of the Company's employees have significant experience in the
uranium ISL mining industry. The number of individuals with ISL experience is
small. The continued success of the Company is dependent upon the efforts of
these key individuals, and the loss of any one or more of such persons'
services could have a material adverse effect on the Company's business
operations and prospects. The Company has not entered into employment contracts
with or purchased key man life insurance for any of these individuals.
MINING RISKS AND INSURANCE
The business of uranium mining generally is subject to a number of
risks and hazards, including environmental hazards, industrial accidents,
flooding, interruptions due to weather conditions and other acts of nature.
Such risks could result in damage to or destruction of the Company's wellfield
infrastructure and production facilities, as well as to adjacent properties,
personal injury, environmental damage and processing and production delays,
causing the Company monetary losses and possible legal liability. While the
Company maintains, and intends to continue to maintain, liability, property
damage and other insurance consistent with industry practice, no assurance can
be given that such insurance will continue to be available, be available at
economically acceptable premiums or be adequate to cover any resulting
liability.
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GLOSSARY OF CERTAIN TERMS
claim . . . . . . . . . . . . . A claim is a tract of land, the
right to mine of which is held under
the federal General Mining Law of
1872 and applicable local laws.
concentrates . . . . . . . . . A product from a uranium mining and
milling facility, which is commonly
referred to as uranium concentrate
or U(3) O(8).
conversion . . . . . . . . . . A process whereby uranium
concentrates are converted into
forms suitable for use as fuel in
commercial nuclear reactors.
cut-off grade . . . . . . . . . Cut-off grade is determined by the
following formula parameters:
estimates over the relevant period
of mining costs, ore treatment
costs, general and administrative
costs, refining costs, royalty
expenses, process and refining
recovery rates and uranium prices.
gross acres . . . . . . . . . . Total acres under which the Company
has mineral rights and can mine for
uranium.
Indian country . . . . . . . . A term derived from jurisdictional
determinations in criminal law
enforcement proceedings under 18
U.S.C. Section 1151 and understood
to encompass territory situated
within Indian reservations, land
owned by Indian allottees and land
within a dependent Indian community.
lixiviant . . . . . . . . . . . When used in connection with uranium
in situ leach mining, a solution
that is pumped into a permeable
uranium ore body to dissolve uranium
in order that a uranium solution can
be pumped from production wells.
net acres . . . . . . . . . . . Actual acres under lease which may
differ from gross acres when
fractional mineral interests are not
leased.
ore . . . . . . . . . . . . . . Naturally occurring material from
which a mineral or minerals of
economic value can be extracted at a
reasonable profit.
over feeding . . . . . . . . . Operating enrichment plants in a
manner that reduces plant operating
costs but increases the amount of
uranium required to produce a given
quantity of enriched uranium.
probable reserves . . . . . . . Reserves for which quantity and
grade and/or quality are computed
from information similar to that
used for proven (measured) reserves,
but the sites for inspection,
sampling, and measurement are
farther apart or are otherwise less
adequately spaced. The degree of
assurance, although lower than that
for proven (measured) reserves, is
high enough to assume continuity
between points of observation.
25
<PAGE> 29
proven reserves . . . . . . . . Reserves for which (a) quantity is
computed from dimensions revealed in
outcrops, trenches, workings or
drill holes; grade and/or quality
are computed from the results of
detailed sampling and (b) the sites
for inspection, sampling and
measurement are spaced so closely
and the geologic character is so
well defined that size, shape, depth
and mineral content of reserves are
well- established.
reclamation . . . . . . . . . . Reclamation involves the returning
of the surface area of the mining
and wellfield operating areas to a
condition similar to pre-mining.
recoverable reserves . . . . . Reserves that are either proven or
probable, are physically minable,
and can be profitably recovered
under conditions specified at the
time of the appraisal, based on a
positive feasibility study. The
calculation of minable reserves is
adjusted for potential mining
recovery and dilution.
reserve . . . . . . . . . . . . That part of a mineral deposit which
could be economically and legally
extracted or produced at the time of
the reserve determination.
restoration . . . . . . . . . . Restoration involves returning an
aquifer to a condition consistent
with its pre-mining use and removing
evidences of surface disturbance.
The restoration of the wellfield can
be accomplished by flushing the ore
zone with native ground water and/or
using reverse osmosis to remove ions
to provide clean water for
reinjection to flush the ore zone.
resources . . . . . . . . . . . A resource is a concentration of
naturally occurring minerals in such
a form that economic extraction is
currently or potentially feasible.
roll front . . . . . . . . . . The configuration of sedimentary
uranium ore bodies as they appear
within the host sand. A term that
depicts an elongate uranium ore mass
that is "C" shaped.
spot price . . . . . . . . . . The price at which uranium may be
purchased for delivery within one
year.
surety obligations . . . . . . A bond, letter of credit, or
financial guarantee posted by a
party in favor of a beneficiary to
ensure the performance of its or
another party's obligations, e.g.,
reclamation bonds, workers'
compensation bond, or guarantees of
debt instruments.
tailings . . . . . . . . . . . Waste material from a mineral
processing mill after the metals and
minerals of a commercial nature have
been extracted; or that portion of
the ore which remains after the
valuable minerals have been
extracted.
Trade Tech . . . . . . . . . . A Denver-based publisher of
information for the nuclear fuel
industry; the successor to the
information services business of
Nuexco.
26
<PAGE> 30
uranium or uranium
concentrates . . . . . . . . . U(3)O(8), or triuranium octoxide.
U(3)O(8) . . . . . . . . . . . Triuranium octoxide equivalent
contained in uranium concentrates,
referred to as uranium concentrate.
waste . . . . . . . . . . . . . Barren rock in a mine, or
mineralized material that is too low
in grade to be mined and milled at a
profit.
27
<PAGE> 31
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
The Company's Common Stock trades on NASDAQ under the trading symbol
URIX. The following table sets forth the high and low sales prices for the
Common Stock as reported through NASDAQ for the periods indicated:
<TABLE>
<CAPTION>
Common Stock
------------
Fiscal Quarter Ending High Low
--------------------- ------ -----
<S> <C> <C>
December 31, 1996 13-5/8 7-1/8
September 30, 1996 14-25/32 9-35/64
June 30, 1996 17-5/8 12-1/8
March 31, 1996 15-1/2 5-5/8
December 31, 1995 7 5-1/8
September 30, 1995 8-5/8 4-1/2
June 30, 1995 4-3/4 2-3/4
March 31, 1995 7-1/8 3
</TABLE>
The high and low sales prices for the common stock for the period
January 1, 1997 through March 1, 1997, was $8.00 and $5.875, respectively.
HOLDERS
As of March 20, 1997, the Company had 10,827,527 shares of Common
Stock outstanding held of record by 123 persons.
DIVIDENDS
The Company did not declare or pay any cash or other dividends on its
Common Stock during the years ending December 31, 1994, 1995 or 1996. The
Company does not anticipate paying dividends for the foreseeable future.
28
<PAGE> 32
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1996 1995 1994 1993 1992
--------------------------------------------------------
(In thousands, except per share and per pound amounts)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA
Uranium sales:
Produced uranium $ 17,827 $ 7,195 $ 959 $ 1,341 $ 4,881
Purchased uranium 6,437 14,634 16,375 11,881 12,943
Cost of uranium sales (20,122) (17,235) (13,466) (10,216) (12,334)
Writedown of uranium properties -- (163) -- (1,945) --
-------- -------- -------- -------- --------
Earnings (loss) from operations
before corporate expenses 4,142 4,431 3,868 1,061 5,490
Corporate expenses (3,055) (3,496) (2,177) (1,903) (2,285)
-------- -------- -------- -------- --------
Earnings (loss) from operations 1,087 935 1,691 (842) 3,205
Interest and other, net (328) (324) 163 387 (394)
Loss on acceleration of uranium contract -- -- (349) -- --
Loss on termination of joint venture
and transfer to stockholders -- (1,781) -- -- --
-------- -------- -------- -------- --------
Earnings (loss) before income taxes 759 1,170 1,505 (455) 2,811
Federal income tax (benefit) -- (234) 300 (107) 408
-------- -------- -------- -------- --------
Net earnings (loss) $ 759 $ (936) $ 1,205 $ (348) $ 2,403
======== ======== ======== ======== ========
Earnings (loss) per common share:
Primary $ 0.08 $ (0.12) $ 0.17 $ (0.05) $ 0.36
======== ======== ======== ======== ========
Fully diluted $ 0.08 $ (0.12) $ 0.17 $ (0.05) $ 0.36
======== ======== ======== ======== ========
Weighted average common stock and equivalents
outstanding:
Primary 10,031 8,098 7,073 6,640 6,684
Fully diluted 10,031 8,098 7,193 6,640 6,756
CONSOLIDATED OPERATING AND OTHER
DATA
Cash provided by operations $ 9,294 $ 5,301 $ 5,080 $ 6,283 $ 9,186
Pounds of uranium produced 1,360 612 -- -- 80
Pounds of uranium purchased 488 660 1,329 510 750
Pounds of uranium delivered 1,656 1,633 1,081 753 1,070
Capital expenditures $ 14,607 $ 3,583 $ 3,183 $ 3,101 $ 2,885
Average sales price per pound(1) $ 16.35 $ 15.64 $ 16.03 $ 17.56 $ 16.66
Average cost of produced
pounds sold (2) $ 11.34 $ 10.28 $ 13.60 $ 12.96 $ 12.62
Average cost of purchased
pounds sold $ 10.21 $ 9.41 $ 10.68 $ 10.88 $ 8.80
Cash cost per produced pound(3) $ 8.51 $ 7.11 N/A N/A $ 10.80
Average cost per produced
pound(2) $ 12.12 $ 10.09 N/A N/A $ 13.68
Average cost per purchased
pound $ 10.21 $ 9.52 $ 10.07 $ 11.24 $ 9.35
</TABLE>
(1) Excludes sales of the Russian component of deliveries made under the
matched sales amendment. The economic benefit of such sales are treated as
"pass-through" sales.
(2) Average cost per produced pound consists of all operating costs, depletion,
depreciation and accrued restoration and reclamation costs.
(3) Cash cost per pound consists of all operating costs and wellfield
development costs associated with producing wellfields.
29
<PAGE> 33
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA
Cash and cash equivalents $ 16,934 $ 4,716 $ 2,528 $ 2,530 $ 1,707
Working capital (deficit) 15,269 4,710 (2,545) (2,777) 2,482
Uranium properties (net) 42,444 37,200 37,230 34,420 33,076
Total assets 68,794 48,085 44,850 40,846 41,725
Total debt (1) 12,577 7,487 9,227 11,286 13,518
Total liabilities 23,497 18,214 16,632 20,563 21,094
Total shareholders' equity 45,297 29,872 28,218 20,283 20,631
</TABLE>
(1) Includes current portion of long-term debt and notes payable.
30
<PAGE> 34
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
This Item 7 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 and estimate of future net cash flows attributable to 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" beginning
on page 21.
CAPITAL RESOURCES AND LIQUIDITY
Operating Cash Flows
At December 31, 1996, the Company's cash and cash equivalents were
$16,934,000 an increase of $12,218,000 from the Company's cash and equivalents
at year end 1995. Cash and cash equivalents in 1995 increased by $2,188,000
from 1994 year end levels. The Company's uranium operations generated positive
cash flow of $9,294,000 for the year ended December 31, 1996, in comparison to
positive cash flow from operations in 1995 and 1994 of $5,301,000 and
$5,080,000, respectively. The Company's net working capital at December 31,
1996, was $15,269,000 compared to $4,710,000 at December 31, 1995.
During January 1995, when companies controlled by Oren L. Benton (the
"Benton Companies") held effective control of the common stock of the Company,
the Company transferred $1 million to the Benton Companies in connection with a
planned joint venture to process uranium at a Benton Companies' mill. Shortly
thereafter, an additional $1,080,000 was transferred to or for the benefit of
Mr. Benton or certain Benton Companies without the authorization of the
Company's Board of Directors. In February 1995, Mr. Benton and certain of the
Benton Companies filed for bankruptcy. In June 1995 the Company received
$300,000 related to the unauthorized transfer; however, the remaining $1.78
million has not been recovered and there can be no assurance that the Company's
efforts to pursue remedies will be successful. A loss for these transactions
was recorded in 1995 which resulted in a reduction of $1.78 million in the
Company's shareholders equity.
Investing Cash Flows
The Company resumed development activities at its Rosita site during
the second quarter of 1995 and uranium production began in June 1995. During
1996, $2,002,000 in capital expenditures were incurred at Rosita. Capital
expenditures to be incurred for 1997 at Rosita, primarily for additional
wellfield development, are expected to be approximately $2,100,000. Significant
development activities at the Company's Kingsville Dome facility began in
December 1995 and resulted in commencement of production at this site in March
1996. Capital expenditures at Kingsville Dome during 1996 totaled $6,695,000
and are expected to be $10,100,000 in 1997. The Company expects to fund its
1997 operations and capital expenditures at its Kingsville Dome and Rosita
projects from cash on hand, sales proceeds under 1996 uranium deliveries and
through existing financing arrangements.
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 related primarily to permitting and licensing
activities have totaled approximately
31
<PAGE> 35
$400,000 since the acquisition date. Extensive drilling and environmental work
has been undertaken on this property by previous leaseholders which will be
useful to the Company for licensing and pre-production evaluation of the
project. The Company is targeting the production capacity for this site at 1.0
million pounds per year. The projected recovery factors on the Alta Mesa
property are estimated at 65% to 75% of their in-place reserves and initial
estimated production costs, including acquisition costs, plant and wellfield
capital costs, operating costs and projected reclamation costs are projected to
be in the $10-$11 per pound range.
The initial capital costs to acquire the rights to the Alta Mesa
property were obtained through a one-year note from the Lindner Dividend Fund.
This $4.0 million note was repaid in January 1997 from the proceeds from the
Company's equity placement completed in December 1996.
Capital expenditures at the Company's Churchrock, Crownpoint and
Vasquez projects for permitting and land holding costs totaled approximately
$1,300,000 in 1996. 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.
Cash used for other investing activities for 1996 comprised primarily
of increases of $2,070,000 related to the purchase of certificates of deposit
to fund certain bonding requirements at the Company's producing and development
properties. These certificates of deposit are pledged under these bonding
requirements and therefore are not readily available to the Company. See Note 1
- - "Restricted Cash" of the Notes to Consolidated Financial Statements.
Financing Cash Flows
During May 1996, the Company entered into a $3.0 million revolving
credit facility. This facility is secured by the Company's receivables from its
uranium sales contracts. Principal and interest payments under the loan are due
monthly, with interest on the loan accruing at the prime rate plus 1%.
Principal advances, net of repayments, under this facility amounted to
$1,440,000 in 1996.
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 principal and accrued interest on this note was paid in
January 1997.
In December 1996, the Company completed an equity placement in which
2,000,000 shares of the Company's common stock were sold in a public offering.
Net proceeds to the Company totaled over $14,000,000 with $4,900,000 of the
proceeds used in January 1997 to repay the $4.0 million note from the Lindner
Dividend Fund and to pay certain other long-term obligations. The balance of
the proceeds will be used for working capital purposes and to fund development
activities at the Company's projects. In 1996, the Company also generated
approximately $630,000 from the issuance of approximately 167,000 shares of
common stock upon the exercise of certain stock options and stock warrants.
Net cash generated from the Company's financing activities in 1995
totaled approximately $720,000. The Company received $2,000,000 in December
1995 from the exercise of 500,000 of the warrants issued in connection with the
Lindner Notes and also received $460,000 during the year from the issuance of
approximately 156,000 shares of common stock associated with the exercise of
certain employee and directors stock options.
The Company received $6,000,000 under the convertible loan made in May
1995 by Lindner Investments and Lindner Dividend Fund and had debt payments
during the year under a note to a bank totaling $7,740,000.
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
32
<PAGE> 36
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.
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.
Years Ended December 31, 1996, 1995 and 1994
The following is a summary of the key operational and financial
statistics related to the Results of Operations:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
(In thousands, except per pound data)
<S> <C> <C> <C> <C>
Uranium sales revenue(1) $ 24,264 $ 21,829 $ 17,334
Total pounds delivered 1,656 1,633 1,081
Average sales price/pound(2) $ 16.35 $ 15.64 $ 16.03
Pounds produced 1,360 612 0
Pounds purchased 488 660 1,329
Average production cost of produced pounds $ 12.12 $ 10.09 N/A
Average cost of purchased pounds $ 10.21 $ 9.52 $ 10.07
Average cost of produced pounds sold $ 11.34 $ 10.28 $ 13.60
Average cost of purchased pounds sold $ 10.21 $ 9.41 $ 10.68
</TABLE>
(1) 1996 and 1995 uranium sales revenues include approximately $4.5 million and
$3.5 million, respectively, from the sale of Russian uranium which is sold
under the matched sales Amendment.
(2) Average sales price does not include the sales of Russian material sold as
a "pass through" sale under the matched sales Amendment.
Revenue from uranium sales in 1996 increased by $2,435,000 from 1995
amounts. This increase resulted primarily from higher average per pound sales
prices achieved this year compared to 1995. The average sales price for total
uranium deliveries (including Russian origin uranium) in 1996 and 1995 was
$14.65 per pound and $13.37 per pound, respectively. Total deliveries in 1996
(1,656,000 pounds) increased slightly from the amounts delivered in 1995
(1,633,000 pounds) but were not a significant factor in the change in uranium
revenues year over year. The deliveries in 1996 included both spot sales
(350,000 pounds) and long-term contract sales (1,306,000 pounds). All of the
spot sales made in 1996
33
<PAGE> 37
were deliveries of produced pounds made pursuant to matched sales agreements.
The average sales price for these deliveries was $17.86 per pound.
Revenue from uranium sales in 1995 increased by $4,495,000 from 1994
levels. Total uranium deliveries in 1995 increased by 552,000 pounds from those
made in 1994. This increase was primarily a result of sales made in 1995 under
the Amendment to the Russian Suspension Agreement (the "Amendment") which
totaled 780,000 pounds during the year. The 780,000 pounds delivered in 1995
included 320,000 of URI produced uranium and 460,000 pounds of Russian
purchased uranium. Sales under the Company's long-term contracts not subject to
the Amendment totaled 715,000 pounds in 1995 compared to deliveries in 1994 of
779,000 pounds. The average sales price per pound for these 1995 deliveries
under URI's long-term contracts was $17.50 and the average sales price for the
1994 long-term contract deliveries was $18.13 per pound. The deliveries in 1995
also included 137,000 pounds sold in the spot market whereas, 1994 included
approximately 302,000 pounds of spot market sales at an average price of
$10.64.
Details of the cost of uranium sales were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Cost of purchased uranium $ 4,979 $10,315 $10,861
Royalties 1,198 432 37
Operating expenses 4,866 2,738 1,743
Provision for restoration and reclamation costs 1,480 597 274
Depreciation and depletion of uranium properties 7,599 3,154 551
Writedown of uranium properties -- 163 --
------- ------- -------
Total cost of uranium sales $20,122 $17,399 $13,466
======= ======= =======
</TABLE>
The Company produced 500,000 and 860,000 pounds from the Rosita and
Kingsville Dome facilities respectively in 1996. Rosita was in production for
all of 1996 whereas the Kingsville Dome production resumed in March 1996. The
average per pound production cost for the year at Rosita and Kingsville Dome
was $11.81 and $12.31, respectively.
Production from Rosita in 1996 was below the one million pound annual
rate the Company had projected previously. This decline in production resulted
in an increase in average per pound production costs for this facility when
compared to the 1995 production costs. The Company has continued production
from Rosita and in January 1997 received the necessary regulatory permits to
expand its production into a new production area northwest of the current
production fields. This new production area is expected to contain the majority
of the remaining uranium reserves at this site with projected production from
this area continuing through mid-1998 which coincides with the planned
shut-down of this production facility.
The Company expects that as production options in new wellfields
become limited, that the latter stages of production from Rosita may result in
production costs that are higher than previously experienced. New operating
techniques to increase productivity from these wellfields will be reviewed and
may be implemented to determine how various recovery options may impact future
projects. There can be no assurance that such methods will enhance production
or improve cost efficiencies.
Kingsville Dome production for 1996 of 860,000 pounds exceeded its
original planned output for the year while maintaining the average production
operating costs at $12.31 per pound. The Company
34
<PAGE> 38
continues to develop and produce from this facility and expects to achieve
higher production levels in 1997 at costs comparable to those achieved in 1996.
Operating expenses attributable directly to the sale of the Company's
produced pounds totaled $4,574,000 in 1996 compared to $1,975,000 for produced
pounds that were sold in 1995. Total operating expenses and depreciation and
depletion include standby costs for the Kingsville Dome and Rosita facilities.
These costs have been recorded as direct charges to operations. Standby costs
for 1996, 1995 and 1994 were $313,000, $875,000 and $1,458,000, respectively.
The provision for restoration and reclamation in 1996 consists of
$1,100,000 ($0.94 per pound) for production sold during 1996 and $380,000 for
costs associated with reclamation activities related to the Benavides project
(a previous mining location). The provision for restoration and reclamation in
1995 consists of $499,000 ($0.93 per pound) for Rosita production sold during
1995 and additional increases to the Benavides and Bruni reserves (previous
mining locations) of $97,000. The 1994 provision for restoration and
reclamation consists of $48,000 ($0.75 per pound) for Rosita production sold
during 1994 and increases to the Benavides and Bruni reserves of $226,000.
The depreciation and depletion provision in 1996 consisted of
$7,578,000 (an average rate of $6.49 per pound) for Rosita and Kingsville Dome
production sold and Kingsville Dome depreciation while on standby of $21,000.
The depreciation and depletion provision in 1995 consisted of $3,042,000 (an
average rate of $5.67 per pound) for Rosita production sold and Rosita and
Kingsville Dome depreciation while on standby of $112,000. The 1994 provision
for depreciation and depletion is comprised of a $5.16 rate per pound for
Rosita production sold of $332,000 and Rosita and Kingsville Dome depreciation
while on standby of $219,000.
Royalties in 1996 totaled $1,198,000 compared to $432,000 in 1995 and
$37,000 in 1994. The increase in 1996 is directly attributable to the combined
increase in production at Rosita and Kingsville Dome and the corresponding
increase in sales of produced uranium compared to 1995. Similarly, the increase
in 1995 over 1994 amounts resulted from the startup of Rosita production in
1995 and the increased sales of produced uranium compared to 1994 deliveries.
The average cost of uranium purchases made in 1996 was $10.21 per
pound compared to $9.52 in 1995. Total deliveries in 1996 consisted of 487,500
purchased pounds, at an average cost per pound of $10.21, and 1,168,000
produced pounds at $11.34 per pound. During 1995, the Company delivered
1,096,000 purchased pounds at an average cost per pound of $9.41 and 537,000
pounds of produced uranium which carried an average cost of $10.28 per pound.
Corporate expenses consisting of general and administrative ("G&A")
expenses decreased to $3,055,000 in 1996 from $3,496,000 in 1995. This decrease
resulted primarily from legal and accounting fees and other expenses relating
to the Benton Companies transactions and the Lindner financing charges in 1995
that were not incurred in 1996. In 1996, G&A included costs associated with the
opening of a corporate headquarters in Albuquerque, New Mexico for a subsidiary
of the Company (Hydro Resources, Inc.), costs associated with the unsuccessful
acquisition bid for a significant uranium production company and continuing
legal costs associated with the unauthorized transfer of funds in 1995 to or
for the benefit of certain Benton Companies. Corporate expenses increased to
$3,496,000 in 1995 from $2,177,000 in 1994. This increase resulted from
$1,020,000 of costs related to the Benton Companies transactions and the
issuance of the Lindner Notes.
Other expense for 1996 was significantly lower than in 1995. This
change was primarily attributable to the losses from the termination of a joint
venture ($1,001,000) and a loss on unauthorized transfers ($780,000) made in
1995 which were previously classified in the December 31, 1995 financial
statements in earnings from operations that were not repeated in 1996. These
same transactions in 1995 were the primary reason for the significant increase
in other expense in 1995 compared to 1994. The 1994
35
<PAGE> 39
other expense category included $349,000 from the loss on the acceleration of a
uranium sales contract which did not occur in 1995.
Total interest costs for 1996, net of capitalized amounts increased
from 1995. This increase resulted from the additional $4.0 million borrowed in
June 1996 to finance the purchase of the Alta Mesa property and advances
received under the Company's credit facility with NationsBank which was entered
into in May 1996. Total interest costs in 1995 including capitalized amounts
decreased by $355,000 compared to 1994. This decrease to $536,000 from $891,000
in 1994 resulted from lower average outstanding debt balances related primarily
to the complete payoff of the bank debt with Union Bank of Switzerland by
October 1995.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by Item 8 appears on pages F-1 through F-23
of this Annual Report on Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
36
<PAGE> 40
PART III
ITEMS 10, 11, 12 AND 13.
In accordance with General Instruction G(3), Items 10, 11, 12, and 13
are hereby incorporated by reference from sections of the Company's definitive
proxy statement entitled "Election of Directors", "Executive Compensation",
"Security Ownership of Principal Stockholders and Management", and "Certain
Transactions with Related Parties". Such definitive proxy statement will be
filed with the Securities and Exchange Commission not later than 120 days after
December 31, 1996.
37
<PAGE> 41
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) (1) Financial Statements.
See the Index to Consolidated Financial Statements on page F-1 for a
listing of those financial statements filed as part of this Annual
Report.
(a) (2) Financial Statement Schedules.
See the Index to Consolidated Financial Statements on page F-1 for a
listing of those financial statements filed as part of this Annual
Report.
(a) (3) Exhibits.
See the Index to Exhibits on page E-1 for a listing of the exhibits
that are filed as part of this Annual Report.
(b) Reports on Form 8-K
A report on Form 8-K was filed by the Company on December 13, 1996
which included a description of the Uranium Industry and Business of
the Company. Such description included a discussion of the Company's
proven and probable uranium reserves and such reserves were the
subject of a report of Douglas International, Inc. who are experts in
uranium mining, geology and ore reserve determination.
38
<PAGE> 42
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: March 27, 1997
URANIUM RESOURCES, INC.
By: /s/ Paul K. Willmott
-----------------------------------
Paul K. Willmott, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Date
- --------- ----
/s/ Paul K. Willmott March 27, 1997
- -----------------------------------------------------
Paul K. Willmott,
Director, President and Chief Executive Officer
/s/ Thomas H. Ehrlich March 27, 1997
- -----------------------------------------------------
Thomas H. Ehrlich,
Vice President - Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Leland O. Erdahl March 27, 1997
- -----------------------------------------------------
Leland O. Erdahl, Director
/s/ George R. Ireland March 27, 1997
- -----------------------------------------------------
George R. Ireland, Director
/s/ James B. Tompkins March 27, 1997
- -----------------------------------------------------
James B. Tompkins, Director
39
<PAGE> 43
URANIUM RESOURCES, INC. AND CONSOLIDATED SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Public Accountants . . . . . . . . . F-2
Consolidated Balance Sheets . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Operations . . . . . . . . . . . F-5
Consolidated Statements of Common Shareholder's Equity. . . F-6
Consolidated Statements of Cash Flows . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . F-8
</TABLE>
The additional financial data referred to below should be read in
conjunction with these financial statements. Schedules not included with this
additional financial data have been omitted because they are not applicable, or
the required information is shown in the financial statements or notes thereto.
The individual financial statements of the subsidiaries of the Company have
been omitted because all such subsidiaries are included in the consolidated
financial statements being filed.
ADDITIONAL FINANCIAL DATA
Financial statement schedules for the years ended
December 31, 1996, 1995 and 1994
II - Valuation and qualifying accounts and reserves. . . . . . .F-23
The accounts of the Company are maintained in United States dollars.
All dollar amounts in the financial statements are stated in United States
dollars except where indicated.
F-1
<PAGE> 44
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Uranium Resources, Inc.:
We have audited the accompanying consolidated balance sheets of Uranium
Resources, Inc. (a Delaware Corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1996. These consolidated financial statements and the
schedule referred to below are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Uranium Resources, Inc. and
subsidiaries as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. The schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
state in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Dallas, Texas
February 14, 1997 (except with respect to the matter discussed
in Note 13, as to which the date is March 27, 1997)
F-2
<PAGE> 45
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 16,934,276 $ 4,715,942
Short-term investment:
Certificate of deposit, restricted 2,779,840 712,094
Receivables, net 1,829,539 4,005,191
Uranium inventory 3,575,285 663,487
Materials and supplies inventory 88,483 126,180
Prepaid and other current assets 239,435 127,519
------------ ------------
Total current assets 25,446,858 10,350,413
------------ ------------
Property, plant and equipment, at cost:
Uranium properties 71,364,561 56,735,549
Other property, plant and equipment 546,985 493,879
Less-accumulated depreciation and depletion (29,335,818) (19,929,621)
------------ ------------
Net property, plant and equipment 42,575,728 37,299,807
Other assets 771,084 434,897
------------ ------------
$ 68,793,670 $ 48,085,117
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated balance sheets.
F-3
<PAGE> 46
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31,
----------------------------
1996 1995
------------ ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 2,201,145 $ 2,464,512
Notes payable 5,440,000 --
Accrued interest payable 185,186 39,843
Current portion of long-term debt 730,074 350,000
Royalties payable 746,113 811,686
Unearned revenue -- 528,970
Current portion of restoration reserve 368,000 544,000
Other accrued liabilities 507,117 901,707
------------ ------------
Total current liabilities 10,177,635 5,640,718
------------ ------------
Other long-term liabilities and deferred credits 4,279,289 2,777,351
Long-term debt, less current portion 6,407,054 7,137,507
Deferred federal income taxes 2,633,000 2,658,000
Shareholders' equity:
Common stock, $.001 par value, shares authorized:
1996 - 25,000,000; 1995 - 12,500,000; shares issued and
outstanding (net of treasury shares): 1996 - 10,813,027;
1995 - 8,645,698 10,966 8,798
Paid-in capital 32,290,630 17,626,510
Retained earnings 13,004,514 12,245,651
Less: Treasury stock (152,500 shares), at cost (9,418) (9,418)
------------ ------------
Total shareholders' equity 45,296,692 29,871,541
------------ ------------
$ 68,793,670 $ 48,085,117
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated balance sheets.
F-4
<PAGE> 47
URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Uranium sales -
Produced uranium $ 17,827,204 $ 7,194,655 $ 958,569
Purchased uranium 6,437,105 14,634,591 16,375,328
------------ ------------ ------------
Uranium sales 24,264,309 21,829,246 17,333,897
Costs and expenses:
Cost of uranium sales -
Direct cost of purchased uranium 4,979,407 10,314,611 10,860,546
Royalties 1,197,890 432,050 37,254
Operating expenses 4,866,436 2,738,420 1,742,669
Provision for restoration and reclamation costs 1,479,939 596,482 274,465
Depreciation and depletion 7,599,047 3,153,793 550,802
Writedown of uranium properties and
other uranium assets -- 163,145 --
------------ ------------ ------------
Total cost of uranium sales 20,122,719 17,398,501 13,465,736
------------ ------------ ------------
Earnings from operations before corporate expenses 4,141,590 4,430,745 3,868,161
Corporate expenses -
General and administrative 3,033,819 3,467,639 2,146,323
Depreciation 20,875 28,235 30,588
------------ ------------ ------------
Total corporate expenses 3,054,694 3,495,874 2,176,911
------------ ------------ ------------
Earnings from operations 1,086,896 934,871 1,691,250
Other income (expense):
Interest expense, net of capitalized interest (610,403) (525,369) (41,564)
Interest and other income, net 282,370 201,263 204,803
Loss on acceleration of uranium contract -- -- (349,265)
Loss on termination of joint venture -- (1,000,953) --
Loss on transfer to stockholder -- (780,000) --
------------ ------------ ------------
Earnings (loss) before federal income taxes 758,863 (1,170,188) 1,505,224
Federal income tax provision (benefit):
Current 25,000 18,000 (72)
Deferred (25,000) (252,000) 300,000
------------ ------------ ------------
Net earnings (loss) $ 758,863 $ (936,188) $ 1,205,296
============ ============ ============
Net earnings (loss) per common share:
Primary $ 0.08 $ (0.12) $ 0.17
============ ============ ============
Fully diluted $ 0.08 $ (0.12) $ 0.17
============ ============ ============
</TABLE>
The accompanying notes to finanacial statements are an integral part of these
consolidated statements.
F-5
<PAGE> 48
URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common
Common Stock Stock
---------------------- Purchase Paid-In Retained Treasury
Shares Amount Warrants Capital Earnings Stock
------------ ------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1993 6,640,020 $ 6,828 $ 349,704 $ 7,961,217 $ 11,976,543 $ (11,580)
Net income -- -- -- -- 1,205,296 --
Common stock issuance
for employee stock option plans 81,781 81 -- 240,475 -- --
Conversion of long-term debt 496,040 496 -- 2,355,693 -- --
Conversion of uranium sales contract 736,842 737 -- 3,584,756 -- --
Expiration of common stock
purchase warrants -- -- (349,704) 349,704 -- --
Waiver of loan fees from affiliate -- -- -- 548,219 -- --
------------ ------- ------------ ------------ ------------ ----------
Balances, December 31, 1994 7,954,683 8,142 0 15,040,064 13,181,839 (11,580)
Net loss -- -- -- -- (936,188) --
Common stock issuance for
employee/director stock option plans 156,015 156 -- 458,908 -- --
Common stock issuance for
stock warrants 500,000 500 -- 1,999,500 -- --
Treasury shares issued 35,000 -- -- 128,038 -- 2,162
------------ ------- ------------ ------------ ------------ ----------
Balances, December 31, 1995 8,645,698 8,798 0 17,626,510 12,245,651 (9,418)
Net income -- -- -- -- 758,863 --
Common stock issuance 2,000,000 2,000 -- 14,030,949 -- --
Common stock issuance for
employee stock option plans 119,329 120 -- 441,219 -- --
Common stock issuance
for stock warrants 48,000 48 -- 191,952 -- --
------------ ------- ------------ ------------ ------------ ----------
Balances, December 31, 1996 10,813,027 $10,966 $ 0 $ 32,290,630 $ 13,004,514 $ (9,418)
============ ======= ============ ============ ============ ==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated statements.
F-6
<PAGE> 49
URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operations:
Net earnings (loss) $ 758,863 $ (936,188) $ 1,205,296
Reconciliation of net income to cash provided by operations-
Provision for restoration and reclamation costs 1,479,939 596,482 274,465
Depreciation and depletion 7,619,922 3,182,028 581,390
Loss on acceleration of uranium contract -- -- 349,265
Writedown of uranium properties and other assets -- 163,145 --
Amortization of other assets -- -- 119,307
Provision (credit) for deferred income taxes (25,000) (252,000) 300,000
Decrease in restoration and reclamation accrual (513,975) (104,108) (157,374)
Other non-cash items, net 274,243 401,711 426,950
------------ ------------ ------------
Cash flow provided by operations, before changes in
operating working capital items 9,593,992 3,051,070 3,099,299
Effect of changes in operating working capital items-
(Increase) decrease in receivables 2,175,652 (3,952,451) (313,197)
(Increase) decrease in inventories (1,000,793) 3,761,066 3,957,339
Increase in prepaid and other current assets (367,894) (238,201) (188,749)
Increase (decrease) in payables and accrued liabilities (1,107,157) 2,679,313 (1,474,311)
------------ ------------ ------------
Net cash provided by operations 9,293,800 5,300,797 5,080,381
Investing activities:
Increase in investments (2,067,746) (149,883) (522,843)
Additions to property, plant and equipment -
Kingsville Dome (6,695,472) (560,772) (125,219)
Rosita (2,001,722) (2,108,508) (1,404,922)
Alta Mesa (4,403,070) -- --
Churchrock (596,725) (477,686) (883,678)
Crownpoint (709,590) (291,394) (682,785)
Other property (200,457) (144,833) (86,098)
Increase in other assets (156,593) (99,218) (1,221)
------------ ------------ ------------
Net cash used in investing activities (16,831,375) (3,832,294) (3,706,766)
Financing activities:
Proceeds from borrowings 10,869,000 6,135,000 2,250,000
Payments and refinancings of principal (5,779,379) (7,874,225) (8,017,047)
Proceeds from sale of uranium sales contract -- -- 4,150,735
Issuance of common stock and warrants, net 14,666,288 2,459,064 240,556
------------ ------------ ------------
Net cash provided by (used in) financing activities 19,755,909 719,839 (1,375,756)
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 12,218,334 2,188,342 (2,141)
Cash and cash equivalents, beginning of period 4,715,942 2,527,600 2,529,741
------------ ------------ ------------
Cash and cash equivalents, end of period $ 16,934,276 $ 4,715,942 $ 2,527,600
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
consolidated statements.
F-7
<PAGE> 50
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION AND DESCRIPTION OF COMPANY
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles and include the accounts of
Uranium Resources, Inc. ("URI") and its wholly owned subsidiaries (collectively
"the Company"). All significant intercompany transactions have been eliminated
in consolidation.
URI was formed in 1977 and incorporated in Delaware in 1987. The
Company is primarily engaged in the business of acquiring, exploring,
developing and mining uranium properties, using the in situ leach ("ISL") or
solution mining process. The primary customers of the Company are major
utilities who utilize nuclear power to generate electricity. The Company
continuously evaluates the creditworthiness of its customers. The Company has
been, in the past, involved in a number of significant ISL uranium mining joint
venture arrangements and has also provided consulting, plant design and
construction expertise to other companies. At present the Company owns both
producing and development properties in South Texas and development properties
in New Mexico. The Company's Rosita and Kingsville Dome uranium production
facilities in South Texas resumed operations in June 1995 and March 1996,
respectively, and were both in operation at December 31, 1996.
INVENTORIES
Uranium inventory consists of uranium concentrates (U(3)O(8)) located
at the Company's Rosita and Kingsville Dome sites and also at converters
awaiting delivery to customers. All uranium inventories are valued at the lower
of cost (first-in, first-out) or market. The cost of produced uranium includes
all operating production costs, and provisions for depreciation, depletion and
future restoration obligations. Materials and supplies inventory is valued at
the lower of average cost or market.
BORROWED URANIUM
Uranium is occasionally borrowed from other parties to facilitate
deliveries under sales contracts. Repayment of the loan is normally made from
production or from purchased uranium. The liability for borrowed uranium is
recorded at the latest spot market price (estimated replacement cost) and the
cost is adjusted to the actual amount when the borrowed material is repaid.
PROPERTY, PLANT AND EQUIPMENT
Uranium Properties
Capitalization of Development Costs - All acquisition, exploration and
development costs (including financing, salary and related overhead costs)
incurred in connection with the various uranium properties are capitalized.
Gains or losses are recognized upon the sale of individual property interests.
All costs incurred in connection with unsuccessful acquisition and exploration
efforts and abandoned properties are charged to expense when known. All
properties with significant acquisition or incurred costs are evaluated for
their realizability on a property-by-property basis. Any impairment of such
costs is recognized by providing a valuation allowance (see Note 2 - "Uranium
Properties - Writedown of Abandoned Property"). Total exploration and
evaluation costs capitalized in 1996, 1995 and 1994 were $116,000, $4,000 and
$75,000, respectively.
F-8
<PAGE> 51
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
Depreciation and Depletion - In general, depletion of uranium mineral
interests and related development costs is computed on a property-by-property
basis using the units-of-production method based on the proved and probable
recoverable uranium reserves as estimated periodically by the Company's
geologists and engineers. Depreciation and depletion is provided on the
investment costs, net of salvage value, of the various uranium properties'
production plants and related equipment using the estimated production life of
the uranium reserves. Other ancillary plant equipment and vehicles are
depreciated using a straight line method based upon the estimated useful lives
of the assets.
Other Property
Other property consists of corporate office equipment, furniture and
fixtures and transportation equipment. Depreciation on other property is
computed based upon the estimated useful lives of the assets. Repairs and
maintenance costs are expensed as incurred. Gain or loss on disposal of such
assets is recorded as other income or expense as such assets are disposed.
Capitalization of Interest
The Company capitalizes interest cost with respect to properties
undergoing exploration or development activities that are not subject to
depreciation or depletion. The average interest rate on outstanding borrowings
during the period is used in calculating the amount of interest to be
capitalized. Interest capitalized in the twelve months ended December 31, 1996,
1995 and 1994 amounted to $11,000, $11,000 and $850,000, respectively. Total
interest costs in these periods were $621,000, $536,000 and $891,000,
respectively.
RESTORATION AND RECLAMATION COSTS
Various federal and state mining laws and regulations require the
Company to reclaim the surface areas and restore underground water quality to
the pre-existing mine area average quality. Accruals for the estimated future
cost of restoration and reclamation are made on a per-pound basis as part of
production costs, or when it is determined by an engineering study that an
adjustment to the accrual is required.
REVENUE RECOGNITION FOR CERTAIN URANIUM SALES
The Company recognizes revenue from the sale of uranium under which
substantially all of its obligations related to the delivery have been
completed. Under certain uranium sales contracts which contain origin-specific
delivery requirements, the revenue from the portion of a sale which requires
the satisfaction of future obligations is recorded as unearned revenue until
these commitments are satisfied. Commitments that are expected to be completed
within one year are classified as current; all others are recorded as long-term
deferred credits.
EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common
shares and dilutive common stock equivalents outstanding during the period. The
weighted average number of shares used in the earnings per share calculations
were 10,031,000, 8,098,000 and 7,073,000 in 1996, 1995, and 1994, respectively.
F-9
<PAGE> 52
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
UNAMORTIZED DEBT ISSUANCE COSTS
Debt discount and related expenses arising from the issuance of debt
securities are amortized by the effective interest method.
CONSOLIDATED STATEMENTS OF CASH FLOWS
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
Additional disclosures of cash flow information follow:
<TABLE>
<CAPTION>
Twelve Months Ended December 31,
1996 1995 1994
-------- -------- ---------
<S> <C> <C> <C>
Cash paid during the period for:
Interest $501,000 $524,000 $756,000
</TABLE>
The change in inventories in the Consolidated Statements of Cash Flows
during 1996, 1995 and 1994 excludes the changes in uranium inventories for
non-cash capitalized restoration and depreciation and depletion provisions.
Such increases (decreases) totaled $1,923,000, $391,000 and ($389,000),
respectively.
Certain additional non-cash transactions occurred in 1995 and 1994,
and such major transactions are summarized as follows:
<TABLE>
<S> <C>
In May 1995, 35,000 treasury shares were issued to financial
advisors in connection with the Lindner Note (Note 5). $130,200
In November 1994, the Company acquired from Energy Fuels the Scottish Nuclear
Contract in exchange for 736,842 shares of common stock and the remaining 1994
balance owed to the Company from Energy
Fuels for uranium purchased (Note 3). $4,500,000
In August 1994, the long-term debt and related interest expense owed
to Mr. Oren L. Benton was converted into 496,040 shares of common
stock (Note 5). $2,356,189
In August 1994, Nuexco Exchange, A.G. acquired the Company's Note
due Citibank, N.A. (Note 5). $6,500,000
In August 1994, the accrued fee obligations and related unamortized
debt discount remaining on the Note with Citibank, N.A. were waived
by Nuexco Exchange, A.G. and have been recorded as an increase to
paid-in capital (Note 5). $548,219
In August 1994, Nuexco Exchange, A.G. made an additional loan to the
Company to finance the purchase of uranium inventory (Note 5). $6,000,000
</TABLE>
F-10
<PAGE> 53
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
RESTRICTED CASH
At December 31, 1996 and 1995, the Company had pledged a certificate
of deposit of $2,779,840 and $712,840, respectively, in order to collateralize
surety bonds required for future restoration and reclamation obligations
related to the Company's South Texas production and development properties.
These funds are not readily available to the Company and are not included in
cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions. Such estimates and assumptions may affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
2. URANIUM PROPERTIES
KINGSVILLE DOME PROPERTY
In 1981, the Company acquired an exploration property in South Texas,
known as Kingsville Dome, from Exxon Corporation. After significant production
in 1988-1990, the property was put on a standby basis because of low uranium
spot prices and production ceased in September 1990.
Wellfield development activities began in December 1995 at Kingsville
Dome which lead to the resumption of production at the property in March 1996.
Total uranium production for the period March 1996 through December 31, 1996
was approximately 860,000 pounds at a cost of approximately $12.31 per pound.
Cost of uranium sales in 1996, 1995 and 1994 in the Consolidated
Statements of Operations includes $293,000, $512,000 and $700,000, respectively
of costs incurred to maintain the facility while Kingsville Dome was on standby
and not in production. At December 31, 1996 the property contained
approximately 2,412,000 pounds of estimated recoverable proved and probable
reserves and the net carrying value of the property was approximately
$15,200,000.
ROSITA PROPERTY
In late 1985, the Company acquired several lease holdings in a uranium
prospect ("Rosita") in South Texas. Construction and development activities
began in the first quarter of 1990 and were completed in September 1990 with
production commencing immediately thereafter. The property was originally put
on a standby basis and production ceased in March 1992.
Wellfield development activity began in early 1995 at Rosita which
lead to the resumption of production at the property in June 1995. Total
production for the year ended December 31, 1996 was approximately 500,000
pounds at a cost of approximately $11.80 per pound.
Cost of uranium sales at December 31, 1995 and 1994 in the
Consolidated Statements of Operations includes $246,000 and $759,000,
respectively, of Rosita standby costs. At December 31, 1996, the property
contained approximately 1,144,000 pounds of estimated recoverable proved and
probable uranium reserves and the net carrying value of the property at
December 31, 1996 was approximately $6,800,000.
F-11
<PAGE> 54
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
ALTA MESA PROPERTY
In June 1996, the Company acquired the Alta Mesa property consisting
of 4,575 acres of leases in South Texas for a cash payment of $4 million of
which $1 million is recoverable against one-half of future royalties. The lease
term ends in December 1999 unless production from the property commences by
that date (subject to extension for permitting delays).
As of December 31, 1996 the Alta Mesa property contained approximately
4,036,000 pounds of estimated recoverable proved and probable reserves. The
Company filed license applications in the fourth quarter of 1996 and
anticipates having the final permits in place in 1998. The net carrying value
of this property at December 31, 1996 was approximately $4,403,000.
CHURCHROCK PROPERTIES
In December 1986, the Company acquired properties in the Churchrock
region of New Mexico containing approximately 6,951,000 pounds of estimated
recoverable proved and probable uranium reserves.
In September 1991, an additional 200 acres of leases were obtained in
exchange for a future production royalty payment which, based upon the expected
selling price of the uranium production, may vary between 5% and 10%.
Preliminary analysis of the drilling data of these 200 acres indicates
approximately 5,488,000 pounds of estimated recoverable proved and probable
reserves.
Permitting activities are currently ongoing on both of these
properties. The net carrying value of these properties at December 31, 1996 was
approximately $6,920,000.
CROWNPOINT PROPERTY
In August 1988, the Company acquired the Crownpoint property,
consisting of 163 acres of leases and related equipment and buildings for cash
payments of $550,000, amounts payable in future years of $950,000 and a sliding
scale overriding royalty on future production. The present value of the future
payable amount, $407,054 at December 31, 1996, is recorded as a purchase money
obligation. Additionally, also in 1988, the Company staked 321 acres of claims
in the same area. In August 1993, the Company acquired approximately 959 acres
of leases adjoining the Crownpoint properties. Initial interpretation of the
drilling data for all the properties acquired in 1988 and 1993 indicate total
estimated recoverable proved and probable uranium reserves of approximately
25,323,000 pounds. The net carrying value of these properties at December 31,
1996 was approximately $7,519,000.
WRITEDOWN OF ABANDONED PROPERTY
In the fourth quarter of 1995, the Company determined that certain
evaluation projects in South Texas would not be pursued toward acquisition. The
costs related to these projects were expensed in 1995 resulting in a pre-tax
charge of approximately $163,000.
3. CONTRACT COMMITMENTS
SALES CONTRACTS
The Company has entered into several long-term contract commitments to
sell uranium. Included in URI's long-term contracts are sales to be made under
the Amendment to the Russian Suspension Agreements (the "Amendment"). Such
sales involve the sale of Russian origin uranium providing it is
F-12
<PAGE> 55
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
matched with U.S. uranium mined after March 11, 1994. Under these arrangements,
the Russian uranium is essentially sold at its approximate purchase price. As a
result, these "pass-through" sales of specifically the Russian origin uranium
is not expected to have a significant impact on the future profitability of the
Company's operations. Total future sales of uranium concentrates (excluding the
Russian component of sales made under the Amendment) of approximately 4,741,000
pounds represent future revenues of approximately $73,359,000 over the various
contract periods from January 1, 1997 through 2002. The average current price
of such future contracted deliveries, with escalation calculated through
December 31, 1996, is $15.47. The Company has contracts which include various
pricing provisions including contracts with market related prices and price
ceilings and price floors which escalate for between 80%-100% of future
inflation, contracts with fixed prices which escalate for between 80%-100% of
future inflation and another contract whose pricing is based upon 99% of market
prices without a price ceiling or floor.
All revenues for the twelve months ended December 31, 1996 were from
sales to nine customers, five of which represented more than 10% of total
revenues. Sales to these five customers totaled $4,860,000, $3,861,000,
$3,565,000, $2,790,000 and $2,663,000 during 1996. All revenues for the twelve
months ended December 31, 1995 were from sales to ten customers, three of which
represented more than 10% of total revenues. Sales to these three customers
totaled $5,040,000, $3,011,000 and $2,600,000 during 1995. Revenues for the
twelve months ended December 31, 1994 were from sales to six customers, five of
which represented more than 10% of total revenues. Sales to these five
customers totaled $3,847,000, $3,670,000, $3,286,000, $3,214,000 and $2,094,000
during 1994.
PURCHASE CONTRACT COMMITMENTS
In 1990, the Company entered into a long-term purchase contract to
purchase 250,000 pounds per year from 1992 through 1995, at an original base
price of $10.50 per pound as of January 1, 1990, escalated at the rate of 50%
of the prime rate and 50% of inflation. In 1995, the Company took deliveries of
200,000 pounds under this contract. On November 29, 1995, the Company and the
supplier both agreed to terminate the contract and forego the delivery of the
remaining 50,000 pounds. In July 1992, the Company entered into a long-term
purchase contract to purchase 200,000 pounds annually from 1993 through 1995.
The contract contained spot market pricing considerations and carries a minimum
price of $8.00 per pound escalated at a 6% rate and a maximum price of $8.00
per pound escalated at an 18% rate. Deliveries under this contract were
completed in 1995.
On August 28, 1995, the Company entered into two long-term Russian
origin uranium purchase contracts to purchase between 40,000 and 60,000 pounds
annually from 1995 through 1998 and to purchase a total of 480,000 pounds to be
purchased from 1995 to 1998, respectively. The original base price of these two
purchase commitments is significantly below current market prices for similar
transactions. These contracts are subject to future price escalations based
upon inflation indices. As of December 31, 1996, 270,000 pounds remain to be
purchased with deliveries in 1997 and 1998.
In addition, the Company entered into an agreement on August 19, 1994
with Energy Fuels Nuclear, Inc. ("EFN"), an affiliated company of Mr. Benton
pursuant to which the Company assigned to EFN its rights under certain uranium
purchase agreements (see Note 5). Through December 31, 1994, the Company
purchased 150,000 pounds of uranium for $1,791,500 under the two agreements and
resold the uranium to EFN for the same price. In a separate transaction, the
Company purchased 100,000 pounds of uranium from a third-party supplier and
resold the same to another company affiliated with Mr. Benton for $940,000. At
December 31, 1994, it was determined that EFN was unable to fulfill its
obligations for the remaining 450,000 pounds under the two agreements and the
Company fulfilled these remaining obligations.
F-13
<PAGE> 56
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
On November 18, 1994, the Company was assigned a long-term sales
contract ("the Scottish Nuclear Contract") from Energy Fuels, Ltd. ("EFL"), an
affiliated company of Mr. Benton, in exchange for 736,842 shares of common
stock and the remaining balance due to the Company in the amount of $881,500
plus accrued interest of $33,006 for 1994 purchases of uranium made by EFN and
another company affiliated with Mr. Benton. The Scottish Nuclear Contract was
valued by the Company and EFL at $4,500,000. The deliveries under the Scottish
Nuclear Contract were accelerated to December 1994 with the Company realizing
proceeds of $4,151,735 in order to fund the current cash requirements of the
Company. The difference from the agreed-upon value of the Scottish Nuclear
Contract and the proceeds received upon accelerating delivery was recorded as a
loss of $349,265 in the December 31, 1994, Consolidated Statements of
Operations.
4. SHORT-TERM DEBT
NATIONSBANK CREDIT AGREEMENT
In May 1996 the Company entered into a $3.0 million revolving-credit
facility with NationsBank, N.A. ("Nations"). This facility is secured by the
Company's receivables from its uranium sales contracts with interest on the
loan accruing at the prime rate plus 1%. Principal and interest payments under
the facility are due monthly. As of December 31, 1996, $1,440,000 was
outstanding under this facility.
LINDNER SHORT-TERM NOTE
In June 1996 the Company entered into an agreement with Lindner
Dividend Fund for a $4.0 million note to acquire the Alta Mesa property. The
terms of the note provide for the payment of both the principal and accrued
interest by June 1997. Interest on the note accrues at a rate of 6.5% per
annum. The entire principal amount plus accrued interest was repaid in January
1997.
5. LONG-TERM DEBT
CITIBANK CREDIT AGREEMENT
On May 24, 1990, the Company entered into a Credit Agreement with
Citibank, N.A. ("Citibank"). On August 19, 1994, the Citibank debt agreements
were restructured as discussed below. The balance at the time of restructuring
was $6,500,000. In connection with the restructuring the Company received a
waiver of accrued fee obligations of $700,000, which was arranged by one of the
Benton Companies. The waiver of these fees was recorded in 1994, net of the
unamortized debt discount remaining on the Citibank debt (approximately
$152,000) as an increase to paid-in capital.
CITIBANK DEBT RESTRUCTURING AND EQUITY CONVERSION
On August 19, 1994 Nuexco Exchange, A.G., ("NEAG"), a company then
owned by Mr. Benton, acquired the note (the "Note") outstanding to Citibank
under the Credit Agreement for $6,500,000. To fund this acquisition of the Note
due Citibank and for the additional loan to the Company, NEAG borrowed
$12,500,000 from Union Bank of Switzerland ("UBS") and made a new loan to the
Company of $6,000,000. The $6,000,000 loaned to the Company was used to
purchase 648,648 pounds of uranium at $9.25 per pound from EFN. The notes due
NEAG ("NEAG Notes") were secured by 599,423 pounds of uranium purchased from
EFN and by the contracts between the Company and certain utilities for delivery
of uranium. NEAG assigned their notes due from the Company and the related
security to UBS. NEAG and UBS released all other collateral that had secured
the original Citibank Note. The balance of the notes was paid in full by
October 1995.
F-14
<PAGE> 57
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
To enable the Company to meet its short-term liquidity requirements
while negotiations with Citibank were in progress, Mr. Benton advanced
$1,125,000 to the Company in January 1994 and $1,125,000 in April 1994. The
advances made to the Company by Mr. Benton accrued interest at Citibank's prime
rate plus 3%. Mr. Benton also guaranteed the Company's payment obligations
through December 31, 1994 on the Citibank Note. On August 19, 1994 the
$2,250,000 in advances together with accrued but unpaid interest of $106,189
were converted into equity by the Company's issuance to Mr. Benton of 496,040
shares of common stock at a valuation of $4.75 per share.
In August 1994, the Company entered into an agreement with an
affiliated company of Mr. Benton ("Benton affiliate") which gave the Company
the right, prior to August 18, 1997 to require the Benton affiliate to purchase
up to $6,996,750 of common stock at a per share price of $4.75 (1,473,000
shares). The Benton affiliate was granted demand and piggy-back registration
rights for such shares. Mr. Benton guaranteed the Benton affiliate's
performance of its obligations under this agreement. The issuance of the
736,842 shares to the Benton affiliate in connection with the assignment of the
long-term sales contract from EFL (Note 3) was credited against this
commitment. The Company does not intend nor does it anticipate that the balance
of the shares will be put to the Benton Companies because of the Benton
bankruptcy.
LINDNER NOTE
On May 25, 1995 the Company entered into an agreement with Lindner
Investments and Lindner Dividend Fund, (the "Lender") two mutual funds managed
by Ryback & Associates, for a $6 million secured convertible note with the
Company (the "Lindner Note"). The Lindner Note is for a term of three years and
bears interest at an annual rate of 6.5% and is convertible at any time during
the three-year term into 1.5 million shares of the Company's common stock at an
initial conversion price of $4.00 per share. The Lender also received a
three-year warrant to purchase 1.5 million shares of the Company's common stock
at an initial price of $4.00 per share. As of December 31, 1996, the Lender had
exercised 500,000 shares of warrants under the agreement for an infusion of
$2.0 million to the Company.
Certain other financial advisors associated with the transaction were
granted warrants and options to purchase up to 150,000 shares at an initial
exercise price of $4.00 per share. The loan is secured by a mortgage on the
Company's Rosita and Kingsville Dome uranium properties in Texas. Part of the
proceeds form the Lindner Note were used to pay down existing payables and
provide funding to complete the production start-up of the Company's Rosita
property. The balance of the proceeds were used to fund pre-production
activities a the Company's Kingsville Dome facility to permit commencement of
production in 1996. As of December 31, 1996, certain other financial advisors
have exercised 48,000 shares of warrants under the agreement.
PURCHASE MONEY OBLIGATION
In 1987, the Company acquired certain long-term sales contract
delivery rights in exchange for cash plus an assignment of a $3,000,000 future
production payment, at $1.00 per pound of production sold from the Kingsville
Dome and Rosita projects, starting in 1988. The production payment was recorded
as a purchase money obligation at an original calculated present value of
$2,379,839 and the remaining balance owed at December 31, 1996 is $730,074. The
remaining balance under the production payment was repaid in January 1997.
F-15
<PAGE> 58
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
SUMMARY OF LONG-TERM DEBT
<TABLE>
<CAPTION>
At December 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Long-term debt of the Company consists of:
Lindner Note $6,000,000 $6,000,000
Purchase money obligation -
Sales contract acquisitions 730,074 1,080,453
Crownpoint property (Note 2) 407,054 407,054
---------- ----------
7,137,128 7,487,507
Less - Current portion 730,074 350,000
---------- ----------
Total long-term debt $6,407,054 $7,137,507
========== ==========
</TABLE>
Maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
For the Twelve Months Ended: For the Twelve Months Ended:
- ---------------------------- ----------------------------
<S> <C> <C> <C>
December 31, 1997 $ 730,074 December 31, 2000 --
December 31, 1998 6,000,000 December 31, 2001 and beyond $ 407,000
December 31, 1999
--
</TABLE>
6. RELATED-PARTY TRANSACTIONS/LIQUIDITY ISSUES
During 1994, the Company encountered liquidity problems that resulted
in the Company entering into certain transactions with companies controlled by
Oren L. Benton (the "Benton Companies") whereby the Benton Companies (a)
assisted in the restructuring of the Citibank, N.A. debt (see Note 4), (b)
arranged for an additional $6.0 million loan to the Company to purchase uranium
inventory to secure the restructured debt, (c) advanced the Company $2,250,000
to make debt payments prior to the restructuring, which advances were
subsequently converted to common stock and (d) committed to provide the Company
with an additional $7.0 million of capital (see Note 4). As a consequence of
the debt restructuring, the Company assigned most of the 1995 proceeds from its
contracts with utilities for the delivery of uranium, to the lender. The debt
payments were equal to the Company's expected revenue from these contracts
which resulted in almost no proceeds being received by the Company until the
fourth quarter of 1995, when the restructured debt was paid in full.
Further, during January 1995, when the Benton Companies held effective
control of the common stock of the Company, the Company transferred $1.0
million to the Benton Companies in connection with a planned joint venture to
process uranium at a Benton Companies' mill. The specific Benton Companies
which were to be part of the planned joint venture did not receive the
transferred funds. Because of the Benton Bankruptcy, the realizability of the
Company's $1.0 million investment is doubtful. Shortly thereafter, the then
Chairman and CFO of the Company, who were also officers of the Benton
Companies, transferred $1.08 million out of the Company without the
authorization of the Company's Board of Directors. In February 1995, the Benton
Companies filed for bankruptcy. The Company received $300,000 in June 1995 from
the $1.08 million transfer, but $1.78 million of the initial $2.08 has not been
recovered and there can be no assurance that the Company's efforts to pursue
remedies will be successful. The Company recorded losses totaling $1.78 million
for these transactions in 1995.
F-16
<PAGE> 59
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
In connection with the Benton Bankruptcy, the bankrupt estates have
advised the Company that they are reviewing various transactions entered into
by the Company with the Benton Companies. Such a review could potentially
result in claims that could have a material adverse effect on the Company. The
bankrupt estates have entered into a tolling agreement with respect to possible
assertions of certain claims. The Company is unable to assess whether any such
claim will be asserted, and if asserted, what adverse consequences, if any,
might result from such assertion. No such claims have been asserted. The
Company can also assert claims against Benton and the Benton Companies in such
proceedings.
The Company pursued various options to solve its liquidity problems
and discussions regarding alternative financing arrangements. Such efforts
resulted in the Company entering into a $6.0 million convertible debt agreement
in May 1995 (see Note 5 - "Long-Term Debt - Lindner Note").
7. SHAREHOLDERS' EQUITY
COMMON STOCK
Common Stock Issued in 1996
In December 1996, the Company completed a public sale of 2,000,000
shares of the Company's common stock at a price of $7.875 per share. The
offering raised $15,750,000 before commissions and expenses of approximately
$1,700,000.
Issuance of Treasury Shares
On May 25, 1995, the Company issued 35,000 shares of the Company's
common stock which were held as treasury shares to financial advisors in
connection with the Lindner Note as discussed in Note 5.
Conversion of Notes to Oren L. Benton
On August 19, 1994, the long-term debt of $2,250,000 and related
interest owed to Oren L. Benton was converted into 496,040 shares of common
stock at a price of $4.75 per share as discussed in Note 5.
Conversion of Uranium Sales Contract
On November 22, 1994, the Company acquired from EFL a long-term sales
contract (Note 3) in exchange for an amount due from EFN and another company
affiliated with Mr. Benton, and 736,842 shares of common stock.
WARRANTS
Lindner Warrants
In connection with the May 1995 Lindner Note as discussed in Note 5,
the Company issued a three-year warrant to purchase 1,500,000 shares of the
Company's common stock at an initial conversion price of $4.00 per share. The
warrants are convertible at any time through May 1998. As of December 31, 1996,
500,000 warrants have been exercised. In addition, the Lindner Note is
convertible at any time during the three year term into 1,500,000 shares of the
Company's common stock at an initial conversion price of $4.00 per share, none
of which have been converted at December 31, 1996.
F-17
<PAGE> 60
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
Financial Advisors' Warrants/Options
On May 25, 1995, the Company issued a three-year warrant to purchase
100,000 shares of the Company's common stock at an initial conversion price of
$4.00 per share to certain financial advisors associated with the Lindner Note
transaction. The warrants are convertible at any time through May 1998. In
addition, the Company granted options to purchase 50,000 shares at an initial
conversion price of $4.00 per share. The options are immediately exercisable
and expire on March 6, 2000. As of December 31, 1996, 48,000 warrants have been
exercised.
Common Stock Purchase Warrants
In conjunction with the March 1990 public offering, 301,875 common
stock purchase warrants were issued. Each warrant was exercisable through
February 26, 1994 to purchase one share of common stock at a price of $5.20 per
share. A total of 82,500 common stock purchase warrants had been exercised as
of December 31, 1993. The remaining warrants expired in accordance with their
terms on February 26, 1994.
Underwriter Warrants
In connection with the March 1990 public offering, the Company issued
to the underwriter, for an aggregate sum of $1,315, Underwriter's Common Stock
Purchase Warrants ("Underwriter Warrants"). The Underwriter Warrants were
exercisable through March 5, 1994 to purchase 32,886 shares of common stock at
a price of $6.60 per share. None of the Underwriter Warrants had been exercised
as of December 31, 1993 and they all expired in accordance with their terms on
March 5, 1994.
STOCK OPTIONS
Directors Stock Options
On May 25, 1995, the Company granted options to certain directors of
URI, to purchase 200,000 shares of the Company's common stock at an exercise
price of $4.50 per share. All such options are immediately exercisable and
expire May 24, 1998, 30 days after the holder ceases to be a director of the
Company or one year after such holder's death, whichever occurs first. None of
these options have been exercised as of December 31, 1996.
On August 16, 1995, the Company granted options to a director of URI,
to purchase 100,000 shares of the Company's common stock at an exercise price
of $8.38 per share which was the fair market value of a share of common stock
on August 16, 1995. Such options are immediately exercisable and expire May 24,
1998, 30 days after the holder ceases to be a director of the Company or one
year after his death, whichever occurs first. None of these options have been
exercised as of December 31, 1996.
Other Stock Options
On July 31, 1995, the Company granted options to a former officer of
the Company to purchase 50,000 shares of the Company's common stock at an
exercise price of $4.75 per share which was the fair market value of a share of
common stock on that date. Such options are immediately exercisable and expire
May 31, 1998. All of these options have been exercised as of December 31, 1996.
F-18
<PAGE> 61
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
8. STOCK-BASED COMPENSATION PLANS
The Company has three stock option plans, the Employees' Stock Option
Plan, the Stock Incentive Plan and the Directors' Stock Option Plan. The
Company accounts for these plans under APB Opinion No. 25, under which no
compensation cost has been recognized. Had compensation cost for these plans
been determined consistent with FASB Statement No. 123 ("FAS 123"), the
Company's net earnings (loss) and earnings (loss) per share ("EPS") for the
year ended December 31, 1996 and 1995 would have been reduced to the following
pro forma amounts:
<TABLE>
<CAPTION>
1996 1995
-------------- --------------
<S> <C> <C>
Net Earnings: As reported $ 758,863 $ (936,188)
Pro forma $ (519,164) $ (1,414,842)
Primary EPS: As reported $ 0.08 $ (0.12)
Pro forma $ (0.06) $ (0.16)
Fully diluted EPS: As reported $ 0.08 $ (0.12)
Pro forma $ (0.06) $ (0.16)
</TABLE>
The fair value of each option is estimated on the date of grant using
the Black-Sholes option-pricing model with the following weighted average
assumptions used for grants in 1996 and 1995, respectively: expected volatility
of 65% and 71% and risk-free interest rates of 6.0% and 6.1%. An expected life
of 4.6 and 5.0 years was used for options granted to the employees and
directors, respectively.
The FAS 123 method of accounting has not been applied to options
granted prior to January 1, 1995, and accordingly the resulting pro forma
compensation cost may not be representative of that to be expected in future
years.
The Directors' Stock Option Plan provides for the grant of 20,000
stock options to each of the non-employee directors along with additional
annual grants of stock options upon re-election as directors at the Company's
annual meeting. Currently there are 84,000 stock options outstanding under the
Directors' Stock Option Plan. Also, on January 15, 1992, the Board of Directors
approved the grant of 577,248 stock options under the Employees' Stock Option
Plan. All of the previously outstanding options were canceled upon the
effectiveness of the new options. On August 10, 1994, the Board of Directors
increased the available options under the Employees' Stock Option Plan and the
Directors' Stock Option Plan to 850,000 options and 150,000 options,
respectively. On October 11, 1995, the Board of Directors elected to discontinue
grants under the Employees' Stock Option Plan with the adoption of a stock
incentive plan covering key employees. The Stock Incentive Plan provides for
the grant of a maximum of 750,000 stock options. These options may be qualified
or nonqualified. As of December 31, 1996, there are 338,810 options outstanding
under the Stock Incentive Plan. Additional details about the options granted
under the stock option plans are as follows:
<TABLE>
<CAPTION>
---------------------------------------------------
At December 31, 1996
---------------------------------------------------
Options
Exercise Options Available Options Options Options
Date of Grant Price Granted for Exercise Exercised Canceled Outstanding
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
January 15, 1992 $ 2.94 617,248 130,123 302,125 185,000 130,123
May 22, 1992 $ 3.00 2,000 -- 1,000 1,000 --
====================================================================================================================
Balances at December 31, 1992 619,248 130,123 303,125 186,000 130,123
====================================================================================================================
February 26, 1993 $ 2.50 10,000 -- 2,500 7,500 --
May 27, 1993 $ 3.50 2,000 -- 500 1,500 --
====================================================================================================================
Balances at December 31, 1993 631,248 130,123 306,125 195,000 130,123
====================================================================================================================
</TABLE>
F-19
<PAGE> 62
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
July 11, 1994 $ 4.38 20,000 10,000 -- -- 20,000
August 10, 1994 $ 4.25 140,000 9,000 1,000 120,000 19,000
December 15, 1994 $ 5.88 3,000 1,000 -- 1,000 2,000
====================================================================================================================
Balances at December 31, 1994 794,248 150,123 307,125 316,000 171,123
====================================================================================================================
February 24, 1995 $ 4.13 210,000 25,000 -- 110,000 100,000
April 12, 1995 $ 3.88 10,000 2,500 -- -- 10,000
May 26, 1995 $ 3.75 40,000 10,000 -- -- 40,000
August 16, 1995 $ 8.38 100,000 25,000 -- -- 100,000
August 31, 1995 $ 6.88 127,508 31,877 -- -- 127,508
October 11, 1995 $ 6.94 35,000 8,750 -- -- 35,000
December 19, 1995 $ 5.50 3,000 750 -- -- 3,000
====================================================================================================================
Balances at December 31, 1995 1,319,756 254,000 307,125 426,000 586,631
====================================================================================================================
February 22, 1996 $ 9.75 178,810 -- -- -- 178,810
May 29, 1996 $ 17.00 3,000 -- -- -- 3,000
May 30, 1996 $ 16.13 75,000 -- -- -- 75,000
July 22, 1996 $ 11.13 50,000 -- -- -- 50,000
====================================================================================================================
Balances at December 31, 1996 1,626,566 254,000 307,125 426,000 893,441
====================================================================================================================
====================================================================================================================
</TABLE>
The exercise price for the options granted under the stock option
plans has been the approximate market price of the common stock on the date
granted. The terms of the options provide that no options may be exercised for
one year after grant, and then for ratable exercise over the subsequent
four-year period, with a total exercisable period of ten years.
The exercise price for the options granted under the Stock Incentive
Plan has been the approximate market price of the common stock on the date
granted. The terms of the options are determined by the Board of Directors upon
grant; however, no options may be exercised after a period of ten years.
9. FEDERAL INCOME TAXES
The deferred federal income tax liability consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
Property development costs - net of amortization $ 6,745,000 $ 7,933,000
Accelerated depreciation 180,000 125,000
Restoration reserves (1,362,000) (1,034,000)
Net operating loss and percentage
depletion carryforwards (5,296,000) (5,971,000)
Valuation allowance and other - net 2,366,000 1,605,000
=========== ===========
Total deferred income tax liability $ 2,633,000 $ 2,658,000
=========== ===========
</TABLE>
Major items causing the Company's tax provision to differ from the
federal statutory rate of 34% were:
<TABLE>
<CAPTION>
For the Twelve Months Ended December 31,
----------------------------------------------------------------------------------------
1996 1995 1994
-------------------------- -------------------------- --------------------------
% OF % OF % OF
PRETAX PRETAX PRETAX
AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Pretax income (loss) $ 758,863 $(1,170,188) $ 1,505,224
----------- ----------- ----------- ----------- ----------- -----------
Pretax income (loss)
times statutory tax 258,000 34.0% (398,000) (34.0%) 512,000 34.0%
rate
Increases
(reductions) in
taxes resulting from:
Percentage depletion (258,000) (34.0%) 398,000 34.0% (512,000) (34.0%)
Alternative minimum
tax -- 0.0% (234,000) (20.0%) 299,928 19.9%
----------- ----------- ----------- ----------- ----------- -----------
Income tax
expense (benefit) $ -- 0.0% $ (234,000) (20.0%) $ 299,928 19.9%
=========== =========== =========== =========== =========== ===========
</TABLE>
F-20
<PAGE> 63
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
The Company's book income for regular federal income tax purposes at
December 31, 1996 is entirely sheltered by cumulative percentage depletion and
investment tax credit carryforwards. However, under the Alternative Minimum Tax
("AMT") system imposed by the 1986 Tax Reform Act ("the 86 ACT"), these
carryforward items may only be utilized on a limited basis resulting in the
above tax provisions, which consists entirely of deferred AMT.
At December 31, 1996, approximately $5,460,000 of percentage depletion
(available for regular tax purposes) had not been utilized to shelter book
income and is available to carry forward to future accounting periods. No tax
payments were required in 1996, 1995 and 1994.
The Company also has available for regular federal income tax purposes
at December 31, 1996 estimated net operating loss carryforwards of
approximately $10,100,000 which expire primarily in 1999 through 2011, if not
previously utilized. At December 31, 1996, the Company had investment tax
credit carryforwards of approximately $21,000, after adjusting for the
reductions required by the 86 ACT, which expire for regular tax purposes in
1997 through 2000.
10. OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS
Other long-term liabilities and deferred credits on the balance sheet consisted
of:
<TABLE>
<CAPTION>
December 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Reserve for future restoration and reclamation costs,
net of current portion of $368,000 and $544,000 in
1996 and 1995 (Note 1) $3,768,495 $2,446,151
Unearned revenue from Russian matched sales (Note 1) 510,794 331,200
---------- ----------
$4,279,289 $2,777,351
========== ==========
</TABLE>
11. COMMITMENTS AND CONTINGENCIES
The Company's mining operations are subject to federal and state
regulations for the protection of the environment, including water quality.
These laws are constantly changing and generally becoming more restrictive. The
ongoing costs of complying with such regulations has not been significant to
the Company's annual operating costs. Future mine closure and reclamation costs
are provided for as each pound of uranium is produced on a unit-of-production
basis. The Company reviews its reclamation obligations each year and determines
the appropriate unit charge. The Company also evaluates the status of current
environmental laws and their potential impact on their accrual for costs. The
Company believes its operations are in compliance with current environmental
regulations.
The Company is from time to time involved in various legal proceedings
of a character normally incident to its business. Management does not believe
that adverse decisions in any pending or threatened proceedings will have a
material adverse effect on the Company's financial condition or results of
operations.
F-21
<PAGE> 64
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1996
12. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures
About Fair Value of Financial Instruments," requires disclosure about the fair
value of financial instruments. Carrying amounts for all financial instruments
approximate fair value as of December 31, 1996. The fair value of debt is
estimated based on the discounted value of the future cash flows using
borrowing rates currently available to the Company for loans with similar terms
and average maturities.
13. SUBSEQUENT EVENT
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 1.2 million shares of the Company's common stock and a
commitment to expend certain amounts on exploration.
F-22
<PAGE> 65
SCHEDULE II
URANIUM RESOURCES, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Additions
---------------------------
Balance at Charged to Charged to
Beginning Costs and Other Balance at End
Description of Period Expenses Accounts Deductions (a) of Period
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996:
Accrued restoration costs ........... $2,990,151 $1,479,939 $ 180,380(b) $ 513,975 $4,136,495(d)
Year ended December 31, 1995:
Accrued restoration costs ........... $2,427,624 $ 596,482 $ 70,153(b) $ 104,108 $2,990,151(d)
Year ended December 31, 1994:
Accrued restoration costs ........... $2,361,297 $ 274,465 $ (50,764)(c) $ 157,374 $2,427,624(d)
</TABLE>
- --------------------
(a) Deductions represent costs incurred in the restoration process.
(b) Increase resulted primarily from the change in the amounts of restoration
provision included in ending uranium inventory.
(c) Decrease resulted primarily from restoration provision amounts in
beginning inventory which were expensed in the current year.
(d) Amounts recorded as current liabilities at December 31, 1996, 1995 and
1994 are $368,000, $544,000 and $90,000, respectively.
F-23
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.1 Restated Certificate of Incorporation of the Company, as amended.
3.2* Restated Bylaws of the Company (filed with the Company's Form S-3
Registration No. 333-17875 on December 16, 1996).
4.1 Registration Rights Agreement dated March 25, 1997 between the
Company and Santa Fe Pacific Gold Corporation.
10.1* Amended and Restated Directors Stock Option Plan (filed with the Company's
Form S-8 Registration No. 333-00349 on January 22, 1996).
10.2* Amended and Restated Employee's Stock Option Plan (filed with the
Company's Form S-8 Registration No. 333-00403 on January 22, 1996).
10.3* 1995 Stock Incentive Plan (filed with the Company's Form S-8
Registration No. 333-00405 on January 22, 1996).
10.4* Non-Qualified Stock Option Agreement dated August 16, 1995,
between the Company and Leland O. Erdahl (filed with the
Company's Annual Report on Form 10-K dated March 27, 1996).
10.5* Non-Qualified Stock Option Agreement dated May 25, 1995, between the
Company and George R. Ireland (filed with the Company's Annual Report
on Form 10-K dated March 27, 1996).
10.6* Non-Qualified Stock Option Agreement dated May 25, 1995, between the
Company and James B. Tompkins (filed with the Company's Annual Report
on Form 10-K dated March 27, 1996).
10.7* Stock Option Agreement dated March 6, 1995 between the Company and
James P. Congleton, as amended on May 25, 1995 (filed with the
Company's Annual Report on Form 10-K dated March 27, 1996).
10.8* Warrant to Purchase Common Stock dated May 25, 1995, between the
Company and Grant Bettingen, Inc. (filed with the Company's Annual
Report on Form 10-K dated March 27, 1996).
10.9* Non-Qualified Stock Option Agreement dated July 31, 1995, between the
Company and Wallace M. Mays (filed with the Company's Form S-8
Registration Statement No. 33-64481 on November 21, 1995).
10.10* Contract dated as of November 17, 1987 and amended as of May
29, 1992 by Hydro Resources, Inc., a wholly-owned subsidiary
of Uranium Resources, Inc., and Public Service of New Mexico
(filed with the Company's Form 8 - Amendment to Application
or Report as filed with the Securities and Exchange
Commission on December 9, 1988).(1)
10.11* Contract for the Purchase of Natural Uranium Concentrates (U3O8)
dated April 5, 1994 between Uranium Resources, Inc., URI, Inc. and
Pacific Gas & Electric Company (filed with the Company's Annual Report
on Form 10-K for the year ended December 31, 1994).(1)
</TABLE>
E-1
<PAGE> 67
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
10.11* Contract for the Purchase of Natural Uranium Concentrates (U3O2)
dated April 5, 1994 between Uranium Resources, Inc., URI, Inc. and
Pacific Gas & Electric Company (filed with the Company's Annual
Report on Form 10-K for the year ended December 31, 1994). (1)
10.12* Agreement for the Sale of Uranium Concentrates dated as of August 23,
1990 between OES Fuel, Incorporated, Uranium Resources, Inc. and URI,
Inc. (filed with Post-Effective Amendment No. 3 to the Company's Form
S-1 Registration Statement as filed with the Securities and Exchange
Commission on December 7, 1990).(1)
10.13* U3O8 Sales Agreement dated September 30, 1988 between GPU Nuclear
Corporation and URI, Inc. guaranteed by Uranium Resources, Inc.
(filed with the Company's Form 8 - Amendment to Application or Report
as filed with the Securities and Exchange Commission on December 9,
1988).(1)
10.14* Summary of Supplemental Health Care Plan (filed with Amendment No. 1
to the Company's Form S-1 Registration Statement (File No. 33-32754)
as filed with the Securities and Exchange Commission on February 20,
1990).
10.15* Note and Warrant Purchase Agreement entered into May 25, 1995 by and
among Lindner Investments, Lindner Dividend Fund and the Company
(filed with the Company's Current Report on Form 8-K dated May 25, 1995).
10.16 Loan Agreement entered into June 18, 1996 by and between Lindner Dividend
Fund and the Company.
10.17* Uranium Concentrates Sales Agreement dated August 28, 1996 by
and between the Company and Georgia Power Company (filed with
the Company's Quarterly Report on Form 10-Q/A-2 for the
quarter ended September 30, 1996).(1)
10.18* Uranium Concentrates Sales Agreement dated August 21, 1996 by and
between the Company and Commonwealth Edison Company (filed with the
Company's Quarterly Report on Form 10-Q/A-2 for the quarter ended September
30, 1996).(1)
10.19 Agreement of Santa Fe Pacific Gold Corporation as Uranco, Inc. Shareholder
with the Company and Guarantee of the Company dated as of March 25, 1997.(1)
10.20 Stock Exchange Agreement and Plan of Reorganization dated as of March 25, 1997.
10.21 License to Explore and Option to Purchase dated March 21, 1997 between
Sante Fe Pacific Gold Corporation and Uranco, Inc.(1)
21.1 Subsidiaries of the Company.
23.1 Consent of Arthur Andersen LLP.
27 Financial Data Schedule.
</TABLE>
*Incorporated by reference pursuant to Rule 12b-32 under the
Securities and Exchange Act of 1934, as amended.
(1)Certain provisions have been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for
confidential treatment.
E-2
<PAGE> 1
EXHIBIT 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
URANIUM RESOURCES, INC.
(AS AMENDED ON JUNE 19, 1996)
ARTICLE 1
The name of the corporation is Uranium Resources, Inc.
ARTICLE 2
The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
19801. The name of its registered agent at such address is The Corporation
Trust Company.
ARTICLE 3
The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
ARTICLE 4
The aggregate number of shares which the corporation has authority to
issue is Twenty-Five Million (25,000,000) shares, $.001 par value per share.
The shares are designated as common stock and have identical rights and
privileges in every respect.
The holders of the stock of the corporation shall have no preemptive
rights to subscribe for any securities of the corporation.
ARTICLE 5
The Board of Directors is authorized to make, alter or repeal the
bylaws of the corporation.
ARTICLE 6
No contract or transaction between the corporation and one or more of
its directors, officers or stockholders, or between the corporation and any
other corporation or firm in which
<PAGE> 2
one or more of them is directly or indirectly interested, shall be void or
voidable solely for this reason, or solely because any such director or officer
is present at or participates in the meeting of the board or committee which
authorizes the contract or transaction, or solely because his or their votes
are counted for such purpose, if:
(1) the material facts as to such director's, officers, or
stockholder's relationship or interest and as to the contract
or transaction are disclosed or are known to the board of
directors or the committee, and the board or committee in good
faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors
even though the disinterested directors be less than a quorum;
or
(2) the material facts as to his relationship or interest and as
to the contract or transaction are disclosed or are known to
the stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of
the stockholders; or
(3) the contract or transaction is fair as to the corporation as
of the time it is authorized, approved or ratified by the
board of directors, a committee, or the stockholders.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction. This provision shall not be
construed to invalidate any contract or transaction which would be valid in the
absence of this provision.
ARTICLE 7
Section 1. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director or officer or employee of
the corporation, or is or was serving at the request of the corporation as a
director or officer or employee of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with
-2-
<PAGE> 3
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
Section 2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer or employee of the corporation, or is or was serving at the request of
the corporation as a director, officer or employee of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, except as otherwise limited by
applicable law.
Section 3. To the extent that a director, officer or employee of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 1 and 2 of this Article 7,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred
by him in connection therewith.
Section 4. Any indemnification under Sections 1 and 2 of this Article
7 (unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer or employee is proper in the circumstances because he has
met the applicable standard of conduct set forth in Sections 1 and 2 of this
Article 7. Such determination shall be made (a) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (c) by the stockholders.
Section 5. Expenses incurred by an officer or director in defending a
civil or criminal action, suit or proceeding shall be paid by the corporation
in advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Article 7. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
Section 6. The indemnification and advancement of expenses provided
by or granted pursuant to the other sections of this Article 7 shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Section 7. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer or employee
of the corporation, or is or was
-3-
<PAGE> 4
serving at the request of the corporation as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability under the
provisions of this Article 7.
Section 8. For purposes of this Article 7, references to "the
corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers and
employees, so that any person who is or was a director, officer or employee of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article 7 with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
Section 9. For purposes of this Article 7, reference to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer or employee of the corporation
which imposes duties on, or involves services by, such director, officer or
employee with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
Article 7.
Section 10. The indemnification and advancement of expenses provided
by or granted pursuant to this Article 7 shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, or employee and shall inure to the benefit of the heirs,
executors and administrators of such a person.
ARTICLE 8
No director of the corporation shall have any personal liability to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided, however, this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the General Corporation
Law of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
-4-
<PAGE> 1
EXHIBIT 4.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of March 25, 1997 by and between Uranium Resources, Inc., a
Delaware corporation ("URI"), and Santa Fe Pacific Gold Corporation, a Delaware
corporation ("Santa Fe").
This Agreement is made pursuant to the Stock Exchange Agreement and
Plan of Reorganization, dated as of March 25, 1997 (the "Plan of
Reorganization") by and between URI and Uranco Inc. ("Uranco"). URI has agreed
to acquire all the issued and outstanding shares of Uranco from Santa Fe which
is the sole beneficial owner of all the issued and outstanding shares of such
company. As consideration for such acquisition, URI has issued to Santa Fe
1,200,000 shares of its Common Stock, par value $.001 per share (the "Common
Shares"). In order to induce Santa Fe to consent to the Plan of
Reorganization, URI has agreed, inter alia, to provide the registration rights
set forth in this Agreement, and the execution and delivery of this Agreement
is a condition precedent to consummation of the transactions contemplated by
the Plan of Reorganization.
The parties hereby agree as follows:
1. Definitions.
Capitalized terms used herein without definition shall have the
meaning set forth in the Plan of Reorganization.
"Commission" means the United States Securities and Exchange
Commission.
"Holder" means Santa Fe, so long as Santa Fe holds any Registrable
Securities, and any other holder of Registrable Securities to whom the
registration rights set forth in Sections 2 and 3 hereof have been transferred
pursuant to Section 11 (d) hereof.
"Person" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization.
"Registrable Securities" means (i) the Common Shares issued to Santa
Fe pursuant to the Plan of Reorganization and (ii) any other securities that
may be issued or distributed in respect of or in exchange for or in replacement
of such Common Shares by way of dividend, split, exchange or other
distribution, recapitalization or reclassification. For the purposes of this
Agreement, Registrable Securities will cease to be Registrable Securities when
(a) a registration statement covering such Registrable Securities has been
declared effective and they have been disposed of pursuant to such effective
registration statement, (b) they are distributed pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act or (c) they have been
otherwise transferred and URI has delivered new certificates or other evidence
of ownership for them not subject to any stop transfer order or other
restriction on transfer and not bearing a legend restricting transfer.
<PAGE> 2
"Rule 144" shall mean Rule 144 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
"Securities Act" means the United States Securities Act of 1933, as
amended.
2. Demand Registration.
(a) Demand. Subject to the terms hereof, URI agrees that it will
(i) file a registration statement with respect to all or part of the
Registrable Securities held by a Holder within thirty days after the Holders of
not less than a majority in number of shares of Registrable Securities make a
written request to URI requesting such registration and specifying the intended
method of disposition of the Registrable Securities to be so registered under
the Securities Act (any such request being referred to as a "Registration
Request") and (ii) use its best efforts to effect such registration (including,
without limitation, filing post-effective amendments, appropriate
qualifications under applicable blue sky or other state securities laws, and
appropriate compliance with the Securities Act) as will permit or facilitate
the sale and distribution of all or such portion of such Registrable Securities
as are specified in such request; provided that such Registration Request is
made at any time on or after the expiration of twelve (12) months from the date
of this Agreement and on or prior to the third anniversary hereof (subject to
any increase in time pursuant to Section 2(b) below), provided further that URI
shall not be obligated to effect such registration unless such registration may
be made pursuant to a registration statement on Form S-3 (or any substitute
form the SEC may adopt) under the Securities Act; and provided further that URI
shall not be obligated to effect such registration if all of the Registrable
Securities to be included in such registration can, within thirty days of such
Registration Request, be sold pursuant to Rule 144.
The Company will use its best efforts to qualify for registration on
Form S-3.
Within ten days after receipt of such Registration Request, URI will
give written notice of such Registration Request to all Holders of Registrable
Securities, which notice shall offer such Holders the opportunity to include in
such registration statement such amount of Registrable Securities as each such
Holder may request, and URI will include in each such registration statement
all Registrable Securities with respect to which it has received written
requests for inclusion therein within ten business days following the date on
which such notice is given.
Subject to Section 3(e) and the last sentence of Section 5 hereof, URI
shall not be required to file more than three registration statements and
effect more than three registrations pursuant to this section (for purposes of
determining whether a registration statement has been filed, a Take-Down
pursuant to Section 3(c) shall count as a registration statement). For
purposes of the foregoing sentence, a registration shall not be deemed to have
been effected or a Take-Down made (i) unless and until such registration
statement has been declared effective under the Securities Act and either (A)
all Registrable Securities covered by such registration statement or Take-Down
have actually been sold or distributed pursuant thereto or (B) the period
-2-
<PAGE> 3
during which URI must keep such registration statement (including a Shelf
Registration during distribution of Registrable Securities after a Take-Down)
effective pursuant to paragraph (b) below shall have expired or (ii) if, after
such registration statement has become effective, such registration is
interfered with by any stop order, injunction, order or other requirement of
law or requirement of any governmental agency or court and, as a result
thereof, no Registrable Securities are actually sold or distributed pursuant to
such registration statement or Take-Down.
(b) Effectiveness, Etc. URI agrees to use its best efforts to
have such registration statement requested pursuant to Section 2(a) declared
effective under the Securities Act as soon as practicable after filing and to
keep such registration statement (as well as any Shelf Registrations during
distributions of Registrable Securities after a TakeDown pursuant to Section
3(c) hereof) continuously effective until ninety days after the effective date
(or the Take-Down Date, as applicable) or such earlier date at which the
distribution is completed. Notwithstanding the foregoing, if (i) the Board of
Directors of URI determines, in good faith, that such registration would be
materially detrimental to URI and the Board of Directors of URI concludes, as a
result, that it is essential to delay the filing of such registration
statement, and (ii) the Company shall furnish to the Holders a certificate
signed by the president of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be materially detrimental to
the Company for such registration statement to be filed without delay and that
it is, therefore, essential to delay the filing of such registration statement,
then URI shall have the right to delay such filing but may not delay the filing
for a period of more than 90 days after receipt of the initial request. In the
event any filing is delayed, the two-year period during which demands pursuant
to Section 2(a) hereof may be made shall be extended by one day for every day
of delay.
URI further agrees, if necessary, to supplement or amend such
registration statement requested pursuant to Section 2(a) (as well as any
Take-Down pursuant to Section 3(c)), if required by (x) the registration form
utilized by URI for such registration statement or by the instructions
applicable to such registration form, (y) the Securities Act or the rules and
regulations thereunder or (z) the Holders of (or any underwriter(s) for) any
shares of the Registrable Securities covered by such registration statement
with respect to information concerning such Holders or underwriter(s). URI
agrees to furnish to the Holders of the Registrable Securities copies of any
such supplement or amendment prior to its being used or filed with the
Commission. URI will pay all Registration Expenses (as hereinafter defined) in
connection with such registration statements requested pursuant to Section
2(a), whether or not it becomes effective, and such Take-Downs pursuant to
Section 3(c).
(c) Right of Company or Security Holders to Piggyback. URI and
any of its security holders that have a contractual right to require URI to
register the sale or other disposition of Common Shares shall, subject to the
terms hereof, have the right to include common shares in any registration
statement under Section 2(a) or any Take-Down pursuant to Section 3(c), but
only if (i) the Holders of a majority of the Registrable Shares being
registered in such registration consent to such inclusion in writing and (ii)
if such registration is an underwritten
-3-
<PAGE> 4
offering, URI or such security holders, as applicable, agree in writing to sell
their securities on the same terms and conditions as apply to the Registrable
Securities being sold.
(d) Selection of Underwriters. If a requested registration
pursuant to this Section 2 or a Take-Down pursuant to Section 3(c) involves an
underwritten offering, the managing underwriters) thereof shall be selected by
the Holders of not less than a majority of the number of shares of the
Registrable Securities so to be registered.
(e) Priority in Requested Registrations. If a requested
registration pursuant to this Section 2 or a Take- Down pursuant to Section
3(c) involves an underwritten offering and the managing underwriter(s) shall
advise URI in writing (with a copy to each Holder of Registrable Securities
requesting registration) that, in the opinion of such managing underwriter(s),
the number of securities requested to be included by Holders in such
registration exceeds the number which can be sold in such offering within a
price range acceptable to the Holders of not less than a majority of the number
of shares of Registrable Securities requested to be included in such
registration, only that number of Registrable Securities which URI is so
advised can be sold in such offering at such acceptable price shall be
included, such Registrable Securities so included being allocated pro rata
among the Holders requesting such registration on the basis of the number of
such securities requested to be included by such Holders, and neither URI nor
any holder of Common Shares other than the Holders hereunder shall participate
in such requested registration, unless all Registrable Securities requested by
the Holders to be registered are included in the registration.
(f) Requested Underwritten Offerings. If requested by the
managing underwriter(s) for any underwritten offering by Holders of Registrable
Securities pursuant to a registration requested under this Section 2 or a
Take-Down pursuant to Section 3(c) (including for such purpose a "qualified
independent underwriter" required in connection with such offering by the rules
of the National Association of Securities Dealers, Inc.), URI will enter into
an underwriting agreement with respect to such offering, such agreement to be
reasonably satisfactory in substance and form to each, such Holder, URI and the
managing underwriter(s) and to contain such representations and warranties by
URI and such other terms as are generally prevailing in agreements of that
type, including, without limitation, indemnities to the effect and to the
extent provided in Section 7. The Holders of the Registrable Securities will
cooperate with URI in the negotiation of the underwriting agreement and will
give consideration to the requests of the managing underwriter(s) and the
reasonable suggestions of URI regarding the form thereof, provided that nothing
herein contained shall diminish the foregoing obligations of URI. The Holders
of Registrable Securities to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements
on the part of, URI to and for the benefit of such underwriters shall also be
made to and for the benefit of such Holders of Registrable Securities and that
any or all of the conditions precedent to the obligations of such underwriters
under such underwriting agreement be conditions precedent to the obligations of
such Holders of Registrable Securities. No such Holder of Registrable
Securities shall be required to make any representations or warranties to or
agreements with URI or the
-4-
<PAGE> 5
underwriters other than representations, warranties or agreements regarding
such Holder, such Holder's Registrable Securities and such Holder's intended
method of distribution and other representations required by law. Without
limiting the foregoing, in no event shall any Holder be required to make any
representation or warranty with respect to URI or its businesses or operations.
3. Piggyback Registration.
(a) Registration of Similar Securities. If at any time after the
first anniversary of the date of this Agreement and prior to the third
anniversary of the date of this Agreement URI proposes to file a registration
statement on Form S-3 or any other form under the Securities Act with respect
to an offering of Similar Securities (other than in connection with an exchange
offer or an offering of securities solely to existing shareholders of URI or a
delayed or continuous offering covered by Section 3(b) or (c) below) then URI
will promptly give to each Holder written notice thereof, which notice shall
state whether such registration will be in connection with an underwritten
offering (and, if not, shall identify the alternative plan of distribution) and
offer each such Holder the opportunity to include in such registration
statement and such underwritten offering such amount of Registrable Securities
as each such Holder may request prior to the anticipated filing date. The
Company shall use its best efforts to include in such registration (and any
related qualification under blue sky laws or other compliance), except as set
forth in Section 3(d) below, and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests made by any
Holder within ten (10) days after the written notice from the Company described
above is mailed or delivered by the Company. Such written request may specify
all or a part of a Holder's Registrable Securities. If such registration is in
connection with an underwritten offering or in connection with a transaction
pursuant to which securities are being sold to a purchaser or purchasers with a
view to the redistribution thereof, such Registrable Securities may only be
sold as part of such underwriting or transaction. If the anticipated filing
date is deferred by more than fifteen business days, URI shall promptly give
written notice of such new filing date to each Holder of Registrable
Securities, which notice shall offer each such Holder the opportunity to
include in such registration statement such amount of Registrable Securities as
each such Holder may request, provided such Holder makes such new request not
later than forty-eight hours prior to the new filing date. For purposes of
this Section 3(a), "Similar Securities' shall mean (i) URI's Common Stock, par
value $.001 per share, and (ii) any other class of URI's common equity
hereinafter authorized, but shall not include debt securities convertible into
any of the foregoing.
(b) Shelf Registrations. If URI proposes to file a registration
statement under the Securities Act with respect to an offering by URI of any
Similar Securities on a delayed or continuous basis (a 'Shelf Registration"),
then URI shall give written notice of such proposed filing to each Holder of
Registrable Securities at least twenty-five days before the anticipated filing
date, which notice shall offer each such Holder the opportunity to include in
such Shelf Registration such amount of Registrable Securities as each such
Holder may request at least five business days prior to the anticipated filing
date. In lieu of including the Registrable Securities in the same registration
statement in which URI's securities are included, the Registrable
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Securities may be included in a separate registration statement on the same
registration form filed no later than the date on which the registration
statement relating to the securities to be offered by URI is filed; provided,
however, that for purposes of this Agreement such separate registration
statement shall be deemed to be the same registration statement as that which
relates to the securities being offered by URI; and provided further that such
separate registration statement shall not be deemed a registration statement
for purposes of the penultimate sentence of Section 2(a). If the anticipated
filing date is deferred by more than fifteen business days, URI shall promptly
give written notice of such new filing date to each Holder of Registrable
Securities, which notice shall offer each such Holder the opportunity to
include such amount of Registrable Securities as each such Holder may request
if such Holder makes such new request at least five business days prior to the
new filing date.
(c) Shelf Registration Take-Downs. As soon as practicable and in
any event within forty-eight hours after receiving written notice (a "Take-Down
Notice") from the Holders of not less than a majority of the number of shares
of Registrable Securities covered by a Shelf Registration specifying the amount
and intended method of disposition of such Holders' Registrable Securities
under the Securities Act, URI shall notify the Holders whether any filing under
the Securities Act is required in connection with such disposition (a
"Take-Down") and shall make all required filings within (3) days after such
notification. The date such filings are made or the date of notification from
URI that no filing is required is referred to as a "TakeDown Date". Any
filings made by URI pursuant to this Section 3(c) in connection with a TakeDown
of Registrable Securities (or any notification that no such filing is required)
shall be deemed to be a filing of a registration statement for purposes of the
penultimate sentence of Section 2(a). No sales shall be made pursuant to a
Shelf Registration pursuant to Sections 3(b) and 3(C) except during the
ninety-day period (the "Take-Down Period") commencing on a TakeDown Date,
subject to Section 5(d) and the last paragraph of section 5.
(d) Underwritten Offering. URI shall use its best efforts to
cause the managing underwriter(s) of a proposed underwritten offering pursuant
to Section 3(a) to permit the Holders of Registrable Securities requested to be
included in the registration for such offering to include such Registrable
Securities in such offering on the same terms and conditions as any Similar
Securities of URI included therein. Upon request by URI or the managing
underwriter(s) made to the Holders of Registrable Securities requested to be
included in the registration for such proposed underwritten offering prior to
the effective date thereof, such Holders shall enter into underwriting
agreements with such underwriter or underwriters in customary form providing
for the inclusion of such Registrable Securities in such offering, on such
terms and conditions or, if any such Holders shall refuse to enter into any
such agreements, URI shall have the right to exclude from such registration all
(but not less than all) Registrable Securities of the Holders who shall have
refused to enter into such agreement. Notwithstanding the foregoing, if the
managing underwriter(s) of such offering inform the Holders of Registrable
Securities that the total amount of securities which such Holders, URI and any
other persons or entities intend to include in such offering is sufficiently
large to materially and adversely affect the success of such offering, then the
respective amounts of securities to be offered for the account of each Holder
of Registrable Securities and for the accounts of all other holders of
securities requesting
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registration shall be reduced pro rata, based on the number of such securities
requested to be included by each Holder of Registrable Securities and each
other holder, to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount recommended by such managing
underwriter(s); provided that URI shall not be subject to such pro rata
reduction.
(e) Effectiveness, Etc., URI agrees to use its best efforts to
effect the registration and the sale of the Registrable Securities requested to
be registered pursuant to this Section 3 in accordance with the intended method
of disposition thereof as quickly as practical; except that URI may terminate
such registration (i) in its sole discretion and for any reason in the case of
a registration pursuant to Section 3(a); or (ii) upon not less than five days
notice to the Holders of Registrable Securities in the case of a registration
pursuant to Sections 3(b) and 3(c), if the Board of Directors of URI
determines, in good faith, that such registration would be seriously
detrimental to URI and the Board of Directors of URI concludes, as a result,
that such registration should not proceed. If URI terminates any registration
pursuant to the foregoing sentence during any Take-Down of Registrable
Securities pursuant to Section 3(c), no registration statement will be deemed
to have been filed or Take-Down deemed to have been made in connection
therewith for purposes of the penultimate sentence of Section 2(a).
(f) Availability of Rule 144. Notwithstanding this Section 3, URI
shall not be obligated to effect registration of any Registrable Securities if
all of such Registrable Securities to be included in such registration can,
within thirty days of such Registration Request, be sold pursuant to Rule 144
under the Securities Act.
4. Holdback Agreements.
(a) To the extent not inconsistent with applicable law, each
Holder of Registrable Securities constituting ten percent (10%) or more of the
outstanding Common Stock of URI agrees not to offer publicly or effect any
public sale or distribution of the issue being registered or of any similar
security of URI, or any securities convertible into or exchangeable or
exercisable for such securities, including a sale pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act, during the seven
days prior to, and during the one hundred and eighty-day period beginning on
the effective date (or the commencement of a takedown in the case of a shelf
registered offering) of any registration statements relating to URI's
securities (except as part of such registration or take-down), if and to the
extent requested by URI in the case of a non-underwritten public offering in
which Registrable Securities of such Holder are included or if and to the
extent requested by the managing underwriter(s) in the case of an underwritten
public offering in which Registrable Securities of such Holder are included;
provided, however, that all officers and directors of the Company and holders
of at least one percent (1%) of the Company's voting securities are bound by
and have entered into similar agreements. Anything herein to the contrary
notwithstanding, under no circumstances shall any Holder of Registrable
Securities be precluded by the provisions of this Section 4 from offering
publicly or effecting any public sale or distribution of Registrable Securities
for more than one
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<PAGE> 8
hundred and eighty-seven days out of any consecutive period of three hundred
and sixty-five days.
(b) URI agrees (i) not to effect any public sale or distribution
of its equity securities or securities convertible into or exchangeable or
exercisable for such equity securities during the seven days prior to the
effective date of any registration pursuant to Section 2 or Section 3 hereof
(except as part of such registration or pursuant to registrations on Form S-8
or any successor form to Form S-8) and during the period subsequent to such
effective date and prior to the completion of the sale by the Holders of all
Registrable Securities offered pursuant to such registration and (ii) to cause
each holder of its privately placed equity securities convertible into or
exchangeable or exercisable for such equity securities purchased from URI on or
after the date of this Agreement to agree not to effect any public sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 (except as part of such registration, if permitted).
The obligations described in this Section 4 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future.
5. Registration Procedures.
Subject to the provisions of Section 2 and 3 hereof, in connection
with the registration of Registrable Securities hereunder, URI will as
expeditiously as possible:
(a) furnish to each seller of Registrable Securities, prior to
filing a registration statement, copies of such registration statement as
proposed to be filed, and thereafter such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents in such
quantities as such seller may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such seller;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) use its best efforts to keep such registration effective for a
period of ninety (90) days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto,
whichever first occurs; provided, however, that (i) such 90-day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (ii) in
the case of any registration of Registrable Securities
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<PAGE> 9
on Form S-3 which are intended to be offered on a continuous or delayed basis,
such 90-day period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold, provided
that Rule 145, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis, and provided further that applicable
rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
that (1) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (II) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (1) and
(111) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the Exchange Act in the registration statement;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
as any seller of Registrable Securities reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller; except that URI will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (b), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;
(e) use its best efforts to cause the Registrable Securities
covered by such registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary by virtue
of the business and operation of URI to enable the seller or sellers thereof to
consummate the disposition of such Registrable Securities;
(f) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and URI
will promptly prepare and furnish to each seller a reasonable number of copies
of a supplement or amendment to such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing;
provided, however, that URI shall have no obligations pursuant to this Section
5(d) in the cases of a registration pursuant to Sections 3(b) and 3(c) except
during the period beginning on the date of the company's receipt of a Take-Down
Notice and ending on the earlier of (i) the sale of all Registrable Securities
being sold pursuant to such Take-Down, and (H) the end of the TakeDown Period
(as it may be extended pursuant to the last paragraph of Section 5);
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<PAGE> 10
(g) use its best efforts to cause all such Registrable Securities
to be listed (i) on each securities exchange on which similar securities issued
by URI are then listed, or (H) if no such similar securities are then listed,
on the Nasdaq National Market System;
(h) enter into customary agreements (including an underwriting
agreement in customary form) in form reasonably necessary to effect the offer
and sale of Common Stock and take such other actions as are reasonably required
in order to expedite or facilitate the disposition of such Registrable
Securities;
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other agent retained by
any such seller or underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of URI and its
Subsidiaries (collectively, the "Records") as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
officers, directors and employees of URI to supply all information reasonably
requested by any such Inspector in connection with such registration statement.
Records which URI determines, in good faith, to be confidential and which it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in the registration statement and either (A)
such registration has not been terminated or delayed pursuant to the provisions
of Section 2 or 3 hereof, as the case may be, or (B) sales have been
consummated pursuant to such registration statement by any seller of
Registrable Securities or (ii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction. Each
seller of Registrable Securities shall use reasonable efforts, prior to any
such disclosure by such seller's Inspector, to inform URI that such disclosure
is necessary to avoid or correct a misstatement or omission in the registration
statement. Each seller of Registrable Securities further agrees that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to URI and allow URI, at the expense of URI, to
undertake appropriate action to prevent disclosure of the Records deemed
confidential;
(j) in the event such sale is pursuant to an underwritten public
offering, use its best efforts to obtain a letter of the kind contemplated by
the Statement of Auditing Standards No. 72, "Letters For Underwriters and
Certain Other Requesting Parties," promulgated by the American Institute of
Certified Public Accountants (an "AICPA Letter") from the independent public
accountants for URI in customary form and covering such matters of the type
customarily covered by such letters as the Holders of a majority of the number
of shares of the Registrable Securities being sold reasonably request;
(k) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and to make available to its security
holders, as soon as reasonably practicable, an earning statement covering a
period of at least twelve months, beginning with the first month after the
effective date of the registration statement, which earning statement shall
satisfy the provisions of Section II (a) of the Securities Act and Rule 158
thereunder; and
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(l) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number for all such Registrable Securities, in each case not later than the
effective date of such registration.
URI may require each seller of Registrable Securities as to which any
registration is being effected to furnish to URI such information regarding
such seller or the distribution of such securities as URI may from time to time
reasonably request in writing, in each case only as required by the Securities
Act.
Each Holder of Registrable Securities agrees that, upon receipt of any
notice from URI of the happening of any event of the kind described in Section
5(d) hereof, such Holder shall forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5(d) hereof (the "Blackout Period"),
and, if so directed by URI, such Holder will deliver to URI (at the expense of
URI) all copies, other than permanent file copies then in such Holder's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event URI shall give any such
notice in connection with a registration statement, URI shall keep such
registration statement effective (or shall extend the Take-Down Period, as
applicable) for the period commencing on the date when each such seller of
Registrable Securities covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
Section 5(d) hereof and continuing thereafter for a number of days equal to the
number of days which were remaining in the period during which URI was
otherwise required to keep such registration statement effective pursuant to
Section 2(b) (or for a number of days equal to the number of days which were
remaining in the Take-Down Period, as applicable) on the date when URI gave
such notice pursuant to Section 5(d) hereof. In the event any Blackout Period
substantially prejudices the successful completion of the distribution of
Registrable Securities, or in any event extends for a period in excess of rive
days, then there shall not be deemed to have been a filing of a registration
statement or the use of a Take-Down in connection with such distribution for
the purposes of the penultimate sentence of Section 2(a).
6. Registration Expenses.
All expenses (other than underwriting discounts and commissions
attributable to the Registrable Securities and other than fees and
disbursements of more than one counsel for the selling Holders) incident to the
performance of or compliance with this Agreement by URI, including, without
limitation, all registration and filing fees (including, without limitation,
fees of the Commission and the National Association of Securities Dealers,
Inc.), fees and expenses of compliance with securities or blue sky laws
(including reasonable fees and disbursements of counsel in connection with blue
sky qualifications of the Registrable Securities), rating agency fees, printing
expenses, messenger and delivery expenses, internal expenses (including,
without limitation, all expenses of its officers and employees performing legal
or accounting duties), the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange on which
similar securities issued by URI are then listed, fees and
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disbursements of counsel for the underwriters and of one counsel for the
selling Holders, fees and disbursements of counsel for URI and its independent
certified public accountants (including the expenses of any special audit or
AICPA Letter required by or incident to such performance), the cost of
securities acts liability insurance (if the underwriters so require or URI
elects to obtain such insurance), the fees and expenses of any special experts
retained by URI in connection with such registration and the fees and expenses
of other persons retained by URI (all such expenses being herein called
"Registration Expenses"), will be borne by URI. AU underwriting discounts,
selling commissions and stock transfer taxes applicable to the sale of
Registrable Securities shall be borne by the Holders of such securities pro
rata on the basis of the number of shares of securities so registered on their
behalf, as shall any other expenses in connection with the registration
required to be borne by the Holders of such securities. Any Holder who retains
counsel other than or in addition to the one counsel for the Holders whose fees
and disbursements are included within Registration Expenses shall pay the fees
and disbursements of such other or additional counsel.
7. Indemnification: Contribution.
(a) Indemnification by URI. URI agrees to indemnify, to the full
extent permitted by law, each Holder of Registrable Securities included in
any registration statement pursuant to Section 2 or 3 hereof, its officers,
directors legal counsel and accountants and each person who controls, is
controlled by or under common control with (within the meaning of the
Securities Act) each such Holder, officer, director, legal counsel and
accountants, and each underwriter and each person who controls, is controlled
by or under common control with any underwriter, against all losses, claims,
damages, liabilities and expenses (including attorneys' fees and other expenses
incurred in connection with investigating or defending any such claims) arising
out of or based on any untrue or alleged untrue statement of material fact
contained in any registration statement, or any prospectus, preliminary
prospectus contained therein, or any amendment or supplement thereto, or in any
other document incident to any such registration, or based on any omission or
alleged omission to state in any such document a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
any violation by the Company of the Securities Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, and will
reimburse each such Holder, each of its officers, directors, legal counsel and
accountants and each person controlling, controlled by or under common control
with such Holder, each such underwriter, and each person controlling,
controlled by or under common control with any such underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating and
defending or settling any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any such untrue statement or omission or alleged untrue statement or
omission based upon information furnished in writing to URI by or on behalf of
a Holder or underwriter expressly for use therein or (ii) the fact that a
Holder or underwriter sold Registerable Securities to a Person to whom there
was not sent or given a copy of the prospectus as amended or supplemented to
the date of such sale at or prior to the confirmation of such sale.
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Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(b) Indemnification by Holders of Registrable Securities. In
connection with any registration statement in which a Holder of Registrable
Securities is participating, each such Holder will furnish to URI in writing
such information with respect to such Holder as URI reasonably requests for use
in connection with any such registration statement, or any prospectus or
preliminary prospectus contained therein, or any amendment or supplement
thereto, and agrees to indemnify, to the extent permitted by law, URI, its
directors and officers and each person who controls URI (within the meaning of
the Securities Act) against any losses, claims, damages, liabilities and
expenses caused by any untrue or alleged untrue statement of a material fact
contained in any such registration statement, or any prospectus or preliminary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information with respect to such Holder provided by such
Holder for use in the preparation of such registration statement.
Notwithstanding anything to the contrary in this Agreement, in no event shall
any indemnification provided hereunder by the Holder(s) of Registrable
Securities in connection with any registration thereof exceed the amount of
proceeds received by such Holder(s) in connection with such registration.
(c) Conduct of Indemnification Proceedings. Any person entitled
to indemnification hereunder shall give prompt written notice to the
indemnifying party after the receipt by such person of actual knowledge of any
claim as to which such person may claim indemnification or contribution
pursuant to this Agreement and, unless in the reasonable judgment of such
indemnified party a conflict of interest may exist between such indemnified
party and the indemnifying party with respect to such claim, permit the
indemnifying party to assume, and the indemnifying party shall assume, the
defense of such claim with counsel reasonably satisfactory to such indemnified
party, and the indemnified party may participate in such defense at its own
expense. Failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under this Section
7, to the extent such failure is not prejudicial. If the indemnifying party is
not entitled to assume the defense of a claim, it will not be obligated to pay
the fees and expenses of more than one counsel for the indemnified parties with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels. The indemnifying party will not be subject to
any liability for any settlement made without its consent. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to the entry of any judgment or
enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
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(d) Contribution. If the indemnification provided for in this
Section 7 from the indemnifying party is held by a court of competent
jurisdiction to be unavailable to an indemnified party hereunder in respect of
any losses, claims, damages, liabilities or expenses referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or the omission to state a material fact, has been made by,
or relates to information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of the losses, claims, damages,
liabilities and expenses referred to above shall be deemed to include, subject
to the limitations set forth in Section 7(c) hereof, any legal or other fees or
expenses reasonably incurred by such party in connection with any investigation
or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
If indemnification is available under this Section 7, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
Section 7(a) and (b) hereof without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this Section 7(d).
Notwithstanding anything to the contrary in this Agreement, in no
event shall the amount contributed hereunder by the Holder(s:) of Registrable
Securities in connection with any registration thereof exceed the amount of
proceeds received by such Holder(s) in connection with such registration.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with an underwritten public offering
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the parties under this Section 7 shall
survive the termination of this Agreement.
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8. Participation in Underwritten Registrations.
No person may participate in any underwritten registration thereunder
unless such person (a) agrees to sell such person's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
9. Rule 144; Current Reports.
With a view to making available to the Holders the benefits of Rule 144
promulgated under the Securities Act and any other rule or regulation of the
Commission that may at any time permit a Holder to sell securities of URI to the
public without registration, URI agrees to use its best efforts to:
(a) timely file all reports and other documents required to be
filed by it under the Securities Act and the Securities Exchange Act of 1934
(the "Exchange Act") and the rules and regulations adopted by the Commission
thereunder (or, if it is not required to file such reports, it will make
publicly available at all times such information as will enable the Holders of
Registrable Securities to sell any Registrable Securities held by them without
registration under the Securities Act as described in this section 9);
(b) take such further action as any Holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such Rule may be amended from time to time, or
(ii) any similar rule or regulation hereafter adopted by the Commission; and
(c) furnish to any Holder so long as such Holder owns any of the
Registrable Securities forthwith upon request a written statement by URI that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act (at any time during which it is subject to such reporting
requirements), a copy of the most recent annual or quarterly report of URI, and
such other reports and documents so filed by URI as may be reasonably requested
in availing any Holder of any rule or regulation of the Commission permitting
the selling of any such securities without registration.
10. Termination of URI's Obligations.
URI's obligations pursuant to Sections 2 and 3 hereof shall terminate
on the date on which all Registrable Securities (other than Registrable
Securities acquired by URI or any affiliate of URI) can be freely sold by the
Holder thereof without registration under the Securities Act to a transferee,
who (unless an affiliate of URI) would be able to sell freely such Common Share
without further registration under the Securities Act.
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<PAGE> 16
11. Miscellaneous.
(a) No Inconsistent Agreements. URI will not hereafter enter into
any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
which provides to any other person more favorable registration rights than
those provided herein to the Holders of Registrable Securities. URI is not a
party to any existing agreement with respect to any of its securities which is
inconsistent with the rights granted to the holders of Registrable Securities
in this Agreement or which provides to any other person more favorable
registration rights than those provided herein to the Holders of Registrable
Securities. Anything in this Agreement to the contrary notwithstanding, (i)
URI shall not be prohibited from entering into other agreements providing for
registration rights with respect to its securities, which agreements may
contain restrictions no less favorable to URI than those contained in Section
4(b) hereof, (ii) URI shall not be prohibited from entering into underwriting
agreements, which underwriting agreements may contain usual and customary
restrictions prohibiting URI from filing registration statements for stated
periods of time not to exceed 180 days and (iii) URI's obligation to file a
registration statement pursuant to Section 2 or effect a Take-Down pursuant to
Section 3(c) shall be suspended during any period of time in which any such
agreement or underwriting agreement prohibits URI from doing so.
(b) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to or departures from the provisions hereof may not be
given unless URI has obtained the written consent of Holders of at least a
majority in number of shares of the Registrable Securities then outstanding
affected by such amendment, modification, waiver or departure, but in no event
shall the obligation of any Holder hereunder be materially increased, except
with the written consent of such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made by hand delivery, facsimile, nationally
recognized courier or first-class mail postage prepaid:
(i) if to a Holder of Registrable Securities, as
indicated below or at such other address as such Holder or assignee
shall have furnished to the Company in writing:
Santa Fe Pacific Gold Corporation
6200 Uptown Boulevard NE
Albuquerque, New Mexico 871 10
Attention: Wayne Jarke
Telephone: 505-880-5395
Facsimile: 505-880-5435
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<PAGE> 17
(ii) if to URI at its address set forth below or at such
other address as the Company shall have furnished the Holders in
writing:
Uranium Resources, Inc.
12750 Merit Drive
Suite 1020, Box 12
Dallas, Texas 75251
Attention: President
Telephone: 214-387-7777
Facsimile: 214-387-7779
All such notices and communications shall be deemed to have been duly
given: when delivered, if by hand, overnight courier or mail; and when
transmitted, if by telecopy.
(d) Successors and Assigns; Transfer of Registration Rights. The
registration rights set forth in this Agreement may be transferred by a Holder
only to a transferee or assignee of not less than 100,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustments for
stock splits, stock dividends, reverse stock splits, and the like), provided,
however, that URI is given written notice of such transfer at or within a
reasonable time after said transfer or assignment, stating the name and address
of each transferee or assignee and identifying the securities with respect to
which the rights are being transferred or assigned, and, provided further, that
the transferee or assignee of such rights assumes in writing the obligations of
such Holder under this Agreement.
(e) Delay of Registration. No Holder shall have any right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of the Agreement.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings to this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of New Mexico applicable to
contracts to be performed wholly within New Mexico, without regard to conflicts
of law principles. Any Holder of Registrable Securities may bring any action
or proceeding to enforce or arising out of this Agreement in any court of
competent jurisdiction. If such Holder commences such an action in a court
located in the County of Bernalillo, State of New Mexico, or the United States
District Court for the District of New Mexico, URI hereby agrees that it will
submit to the personal jurisdiction of such courts and will not attempt to have
such action dismissed, abated or transferred on the
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<PAGE> 18
ground of forum non convenience; provided, however, that nothing contained
herein shall prohibit URI from seeking, by appropriate motion, to remove an
action brought in a New Mexico state court to the United States District Court
for the District of New Mexico. If such action is so removed, however, URI
shall not seek to transfer such action to any other district, nor shall URI
seek to transfer to any other district any action which such Holder originally
commenced in such federal court. Any action or proceeding brought by URI to
enforce or arising out of this Agreement shall be brought solely in a court of
competent jurisdiction located in the County of Bernalillo, State of New
Mexico, or in the United States District Court for the District of New Mexico.
URI agrees that a summons and complaint or equivalent documents
commencing an action or proceeding in any court shall be validly and properly
served and shall confer personal jurisdiction over URI if served to the
President of URI, whom URI hereby designates and appoints as URI's authorized
agent to accept and acknowledge on its behalf service of any and all process
which may be served in such action or proceeding in any such court. URI shall
be sent, by certified mail, a copy of such summons and complaint at the time of
service upon such agent; provided, however, that any such copy shall be sent
solely as a courtesy to URI and its failure to receive such copy shall in no
way affect the validity and propriety of the service made on URI through such
agent, as above provided. URI waives any objection which it may now or
hereafter have to venue of any such action or proceeding, and waive any right
to seek removal of any action or proceeding commenced in accordance herewith.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that any of the rights and privileges
of Santa Fe shall be enforceable to the fullest extent permitted by law.
(j) Entire Agreement. This agreement is entered into by the
parties in connection with a transaction involving the transfer of common stock
of Uranco owned by Santa Fe to URI in exchange for common stock of the Company,
the grant by URI to Santa Fe of registration rights with respect to the stock
of URI to be issued to Santa Fe, the grant by Santa Fe to Uranco of a license
to explore and an option to purchase in exchange for certain commitments by
Uranco, and the guarantee by URI of certain obligations of Uranco to Santa Fe.
In order to effect this transaction, certain of the parties have
contemporaneously entered into certain agreements, specifically, the Stock
Exchange Agreement and Plan of Reorganization (URI and Uranco), the Agreement
of Santa Fe as Uranco Shareholder and Guarantee of URI (Santa Fe and URI); the
License to Explore and Option to Purchase (Santa Fe and Uranco); and the
Registration Rights Agreement (Santa Fe and URI). All of such agreements,
together with all exhibits or schedules thereto and documents delivered
pursuant thereto, contain the entire agreement among the parties with respect
to the contemplated transaction, and shall supersede all previous writings and
all previous or contemporaneous oral negotiations, commitments, and
understandings.
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<PAGE> 19
(k) Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
URANIUM RESOURCES, INC.
By: /s/ Paul K. Willmott
-----------------------------------
Name: Paul K. Willmott
---------------------------------
Title: President
--------------------------------
SANTA FE PACIFIC GOLD CORPORATION
By: /s/ D.A. Smith
-----------------------------------
Name: D.A. Smith
---------------------------------
Title: Vice President and Chief
Financial Officer
--------------------------------
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<PAGE> 1
EXHIBIT 10.16
LOAN AGREEMENT
This Loan Agreement (the "Agreement") is made and entered into this 18th
day of June, 1996 by and between Uranium Resources, Inc. (the "Company" or
"Uranium Resources"), and Lindner Dividend Fund, a series of Lindner
Investments, a Massachusetts business trust ("Creditor"), whose address is 7711
Carondelet Avenue, Suite 700, St. Louis, Missouri 63105.
RECITALS
A. On May 25, 1995, the Company, Lindner Dividend Fund, Inc., a
Missouri Corporation and Lindner Investments, a Massachusetts business trust
entered into a certain Note and Warrant Purchase Agreement (the "Note and
Warrant Purchase Agreement") pursuant to which the Purchaser, as defined
therein, purchased certain secured promissory notes to raise funds for the
Company.
B. The Company now seeks to borrow $4,000,000.00 from Creditor to
allow the Company to enter into a certain Uranium Solution Mining Lease with
Mestena Unproven, Ltd., et. al. as lessor, which lease has an effective date of
December 16, 1995 (the "Lease").
C. The Company has agreed to execute a promissory note in the
principal amount of $4,000,000.00 in favor of Creditor (the "Note"), and a
certain Deed of Trust of even date herewith granting Creditor a first lien as
to the Company's rights pursuant to the Lease (the "Second Deed of Trust").
D. The Company has agreed that in connection with this transaction,
it will be bound by certain of the representations, warranties and covenants
contained in the Note and Warrant Purchase Agreement.
E. The parties now memorialize in this Agreement the additional
agreements and covenants negotiated in connection with the Note and Second Deed
of Trust.
NOW, THEREFORE, in consideration of the covenants and agreements
contained in this Agreement, it is agreed by the parties as follows:
1. Defined Terms. Capitalized terms which are not defined herein
shall have the meanings assigned to such terms in the Note and Warrant Purchase
Agreement, except as otherwise specified herein.
2. The Loan. Subject to the terms and conditions hereof and in
reliance upon the representation and warranties
<PAGE> 2
set forth in this Agreement, the Creditor hereby agrees to loan to the Company
four million dollars ($4,000,000.00) to permit the Company to enter into the
Lease (the "Loan"). As security for the Loan, the Company shall grant to
Creditor a first Lien on the collateral which is the subject of the Second Deed
of Trust.
3. Representations and Warranties. The Company represents and
warrants that:
3.1 Note and Warrant Purchase Agreement. The following
representations and warranties of the Company contained in Section 5 of the
Note and Warrant Purchase are true and correct in all respects on the date
hereof: 5.1, 5.2, 5.4, 5.9, 5.11, 5.13, 5.15, 5.17, 5.18, 5.19, 5.20, 5.21 and
5.22. For purposes of the foregoing representations and warranties, capitalized
terms contained therein shall have the meaning assigned to them in the Note and
Warrant Purchase Agreement, except that (i) "Purchase Documents" shall include
the Note, the Second Deed of Trust, and this Agreement; and (ii) The "Texas
Real Property" shall include all of the Company's real property and leasehold
interests in the collateral more particularly described in the Second Deed of
Trust.
3.2 Corporate Organization and Authority. Each of the Company and
the Subsidiaries (a) is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware (except for Beltline
Resources, Inc., a Subsidiary of the Company which is a corporation duly
organized and validly existing, and in good standing under the laws of the
State of Texas), (b) has full corporate power and authority to carry on its
business as now conducted, (c) has full corporate power and authority to enter
into the Note, Deed of Trust and this Agreement and to execute and deliver such
documents as contemplated therein and (d) is duly qualified or licensed and in
good standing in each state or jurisdiction in which the ownership or its
properties or the conduct of its, business requires said qualification or
licensing, except where failure to be so qualified, licensed and in good
standing could not reasonably be expected to have a Material Adverse Effect.
3.3 Authorization and Approvals. The execution, delivery and
performance of the Note, the Second Deed of Trust and this Agreement do not (a)
require any approval or consent on the part of, or filing, registration or
qualification with, any governmental body, federal, state or local that has not
been obtained or performed, except the recording of the Deed of Trust in the
applicable office, or (b) contravene (i) the charter or by-laws of the Company
or any Subsidiary, or (ii) any applicable law or contractual restriction
binding on or affecting the Company or any Subsidiary, and (c) do not result
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<PAGE> 3
in or require the creation of any Lien (other than Liens created pursuant to
the Second Deed of Trust.
3.4 Company Collateral. The Company is the owner of the leasehold
interest covered by the Second Deed of Trust, including without limitation, all
of the Company's rights pursuant to the Lease. The collateral is not subject
to any Liens other than those in favor of Creditor, except as set forth in the
Mortgage Title Opinion referenced in section 10.6 hereof.
3.5 Actions, Suits or Proceedings. Except as set forth in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
there are no actions, suits or proceedings, at law or in equity, and no
proceedings before any arbitrator or by or before any governmental commission,
board, bureau or other administrative agency, pending, or to the best knowledge
of the Company threatened, against or affecting the Company, any Subsidiary, or
any properties or rights of the Company or any Subsidiary which, if adversely
determined, could materially impair the right of the Company or any Subsidiary
to carry on business substantially as now conducted or could have a Material
Adverse Effect upon the Company and the Subsidiaries individually, or taken as
a whole.
3.6 Financial Statements. Except as set forth in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, the Financial
Statements, as hereinafter defined, have been prepared in accordance with
generally accepted accounting principles consistently applied, except as
otherwise indicated in such Financial Statements, or in an auditor's report
with respect thereto, and present fairly the financial condition of the Company
and its Subsidiaries as of the dates indicated therein, and the results of
their operations and changes in their cash flows for the periods then ended.
To the best of the Company's knowledge, except as set forth in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, neither the
Company nor any Subsidiary has any material contingent obligations, liabilities
for taxes, long-term leases or unusual forward or long-term commitments not
disclosed by, or reserved against, in the Financial Statements. "Financial
Statements" shall mean the audited financial statements of the Company and its
Subsidiaries contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and the unaudited consolidated financial Statements of
the Company and its Subsidiaries contained in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996.
3.7 Taxes. The Company has and each of its Subsidiaries has filed
all federal, state and foreign income tax returns which are required to be
filed at or prior to the
3
<PAGE> 4
date of this Agreement, and each has paid or caused to be paid all taxes as
shown on such returns or on any assessment received by it to the extent that
such taxes or assessments have become due at or prior to the date of this
Agreement. Federal income tax returns of the Company and its Subsidiaries have
been examined and reported on by the taxing authorities or closed by applicable
statutes and satisfied for all fiscal years prior to and including the fiscal
year ended on July 31, 1992.
3.8 Valid Liens. The Liens granted by the Company to Purchaser in or
on the collateral which is the subject of the Second Deed of Trust, including,
without limitation, the Company's rights pursuant to the Lease, are valid and
perfected Liens, securing the obligations of the Company to Creditor under the
Note, the Second Deed of Trust and this Agreement, and such collateral is
subject to no Liens that are prior to, on a parity with or junior to the Liens
in favor of the Creditor, except as set forth in the Mortgage Title Opinion
referenced in section 10.6 hereof.
3.9 Compliance with Agreement; No Default. The Company is in
compliance with all of the covenants contained in the Note, the Second Deed of
Trust and this Agreement, and no Event of Default has occurred and is
continuing. The Company has performed and complied in all material respects
with all agreements and conditions contained in the Note, the Second Deed of
Trust or this Agreement which are required to be performed or complied with by
the Company on or before the closing date.
4. Affirmative Covenants. So long as the indebtedness under the
Note is outstanding and unless the Creditor shall otherwise consent in writing,
the Company shall comply with the following affirmative covenants outlined in
Section 6 of the Note and Warrant Purchase Agreement: 6.1, 6.2, 6.3, 6.4, 6.5,
6.6, 6.7, 6.8, 6.9, 6.10. For purposes of the foregoing affirmative covenants,
capitalized terms contained in such affirmative covenant, or in the definition
of any capitalized term within such affirmative covenant, shall have the
meanings assigned to them in the Note and Warrant Purchase Agreement, except
that "Notes" shall include the Note; "Purchaser" shall mean the Creditor; an
"Event of Default" shall include an Event of Default pursuant to this Loan
Agreement; the "Collateral" and the "Texas Real Property" shall include all of
the Company's real property and leasehold interests in the collateral more
particularly described in the Second Deed of Trust; "Closing Date" shall mean
the date which is simultaneous with the execution and delivery of this
Agreement, or such later date as mutually agreeable to the parties; and
"Purchase Documents" shall include the Note, the Second Deed of Trust, and this
Agreement.
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<PAGE> 5
5. Negative Covenants. So long as the indebtedness under the Note
is outstanding and unless the Creditor shall otherwise consent in writing, the
Company shall be bound by each of the following negative covenants outlined in
section 7 of the Note and Warrant Purchase Agreement: 7.1, 7.2, 7.3, 7.4, 7.5,
7.6, 7.7 and 7.8. For purposes of the foregoing negative covenants, capitalized
terms contained in such negative covenant, or in the definition of any
capitalized term within such negative covenant, shall have the meanings
assigned to them in the Note and Warrant Purchase Agreement, except that
"Purchaser" shall mean the Creditor; an "Event of Default" shall include an
Event of Default pursuant to this Loan Agreement; the "Collateral" and the
"Texas Real Property" shall include all of the Company's real property and
leasehold interests in the collateral more particularly described in the
Second Deed of Trust; and "Purchase Documents" shall include the Note, the
Second Deed of Trust, and this Agreement.
6. Use of Loan Proceeds. The Company further agrees that it shall
not use the monies loaned by Creditor to the Company for any purpose other than
to acquire its interests pursuant to the Lease.
7. Events of Default. It shall be a default under this Agreement,
the Note and the Second Deed of Trust if any of the following events occurs:
7.1 The Company defaults in the payment of principal or interest on
the Note when the same becomes due and payable and the default continues for a
period of five (5) days;
7.2. The Company fails to comply with any term or covenant in this
Agreement, the Note or the Second Deed of Trust (other than payment terms of
the Note), and the failure continues for a period of thirty (30) days;
7.3. An event of default occurs under the Deed of Trust or the Note
and Warrant Purchase Agreement.
8. Acceleration. If an Event of Default (other than an Event of
Default specified in clauses (g) and (h) of Section 8.1 of the Note and Warrant
Purchase Agreement) occurs and is continuing, the Creditor, by written notice
to the Company may declare the unpaid principal of and accrued interest on the
Note to be due and payable. Upon such declaration the principal and interest
shall be due and payable immediately. If an Event of Default specified in
clause (g) or (h) of Section 8.1 of the Note and Warrant Purchase Agreement
occurs, the unpaid principal of and accrued interest on the Note shall ipso
fact become and be immediately due and payable without any declaration or other
act on the part of Creditor. The Creditor
5
<PAGE> 6
may by notice to the Company rescind an acceleration and its consequences if
the rescission would not conflict with any judgment or decree and if all
existing Events of Default under this Agreement have been cured or waived,
except for the nonpayment of principal or interest that has become due solely
because of the acceleration.
9. Other Remedies. If an Event of Default occurs and is continuing,
the Creditor may pursue any available remedy to collect the payment of
principal or interest on the Note or to enforce the performance of any
provision of the Note or this Agreement. Any failure of the Creditor to take
any steps to enforce, foreclose upon, or realize on any of the collateral which
is the subject of the Second Deed of Trust or to exercise any other right under
the Note, the Second Deed of Trust or this Agreement, shall not operate as a
waiver of any other right or remedy of the Creditor or as a defense to the
enforcement of the Note, the Second Deed of Trust or this Agreement. Moreover,
the Creditor's manner of disposing of any of its collateral or marshalling is
not a defense to the enforcement of the Creditor's rights under the Note, the
Second Deed of Trust or this Agreement.
10. Conditions of Loan. The obligation of Creditor to loan monies
under this Agreement is subject to receipt by Creditor of the following
documents, in form and substance satisfactory to the Creditor, on or prior to
the date of this Agreement, which the Company agrees to provide:
10.1 Certificates of recent date of the appropriate authority or
official of the Company's state of incorporation, listing all incorporation
documents of the Company on file in that office and certifying as to the good
standing and corporate existence of the Company, together with copies of such
incorporation documents of the Company, certified as of a recent date by such
authority or official and certified as true and correct as of the Closing Date
by a duly authorized officer of the Company.
10.2 A copy of the Bylaws of the Company, together with all
authorizing resolutions and evidence of other corporate action taken by the
Company to authorize the execution, delivery and performance by the Company of
the Note, the Second Deed of Trust and this Agreement, and the consummation by
the Company of the transactions contemplated by such documents, certified as
true and correct as of the date of this Agreement by a duly authorized officer
of the Company.
10.3 Certificates of incumbency of the Company containing and
attesting to the genuineness of the signatures of those officers authorized to
act on behalf of the Company in connection with the loan, and the consummation
by the Company
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<PAGE> 7
of the transactions contemplated by the Note, the Second Deed of Trust and this
Agreement, certified as true and correct as of the date hereof by a duly
authorized officer of the Company.
10.4 The Note duly executed by the Company;
10.5 The Second Deed of Trust duly executed by the Company;
10.6 Mortgage Title Opinion for the collateral outlined in the Second
Deed of Trust reflecting a first lien in favor of the Creditor and otherwise
satisfactory to the Creditor;
10.7 An opinion of counsel to the Company addressed to Creditor and
its counsel, dated as of the date hereof, substantially in a form acceptable to
Creditor;
10.9 Any and all such other documents as the Creditor may reasonably
request;
10.10 Payment of all administration expenses as
required by this Agreement, incurred by the Company up to the date of this
Agreement; and
10.11 A written consent by Lindner Investments and Lindner Dividend
Fund to the Loan.
11. Miscellaneous Provisions.
11.1 Notices. All communications provided for hereunder shall be in
writing and delivered or mailed by registered or certified mail, at the address
appearing below, or such other address of which the parties hereto have been
given notice.
If to Company: Uranium Resources, Inc.
123750 Merit Drive, Suite 1020
Dallas, Texas 75251
Attention: President
With a copy to: Baker & Hostetler
303 East 17th Street
Suite 1100
Denver, Colorado 80203
Attention: Alfred C. Chidester
If to Creditor: c/o Ryback Management Corporation
7711 Carondelet Avenue, Suite 700
St. Louis, Missouri 63105
Attention: Eric E. Ryback
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<PAGE> 8
With a Copy to: Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
Attention: Paul R. Rentenbach
11.2 Successor and Assigns. This Agreement shall be binding upon and
inure to the benefit of, and be enforceable by, the parties hereto and their
respective successors and assigns.
11.3 Severability. Should any part of this Agreement for any reason
be declared invalid, such decisions shall not affect the validity of any
remaining portion, which remaining portion shall remain in force and effect as
if this Agreement had been executed with the invalid portion thereof eliminated
and it is hereby declared the intention of the parties hereto that they would
have executed the remaining portion of the Agreement without including therein
any such part, parts, or portion which may, for any reason, by hereafter
declared invalid.
11.4 Captions. The descriptive headings of the various section or
parts of this Agreement are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
11.5 Payments Due on Saturdays, Sundays and Holidays. In any case
where the interest payment date on the Note or the date fixed for any other
payment of the Note shall be on a Saturday, Sunday or a legal holiday or a day
on which banking institutions are authorized by law to close in St. Louis,
Missouri, then such payment or exchange need not be made on such date but may
be made on the next succeeding business day not a Saturday, Sunday or a legal
holiday or a day upon which banking institutions are authorized by law to close
in St. Louis, Missouri, with the same force and effect as if made on the due
date.
11.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument. The execution and
delivery of this Agreement shall be deemed effective upon receipt by each party
hereto of a facsimile copy of this Agreement executed by the other party
hereto.
11.7 Governing Law. This Agreement and the Note shall be construed in
accordance with Missouri law.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties have executed this agreement.
URANIUM RESOURCES, INC.
By: /s/ PAUL K. WILLMOTT
----------------------------
Paul K. Willmont
Its: President
LINDNER DIVIDEND FUND, a series of
LINDNER INVESTMENTS
By: /s/ ERIC E. RYBACK
---------------------------
Eric E. Ryback
Its: President
9
<PAGE> 1
EXHIBIT 10.19
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION
AS URANCO INC. SHAREHOLDER WITH URANIUM RESOURCES, INC.
AND GUARANTEE OF URANIUM RESOURCES, INC.
This Agreement is made and entered into effective as of March 25, 1997
between Santa Fe Pacific Gold Corporation, a Delaware corporation ("SFPG"), and
Uranium Resources, Inc., a Delaware corporation ("URI").
RECITALS:
1. SFPG owns all of the issued and outstanding shares of capital
stock (the "Uranco Stock") of Uranco Inc., a Delaware corporation ("Uranco").
2. SFPG has heretofore conveyed by deed to Uranco certain mineral
interests as specifically set forth herein. This Agreement is the Agreement
referred to in those deeds as setting forth the exclusive remedies of the
grantee, its successors and assigns, related to the property covered by the
deeds.
3. SFPG has heretofore granted an exploration license to Uranco
Inc. which imposes certain obligations upon Uranco Inc.
4. Simultaneously herewith, Uranco has entered into a Stock
Exchange Agreement and Plan of Reorganization (the "Stock Exchange Agreement")
with URI pursuant to which SFPG is to exchange the Uranco Stock for 1,200,000
shares of the common stock, $.001 par value per share, of URI (hereinafter the
"URI Shares") (the "Exchange").
5. As a condition to the Exchange, URI is willing to guarantee
the obligations of Uranco under the exploration license provided SFPG agrees to
compensate it in the event that the title of Uranco to uranium in place in
certain properties, the uranium or mineral interests of which were obtained by
Uranco from SFPG, should fail.
6. The parties desire to enter into this Agreement to consummate
the Exchange and provide the guarantee by URI of Uranco's obligations under the
exploration license.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties hereto agree as follows:
SECTION 1. SFPG TRANSFER OF URANCO STOCK AND INVESTMENT REPRESENTATION.
SFPG hereby conveys, transfers and assigns all its right, title and
interest in and to the Uranco Stock to URI in consideration of the issuance by
URI of the URI Shares, receipt of which is hereby acknowledged by SFPG, in
accordance with the terms and conditions set forth in the Stock Exchange
Agreement and Plan of Reorganization dated contemporaneously herewith
<PAGE> 2
by and between Uranco and URI. SFPG has the knowledge and experience in
business and financial matters to meaningfully evaluate the merits and risks of
the purchase and acquisition of the URI Shares in exchange and consideration
for the Uranco Stock as contemplated hereby. SFPG acknowledges that the URI
Shares have been issued by URI without registration or qualification or other
filings being made under the Federal Securities Act of 1933, as amended, or the
securities or "Blue Sky" laws of any state, in reliance upon specific
exemptions therefrom, and in furtherance thereof SFPG represents that the URI
Shares received by it have been taken for its own account for investment, with
no present intention of a distribution or disposition thereof to others. SFPG
agrees that the certificates representing the URI Shares issued to it shall be
subject to a stop-transfer order and shall bear a restrictive legend, in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
ARE "RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY, IS NOT REQUIRED TO BE
REGISTERED UNDER THE ACT.
SECTION 2. URI GUARANTEE OF EXPLORATION LICENSE OBLIGATIONS.
URI guarantees the performance by Uranco of its obligations under the
License to Explore and Option to Purchase granted as of March 21, 1997 from
SFPG (the "License").
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<PAGE> 3
SECTION 3. [ ]
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<PAGE> 4
SECTION 4. SFPG REPRESENTATIONS AND WARRANTIES.
SFPG represents and warrants to URI that:
(a) SFPG has heretofore conveyed to Uranco (i) all of the interest
reserved by Santa Fe Pacific Railroad Company in the instruments set forth in
the Deeds attached hereto at Schedule 3 but excluding coal in place, including
development or mineral rights related thereto (the "Mineral Interests") and
further excluding the interests described as excluded in the Deeds but subject
to the grants and interests stated in the Deeds; and (ii) title to all
geological, geophysical and geochemical data and interpretive data, (except
data relating to coal, including the development or mining of coal) (the
"Technical Data") relating to the Mineral Interests being conveyed by the
Deeds; and has delivered to Uranco all Technical Data presently known by Senior
Management of SFPG to be in its possession and will deliver copies of all
geological, geophysical and geochemical data and interpretive data for the
property included in the License within a reasonable time after a written
request from Uranco and/or URI.
(b) The Board of Directors of SFPG has approved the transactions
set forth in this Agreement and SFPG has the requisite power and authority to
enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery by SFPG of this Agreement, the performance by SFPG of
its obligations hereunder and the consummation by SFPG of the transactions
contemplated hereby have, to the extent necessary, been duly authorized by the
appropriate corporate action, and no other proceeding on the part of SFPG is
necessary for the execution and delivery thereof and the performance of its
obligations hereunder. This Agreement is a legal, valid and binding obligation
of SFPG, enforceable in accordance with its terms except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the effect
of general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(c) All consents and approvals required for SFPG to enter into
this agreement and to carry out the transaction as set forth herein have been
obtained. Neither the execution, delivery or performance of this Agreement by
SFPG nor the consummation by SFPG of the transactions contemplated hereby will
(i) conflict with or result in any breach of any provisions of the Articles of
Incorporation or By-laws of SFPG or any of its Subsidiaries, (ii) require any
filing with, or permit, authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission; (iii) require the
consent or approval of any person; (iv) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
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<PAGE> 5
under, or result in the creation of any lien or other encumbrance on any of the
Mineral Interests pursuant to, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which SFPG is a party or by which SFPG or its
properties or assets may be bound; or (v) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to SFPG or by which any of its
property or assets is bound.
(d) Except as set forth in Schedule 4(d), there is no Proceeding
(as defined below) which has been served on SFPG or, to the Actual Knowledge of
Senior Management of SFPG, threatened against or involving SFPG involving the
Mineral Interests before any court, arbitrator or administrative or
governmental body. There are no Proceedings pending or, to the Actual
Knowledge of Senior Management of SFPG, threatened against SFPG arising out of
or in any way related to this Agreement or any of the transactions contemplated
hereby. As used in this Agreement, "Proceeding" means any action, suit,
hearing, arbitration or governmental investigation (whether public or private).
(e) Senior Management of SFPG has no Actual Knowledge of any
failure on the part of Uranco Inc. or its predecessors in title to the mineral
interests owned by Uranco Inc. to comply in all material respects with the laws
and regulations of federal, state or local governments applicable to such
mineral interests, including environmental laws.
As used in this section, "Senior Management" includes Chairman,
President and Chief Executive Officer Patrick M. James, Executive Vice
President and Chief Operating Officer Leroy E. Wilkes, Senior Vice President -
Corporate Development Bruce D. Hansen, Vice President - Environmental Quality
Tim J. Leftwich, and General Counsel and Secretary Wayne Jarke. As used in
this section, "Actual Knowledge" means any personal knowledge, as of the date
hereof, without making inquiry of any other person and without review of any
records of SFPG or otherwise; and
(f) The revenues generated by the Mineral Interests conveyed by
SFPG to Uranco on or before the date of this Agreement did not exceed
$5,000,000 over the three-year period preceding the date of this Agreement.
SECTION 5. URI REPRESENTATIONS AND WARRANTIES.
URI represents and warrants to SFPG that:
(a) The Board of Directors of URI has approved the transactions
set forth in this Agreement and URI has the requisite power and authority to
enter into this Agreement and to carry out its obligations hereunder;
(b) All consents and approvals required for URI to enter into this
agreement and to carry out the transaction as set forth herein have been
obtained;
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<PAGE> 6
(c) Its representations and warranties contained in Article 2,
Sections, 2. 1 through 2.9 of the Stock Exchange Agreement and Plan of
Reorganization dated effective as of March 25, 1997, by and between Uranco Inc.
and URI are true and correct;
(d) The URI Shares are fully paid and non-assessable and not
subject to preemptive rights;
SECTION 6. INDEMNIFICATION BY SFPG AND URI.
(a) SFPG agrees to indemnify and hold URI and Uranco harmless
against and in respect of (1) any and all damages resulting from any
misrepresentation, breach of any representation or warranty or nonfulfillment
of any agreement on the part of SFPG under this Agreement or from any
misrepresentations in or omission from any certificate furnished by SFPG
hereunder; and (2) any and all actions, suits, proceedings, demands,
assessments, judgments, costs and other expenses (including reasonable legal
fees) incident to the foregoing.
(b) URI agrees to indemnify and hold SFPG harmless against and in
respect of (1) any and all damages resulting from any misrepresentation, breach
of any representation or warranty or nonfulfillment of any agreement on the
part of URI under this Agreement or from any misrepresentations in or omission
from any certificate furnished by URI hereunder; and (2) any and all actions,
suits, proceedings, demands, assessments, judgments, costs and other expenses
(including reasonable legal fees) incident to the foregoing.
(c) Notice of any claims desired to be asserted by a party seeking
indemnification ("Indemnitee") against the other party ("Indemnitor") with
respect to any matter for which Indemnitee claims indemnification pursuant to
this Section 6 shall be served by Indemnitee upon the Indemnitor promptly. Any
such notice shall set forth in reasonable detail the basis for the claim
asserted. Within 20 days following its receipt of such notice, the Indemnitor
shall send written notice to the Indemnitee stating:
(1) Whether in its view the claim is one for which the
Indemnitee is entitled to indemnification (a "Covered Claim"), and
(2) If it acknowledges that the claim is a Covered Claim
whether they choose to dispute its validity by participating in any
defense of any action brought by a third party with respect to such
claim.
If the Indemnitor fails to furnish such notice within such 20-day
period, such failure shall constitute its agreement that the claim is a
"Covered Claim" and its election not to participate in the defense of any
action on the Claim.
If Indemnitor fails to furnish such notice or states in such
notification that the claim is not a Covered Claim or that it declines to
dispute the validity of said Claim, the Indemnitee may defend or settle the
claim without the participation of Indemnitor, reserving any rights it might
have with respect to indemnification. If Indemnitor acknowledges that the
claim
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<PAGE> 7
is a Covered Claim, then Indemnitor may participate, at its own cost and
expense, in any discussions and proceedings relating thereto, provided that it
has so notified the Indemnitee of its intention to do so in such notice. If
Indemnitor does participate in any discussions and proceedings, Indemnitor
shall pay its own costs and expenses in connection therewith.
Any settlement or compromise made by the Indemnitee in accordance with
this Section 5 without the participation of the Indemnitor or any final
judgment or decree entered in any claim, suit or action defended only by the
Indemnitee alone shall be deemed to have been consented to by, and shall be
obligatory and binding upon, the Indemnitor as fully as if the Indemnitor alone
had assumed the defense thereof and a final judgment or decree had been entered
in such suit or action, or with regard to such claim by a court of competent
jurisdiction for the amount of such settlement or compromise, satisfaction,
judgment or decree, subject only to the right of the Indemnitor to dispute that
any such claim is a Covered Claim if, but only if, the Indemnitor has served
the proper notice within the proper time asserting that the claim is not a
Covered Claim.
(d) To the extent, if at all, that a court of competent
jurisdiction determines that NMSA 1978, Section 56-7-2 (Repl. Pamp. 1996)
applies to any provision of this Agreement, then any and all provisions of
indemnification shall not indemnify any indemnitee against loss or damages,
for:
(1) death of bodily injury to persons; or
(2) injury to property; or
(3) any other loss, damage or expense arising under (i) or (ii) or
both; or
(4) any combination of these, arising from the sole or concurrent
negligence of the indemnitee or the agents or employees of the
indemnitee or any independent contractor who is directly responsible
to the indemnitee, or from any accident which occurs in operations
carried on at the direction or under the supervision of the indemnitee
or an employee or representative of the indemnitee or in accordance
with methods and means specified by the indemnitee or employees or
representations of the indemnitee.
(e) To the extent, if at all, that a court of competent
jurisdiction determines that NMSA 1978, Section 56-7-1 applies to the
indemnification set forth in this Agreement, the indemnification does not apply
to liability, claims, damages, losses or expenses, including attorney fees
arising out of:
(1) the preparation or approval of maps, drawings, opinions,
reports, surveys, change orders, designs or specifications by the
indemnitee, or the agents or employees of the indemnitee; or
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<PAGE> 8
(2) the giving of or failure to give directions or instructions by
the indemnitee, or the agents or employees of the indemnitee, where
such giving or failure to give directions or instructions is the
primary cause of bodily injury to persons or damage to property.
SECTION 7. COVENANTS OF URI.
URI for the two year period commencing on the date of the Exchange or
until SFPG disposes of all of the URI Shares acquired in the Exchange,
whichever is earlier, will cause Uranco to actively engage in the conduct of
the trade or business being conducted by Uranco on the date hereof and will not
cause or allow Uranco to take any action, or to fail to take any action, which
would, or could with the passage of time, adversely affect the qualification of
the Exchange under Section 368(a)(1)(B) of the Internal Revenue Code, including
but not limited to the following:
(a) Merge or consolidate Uranco with or into any other
corporation;
(b) Liquidate or partially liquidate Uranco;
(c) Cause Uranco to sell or transfer substantially all its assets
in a single transaction or series of related transactions;
(d) Cause Uranco to redeem or otherwise repurchase any of its
capital stock;
(e) Cause Uranco to issue additional shares of its stock (except
in connection with an issuance pursuant to employee benefit or compensation
plans of Uranco; or
(f) Cease to engage in the active conduct of the trade or business
engaged in by Uranco on the date hereof;
unless URI first obtains, and permits to SFPG to review, an opinion of Baker &
Hostetler LLP or other law firm of similar repute, or a ruling from the
Internal Revenue Service that such transaction will not adversely affect the
qualification of the Exchange under Section 368(a)(1)(B) of the Internal
Revenue Code.
The foregoing shall apply regardless of whether or not the Exchange
actually qualifies under Section 368(a)(1)(B) of the Internal Revenue Code.
SECTION 8. LEGAL OPINIONS.
The following legal opinions have been exchanged by the parties:
(a) URI has received the opinion of Modrall, Sperling, Roehl,
Harris & Sisk, P.A., counsel to SFPG, dated the Closing Date, substantially to
the effect that:
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<PAGE> 9
(i) SFPG is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(ii) SFPG has full corporate power and authority to
execute, deliver and perform this Agreement and this Agreement has
been duly authorized, executed and delivered by SFPG and (assuming due
and valid authorization, execution and delivery by URI) constitutes
the legal, valid and binding agreement of SFPG, enforceable in
accordance with its terms except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by
the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iii) The execution and performance by SFPG of this
Agreement will not violate the Certificate of Incorporation or By-Laws
of SFPG, respectively, and, to the knowledge of such counsel, will not
violate, result in a breach of or constitute a default under any
material lease, mortgage, contract, agreement, instrument, law, rule,
regulation, judgment, order or decree to which SFPG is a party or by
which they or any of their properties or assets may be bound.
(iv) After inquiry of the officers of SFPG, such counsel
has no knowledge of any consent, approval, authorization or order of
any court or governmental agency or body which has not been obtained
but which is required on behalf of SFPG for the consummation of the
transactions contemplated by this Agreement.
(v) After inquiry of the officers of SFPG, such counsel
has no knowledge of any actions, suits or proceedings, pending or
threatened against or affecting SFPG by any governmental entity which
seek to restrain, prohibit or invalidate the transactions contemplated
by this Agreement.
(b) SFPG has received the opinion of Baker & Hostetler LLP,
counsel to URI, dated the Closing Date, substantially to the effect that:
(i) The incorporation, existence and good standing of URI
are as stated in this Agreement.
(ii) URI has full corporate power and authority to
execute, deliver and perform this Agreement and the Stock Exchange
Agreement and this Agreement and the Stock Exchange Agreement have
been duly authorized, executed and delivered by URI and (assuming due
and valid authorization, execution and delivery by Uranco) constitute
the legal, valid and binding agreements of URI, enforceable in
accordance with their terms except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent
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<PAGE> 10
transfer or other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect of
general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(iii) The execution and performance by URI of this
Agreement and the Stock Exchange Agreement will not violate the
Certificate of Incorporation or ByLaws of URI, respectively, and, to
the knowledge of such counsel, will not violate, result in a breach of
or constitute a default under any material lease, mortgage, contract,
agreement, instrument, law, rule, regulation, judgment, order or
decree to which URI is a party or by which it or any of its properties
or assets may be bound.
(iv) To the knowledge of such counsel, no consent,
approval, authorization or order of any court or governmental agency
or body which has not been obtained is required on behalf of URI for
the consummation of the transactions contemplated by this Agreement or
the Stock Exchange Agreement.
(v) To the knowledge of such counsel, there are no
actions, suits or proceedings, pending or threatened against or
affecting URI by any governmental entity which seek to restrain,
prohibit or invalidate the transactions contemplated by this Agreement
or the Stock Exchange Agreement.
(vi) The Shares have been duly authorized and are validly
issued and outstanding and are fully paid and nonassessable.
(vii) The shares of URI Common Stock issued in the Exchange
have been listed on the Nasdaq National Market subject to official
notice of issuance.
SECTION 9. PUBLIC ANNOUNCEMENTS.
URI and SFPG will consult with each other before issuing any press
release or otherwise making any public statements with respect to this
Agreement or the transactions contemplated hereby and will not issue any such
press release or make any such public statement prior to such consultation.
Notwithstanding the foregoing, SFPG and URI shall not be prohibited from
issuing any press release or making any public statement with respect to this
Agreement or the transactions contemplated hereby as may be required under
applicable law, but in any such event, SFPG or URI, as the case may be, shall
notify the other party prior to taking such action.
SECTION 10. NASDAQ NATIONAL MARKET.
URI shall use its reasonable best efforts to list on the Nasdaq
National Market, upon official notice of issuance, the shares of URI Common
Stock to be issued to SFPG in connection with the Exchange.
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SECTION 11. FEES AND EXPENSES.
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses, except as otherwise specifically set forth in this
Agreement or in the Registration Rights Agreement.
SECTION 12. REASONABLE EFFORTS.
Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts after the
Closing, to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Exchange and the other transactions
contemplated by this Agreement and the prompt satisfaction of the conditions
hereto, including (a) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from Governmental Entities and the making of
all necessary registrations and filings and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by, any Governmental Entity, (b) the obtaining of all necessary
consents, approvals or waivers from third parties, and (c) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement.
SECTION 13. NOTICES.
All notices and other communications hereunder shall be in writing and
shall be deemed given on the date of delivery, if delivered personally or faxed
during normal business hours of the recipient, or three days after deposit in
the U.S. Mail, postage prepaid, if mailed by registered or certified mail
(return receipt requested) as follows:
(a) if to SFPG, to:
Santa Fe Pacific Gold Corporation
6200 Uptown Blvd. NE
Albuquerque, New Mexico 87110
Attention: Wayne Jarke, General Counsel
Fax No.: (505) 880-5437
with a copy to:
Modrall Law Firm
500 Fourth Street NW, Suite 1000
Albuquerque, New Mexico 87102
Attention: John R. Cooney
Fax No.: (505) 848-1889
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<PAGE> 12
(b) If to URI, to:
Uranium Resources, Inc.
12750 Merit Drive, Suite 1020
Box 12
Dallas, Texas 75251
Attention: President
Fax No.: (214) 387-7779
with a copy to:
Baker & Hostetler LLP
303 East 17th Avenue, Suite 1100
Denver, Colorado 80203
Attention: Alfred C. Chidester
Fax No.: (303) 861-7805
SFPG and URI may hereafter notify the other of changes in the information set
forth in this section, which changes shall be effective if given in compliance
with this section.
SECTION 14. ASSIGNABILITY AND PARTIES IN INTEREST.
This Agreement shall inure to the benefit of and be binding upon URI
and SFPG and their respective successors and assigns. The assigning party
shall give notice of such assignment within 20 days after the effective date of
assignment. Any assignment shall be of the entire Agreement.
SECTION 15. CHOICE OF LAW, CHOICE OF FORUM AND ATTORNEYS' FEES.
This Agreement shall be governed by and construed in accordance with
the internal law of the State of New Mexico without giving effect to conflicts
of law principles thereof. SFPG and URI agree that all litigation arising out
of or related to this Agreement for the performance or non-performance of
actions contemplated by this Agreement shall be brought in a federal or state
court of competent jurisdiction within the state of New Mexico. SFPG and URI
consent to jurisdiction of such a court. In any action or proceeding brought
to enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party shall be entitled to
recover reasonable attorneys' fees in addition to any other available remedy.
SECTION 16. COUNTERPARTS.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and the same instrument.
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SECTION 17. COMPLETE AGREEMENT.
This agreement is entered into by the parties in connection with a
transaction involving the transfer of common stock of Uranco owned by SFPG to
URI in exchange for common stock of URI, the grant by URI to SFPG of
registration rights with respect to the stock of URI issued to SFPG, the grant
by SFPG to Uranco of a license to explore and an option to purchase in exchange
for certain commitments by Uranco, and the guarantee by URI of certain
obligations of Uranco to SFPG. In order to effect this transaction, certain of
the parties have contemporaneously entered into certain agreements,
specifically, the Stock Exchange Agreement and Plan of Reorganization (URI and
Uranco); this Agreement; the License to Explore and Option to Purchase (SFPG
and Uranco); and the Registration Rights Agreement (SFPG and URI). All of such
agreements, together with all exhibits or schedules thereto and documents
delivered pursuant thereto, contain the entire agreement among the parties with
respect to the contemplated transaction, and shall supersede all previous
writings and all previous or contemporaneous oral negotiations, commitments,
and understandings.
SECTION 18. CONFIDENTIALITY AGREEMENT.
The Parties have heretofore entered into a Confidentiality Agreement
dated August 26, 1996, which is incorporated herein by reference and which
shall continue to govern the conduct of the Parties.
SECTION 19. INTERPRETATION.
The headings in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
SECTION 20. SEVERABILITY.
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction be ineffective
as to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
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<PAGE> 14
SANTA FE PACIFIC GOLD CORPORATION
Date: March 25, 1997 By: /s/ Bruce D. Hansen
----------------------------------
Name: Bruce D. Hansen
Title: Senior Vice-President-
Corporate Development
URANIUM RESOURCES, INC.
Date: March 25, 1997 By: /s/ Paul K. Willmott
----------------------------------
Name: Paul K. Willmott
Title: President
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<PAGE> 15
Schedule 3
3.1 Category I, McKinley County
3.2 Category I Claims, McKinley County
3.3 Category I, Sandoval County
3.4 Category II, McKinley County
3.5 Category II, Cibola County
3.6 Category II Royalty, Cibola County
3.7 Category II, Sandoval County
3.8 Category II, Bernalillo County
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<PAGE> 16
EXHIBIT 10.19
Schedule 4(d)
Navajo Nation land and jurisdictional claims: Since 1982, the Navajo
Nation has asserted title and jurisdictional claims over lands in the
checkerboard area in northwestern New Mexico outside the boundaries of the
recognized Navajo Reservation, including portions of McKinley County, where
some of the mineral interests subject to this Agreement are located. While the
federal courts have rejected claims to title to lands, see Navajo Tribe v. New
Mexico, 809 F.2d 1455 (10th Cir. 1987), the courts have acknowledged the
potential for the exercise of off-reservation civil jurisdiction over
non-Indians by the Navajo Nation. See Pittsburg & Midway Coal Mining Co. v.
Watchman, 52 F.3d 1531 (10th Cir. 1995); Texaco, Inc. v. Zah, 5 F.3d 1374 (10th
Cir. 1993).
In view of these assertions, there is the potential that the Navajo
Nation will assert title to, or jurisdiction over, the mineral interests
subject to this Agreement located in McKinley County, New Mexico. While title
claims were rejected, the decision was not on the merits, but was founded on
the fact that the United States was immune from suit, that the suit should have
been brought under the Indian Claims Commission Act of 1946, and the suit could
not proceed against the remaining defendants, including Santa Fe Mining, Inc. ,
because the United States was an indispensable party. Accordingly, the
decision could be read to have barred the claim or remedy, but not the
underlying rights to title to the lands. As reflected in Pittsburg & Midway,
the Navajo Nation aggressively asserts civil jurisdiction, including taxation
and regulatory authority, to off-reservation areas within the territorial
confines of the "Navajo Nation" as the Nation defines that term in 7 N.N.C.
Section 254. While Santa Fe Pacific Gold Corporation and Uranco Inc. have not
attempted to determine whether the mineral interests subject to this agreement
would fall within the area over which the Navajo Nation would assert title or
jurisdiction, neither company are presently aware of any Navajo Nation claim
that would include the mineral interests subject to this Agreement that are
located in Bernalillo, Cibola, or Sandoval Counties.
<PAGE> 17
EXHIBIT 10.19
AFTER RECORDING RETURN TO:
Margaret Lewis Meister
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
P. O. Box 2168
Albuquerque, New Mexico 87103
DEED
Category I
McKinley
STATE OF NEW MEXICO )
COUNTY OF McKINLEY )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals Corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard
N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS
to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the interest reserved by Santa Fe
Pacific Railroad Company in the instruments described in Exhibit A hereto but
only so far as such reservations and exceptions pertain to and cover the real
estate in McKinley County, New Mexico more particularly described in Exhibit B
hereto, less and except the interests described in Exhibit C hereto and subject
to the grants and interests set forth in the instruments set forth in Exhibit D
hereto, all of which exhibits are incorporated herein by reference.
LIMITATION OF REMEDY. Any warranty of title by the Grantor
and any remedies of the Grantee or its successors and assigns related to the
property covered by this Deed shall be limited to the remedies set forth in
that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC.
SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997,
(a copy of which is maintained in the offices of Grantor and Grantee and
attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500
Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other
rights, damages or claims than those specifically set forth therein. Any
rights asserted under the terms of such agreement must be brought within the
time period set forth in such agreement.
<PAGE> 18
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING
DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to
affect or purport to affect, in any way, coal in place, including development
or mining rights related to coal, in any of the property of Grantor or any of
its subsidiaries or affiliates including, but not limited to, the San Juan
Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED
herefrom and RESERVED to Grantor.
WITNESS its hand and seal this 21 day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By:/s/ BRUCE D. HANSEN
------------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March 21, 1997, by Bruce
D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific
Gold Corporation.
(Seal) /s/ JACQUELINE WALSTON
----------------------------------
Jacqueline Walston
Notary Public
My commission expires: January 28, 1998
-----------------
<PAGE> 19
EXHIBIT A
CATEGORY I DEED, MCKINLEY COUNTY
Deeds Reserving Mineral Interests
Warranty Deed dated October 15, 1945 from Santa Fe Pacific Railroad
Company to Fernandez Company, recorded in Book 12 DR, Page 536, in the
official records of McKinley County, New Mexico.
Warranty Deed dated March 4, 1952 from Santa Fe Pacific Railroad
Company to Hazel W. Prewitt, recorded in Book 11 Misc., Page 370, in
the official records of McKinley County, New Mexico.
Warranty Deed dated May 15, 1945 from Santa Fe Pacific Railroad
Company to Harold F. Prewitt and Hazel W. Prewitt, recorded in Book 12
of Deeds, Page 482, in the official records of McKinley County, New
Mexico.
Warranty Deed dated April 16, 1951 from Santa Fe Pacific Railroad Company to
Nabor Marquez.
Warranty Deed dated February 6, 1947, from Santa Fe Pacific Railroad Company to
Nabor Marquez, recorded in Book 13 of Deeds, Page 165, in the official
records of McKinley County, New Mexico.
Warranty Deed dated January 16, 1948, from Santa Fe Pacific Railroad Company to
W. A. Berryhill, recorded in Book 13 of Deeds, Page 298, in the
official records of McKinley County, New Mexico.
Warranty Deed dated August 16, 1950, from Santa Fe Pacific Railroad Company to
Rose C. Eaves, recorded in Book 10 of W. D., Page 423, in the official
records of McKinley County, New Mexico.
Warranty Deed dated March 15, 1947, from Santa Fe Pacific Railroad Company to
Hazel W. Prewitt, an individual, and Hazel W. Prewitt, Guardian Estate
of Joan M. Prewitt, a minor, recorded in Book 13 of Deeds, Page 240, in
the official records of McKinley County, New Mexico.
Warranty Deed dated May 14, 1929, from Santa Fe Pacific Railroad Company to the
United States of America, In Trust for the Navajo Tribe, recorded in
Book 7 of Deeds, Page 243, in the official records of McKinley County,
New Mexico.
Warranty Deed dated November 1, 1948, from Santa Fe Pacific Railroad Company to
W. F. Pitt and Susie Bell Pitt, husband and wife, recorded in Book 9 of
W. D., Page 53, in the official records of McKinley County, New Mexico.
Warranty Deed dated December 1, 1944, from Santa Fe Pacific Railroad to Harold
P. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds, Page
440, in the official records of McKinley County, New Mexico.
<PAGE> 20
EXHIBIT B
CATEGORY I DEED, MCKINLEY COUNTY
CONVEYANCE OF ALL MINERALS EXCEPT COAL TO URANCO
(Revised 03/10/97)
MERIDIAN: NMPM ACRES
<TABLE>
<S> <C> <C>
Township 13 North, Range 8 West
-------------------------------
Section 13 Lots 1-4, W/2 NE/4, W/2 SE4, W/2 645.36
Section 15 All 640.00
Section 17 All 640.00
Township 13 North, Range 9 West
-------------------------------
Section 1 Lots 1-4, S/2 N/2, S/2 640.80
Section 3 Lots 1-4, S/2 N/2, S/2 640.24
Section 5 Lots 1-4, S/2 N/2, S/2 640.00
Section 7 Lots 1-4, E/2 W/2, E/2 648.08
Section 9 All, except that portion of E/2 and 379.92
East 360 ft. of E/2 W/2 described in
Quitclaim Deed to USA dated 3/3/87
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Township 13 North, Range 10 West
--------------------------------
Section 1 Lots 1-4, S/2 N/2, S/2 638.80
Section 3 Lots 1-4, S/2 N/2, S/2 638.16
Section 11 All 640.00
Section 13 All 640.00
</TABLE>
B-1
<PAGE> 21
<TABLE>
<S> <C> <C>
Township 14 North, Range 10 West
--------------------------------
Section 1 All, except 29.98 ac. in Baca Rail Spur 610.66
Section 3 All 640.88
Section 5 All 640.40
Section 7 All 651.04
Section 9 All 640.00
Section 13 All 640.00
Section 15 All, except 4.484 ac. for gas pipeline 607.54
R/W and 27.973 ac. for Baca Rail Spur
Section 17 All 640.00
Section 21 All, except 33.09 ac. in Baca Rail Spur 606.91
Section 23 All 640.00
Section 25 All 640.00
Section 27 All 640.00
Section 29 All, except 32.24 ac. in Baca Rail Spur 607.76
Section 33 All 640.00
Section 35 All 640.00
Township 15 North, Range 10 West
--------------------------------
Section 5 All 641.92
Section 7 All 667.36
Section 9 All 640.00
Section 11 All, except 30.73 ac. in Baca Rail Spur 609.27
Section 15 All, except 27.85 ac. in Baca Rail Spur 612.15
Section 17 All 640.00
Section 19 All 665.04
Section 21 All 640.00
</TABLE>
B-2
<PAGE> 22
<TABLE>
<S> <C> <C>
Section 27 All 640.00
Section 29 All 640.00
Township 16 North, Range 10 West
--------------------------------
Section 7 All 672.48
Section 19 All 669.80
Township 19 North, Range 11 West
--------------------------------
Section 10 All 640.00
Section 11 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 18 All 637.60
Section 19 All 638.44
Section 20 All 640.00
Section 29 N/2, SW/4, N/2 SE/4, SE/4 SE/4 600.00
Section 30 All 639.20
Section 31 All 638.36
Township 17 North, Range 14 West
--------------------------------
Section 13 Lots 1-4 7.32
Section 25 Lots 1-4 11.58
Township 16 North, Range 16 West
--------------------------------
Section 7 Lot 4, S/2 and NE/4 of Lot 3, NE/4, 481.14
SE/4, E/2 SW/4, NE/4 SE/4 NW/4, S/2
SE/4 NW/4
Section 7 Lots 1, 2, NW/4 of Lot 3, NE/4 NW/4, 114.78
NW/4 SE/4 NW/4
</TABLE>
B-3
<PAGE> 23
<TABLE>
<S> <C> <C>
Section 9 N/2 NW/4, N/2 S/2 NW/4, S/2 SW/4 NW/4, 220.00
SW/4 SE/4 NW/4, N/2 NW/4 SW/4, SW/4
NW/4 SW/4, NW/4 NE/4 SW/4, N/2 NW/4
NE/4, SW/4 NW/4 NE/4
Section 9 SE/4, S/2 NE/4, NE/4 NE/4, SE/4 NW/4 420.00
NE/4, S/2 SW/4, E/2 NE/4 SW/4, SW/4 NE/4
SW/4, SE/4 NW/4 SW/4, SE/4 SE/4 NW/4
Section 17 S/2, N/2 NW,/4, SW/4 NW/4 440.00
Section 17 NE/4, SE/4 NW/4 200.00
Township 16 North, Range 17 West
--------------------------------
Section 13 All 640.00
---------
County Total 36,102.99
</TABLE>
B-4
<PAGE> 24
COMPANY: GOLD
STATE: NM
COUNTY: SANDOVAL
<TABLE>
<S> <C> <C>
Township 12 North, Range 3 West
-------------------------------
Section 19 NW/4, SE/4 320.00
------
County Total 320.00
------
GRAND TOTAL: 36,422.99
=========
</TABLE>
B-5
<PAGE> 25
EXHIBIT C
CATEGORY I DEED, MCKINLEY COUNTY
Items Not Included in Grant
Any interest in or under the property in Section 1 and 15, T.14N., R.10W., as
described in the Special Warranty Deed dated November 23, 1983, between Betty
Lou Wilcoxson Harris and Phil Harris to SF Coal Corporation, recorded in Book
35 of Deeds, Page 590, in the official records of McKinley County, New Mexico.
Any interest in or under the property in Sections 21 and 29, T.14N., R.10W., as
described in the Special Warranty Deed dated November 9, 1983, between Leroy
Navarre and Billie Ione Navarre and SF Coal Corporation recorded in Book 35 of
Deeds, Page 585, in the official records of McKinley County, New Mexico.
Any interest in or under the property in Sections 11 and 15, T.15N., R.10W., as
described in the Quitclaim Deed dated November 23, 1983, between R. M. Albers
and Imogene Albers and SF Coal Corporation, recorded in Book 35, Page 598, in
the official records of McKinley County, New Mexico.
Any and all right, title and interest retained by Grantor in that certain
Surface Use Agreement by and between Santa Fe Pacific Railroad Company and R.M.
Albers, et al., dated June 3, 1980, a memorandum of which was recorded at Book
78, Page 252-253 of the official records of McKinley, County, New Mexico.
Any and all right, title and interest retained by Grantor in that certain
Agreement by and between Santa Fe Pacific Railroad Company and Fernandez
Company, Ltd., dated July 31, 1979, a memorandum of which was recorded at Book
76, Page 938 of the official records of McKinley County, New Mexico, which
agreement was partially released on April 2, 1982, which release is recorded at
Book 52, Pages 961 -962 of the official records of McKinley County New Mexico,
and which Agreement was amended on March 2, 1987, a memorandum of which was
recorded in Book 90 Misc., Pages 639-642 of the official records of McKinley
County, New Mexico.
<PAGE> 26
EXHIBIT D
CATEGORY I, MCKINLEY COUNTY
Items to which Deed is Subject
Stipulation in the District Court of McKinley County, New Mexico, case entitled
Santa Fe Pacific Railroad Company, a corporation, Plaintiff v. Duane Berryhill
and Nelda Berryhill, his wife, et. al., No. 8287, filed for record on July 25,
1953 at 9:30 a.m., recorded in Vol. 93, Folio 225, Valencia County records.
Lease Option Agreement dated October 8, 1987, between Cerrillos Land Company
and Santa Fe Energy Company, as amended on July 1, 1988, and as amended on
December 1, 1989, a memorandum of which is recorded in Book 2, Page 1630, in
the official records of McKinley County, New Mexico.
Uranium Mining Lease and Agreement dated March 21, 1957, between Santa Fe
Pacific Railroad Company and Quinta Corporation, as it affects the NE/4 and
SE/4 NW/4 of Section 17, T.16N., R.16W., McKinley County, New Mexico.
Surface Owners Agreement dated February 17, 1959 between Santa Fe Pacific
Railroad Company and the Navajo Tribe of Indians recorded in Book 36, pages
25-29, in the official records of McKinley County, New Mexico.
Waiver of Mineral Development Rights for Taylor Substation Site and Access
Roadway dated November 13, 1973, from Santa Fe Pacific Railroad Company to
Plains Electric Company, recorded in Book 44, Page 932, in the official records
of McKinley County, New Mexico, covering two parcels of land in Lots 3 and 4,
Section 1, T.13N., R.10W.
Uranium Mining Lease dated December 4, 1980 from Santa Fe Pacific Railroad
Company to Teton Exploration Drilling Company covering NE/4 NW/4, Lots 1 and 2,
NW/4 SE/4 NW/4 and NW/4 of Lot 3 in Section 7,T.16N., R.16W. and all of Section
13, T.16N., R.17W., McKinley County, New Mexico.
Surface Owners Agreement by and between Santa Fe Pacific Railroad Company and
Fernandez Company, Ltd., dated July 31, 1979, a memorandum of which was
recorded at Book 76, Page 938 of the official records of McKinley County, New
Mexico, which agreement was partially released on April 2, 1982, which release
is recorded at Book 52, Pages 961-962 of the official records of McKinley
County New Mexico, and which Agreement was amended on March 2, 1987, a
memorandum of which was recorded in Book 90 Misc., Pages 639-642 of the
official records of McKinley County, New Mexico.
Surface Use Agreement by and between Santa Fe Pacific Railroad Company and R.M.
Albers, et al., dated June 3, 1980, a memorandum of which was recorded at Book
78, Page 252-253 of the official records of McKinley County, New Mexico.
<PAGE> 27
Minerals Lease dated May 1, 1993, between Santa Fe Pacific Minerals Corporation
and Quivira Mining Company, a memorandum of which is recorded in Book 7 of
Comp., Page 439, in the official records of McKinley County, New Mexico, as it
covers All of Sections 13, 23, and 25, and a portion of Section 15, T.14N.,
R.10W.
Special Warranty Deed dated June 25, 1993, (effective 6-26-93) from Hospah Coal
Company, Santa Fe Pacific Minerals Corporation, Santa Fe Pacific Mining, Inc.,
The Atchison, Topeka and Santa Fe Railway Company, and the Star Lake Railroad
Company to San Juan Basin Coal Holding Company, recorded in Book 6 Comp., Page
8560, of the official records of McKinley County, New Mexico, covering coal and
coal development rights or mining rights.
Special Warranty Deed dated effective June 25, 1993, from Santa Fe Pacific
Minerals Corporation to Hanson Natural Resources Company covering coal and
related mining rights in Section 19, T.16N., R. 10W., McKinley County, New
Mexico, recorded in Book 6 Comp., Page 8457 in the official records of McKinley
County, New Mexico. (SFPG-47567)
Special Warranty Deed dated effective June 25, 1993, from Santa Fe Pacific
Minerals Corporation to Hanson Natural Resources Company covering coal and
related mining rights in Section 7, T.16N. R.10W., recorded in Book 6 Comp.,
Page 8480, in the official records of McKinley County. (SFPG-47573)
Amended and Restated San Juan Basin Agreement dated June 25, 1993, by and
between Hospah Coal Company, Hanson Natural Resources Company and Chaco Energy
Company.
Road Use and Overpass Construction Agreement dated February 16, 1984 between
Ranch Road, Inc. and SF Coal Corporation, as it covers Section 21, T.14N. ,
R.10W., McKinley County, New Mexico. (SFPG-32-001-SR-19)
Real Estate Taxes for the years 1997 and subsequent years.
<PAGE> 28
AFTER RECORDING RETURN TO:
Margaret Lewis Meister
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
P. O. Box 2168
Albuquerque, New Mexico 87103
DEED
Category I Claims
McKinley
STATE OF NEW MEXICO )
COUNTY OF McKINLEY )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals Corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard
N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS
to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the interest of Grantor in the
instruments described in Exhibit A hereto.
LIMITATION OF REMEDY. Any warranty of title by the Grantor and any
remedies of the Grantee or its successors and assigns related to the property
covered by this Deed shall be limited to the remedies set forth in that certain
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER,
AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997, (a copy of
which is maintained in the offices of Grantor and Grantee and attorneys for
Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W.,
Albuquerque, New Mexico 87102) and shall not include any other rights, damages
or claims than those specifically set forth therein. Any rights asserted under
the terms of such agreement must be brought within the time period set forth in
such agreement.
<PAGE> 29
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR
MINING RIGHTS. This conveyance does not and is not intended to affect or
purport to affect, in any way, coal in place, including development or mining
rights related to coal, in any of the property of Grantor or any of its
subsidiaries or affiliates including, but not limited to, the San Juan Basin
Coal Holding Company, and coal in place and all such rights are EXCEPTED
herefrom and RESERVED to Grantor.
WITNESS its hand and seal this 21 day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By: /s/ BRUCE D. HANSEN
-----------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March 21, 1997,
by Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe
Pacific Gold Corporation.
(Seal) /s/ JACQUELINE WALSTON
-----------------------------------
Jacqueline Walston
Notary Public
My commission expires: 01/28/98
---------------
<PAGE> 30
EXHIBIT A
MCKINLEY COUNTY, NEW MEXICO
WEST LARGO PROJECT
32-010-002 / 32-010-0003
<TABLE>
<CAPTION>
RECORDING DATA BLM SERIAL
CLAIM NAMES BOOK PAGE NUMBERS
- ----------- -------------- ----------
<S> <C> <C> <C>
ID 21 53 1 NMMC 50374
123 620 * amended
123 655 * amended
ID 22 53 2 NMMC 50375
123 616 * amended
123 657 * amended
ID 23 53 3 NMMC 50376
123 602 * amended
123 659 * amended
ID 24 53 4 NMMC 50377
123 618 * amended
123 661 * amended
ID 25 53 5 NMMC 50378
123 600 * amended
123 663 * amended
ID 26 53 6 NMMC 50379
123 604 * amended
123 665 * amended
ID 27 53 7 NMMC 50380
123 606 * amended
123 667 * amended
ID 28 53 8 NMMC 50381
123 624 * amended
123 669 * amended
ID 29 53 9 NMMC 50382
123 608 * amended
123 671 * amended
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
RECORDING DATA BLM SERIAL
CLAIM NAMES BOOK PAGE NUMBERS
- ----------- -------------- ----------
<S> <C> <C> <C>
ID 30 53 10 NMMC 50383
123 626 * amended
123 673 * amended
ID 31 53 11 NMMC 5172
109 775 * amended
122 725 * amended
ID 32 53 12 NMMC 5173
109 776 * amended
118 382 * amended
ID 33 53 13 NMMC 5174
109 777 * amended
ID 34 53 14 NMMC 5175
109 778 * amended
ID 35 53 15 NMMC 5176
109 779 * amended
ID 36 53 16 NMMC 5177
109 780 * amended
ID 37 53 17 NMMC 5178
109 781 * amended
ID 38 53 18 NMMC 5179
109 782 * amended
122 723 * amended
ID 39 53 19 NMMC 50384
123 594 * amended
123 675 * amended
ID 40 53 20 NMMC 50385
123 592 * amended
123 677 * amended
ID 41 53 21 NMMC 50386
123 622 * amended
123 679 * amended
ID 42 53 22 NMMC 50387
123 598 * amended
123 681 * amended
</TABLE>
2
<PAGE> 32
<TABLE>
<CAPTION>
RECORDING DATA BLM SERIAL
CLAIM NAMES BOOK PAGE NUMBERS
- ----------- -------------- ----------
<S> <C> <C> <C>
ID 43 53 23 NMMC 50388
123 628 * amended
123 683 * amended
ID 44 53 24 NMMC 50389
123 614 * amended
123 685 * amended
ID 45 53 25 NMMC 5180
109 783 * amended
ID 46 53 26 NMMC 50390
123 635 * amended
ID 47 53 27 NMMC 50391
123 637 * amended
ID 48 53 28 NMMC 50392
123 639 * amended
ID 49 53 29 NMMC 50393
123 641 * amended
ID 50 53 30 NMMC 50394
123 643 * amended
ID 51 53 31 NMMC 50395
123 590 * amended
123 687
ID 87 79 702 NMMC 50396
123 596 * amended
123 689 * amended
ID 88 79 703 NMMC 50397
123 612 * amended
123 691 * amended
ID 89 79 704 NMMC 50398
123 610 * amended
123 693 * amended
ID 90 79 705 NMMC 50399
123 645 amended
</TABLE>
3
<PAGE> 33
<TABLE>
<CAPTION>
RECORDING DATA BLM SERIAL
CLAIM NAMES BOOK PAGE NUMBERS
- ----------- -------------- ----------
<S> <C> <C> <C>
ID 91 79 706 NMMC 50400
123 647 * amended
ID 95 79 710 NMMC 50403
123 651 * amended
ID 96 79 711 NMMC 50401
123 649 * amended
ID 97 79 712 NMMC 50402
123 653 * amended
ID 52 53 32 NMMC 9098
112 629 * amended
123 697 * amended
ID 53 53 33 NMMC 9099
112 630 * amended
123 699 * amended
ID 54 53 34 NMMC 9100
112 631 * amended
123 701 * amended
ID 55 53 35 NMMC 9101
112 632 * amended
123 703 * amended
ID 56 53 36 NMMC 9102
112 633 * amended
123 705 * amended
ID 57 53 37 NMMC 9103
112 634 * amended
123 707 * amended
ID 58 53 38 NMMC 9104
112 635 * amended
123 709 * amended
ID 59 53 39 NMMC 9105
112 636 * amended
123 711 * amended
</TABLE>
4
<PAGE> 34
<TABLE>
<CAPTION>
RECORDING DATA BLM SERIAL
CLAIM NAMES BOOK PAGE NUMBERS
- ----------- -------------- ----------
<S> <C> <C> <C>
ID 60 53 40 NMMC 9106
112 637 * amended
123 713 * amended
ID 61 53 41 NMMC 9107
112 638 * amended
123 715 * amended
ID 62 53 42 NMMC 9108
112 639 * amended
123 717 * amended
ID 63 53 43 NMMC 9109
112 640 * amended
123 719 * amended
ID 64 53 44 NMMC 9110
112 641 * amended
123 721 * amended
ID 65 53 45 NMMC 9111
112 642 * amended
123 723 * amended
ID 66 53 46 NMMC 9112
112 643 * amended
123 725 * amended
ID 67 53 47 NMMC 9113
112 644 * amended
123 727 * amended
ID 68 53 48 NMMC 9114
112 645 * amended
123 729 * amended
ID 69 53 49 NMMC 9115
112 646 * amended
123 731 * amended
ID 70 53 50 NMMC 9116
112 647 * amended
123 733 * amended
ID 71 53 51 NMMC 9117
112 648 * amended
123 735 * amended
</TABLE>
5
<PAGE> 35
<TABLE>
<CAPTION>
RECORDING DATA BLM SERIAL
CLAIM NAMES BOOK PAGE NUMBERS
- ----------- -------------- ----------
<S> <C> <C> <C>
ID 72 53 52 NMMC 9118
112 649 * amended
123 737 * amended
ID 73 53 53 NMMC 9119
112 650 * amended
123 739 * amended
ID 74 53 54 NMMC 9120
112 651 * amended
123 741 * amended
ID 75 53 55 NMMC 9121
112 652 * amended
123 743 * amended
ID 76 53 56 NMMC 9122
112 653 * amended
123 745 * amended
ID 77 53 57 NMMC 9123
112 654 * amended
123 747 * amended
ID 78 53 58 NMMC 9124
112 655 * amended
123 749 * amended
ID 79 53 59 NMMC 9125
112 656 * amended
123 751 * amended
ID 80 53 60 NMMC 9126
112 657 * amended
123 753 * amended
ID 81 53 61 NMMC 9127
112 658 * amended
123 755 * amended
ID 82 53 62 NMMC 9128
112 659 * amended
123 757 * amended
ID 83 53 63 NMMC 9129
112 660 * amended
123 759 * amended
</TABLE>
6
<PAGE> 36
<TABLE>
<CAPTION>
RECORDING DATA BLM SERIAL
CLAIM NAMES BOOK PAGE NUMBERS
- ----------- -------------- ----------
<S> <C> <C> <C>
ID 84 53 64 NMMC 9130
112 661 * amended
123 761 * amended
ID 85 53 65 NMMC 9131
112 662 * amended
123 763 * amended
ID 86 53 66 NMMC 9132
112 663 * amended
123 765 * amended
ID 98 112 799 NMMC 9133
123 767 * amended
</TABLE>
Located in Sec. 20, 21, 22, 27, 28, 29, 32, 33, 34 15N-10W
7
<PAGE> 37
EXHIBIT 10.19
AFTER RECORDING RETURN TO:
Margaret Lewis Meister
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
P. O. Box 2168
Albuquerque, New Mexico 87103
DEED
Category I
Sandoval
STATE OF NEW MEXICO )
COUNTY OF SANDOVAL )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals Corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard
N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS
to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the interest reserved by Santa Fe
Pacific Railroad Company in the instruments described in Exhibit A hereto but
only so far as such reservations and exceptions pertain to and cover the real
estate in Sandoval County, New Mexico more particularly described in Exhibit B
hereto, less and except the interests described in Exhibit C hereto and subject
to the grants and interests set forth in the instruments set forth in Exhibit D
hereto, all of which exhibits are incorporated herein by reference.
LIMITATION OF REMEDY. Any warranty of title by the Grantor and any
remedies of the Grantee or its successors and assigns related to the property
covered by this Deed shall be limited to the remedies set forth in that certain
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER,
AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997, (a copy of
which is maintained in the offices of Grantor and Grantee and attorneys for
Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W.,
Albuquerque, New Mexico 87102) and shall not include any other rights, damages
or claims than those specifically set forth therein. Any rights asserted under
the terms of such agreement must be brought within the time period set forth in
that agreement.
<PAGE> 38
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR
MINING RIGHTS. This conveyance does not and is not intended to affect or
purport to affect, in any way, coal in place, including development or mining
rights related to coal, in any of the property of Grantor or any of its
subsidiaries or affiliates including, but not limited to, the San Juan Basin
Coal Holding Company, and coal in place and all such rights are EXCEPTED
herefrom and RESERVED to Grantor.
WITNESS its hand and seal this 21 day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By: /s/ BRUCE D. HANSEN
-----------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March 21, 1997, by
Bruce D. Hansen as Senior Vice President-Corporate Development of
Santa Fe Pacific Gold Corporation.
/s/ JACQUELINE WALSTON
---------------------------------------
Jacqueline Walston
(Seal) Notary Public
My commission expires: 01/28/98
---------------
<PAGE> 39
EXHIBIT A
CATEGORY I DEED, SANDOVAL COUNTY
Deeds Reserving Mineral Interests
Warranty Deed dated September 8, 1949, from Santa Fe Pacific Railroad Company
to Lou C. Evans.
<PAGE> 40
EXHIBIT B
CATEGORY I DEED, SANDOVAL COUNTY
CONVEYANCE OF ALL MINERALS EXCEPT COAL TO URANCO
(Revised 03/10/97)
COMPANY: GOLD
STATE: NM
COUNTY: SANDOVAL
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C>
Township 12 North, Range 3 West
-------------------------------
Section 19 NW/4, SE/4 320.00
------
County Total 320.00
------
</TABLE>
<PAGE> 41
EXHIBIT C
CATEGORY I DEED, SANDOVAL COUNTY
Items Not Included in Grant
None
<PAGE> 42
EXHIBIT D
CATEGORY I DEED, SANDOVAL COUNTY
Items to which Deed is Subject
Lease Option Agreement dated October 8, 1987, between Cerrillos
Land Company and Santa Fe Energy Company, as amended on July 1,
1988, and as amended on December 1, 1989.
<PAGE> 43
EXHIBIT 10.19
AFTER RECORDING RETURN TO:
Margaret Lewis Meister
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
P.O. Box 2168
Albuquerque, New Mexico 87103
DEED
Category II
McKinley
STATE OF NEW MEXICO )
COUNTY OF McKINLEY )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals Corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard
N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS
to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the interest in uranium reserved by
Santa Fe Pacific Railroad Company in the instruments described in Exhibit A
hereto but only so far as such reservations and exceptions pertain to and cover
the real estate in McKinley County, New Mexico more particularly described in
Exhibit B hereto (the "Property"), less and except the interests described in
Exhibit C hereto and subject to the grants and interests set forth in the
instruments set forth in Exhibit D hereto, all of which exhibits are
incorporated herein by reference.
LIMITATION OF REMEDY. Any warranty of title by the Grantor and any
remedies of the Grantee or its successors and assigns related to the property
covered by this Deed shall be limited to the remedies set forth in that certain
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER,
AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that
certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and
Grantee, dated effective as of March 21, 1997 (copies of which are maintained
in the offices of Grantor and Grantee and attorneys for Grantor, Modrall,
Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New
Mexico 87102) and shall not include any other rights, damages or claims than
those specifically set forth therein. Any rights asserted under the terms of
such agreements must be brought within the time period set forth in such
agreements.
CONVEYANCE SUBJECT TO THE OBLIGATION TO PURCHASE ENTIRE MINERAL
ESTATE. The grant of this deed is subject to the following right of Grantor.
At such time as Grantee or its successors or assigns applies for a mining
permit with respect to the Property or performs any activities on the Property
which would require a mining permit, Grantor shall have the right to require
Grantee or its successors or assigns to purchase all of the mineral estate
(except coal in place including development or mining rights related to coal)
owned by Grantor on the portion of the Property which is the subject of the
mining permit or activities which would require a mining permit for a purchase
price of $200 per acre (the "Purchase
<PAGE> 44
Price"), which Purchase Price shall be paid within 30 days after Grantor
declares its right to require the purchase. The Purchase Price shall be
increased by the same percentage as the percentage increase in the Spot Price
of uranium on the date of Grantor's exercise of such right over $15.80 per
pound. Grantee shall purchase such portions of property as entire sections or
as much of each section as was originally conveyed by Grantor to Grantee.
Additionally, Grantor grants to Grantee or its successor and assigns
for a period of 99 years from the date of this Deed the option to purchase all
of the remaining mineral estate (except coal in place, including development or
mining rights related to coal) owned by Grantor in all or any portion of the
Property for a total purchase price of $200 per acre (the "Purchase Price"),
which Purchase Price will be payable within 30 days after Grantee or its
successors or assigns elects to exercise the option to purchase. The Purchase
Price shall be increased by the same percentage as the percentage increase in
the Spot Price of uranium on the date of Grantor's exercise of such right over
$15.80 per pound. Grantee shall purchase such portions of property as entire
sections or as much of each section as was originally conveyed by Grantor to
Grantee.
The Spot Price shall mean that price at which uranium may be purchased
for delivery within one year, as reported by TradeTech or its successors in
interest, or, in the absence of TradeTech or a successor in interest, another
accepted industry publication.
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR
MINING RIGHTS. This conveyance does not and is not intended to affect or
purport to affect, in any way, coal in place, including development or mining
rights related to coal, in any of the property of Grantor or any of its
subsidiaries or affiliates including, but not limited to, the San Juan Basin
Coal Holding Company, and coal in place and all such rights are EXCEPTED
herefrom and RESERVED to Grantor.
WITNESS its hand and seal this 21st day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By: /s/ BRUCE D. HANSEN
-----------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
<PAGE> 45
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March 21, 1997, by Bruce
D. Hansen as Senior Vice President Corporate Development of Santa Fe Pacific
Gold Corporation.
/s/ JACQUELINE WALSTON
---------------------------------------
Jacqueline Walston
(Seal) Notary Public
My commission expires: 01/28/98
----------------
<PAGE> 46
EXHIBIT A
CATEGORY II DEED, MCKINLEY COUNTY
Deeds Reserving Mineral Interests
Warranty Deed dated January 2, 1946, from Santa Fe Pacific Railroad Company to
Tom L. Elkins, recorded in Book 9 of Warranty Deeds, Page 93, in the
official records of McKinley County, New Mexico.
Warranty Deed dated February 23, 1937, from Santa Fe Pacific Railroad Company
to Margaret A. Prewitt, recorded in Book 10 of Deeds, Page 485, in the
official records of McKinley County, New Mexico.
Warranty Deed dated January 2, 1946, from Santa Fe Pacific Railroad Company to
Tom L. Elkins, recorded in Book 12 of Deeds, Page 585, in the official
records of McKinley County, New Mexico.
Warranty Deed dated January, 20, 1947, from Santa Fe Pacific Railroad Company
to Frank Bond & Son, Inc., recorded in Book 13 of Deeds, Page 219, in
the official records of McKinley County, New Mexico.
Warranty Deed dated July 1, 1948, from Santa Fe Pacific Railroad Company to
Hazel W. Prewitt, recorded in Book 9 of Warranty Deeds, Page 30, in
the official records of McKinley County, New Mexico.
Warranty Deed dated March 29, 1929, from Santa Fe Pacific Railroad Company to
Antonio Lucero, recorded in Book 12 of Deeds, Page 516, in the
official records of McKinley County, New Mexico.
Warranty Deed dated January 2, 1925, from Santa Fe Pacific Railroad Company to
H. F. Prewitt.
Warranty Deed dated August 11, 1927, from Santa Fe Pacific Railroad Company to
Frank Gantar, recorded in Book 7 of Deeds, Page 161, in the official
records of McKinley County, New Mexico.
Warranty Deed dated January 2, 1946, from Santa Fe Pacific Railroad Company to
Gib Graham, recorded in Book 13 of Deeds, Page 13, in the official
records of McKinley County, New Mexico.
Warranty Deed dated January 26, 1931, from Santa Fe Pacific Railroad Company to
The Gallup Country Club, recorded in Book 8 of Deeds, Page 62, in the
official records of McKinley County, New Mexico.
Warranty Deed dated May 1, 1950, from Santa Fe Pacific Railroad Company to Bert
P. Cresto and Emma Cresto, recorded in Book 13 of Deeds, Page 384, in
the official records of McKinley County, New Mexico.
A-1
<PAGE> 47
Warranty deed dated May 1, 1950, from Santa Fe Pacific Railroad Company to C.
E. Gurley and Irene J. Gurley, recorded in Book 10 of Warranty Deeds,
Page 395, in the official records of McKinley County, New Mexico.
Warranty Deed dated May 1, 1950, from Santa Fe Pacific Railroad Company to
George Bubany, recorded in Book 13 of Deeds, Page 382, in the official
records of McKinley County, New Mexico.
Quitclaim Deed dated April 15, 1959, from Santa Fe Pacific Railroad Company to
Owners of record, recorded in Book 9, Page 480, in the official
records of McKinley County, New Mexico.
Warranty Deed dated May 1, 1950, from Santa Fe Pacific Railroad Company to John
D. Guest, recorded in Book 13 of Deeds, Page 381, in the official
records of McKinley County, New Mexico.
Warranty Deed dated March 27, 1950, from Santa Fe Pacific Railroad Company to
C. H. Harrell, recorded in Book 10 of Warranty Deeds, Page 366, in the
official records of McKinley County, New Mexico.
Warranty Deed dated October 20, 1930, from Santa Fe Pacific Railroad Company to
John Grenko, recorded in Book 12 of Deeds, Page 428, in the official
records of McKinley County, New Mexico.
Warranty Deed dated October 5, 1949, from Santa Fe Pacific Railroad Company to
Asa Glascock and Howard Wilson, recorded in Book 13 of Deeds, Page
404, in the official records of McKinley County, New Mexico.
Warranty Deed dated June 19, 1925, from Santa Fe Pacific Railroad Company to
County of McKinley, State of New Mexico.
Warranty Deed dated May 16, 1938, from Santa Fe Pacific Railroad Company to
Howard Wilson, recorded in Book 11 of Deed Records, Page 489, in the
official records of McKinley County, New Mexico.
Warranty Deed dated April 5, 1938, from Santa Fe Pacific Railroad Company to L.
L. Sabin, recorded in Book 11 of Deeds, Page 636, in the official
records of McKinley County, New Mexico.
Warranty Deed dated August 19, 1930, from Santa Fe Pacific Railroad Company to
Christian Reformed Board of Mission, recorded in Book 7 of Deeds, Page
283, in the official records of McKinley County, New Mexico.
Warranty Deed dated August 1, 1946, from Santa Fe Pacific Railroad Company to
C. G. Wallace, recorded in Book 9 of Warranty Deeds, Page 7, in the
official records of McKinley County, New Mexico.
Warranty Deed dated July 12, 1922, from Santa Fe Pacific Railroad Company to
County Board of Education of McKinley County, New
A-2
<PAGE> 48
Mexico, recorded in Book 6 of Deed Records, Page 267, in the official
records of McKinley County, New Mexico.
Warranty Deed dated July 29, 1952, from Santa Fe Pacific Railroad Company to
Thos. M. Kilpatrick and C. F. Knowles, recorded in Book 11 of Warranty
Deeds, Page 302, in the official records of McKinley County, New
Mexico.
Warranty Deed dated May 26, 1926, from Santa Fe Pacific Railroad Company to
W.0. Turner.
Quitclaim Deed dated January 20, 1975, by and between Santa Fe Pacific Railroad
Company and W. O. Turner, covering N/2, SW/4 of Section 35, T.15N.,
R.19W., McKinley County, New Mexico, recorded in Book 23, Page 68 in
the official records thereof.
Warranty Deed dated September 1, 1944, from Santa Fe Pacific Railroad Company
to Claude Neafus and S. R. Bellmaine, recorded in Book 12 of Deeds,
Page 402, in the official records of McKinley County, New Mexico.
Warranty Deed dated April 27, 1950, from Santa Fe Pacific Railroad Company to
Gib Graham, recorded in Book 10 of Warranty Deeds, Page 378, in the
official records of McKinley County, New Mexico.
Warranty Deed dated November 7, 1934, from Santa Fe Pacific Railroad Company to
L. L. Sabin, recorded in Book 8 of Deeds, Page 274, in the official
records of McKinley County, New Mexico.
Warranty Deed dated October 15, 1945, from Santa Fe Pacific Railroad Company to
Fernandez Company, recorded in Book 12 DR, Page 536, in the official
records of McKinley County, New Mexico.
Warranty Deed dated March 4, 1952, from Santa Fe Pacific Railroad Company to
Hazel W. Prewitt, recorded in Book 11 Misc., Page 370, in the official
records of McKinley County, New Mexico.
Warranty Deed dated May 15, 1945, from Santa Fe Pacific Railroad Company to
Harold F. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds,
Page 482, in the official records of McKinley County, New Mexico.
Warranty Deed dated January 16, 1948, from Santa Fe Pacific Railroad Company to
W. A. Berryhill, recorded in Book 13 of Deeds, Page 298, in the
official records of McKinley County, New Mexico.
Warranty Deed dated May 14, 1929, from Santa Fe Pacific Railroad Company to the
United States of America, In Trust for the Navajo Tribe, recorded in
Book 7 of Deeds, Page 243, in the official records of McKinley County,
New Mexico.
A-3
<PAGE> 49
Warranty Deed dated December 1, 1944, from Santa Fe Pacific Railroad to Harold
P. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds, Page
440, in the official records of McKinley County, New Mexico.
A-4
<PAGE> 50
EXHIBIT B
CATEGORY II DEED, MCKINLEY COUNTY
CONVEYANCE OF URANIUM RIGHTS TO URANCO
(Revised 03/10/97)
COMPANY: GOLD
STATE: NM
COUNTY: McKINLEY
<TABLE>
<CAPTION>
MERIDIAN: NMPM
ACRES
-----
<S> <C> <C> <C>
Township 14 North, Range 8 West
-------------------------------
Section 10 All 640.00
Township 13 North, Range 10 West
--------------------------------
Section 5 Lots 1-4, S/2 N/2, S/2 639.36
Section 7 Lots 1-4, E/2, E/2 W/2 650.24
Section 9 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 21 W/2 SW/4 SE/4 NE/4, N/2 NE/4, SW/4 595.00
NE/4, N/2 SE/4 NE/4, NW/4, S/2
SE/4, NW/4 SE/4
Section 27 All 640.00
Section 29 All 640.00
Section 31 Lots 1-4, E/2 W/2, E/2 640.56
Section 33 All 640.00
Section 35 All 640.00
Township 15 North, Range 10 West
--------------------------------
Section 1 All, except 31.07 acres in Baca 608.93
Rail Spur
Section 3 All 641.00
Section 13 All 640.00
</TABLE>
B-1
<PAGE> 51
<TABLE>
<S> <C> <C> <C>
Section 23 All, except 29.81 ac. in Baca Rail 610.19
Spur
Section 25 All, except 25.79 ac. in Baca Rail 614.21
Spur
Section 31 All 663.60
Section 33 All 640.00
Section 35 All 640.00
Township 16 North, Range 10 West
--------------------------------
Section 5 All 639.76
Section 9 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 21 All 640.00
Section 23 All 640.00
Section 25 All 640.00
Section 27 All 640.00
Section 29 All 640.00
Section 31 All 667.68
Section 33 All 640.00
Section 35 All 640.00
Township 17 North, Range 10 West
--------------------------------
Section 31 Lots 1-4, E/2 W/2, E/2 640.32
Township 13 North, Range 11 West
--------------------------------
Section 3 Lots 3, 4, S/2 NW/4 160.98
Section 5 All, except 24.71 ac. in Baca Rail 610.17
Spur
Section 7 All that portion lying North and 495.00
East f the AT&SF Railway Co. R/W
</TABLE>
B-2
<PAGE> 52
<TABLE>
<S> <C> <C> <C>
Section 9 NE/4, N/2 NW/4, N/2 SE/4, SE/4 SE/4 360.00
Section 9 S/2 NW/4, SW/4, SW/4 SE/4 280.00
Section 15 All 640.00
Section 17 All that portion lying North and 96.71
East of the AT&SF Railway Co. R/W,
except 39.63 ac. in Baca Rail Spur
Section 17 Lots 5-8, SW/4 SE/4, SW/4 275.53
Section 19 All 640.06
Section 21 All that part lying North and East 199.59
of the AT&SF Railway Co. R/W
Section 21 Lots 5-10, NW/4 SW/4 155.74
Section 22 All 640.00
Section 23 All 640.00
Section 24 SE/4, W/2 480.00
Section 25 All 640.00
Section 26 All 640.00
Section 27 All that part lying North and East 549.31
of the AT&SF Railway Co. R/W
Section 29 All 640.00
Section 31 All 640.96
Section 33 All 640.00
Section 34 That portion of the E/2 lying South 23.70
and West of the AT&SF Railway Co.
R/W
Section 34 That portion of the E/2 lying North 283.09
and East of the AT&SF Railway Co.
R/W
Section 35 All 640.00
Township 15 North, Range 11 West
--------------------------------
Section 27 E/2 E/2 160.00
</TABLE>
B-3
<PAGE> 53
<TABLE>
<S> <C> <C> <C>
Section 35 NW/4 NW/4 40.00
Township 14 North, Range 13 West
--------------------------------
Section 31 All, except 200 ft. R/W of AT&SF 619.15
Ry. Co.
Section 35 All that portion lying North and 531.25
East of R/W of AT&SF Ry. Co.
Township 14 North, Range 14 West
--------------------------------
Section 7 Lots 3, 4, that portion of E/2 SW/4 139.78
lying South & West of AT&SF RR R/W
Section 21 All that portion lying North & East 114.06
of AT&SF RR R/W
Section 25 All that portion lying North & East 494.75
of AT&SF RR R/W
Township 17 North, Range 14 West
---------------------------------
Section 1 Lots 1-4 2.02
Section 31 Lots 1-4, S/2 S/2 321.60
Section 33 Lots 1-4, S/2 S/2 317.76
Section 35 Lots 1-4, S/2 S/2 318.20
Township 14 North, Range 15 West
--------------------------------
Section 1 Part Northeast of Northeast line of 96.34
AT&SF station grounds at S. Guam,
said line parallel to & 1320 ft.
northeasterly from centerline of
original AT&SF main track, except
portion Conveyed by SFPR to AT&SF
8-29-17, recorded in Bk. 5, Pg.
152, and portion of SE SE
northeasterly of AT&SF R/W and
southeasterly of southeast end of
station grounds at S. Guam
Township 15 North, Range 15 West
--------------------------------
Section 25 All, except 26.55 ac. in R/W 613.45
Section 27 All that portion lying North & East 515.85
of AT&SF RR R/W
</TABLE>
B-4
<PAGE> 54
<TABLE>
<S> <C> <C> <C>
Section 35 All that portion lying North & East 197.84
of AT&SF RR R/W
Township 17 North, Range 15 West
--------------------------------
Section 31 All 315.20
Section 33 All 317.98
Section 35 All 315.20
Township 15 North, Range 16 West
--------------------------------
Section 1 All 639.52
Section 3 All 641.90
Section 5 All 638.82
Section 7 All 616.18
Section 9 All 640.00
Section 11 All 640.00
Section 13 Lots 1-4 195.60
Section 15 Lots 1-4 185.28
Section 17 Lots 1-4 174.16
Township 16 North, Range 16 West
--------------------------------
Section 1 All 595.20
Section 5 All 606.88
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 19 All 602.52
Section 21 All 640.00
Section 23 All 640.00
Section 25 All 640.00
</TABLE>
B-5
<PAGE> 55
<TABLE>
<S> <C> <C> <C>
Section 27 All 640.00
Section 29 All 640.00
Section 33 All 640.00
Section 35 All 640.00
Township 17 North, Range 16 West
--------------------------------
Section 31 Lots 1-4, S/2 S/2 305.28
Section 33 Lots 1-4, S/2 S/2 308.21
Township 14 North, Range 17 West
--------------------------------
Section 3 Lots 1-5, SW/4 NW/4, W/2 SW/4 235.56
Section 5 Lots 1-4, S/2 N/2, E/2 SE/4, NW/4 598.88
SE/4, N/2 SW/4 SE/4, W/2 SW/4, NE/4
SW/4, N/2 SE/4 SW/4
Section 7 All 638.12
Section 9 W/2, E/2 SE/4, SW/4 SE/4, N/2 NE/4 480.00
NE/4, E/2 NW/4 NE/4
Section 9 SW/4 NE/4, NW/4 SE/4 80.00
Section 9 S/2 NE/4 NE/4 20.00
Section 9 NW/4 NW/4 NE/4 10.00
Section 9 SW/4 NW/4 NE/4 10.00
Section 15 Lots 1-4, W/2 W/2 236.88
Section 17 All 640.00
Section 19 All 640.88
Section 21 All 640.00
Section 27 Lots 1-4, W/2 W/2 239.82
Section 29 N/2, SW/4 480.00
Section 33 S/2 320.00
Township 15 North, Range 17 West
--------------------------------
Section 1 All 689.84
</TABLE>
B-6
<PAGE> 56
<TABLE>
<S> <C> <C> <C>
Section 3 All 640.62
Section 7 All 639.94
Section 9 NE/4, S/2 480.00
Section 13 Lots 1-4 164.48
Section 15 Lots 1-6, W/2 W/2, less 24.24 ac. 300.37
in AT&SF RR R/W for East bound main
track
Section 19 Lots 1, 2, E/2, E/2 NW/4 481.09
Section 21 E/2, W/2 NW/4, S/2 SW/4 480.00
Section 27 W/2 SW/4 80.00
Section 29 All 640.00
Section 31 All 638.84
Township 16 North, Range 17 West
--------------------------------
Section 1 All 614.40
Section 3 All 622.04
Section 5 All 624.52
Section 7 All 632.52
Section 9 All 640.00
Section 11 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 19 All 636.44
Section 21 All 640.00
Section 25 All 640.00
Section 27 All 640.00
Section 29 All 640.00
Section 31 All 637.44
</TABLE>
B-7
<PAGE> 57
<TABLE>
<S> <C> <C> <C>
Section 33 All 640.00
Section 35 All 640.00
Township 17 North, Range 17 West
--------------------------------
Section 31 Lots 1-4, S/2 S/2 297.38
Section 33 Lots 1-4, S/2 S/2 307.78
Section 35 Lots 1-4, S/2 S/2 306.02
Township 14 North, Range 18 West
--------------------------------
Section 5 All 639.48
Township 15 North, Range 18 West
--------------------------------
Section 1 All 638.56
Section 11 NE/4, E/2 NW/4 240.00
Section 23 All 640.00
Section 27 SE/4, NE/4 SW/4 200.00
Section 27 S/2 NE/4, NE/4 NE/4 120.00
Section 27 SE/4 NW/4, S/2 NW/4 NE/4, NW/4 NW/4 70.00
NE/4
Section 27 S/2 NE/4 NW/4 20.00
Section 27 N/2 NE/4 NW/4 20.00
Section 31 NE/4 NE/4 40.00
Section 31 Lots 1-4, SE/4 NE/4, NE/4 NW/4, 436.40
SE/4, SE/4 SW/4
Section 35 E/2, E/2 NW/4 400.00
Township 16 North, Range 18 West
--------------------------------
Section 1 All 622.84
Section 3 All 622.72
Section 5 All, except 10.30 acres 614.26
</TABLE>
B-8
<PAGE> 58
<TABLE>
<S> <C> <C> <C>
Section 5 That portion lying within 40 ft. & 10.30
on both sides of survey line of
Road 32, Section 2 as relocated for
construction and known as F.A.P.
#146-A
Section 7 All, except 10.00 ac. quitclaimed 620.16
to County of McKinley by deed dated
6-19-25
Section 7 That portion lying within 40 ft. & 10.00
on both sides of survey line of
Road 32, Section 2 as relocated for
construction and known as F.A.P.
#146
Section 9 All 640.00
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 19 All 634.08
Section 21 N/2 320.00
Section 23 All 640.00
Section 25 All 640.00
Township 17 North, Range 18 West
--------------------------------
Section 31 Lots 1-4, S/2 S/2 290.40
Section 33 Lots 1-4, SW/4 SE/4, S/2 SW/4 255.58
Section 33 N/2 SE/4 SE/4, SE/4 SE/4 SE/4 30.00
Section 35 Lots 1-4, S/2 S/2 298.78
Township 15 North, Range 19 West
--------------------------------
Section 7 Lots 3, 4, E/2 SW/4 156.27
Section 17 NE/4, E/2 NW/4, S/2 560.00
Section 19 All 633.40
</TABLE>
B-9
<PAGE> 59
<TABLE>
<S> <C> <C> <C>
Section 21 NW/4, SE/4, SW/4 NE/4, W/2 SE/4 389.00
NE/4, W/2 E/2 SE/4 NE/4, except 1
ac. in W/2 E/2 SE/4 NE/4
Section 21 1 ac. tract in W/2 E/2 SE/4 NE/4 1.00
Section 29 All, except AT&SF RR R/W and 512.25
station grounds
Section 31 SE/4, NW/4, except AT&SF RR R/W 288.91
Section 33 All 640.00
Section 35 N/2, SW/4 480.00
Township 16 North, Range 19 West
--------------------------------
Section 1 All 630.12
Section 3 All 636.30
Section 5 All 637.60
Section 7 All 629.24
Section 9 All 640.00
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 19 All 630.48
Section 23 All 640.00
Section 25 All 640.00
Section 31 All 629.80
Township 17 North, Range 19 West
--------------------------------
Section 31 Lots 1-4, S/2 S/2 288.60
Section 33 Lots 1-4, S/2 S/2 290.40
Section 35 Lots 1-4, S/2 S/2 295.58
</TABLE>
B-10
<PAGE> 60
<TABLE>
<S> <C> <C> <C>
Township 16 North, Range 20 West
--------------------------------
Section 1 All 638.12
Section 13 All 640.00
Section 17 SW/4 160.00
Section 19 All 640.92
Section 21 W/2 W/2 160.00
Section 25 All 640.00
Section 27 S/2 SW/4, NW/4 SW/4, S/2 SE/4, 240.00
NE/4 SE/4
Section 29 All 640.00
Section 31 All 638.00
Section 33 All 640.00
Section 35 All 640.00
Township 16 North, Range 21 West
--------------------------------
Section 1 W/2 322.00
Section 3 All 123.86
Section 11 N/2, N/2 SW/4, SW/4 SW/4 440.00
Section 15 Lots 1-4 128.06
Section 23 All 640.00
Section 25 All 640.00
Section 27 Lots 1-4 128.80
Section 35 All 640.00
------
County Total 105,447.60
==========
</TABLE>
B-11
<PAGE> 61
EXHIBIT C
CATEGORY II DEED, MCKINLEY COUNTY
Items Not Included in Grant
Less and Except any interest in or under the property in Sections 1, 23, and
25, T.15N., R.10W., as described in the Quitclaim Deed dated November 23, 1983,
between R. M. Albers and Imogene Albers and SF Coal Corporation, recorded in
book 35, Page 598, in the official records of McKinley County, New Mexico.
Less and Except any interest in or under the property in Sections 5 and 17,
T.13N., R.11W. , as described in the Special Warranty Deed dated November 8,
1983, between Donald J. Elkins and Gwen Elkins and SF Coal Corporation,
recorded in Book 35, Page 567, in the official records of McKinley County, New
Mexico.
<PAGE> 62
EXHIBIT D
CATEGORY II DEED, MCKINLEY COUNTY
Items to which Deed is Subject
Stipulation in the District Court of McKinley County, New Mexico, case entitled
Santa Fe Pacific Railroad Company, a corporation, plaintiff v. Duane Berryhill
and Nelda Berryhill, his wife, el al., filed for record on July 25, 1952 at
9:30 a.m., recorded in Vol. 93, Folio 225, Valencia County records.
Agreement dated May 1, 1964, by and between Santa Fe Pacific Railroad Company
and The Gallup Country Club, covering certain land in Section 23, T.15N.,
R.18W., McKinley County, New Mexico. (SFP-42117)
Agreement dated November 26, 1957, by and between Santa Fe Pacific Railroad
Company and C. E. Gurley and Irene J. Gurley, covering property in Section 27,
T.15N., R.18W., McKinley County, New Mexico. (SFP-42215-A)
Agreement dated April 16, 1959 by and between Santa Fe Pacific Railroad Company
and George Bubany, covering certain lands in Section 27, T.15N., R.18W.,
McKinley County, New Mexico. SFP-42216-B)
Agreement dated May 1, 1959, by and between Santa Fe Pacific Railroad Company
and John D. Guest, covering property in the NW/4 of Section 27, T.15N., R.18W.,
McKinley County, New Mexico. (SFP-42217-A)
Agreement dated October 14, 1965, by and between Santa Fe Pacific Railroad
Company and Howard Wilson covering a parcel of land in Section 7, T.16N.,
R.18W., McKinley County, New Mexico. (SFP-39456-A)
[Section not being conveyed]
Amended and Restated San Juan Basin Agreement dated June 25, 1993, by and
between Hospah Coal Company and Chaco Energy Company.
Lease Option Agreement dated October 8, 1987, between Cerrillos Land Company
and Santa Fe Energy Company, as amended on July 1, 1988, and as amended on
December 1, 1989, a memorandum of which is recorded in book 2, Page 1630, in
the official records of McKinley County, New Mexico.
Special Warranty Deed dated June 25, 1993, from Hospah Coal Company, Santa Fe
Pacific Minerals Corporation, Santa Fe Pacific Mining, Inc., The Atchison,
Topeka and Santa Fe Railway Company, and the Star Lake Railroad Company to San
Juan Basin Coal Holding
D-1
<PAGE> 63
Company, recorded in Book 6 Comp., Page 8560, of the official records of
McKinley County, New Mexico, covering coal and coal development rights or
mining rights.
Special Warranty Deed dated June 24, 1993, from Santa Fe Pacific Minerals
Corporation to Hanson Natural Resources Company covering coal and related
mining rights in Sections 17, 25, 33 and 35, T.16N., R.10W., and Section 3,
T.15N., R.10W., McKinley County, New Mexico.
Special Warranty Deed dated June 24, 1993, from Santa Fe Pacific Minerals
Corporation to Hanson Natural Resources Company covering coal and relating
mining rights in Section 1, T.15N., R.10W., and Sections 9, 21, 23, 27 and 29,
T.16N., R.10W., recorded in Book 6 Comp., Page 8480, in the official records of
McKinley County, New Mexico.
Oil and Gas Lease dated May 1, 1975, from Santa Fe Pacific Railroad Company to
Tenneco Oil Company, covering Section 25, T.16N., R.10W, McKinley County, New
Mexico. (SFP-9951)
Real Estate Taxes for the years 1997 and subsequent years.
D-2
<PAGE> 64
EXHIBIT 10.19
AFTER RECORDING RETURN TO:
Margaret Lewis Meister
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
P. O. Box 2168
Albuquerque, New Mexico 87103
DEED
Category II
Cibola
STATE OF NEW MEXICO )
COUNTY OF CIBOLA )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals Corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard
N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS
to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the interest in uranium reserved by
Santa Fe Pacific Railroad Company in the instruments described in Exhibit A
hereto but only so far as such reservations and exceptions pertain to and cover
the real estate in Cibola County, New Mexico more particularly described in
Exhibit B hereto (the "Property"), less and except the interests described in
Exhibit C hereto and subject to the grants and interests set forth in the
instruments set forth in Exhibit D hereto, all of which exhibits are
incorporated herein by reference.
LIMITATION OF REMEDY. Any warranty of title by the Grantor and any
remedies of the Grantee or its successors and assigns related to the property
covered by this Deed shall be limited to the remedies set forth in that certain
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER,
AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that
certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and
Grantee, dated effective as of March 21, 1997, (copies of which are maintained
in the offices of Grantor and Grantee and attorneys for Grantor, Modrall,
Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New
Mexico 87102) and shall not include any other rights, damages or claims than
those specifically set forth therein. Any rights asserted under the terms of
such agreements must be brought within the time period set forth in such
agreements.
CONVEYANCE SUBJECT TO THE OBLIGATION TO PURCHASE ENTIRE MINERAL
ESTATE. The grant of this deed is subject to the following right of Grantor.
At such time as Grantee or its successors or assigns applies for a mining
permit with respect to the Property or performs any activities on the Property
which would require a mining permit, Grantor shall have the right to require
Grantee or its successors or assigns to purchase all of the mineral estate
(except coal in place, including development or mining rights related to coal)
owned by Grantor on the portion of the Property which is the subject of the
mining permit or activities which would require a mining permit for a purchase
price of $200 per acre (the "Purchase
<PAGE> 65
Price"), which Purchase Price shall be paid within 30 days after Grantor
declares its right to require the purchase. The Purchase Price shall be
increased by the same percentage as the percentage increase in the Spot Price
of uranium on the date of Grantor's exercise of such right over $15.80 per
pound. Grantee shall purchase such portions of property as entire sections or
as much of each section as was originally conveyed by Grantor to Grantee.
Additionally, Grantor grants to Grantee or its successor and assigns
for a period of 99 years from the date of this Deed the option to purchase all
of the remaining mineral estate (except coal in place, including development or
mining rights related to coal) owned by Grantor in all or any portion of the
Property for a total purchase price of $200 per acre (the "Purchase Price"),
which Purchase Price will be payable within 30 days after Grantee or its
successors or assigns elects to exercise the option to purchase. The Purchase
Price shall be increased by the same percentage as the percentage increase in
the Spot Price of uranium on the date of Grantor's exercise of such right over
$15.80 per pound. Grantee shall purchase such portions of property as entire
sections or as much of each section as was originally conveyed by Grantor to
Grantee.
The Spot Price shall mean that price at which uranium may be purchased
for delivery within one year, as reported by TradeTech or its successors in
interest, or, in the absence of TradeTech or a successor in interest, another
accepted industry publication.
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR
MINING RIGHTS. This Conveyance does not and is not intended to affect or
purport to affect, in any way, coal in place, including development or mining
rights related to coal, in any of the property of Grantor or any of its
subsidiaries or affiliates including, but not limited to, the San Juan Basin
Coal Holding Company, and coal in place and all such rights are EXCEPTED
herefrom and RESERVED to Grantor.
WITNESS its hand and seal this 21st day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By:/s/ BRUCE D. HANSEN
------------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
<PAGE> 66
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March 21, 1997, by Bruce
D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific
Gold Corporation.
/s/ JACQUELINE WALSTON
---------------------------------------
Jacqueline Walston
(Seal) Notary Public
My commission expires: 01/28/98
----------------
<PAGE> 67
EXHIBIT A
CATEGORY II DEED, CIBOLA COUNTY
Deeds Reserving Mineral Rights
Warranty Deed dated June 15, 1943, from Santa Fe Pacific Railroad Company to
C.P. Duran and Jose M. Chavez.
Warranty Deed dated May 1, 1946, from Santa Fe Pacific Railroad Company to
C. P. Duran and Jose M. Chavez.
<PAGE> 68
EXHIBIT B
CATEGORY II DEED, CIBOLA COUNTY
CONVEYANCE OF URANIUM RIGHTS TO URANCO
(Revised 03/10/97)
COMPANY: GOLD
STATE: NM
COUNTY: CIBOLA
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C> <C>
Township 11 North, Range 7 West
-------------------------------
Section 31 Lots 1-4, E/2 NW/4, E/2 SW/4, NE/4, 634.52
SE/4
Township 11 North, Range 8 West
-------------------------------
Section 25 All 640.00
------
County Total 1,274.52
</TABLE>
<PAGE> 69
EXHIBIT C
CATEGORY II DEED, CIBOLA COUNTY
Items Not Included in Grant
NONE
<PAGE> 70
EXHIBIT D
CATEGORY II DEED, CIBOLA COUNTY
Items to which Deed is Subject
Lease Option Agreement dated October 8, 1987 between Cerrillos Land Co. and
Santa Fe Energy Co., as amended on July 1, 1988, and as amended on December 1,
1989, a memorandum in the official records of McKinley County, New Mexico.
Real Estate Taxes for the years 1997 and subsequent years.
<PAGE> 71
EXHIBIT 10.19
AFTER RECORDING RETURN TO:
Margaret Lewis Meister
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
P. O. Box 2168
Albuquerque, New Mexico 87103
ROYALTY DEED
Category II Royalty
Cibola
STATE OF NEW MEXICO )
COUNTY OF CIBOLA )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals Corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard
N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS
to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the royalty interest received by
Santa Fe Pacific Railroad Company in the instrument described in Exhibit A
hereto but only so far as such grant pertains to and covers the real estate in
Cibola County, New Mexico more particularly described in Exhibit B hereto (the
"Property"), less and except the interests described in Exhibit C hereto and
subject to the grants and interests set forth in the instruments set forth in
Exhibit D hereto, all of which exhibits are incorporated herein by reference.
LIMITATION OF REMEDY. Any warranty of title by the Grantor and any
remedies of the Grantee or its successors and assigns related to the property
covered by this Deed shall be limited to the remedies set forth in that certain
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER,
AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that
certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and
Grantee, dated effective as of March 21, 1997 (copies of which are maintained
in the offices of Grantor and Grantee and attorneys for Grantor, Modrall,
Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New
Mexico 87102) and shall not include any other rights, damages or claims than
those specifically set forth therein. Any rights asserted under the terms of
such agreements must be brought within the time period set forth in such
agreements.
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR
MINING RIGHTS. This conveyance does not and is not intended to affect or
purport to affect, in any way, coal in place, including development or mining
rights related to coal, in any of the property of Grantor or any of its
subsidiaries or affiliates including, but not limited to, the San Juan Basin
Coal Holding Company, and coal in place and all such rights are EXCEPTED
herefrom and RESERVED to Grantor.
<PAGE> 72
WITNESS its hand and seal this 21st day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By: /s/ BRUCE D. HANSEN
-----------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March 21 1997, by Bruce
D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific
Gold Corporation.
/s/ JACQUELINE WALSTON
---------------------------------------
Jacqueline Walston
(Seal) Notary Public
My commission expires: 01/28/98
----------------
<PAGE> 73
EXHIBIT A
CATEGORY II DEED, CIBOLA COUNTY
Deeds Reserving Mineral Rights
Grant of Royalty dated February 10, 1983 from Gulf Oil Corporation
to Santa Fe Pacific Railroad recorded in Book 1 of Misc., Page 3534
in the official records of Cibola County, New Mexico.
<PAGE> 74
EXHIBIT B
CATEGORY II ROYALTY DEED, CIBOLA COUNTY
CONVEYANCE OF URANIUM RIGHTS TO URANCO
(Revised 03/10/97)
<TABLE>
<S> <C> <C>
Township 13 North, Range 8 West
-------------------------------
Section 25 Lots 5, 6, 8, 9, 10, E/2 NE/4 234.52
**Royalty Interest Only**
</TABLE>
<PAGE> 75
EXHIBIT C
CATEGORY II DEED, CIBOLA COUNTY
Items Not Included in Grant
NONE
<PAGE> 76
EXHIBIT D
CATEGORY II DEED, CIBOLA COUNTY
Items to which Deed is Subject
Real Estate Taxes for the years 1997 and subsequent years.
<PAGE> 77
EXHIBIT 10.19
AFTER RECORDING RETURN TO:
Margaret Lewis Meister
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
P. O. Box 2168
Albuquerque, New Mexico 87103
DEED
Category II
Sandoval
STATE OF NEW MEXICO )
COUNTY OF SANDOVAL )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals Corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.
E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to
URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the interest in uranium reserved by
Santa Fe Pacific Railroad Company in the instruments described in Exhibit A
hereto but only so far as such reservations and exceptions pertain to and cover
the real estate in Sandoval County, New Mexico more particularly described in
Exhibit B hereto (the "Property"), less and except the interests described in
Exhibit C hereto and subject to the grants and interests set forth in the
instruments set forth in Exhibit D hereto, all of which exhibits are
incorporated herein by reference.
LIMITATION OF REMEDY. Any warranty of title by the Grantor and any
remedies of the Grantee or its successors and assigns related to the property
covered by this Deed shall be limited to the remedies set forth in that certain
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER,
AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that
certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and
Grantee, dated effective as of March 21, 1997 (copies of which are maintained
in the offices of Grantor and Grantee and attorneys for Grantor, Modrall,
Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New
Mexico 87102) and shall not include any other rights, damages or claims than
those specifically set forth therein. Any rights asserted under the terms of
such agreements must be brought within the time period set forth in such
agreements.
CONVEYANCE SUBJECT TO THE OBLIGATION TO PURCHASE ENTIRE MINERAL
ESTATE. The grant of this deed is subject to the following right of Grantor.
At such time as Grantee or its successors or assigns applies for a mining
permit with respect to the Property or performs any activities on the Property
which would require a mining permit, Grantor shall have the right to require
Grantee or its successors or assigns to purchase all of the mineral estate
(except coal in place, including development or mining rights related to coal)
owned by Grantor on the portion of the Property which is the subject of the
mining permit or activities which would require a mining permit for a purchase
price of $200 per acre (the "Purchase
<PAGE> 78
Price"), which Purchase Price shall be paid within 30 days after Grantor
declares its right to require the purchase. The Purchase Price shall be
increased by the same percentage as the percentage increase in the Spot Price
of uranium on the date of Grantor's exercise of such right over $15.80 per
pound. Grantee shall purchase such portions of property as entire sections or
as much of each section as was originally conveyed by Grantor to Grantee.
Additionally, Grantor grants to Grantee or its successor and assigns
for a period of 99 years from the date of this Deed the option to purchase all
of the remaining mineral estate (except coal in place, including development or
mining rights related to coal) owned by Grantor in all or any portion of the
Property for a total purchase price of $200 per acre (the "Purchase Price"),
which Purchase Price will be payable within 30 days after Grantee or its
successors or assigns elects to exercise the option to purchase. The Purchase
Price shall be increased by the same percentage as the percentage increase in
the Spot Price of uranium on the date of Grantor's exercise of such right over
$15.80 per pound. Grantee shall purchase such portions of property as entire
sections or as much of each section as was originally conveyed by Grantor to
Grantee.
The Spot Price shall mean that price at which uranium may be purchased
for delivery within one year, as reported by TradeTech or its successors in
interest, or, in the absence of TradeTech or a successor in interest, another
accepted industry publication.
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR
MINING RIGHTS. This conveyance does not and is not intended to affect or purport
to affect, in any way, coal in place, including development or mining rights
related to coal, in any of the property of Grantor or any of its subsidiaries
or affiliates including, but not limited to, the San Juan Basin Coal Holding
Company, and coal in place and all such rights are EXCEPTED herefrom and
RESERVED to Grantor.
WITNESS its hand and seal this 21st day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By: /s/ BRUCE D. HANSEN
-----------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
<PAGE> 79
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March 21, 1997, by Bruce
D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific
Gold Corporation.
/s/ JACQUELINE WALSTON
----------------------------
Jacqueline Walston
(Seal) Notary Public
My commission expires: 01/28/98
---------------
<PAGE> 80
EXHIBIT A
CATEGORY II DEED, SANDOVAL COUNTY
Deeds Reserving Mineral Interests
Warranty Deed dated August 2, 1948, from Santa Fe Pacific Railroad Company to
Frank Bond & Son, Inc., recorded in Volume 6 of Deed Records, Page 120.
Warranty Deed dated April 1, 1949, from Santa Fe Pacific Railroad Company to
Benjamin Benavidez, Abel Benavidez and Moises Benavidez, recorded in Volume 9
of Deed Records, Page 903, in the official records of Sandoval County, New
Mexico.
Warranty Deed dated December 6, 1938, from Santa Fe Pacific Railroad Company to
Frank Bond and Son, recorded in Volume 5 of Deed Records, Page 42, in the
official records of Sandoval County, New Mexico.
Warranty Deed dated May 15, 1943, from Santa Fe Pacific Railroad Company to
Frank Bond & Son, Ltd.
Warranty Deed dated April 1, 1949, from Santa Fe Pacific Railroad Company to
Faustino Benavidez, recorded in Volume 6 of Deed Records, Page 169, in the
official records of Sandoval County, New Mexico.
Warranty Deed dated December 15, 1943, from Santa Fe Pacific Railroad Company
to Benajamin Benavidez, recorded in Volume 5 of Deed Records, Page 494, in the
official records of Sandoval County, New Mexico.
Warranty Deed dated November 1, 1949, from Santa Fe Pacific Railroad Company to
O. F. Sandoval and Porfirio Sandoval.
<PAGE> 81
EXHIBIT B
CATEGORY II DEED, SANDOVAL COUNTY
CONVEYANCE OF URANIUM RIGHTS TO URANCO
(Revised 11/7/96)
COMPANY: GOLD
STATE: NM
COUNTY: SANDOVAL
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C> <C>
Township 12 North, Range 1 East
-------------------------------
Section 5 Lots 7, 8 SE/4, S/2 NW/4, Lot 6 451.11
NE/4, Lot 3 NW/4, Lot 5 NE/4, Lot 4
NW/4, SW/4
Section 6 All 614.74
Section 7 All 615.68
Section 8 Lots 1-4, NW/4, W/2 SW/4 354.06
Section 17 Lots 1-4 171.63
Section 18 All 614.56
Section 19 All 611.44
Section 20 Lots 1-4 178.14
Section 29 Lots 1-4, W/2 SW/4, SE/4 SW/4 253.05
Section 30 All 613.28
Section 31 All 616.80
Township 13 North, Range 1 East
-------------------------------
Section 4 All 647.16
Section 5 All 650.80
Section 6 All 615.05
Section 7 All 599.88
Section 8 All 640.00
Section 9 All 640.00
</TABLE>
B-1
<PAGE> 82
<TABLE>
<S> <C> <C> <C>
Section 17 All 640.00
Section 18 All 600.68
Section 19 All 602.52
Section 20 All 640.00
Section 21 All 640.00
Section 28 All 640.00
Section 29 All 640.00
Section 30 All 606.27
Section 31 All, except North 300 ft. of 555.09
Section
Section 33 All 534.92
Township 14 North, Range 1 East
-------------------------------
Section 5 Lots 1-4, S/2 N/2, SE/4, NE/4 SW/4 531.88
Section 5 NW/4 SW/4, S/2 SW/4 120.00
Township 12 North, Range 1 West
-------------------------------
Section 1 Lots 1-4, S/2 N/2, S/2 641.98
Section 3 Lots 1-4, S/2 N/2, S/2 647.18
Section 4 Lots 1-8 343.57
Section 9 Lots 1-8 341.56
Section 10 NE/4, NE/4 SE/4, W/2 SE/4, W/2 600.00
Section 11 All 640.00
Section 12 All 640.00
Section 13 All 640.00
Section 14 NE/4, S/2 480.00
Section 15 All 640.00
Section 21 Lots 1-8 341.64
Section 22 All 640.00
</TABLE>
B-2
<PAGE> 83
<TABLE>
<S> <C> <C> <C>
Section 23 All 640.00
Section 24 All 640.00
Section 25 All 640.00
Section 26 All 640.00
Section 27 E/2, E/2 SW/4 400.00
Section 27 NW/4, W/2 SW/4 240.00
Section 28 Lots 1-8 345.84
Section 33 Lots 1-8 344.52
Section 34 All 640.00
Section 35 W/2 320.00
Section 35 E/2 320.00
Township 13 North, Range 1 West
-------------------------------
Section 12 All 640.00
Section 14 All 640.00
Section 22 N/2 320.00
Section 22 E/2 SE/4, N/2 SW/4 160.00
Section 24 All 640.00
Section 26 N/2, W/2 SE/4, SW/4 560.00
Section 28 Lots 1-4, E/2 338.88
Section 34 All, except North 300 ft. of 603.64
Section ---------
County Total 31,307.55
</TABLE>
B-3
<PAGE> 84
EXHIBIT C
CATEGORY II DEED, SANDOVAL COUNTY
Items Not Included in Grant
NONE
<PAGE> 85
EXHIBIT D
CATEGORY II DEED, SANDOVAL COUNTY
Items to which Deed is Subject
Lease Option Agreement dated October 8, 1987 between Cerrillos Land Co. and
Santa Fe Energy Co., as amended on July 1, 1988, and as amended on December 1,
1989, a memorandum of which is recorded in Book 2, page 1630, in the official
records of McKinley County, New Mexico.
Surface and mineral limitation contained in Warranty Deed dated October 29,
1979 from Santa Fe Pacific Railroad to Paragon Resources, Incorporated covering
certain lands in Section 28 and 29-13N-1E, Sandoval Co., NM.
Real Estate taxes for years 1997 and subsequent years.
<PAGE> 86
EXHIBIT 10.19
AFTER RECORDING RETURN TO:
Margaret Lewis Meister
Modrall, Sperling, Roehl, Harris & Sisk, P.A.
P. O. Box 2168
Albuquerque, New Mexico 87103
DEED
Category II
Bernalillo
STATE OF NEW MEXICO )
COUNTY OF BERNALILLO )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals Corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.
E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to
URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the interest in uranium reserved by
Santa Fe Pacific Railroad Company in the instruments described in Exhibit A
hereto but only so far as such reservations and exceptions pertain to and cover
the real estate in Bernalillo County, New Mexico more particularly described in
Exhibit B hereto (the "Property"), less and except the interests described in
Exhibit C hereto and subject to the grants and interests set forth in the
instruments set forth in Exhibit D hereto, all of which exhibits are
incorporated herein by reference.
LIMITATION OF REMEDY. Any warranty of title by the Grantor and any
remedies of the Grantee or its successors and assigns related to the property
covered by this Deed shall be limited to the remedies set forth in that certain
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER,
AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that
certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and
Grantee, dated effective as of March 21, 1997 (copies of which are maintained
in the offices of Grantor and Grantee and attorneys for Grantor, Modrall,
Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New
Mexico 87102) and shall not include any other rights, damages or claims than
those specifically set forth therein. Any rights asserted under the terms of
such agreements must be brought within the time period set forth in such
agreements.
CONVEYANCE SUBJECT TO THE OBLIGATION TO PURCHASE ENTIRE MINERAL
ESTATE. The grant of this deed is subject to the following right of Grantor.
At such time as Grantee or its successors or assigns applies for a mining
permit with respect to the Property or performs any activities on the Property
which would require a mining permit, Grantor shall have the right to require
Grantee or its successors or assigns to purchase all of the mineral estate
(except coal in place, including development or mining rights related to coal)
owned by Grantor on the portion of the Property which is the subject of the
mining permit or activities which would require a mining permit for a purchase
price of $200 per acre (the "Purchase
<PAGE> 87
Price"), which Purchase Price shall be paid within 30 days after Grantor
declares its right to require the purchase. The Purchase Price shall be
increased by the same percentage as the percentage increase in the Spot Price
of uranium on the date of Grantor's exercise of such right over $15.80 per
pound. Grantee shall purchase such portions of property as entire sections or
as much of each section as was originally conveyed by Grantor to Grantee.
Additionally, Grantor grants to Grantee or its successor and assigns
for a period of 99 years from the date of this Deed the option to purchase all
of the remaining mineral estate (except coal in place, including development or
mining rights related to coal) owned by Grantor in all or any portion of the
Property for a total purchase price of $200 per acre (the "Purchase Price"),
which Purchase Price will be payable within 30 days after Grantee or its
successors or assigns elects to exercise the option to purchase. The Purchase
Price shall be increased by the same percentage as the percentage increase in
the Spot Price of uranium on the date of Grantor's exercise of such right over
$15.80 per pound. Grantee shall purchase such portions of property as entire
sections or as much of each section as was originally conveyed by Grantor to
Grantee.
The Spot Price shall mean that price at which uranium may be purchased
for delivery within one year, as reported by TradeTech or its successors in
interest, or, in the absence of Trade Tech or a successor in interest, another
accepted industry publication.
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR
MINING RIGHTS. This conveyance does not and is not intended to affect or
purport to affect, in any way, coal in place, including development or mining
rights related to coal, in any of the property of Grantor or any of its
subsidiaries or affiliates including, but not limited to, the San Juan Basin
Coal Holding Company, and coal in place and all such rights are EXCEPTED
herefrom and RESERVED to Grantor.
WITNESS its hand and seal this 21st day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By: /s/ BRUCE D. HANSEN
-----------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
<PAGE> 88
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March 21, 1997, by Bruce
D. Hansen as Senior Vice President- Corporate Development of Santa Fe Pacific
Gold Corporation.
(Seal) /s/ JACQUELINE WALSTON
---------------------------------------
Notary Public
My commission expires: 01/28/98
----------------
<PAGE> 89
EXHIBIT A
CATEGORY II DEED, BERNALILLO COUNTY
Deeds Reserving Mineral Interests
Warranty Deed dated January 27, 1949, from Santa Fe Pacific Railroad Company to
Sam R. Angell, Sr.
<PAGE> 90
EXHIBIT B
CATEGORY II DEED, BERNALILLO COUNTY
CONVEYANCE OF URANIUM RIGHTS TO URANCO
(Revised 11/7/96)
COMPANY: GOLD
STATE: NM
COUNTY: BERNALILLO
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C> <C>
Township 11 North, Range 1 East
-------------------------------
Section 5 Lots 3-7, SW/4 NW/4, NW/4 SW/4 257.09
Section 7 All 623.58
Section 19 All 622.72
Township 11 North, Range 1 West
-------------------------------
Section 1 Lots 1-4, S/2 NE/4, S/2 NW/4, SE/4, 634.78
SW/4
Section 3 Lots 1-4, S/2 NE/4, S/2 NW/4, SE/4, 626.78
SW/4
Section 9 Lots 1-4, E/2 NE/4, E/2 SE/4 332.78
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 21 Lots 1-4, E/2 NE/4, E/2 SE/4 319.66
Section 23 All 640.00
Section 25 Lots 1-4, N/2 NE/4, N/2 NW/4 181.60
Section 27 Lots 1-4, N/2 NE/4, N/2 NW/4 180.40
--------
County Total 6,339.39
</TABLE>
<PAGE> 91
EXHIBIT C
CATEGORY II DEED, BERNALILLO COUNTY
Items Not Included in Grant
NONE
<PAGE> 92
EXHIBIT D
CATEGORY II DEED, BERNALILLO COUNTY
Items to which Deed is Subject
Lease Option Agreement dated 10-08-97 between Cerrillos Land Co. and Santa Fe
Energy Co., as amended on July 1, 1988, and as amended on December 1, 1989, a
memorandum of which is recorded in Book 2, page 1630, in the official records
of McKinley County, New Mexico.
Real Estate Taxes for the years 1997 and subsequent years.
<PAGE> 1
EXHIBIT 10.20
STOCK EXCHANGE AGREEMENT
AND PLAN OF REORGANIZATION
By and Between
URANIUM RESOURCES, INC.
And
URANCO, INC.
Dated as of
MARCH 25, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1 - REPRESENTATIONS AND WARRANTIES OF URANCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1. Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.4. Consents and Approvals, No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.6. No Fees Owing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.7. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.8. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.9. No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF URI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.1. Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2. Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.3. Authority; Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.4. SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.5. Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.7. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8. No Fees Owing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.9. Investment Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.10. No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 3 - CERTAIN OTHER UNDERSTANDINGS AND AGREEMENTS
OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.1. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.2. Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 4 - CLOSING; ISSUANCE OF SHARES; EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.1. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.2. The Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.3. Closing Documents Delivered to URI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.4. Closing Documents Delivered by URI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 5 - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.1. Assignability and Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.2. Choice of Law and Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.3. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.4. Complete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.5. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.7. Knowledge, Due Diligence Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
-i-
<PAGE> 3
STOCK EXCHANGE AGREEMENT
AND PLAN OF REORGANIZATION
This STOCK EXCHANGE AGREEMENT (this "Agreement") is made and entered
into effective as of March 25, 1997 by and between Uranium Resources, Inc., a
Delaware corporation ("URI"), and Uranco Inc., a Delaware corporation
("Uranco").
RECITALS:
1. Uranco is the holder of certain uranium and mineral interests
in New Mexico which it is desirous of exploring and possibly developing, but
lacks the capital to do so.
2. URI is in the uranium business, holds uranium interests in New
Mexico and has the expertise to explore and consider development of the uranium
interests held by Uranco.
3. Uranco and URI desire to exchange all of the outstanding stock
of Uranco for 1,200,000 shares (the "Shares") of URI's common stock, $.001 par
value per share ("Common Stock"), upon and subject to the terms and conditions
set forth in this Agreement.
4. Uranco and URI intend and desire to qualify this transaction
as a "reorganization" within the meaning of Section 368(a)(1)(B) of the
Internal Revenue Code.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties hereto adopt this plan of reorganization
and agree as follows:
-1-
<PAGE> 4
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF URANCO
Uranco represents and warrants to URI that:
SECTION 1.1. CORPORATE ORGANIZATION.
Uranco is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware, with all requisite corporate
power and authority to own, operate and lease its properties and to carry on
its business as now being conducted, and is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which its ownership or
leasing of property or conduct of business requires such licensing or
qualification, except where the failure to be so qualified would not have a
Material Adverse Effect on Uranco. For purposes of this Agreement (a)
"Material Adverse Change" or "Material Adverse Effect" means, when used with
respect to Uranco or URI, as the case may be, any change or effect that is or,
so far as can reasonably be determined, is likely to be materially adverse to
the assets, properties, condition (financial or otherwise), business or results
of operations of Uranco or URI, in each case together with its Subsidiaries
taken as a whole, and (b) "Subsidiary" means any corporation, partnership,
joint venture or other legal entity of which Uranco or URI, as the case may be
(either alone or through or together with any other Subsidiary), owns, directly
or indirectly, 50% or more of the stock or other equity interests the holders
of which are generally entitled to vote for the election of the other governing
body of such corporation or other legal entity. Uranco has delivered to URI
complete and correct copies of its Articles of Incorporation and By-Laws as in
effect on the date hereof.
SECTION 1.2. AUTHORIZATION.
The execution and delivery by Uranco of this Agreement, the
performance by Uranco of its obligations hereunder and the consummation by
Uranco of the transactions contemplated hereby have been duly authorized by the
appropriate corporate action, and no other proceeding on the part of Uranco is
necessary for the execution and delivery thereof and the performance of its
obligations hereunder. This Agreement is a legal, valid and binding obligation
of Uranco, enforceable in accordance with its terms except to the extent
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by the effect
of general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
-2-
<PAGE> 5
SECTION 1.3. CAPITALIZATION.
All of the issued and outstanding shares of the common stock of Uranco
(the "Uranco Common Stock") are owned by Santa Fe Pacific Gold Corporation
("Santa Fe"). All of such outstanding shares have been duly and validly
issued, were not issued in violation of any preemptive rights and are fully
paid and non-assessable. There are no options, warrants, subscriptions,
conversion or other rights, agreements, commitments, arrangements or
understandings with respect to the issuance of shares of capital stock of
Uranco or any other securities convertible into, exchangeable for or evidencing
the right to subscribe for any such shares.
SECTION 1.4. CONSENTS AND APPROVALS; NO VIOLATIONS.
Neither the execution, delivery or performance of this Agreement by
Uranco nor the consummation by Uranco of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provisions of the
Articles of Incorporation or By-laws of Uranco, (ii) require any filing with,
or permit, authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission; (iii) require the consent or approval of
any person other than Santa Fe; (iv) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, or result in the creation of any lien or other encumbrance on any of the
Mineral Interests pursuant to, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Uranco is a party or by which it or its
properties or assets may be bound; or (v) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Uranco or by which any
property or asset of Uranco is bound.
SECTION 1.5. LITIGATION.
Except as set forth in Schedule 1.5, there is no Proceeding (as
defined below) pending or, to the knowledge of Uranco, threatened against or
involving Uranco involving the Mineral Interests before any court, arbitrator
or administrative or governmental body, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Uranco relating to
the Mineral Interests, nor, to the knowledge of Uranco, is there any basis for
any such Proceeding. There are no Proceedings pending or, to the knowledge of
Uranco, threatened against Uranco arising out of or in any way related to this
Agreement or any of the transactions contemplated hereby. As used in this
Agreement, "Proceeding" means any action, suit, hearing, arbitration or
governmental investigation (whether public or private).
-3-
<PAGE> 6
SECTION 1.6. NO FEES OWING.
Neither Uranco nor any of its directors, officers or shareholders has
employed any broker or finder or incurred any liability for any financial
advisory, brokerage or finders' fees or similar fees or commissions in
connection with the transactions contemplated by this Agreement.
SECTION 1.7. COMPLIANCE WITH LAWS.
Uranco has complied in all material respects with the laws and
regulations of federal, state and local governments and all agencies thereof
which are applicable to its business.
SECTION 1.8. DISCLOSURE.
To Uranco's knowledge, no representation or warranty by Uranco in this
Agreement contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
SECTION 1.9. NO OTHER REPRESENTATIONS.
Uranco is not making any representation or warranty, express or
implied, of any nature whatsoever, except as specifically set forth in Article
1 of this Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF URI
URI represents and warrants to Uranco that:
SECTION 2.1. ORGANIZATION, STANDING AND POWER.
URI is a corporation duly domesticated, validly existing and in good
standing under the laws of the State of Delaware and has the requisite
corporate power and authority to carry on its business as now being conducted.
URI is duly qualified to do business, and is in good standing, in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, including without limitation the
State of New Mexico, except where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect on URI.
-4-
<PAGE> 7
SECTION 2.2. CAPITAL STRUCTURE.
The authorized capital stock of URI consists of 25,000,000 shares of
URI Common Stock. At the close of business on March 5, 1997, (i) 10,827,527
shares of URI Common Stock were issued and outstanding, (ii) 1,463,346 shares
of URI Common Stock were reserved for issuance upon the exercise of then
outstanding URI stock options, (iii) 291,785 shares of URI Common Stock were
reserved for issuance upon exercise of URI stock options which may be granted in
the future under currently existing stock option plans, (iv) 152,500 shares of
URI Common Stock were held by URI in its treasury, and (v) 2,500,000 shares of
URI Common Stock were reserved for issuance upon the conversion of certain debt
and the exercise of certain warrants. All outstanding shares of capital stock
of URI are validly issued, fully paid and nonassessable and not subject to
preemptive rights. Except as set forth above as of the date of this Agreement,
there are no options, warrants, rights, commitments, agreements, arrangements
or undertakings of any kind to which URI is a party or by which it is bound
obligating URI to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock or other voting securities of URI.
SECTION 2.3. AUTHORITY; NON-CONTRAVENTION.
The Board of Directors of URI has declared the Exchange fair to and
advisable and in the best interest of the stockholders of URI. URI has all
requisite power and authority to enter into this Agreement and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by URI and the consummation by URI of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of URI. This Agreement has been duly executed and delivered by URI and
(assuming the valid authorization, execution and delivery of this Agreement by
Uranco) constitutes a valid and binding obligation of URI enforceable against
URI in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws of general applicability relating to or
affecting the enforcement of creditors' rights and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law). The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby and
compliance with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a night of termination, cancellation or acceleration of
any obligation or to the loss of a material benefit under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of URI under, any provision of (i) the Certificate of
Incorporation or Bylaws of URI (true and complete copies of which as of the
date hereof have been delivered to Uranco), (ii) any loan or credit agreement,
note, bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to URI or (iii) any judgment,
order, decree, statute, law, ordinance, rule or regulation applicable to URI or
any of its respective properties or assets.
-5-
<PAGE> 8
No filing or registration with, or authorization, consent or approval
of, any governmental entity is required by or with respect to URI in connection
with the execution and delivery of this Agreement by URI or is necessary for
the consummation by URI of the Exchange and the other transactions contemplated
by this Agreement, except for (i) in connection, or in compliance, with the
provisions of the Securities Exchange Act of 1934 (the "Exchange Act"), (ii)
such filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Exchange or the transactions contemplated by this
Agreement, (iii) such filings as may be required in connection with applicable
taxes, (iv) filings under the HSR Act, and (v) such other consents, approvals,
orders, authorizations, registrations, declarations and filings the failure of
which to be obtained or made would not, individually or in the aggregate, have
a Material Adverse Effect on URI, materially impair the ability of URI to
perform its obligations hereunder or prevent the consummation of any of the
transactions contemplated hereby.
SECTION 2.4. SEC DOCUMENTS.
URI has timely filed all required documents with the SEC since January
1, 1995 (the "URI SEC Documents"). As of their respective dates, URI SEC
Documents complied in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act,
as the case may be, and none of URI SEC Documents, contained, as of their
respective dates, any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of URI included in URI SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles (except, in the case of unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto) and fairly present
the financial position of URI as at the dates thereof and the results of their
operations and changes in financial position for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments and to any other adjustments described therein).
SECTION 2.5. ABSENCE OF MATERIAL ADVERSE CHANGE.
Except as disclosed in URI SEC Documents filed with the SEC prior to
the date hereof, there has not been any Material Adverse Change with respect to
URI (other than changes in generally accepted accounting principles or
interpretations thereof that affect the uranium industry generally or changes
in general economic conditions that affect such industry on a nationwide
basis).
-6-
<PAGE> 9
SECTION 2.6. LITIGATION.
Except as disclosed prior to the date hereof in URI SEC Documents,
copies of all of which have been provided to Uranco, there is no suit, action,
investigation or proceeding pending or, to the knowledge of the executive
officers of URI, threatened against URI at law or in equity before or by any
federal, state, municipal or other court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, or
before any arbitrator of any kind, that would have a Material Adverse Effect on
URI or, with respect to such matters that are pending or threatened as of the
date hereof, materially impair the ability of URI to perform its obligations
hereunder or to consummate the transactions contemplated hereby, and there is
no judgment, decree, injunction, rule or order of any court, governmental
department, commission, board, bureau, agency, instrumentality or arbitrator to
which URI or any of its Subsidiaries is subject that would have a Material
Adverse Effect on URI or, with respect to such items that are outstanding and
applicable as of the date hereof, materially impair the ability of URI to
perform its obligations hereunder or to consummate the transactions
contemplated hereby.
SECTION 2.7. OPINION OF FINANCIAL ADVISOR.
On the date hereof URI has received the written opinion of EVEREN
Securities, Inc. to the effect that the terms of the Exchange are fair to the
holders of URI Common Stock from a financial point of view.
SECTION 2.8. NO FEES OWING.
No broker, investment banker or other person, other than EVEREN
Securities, Inc. the fees and expenses of which will be paid by URI, is
entitled to any broker's, finder's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of URI.
SECTION 2.9. INVESTMENT REPRESENTATION.
URI has the knowledge and experience in business and financial matters
to meaningfully evaluate the merits and risks of the issuance of URI's Common
Stock in exchange and consideration for the Uranco Stock as contemplated
hereby. URI understands and acknowledges that the Uranco Stock was originally
issued to Santa Fe, and will be sold and transferred to URI, without
registration or qualification under the Securities Act of 1933, as amended, or
any applicable state securities or "Blue Sky" law, in reliance upon specific
exemptions therefrom, and in furtherance thereof URI represents that the Uranco
Stock will be taken and received by URI for its own account for investment,
with no present intention of a distribution or disposition thereof to others.
URI further acknowledges and agrees that the certificate(s) representing the
Uranco Stock transferred to URI shall bear a restrictive legend, in
substantially the following form:
-7-
<PAGE> 10
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
ARE "RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR
ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY, IS NOT REQUIRED TO BE REGISTERED UNDER
THE ACT.
SECTION 2.10. NO OTHER REPRESENTATIONS.
URI is not making any representation or warranty, express or implied,
of any nature whatsoever, except as specifically set forth in Article 2 of this
Agreement.
ARTICLE 3
CERTAIN OTHER UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES
SECTION 3.1. FEES AND EXPENSES.
All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
costs and expenses, except as otherwise specifically set forth in this
Agreement or in the Registration Rights Agreement.
SECTION 3.2. REASONABLE EFFORTS.
Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts after the
Closing, to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Exchange and the other transactions
contemplated by this Agreement and the prompt satisfaction of the conditions
hereto, including (a) the obtaining of all necessary actions or non-actions,
waivers, consents and approvals from Governmental Entities and the making of
all necessary registrations and filings and the taking of all reasonable steps
as may be necessary to obtain an approval or waiver from, or to avoid an action
or proceeding by, any Governmental Entity, (b) the obtaining of all necessary
consents, approvals or waivers from third parties, and (c) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement.
-8-
<PAGE> 11
ARTICLE 4
CLOSING; ISSUANCE OF SHARES; EXCHANGE
SECTION 4.1. THE CLOSING.
The consummation of the Exchange (hereinafter the "Closing") occurred
at the offices of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque,
New Mexico, at 10:00 a.m. Mountain Standard time, on March 25, 1997 (the
"Closing Date").
SECTION 4.2. THE EXCHANGE.
At the Closing, URI issued and delivered to Uranco's shareholder,
Santa Fe, the Shares. In consideration for the issuance and sale of the Shares
to Santa Fe, and as payment in full of the Shares, at the Closing Santa Fe
transferred to URI the certificates evidencing all of the issued and
outstanding shares of capital stock of Uranco. All of the Shares are fully
paid and nonassessable.
SECTION 4.3. CLOSING DOCUMENTS DELIVERED TO URI.
The following documents were delivered to URI at closing:
(a) The opinion of Modrall, Sperling, Roehl, Harris & Sisk, P.A.,
counsel to Uranco, dated the Closing Date, substantially to the effect that:
(i) The incorporation, existence and good standing of
Uranco is as stated in this Agreement; the authorized and issued and
outstanding shares of Uranco are as stated in this Agreement; all
outstanding shares of Uranco Common Stock are duly and validly
authorized and issued, fully paid and nonassessable and have not been
issued in violation of any preemptive right of any stockholders.
(ii) Uranco has full corporate power and authority to
execute, deliver and perform this Agreement and this Agreement has
been duly authorized, executed and delivered by Uranco and (assuming
due and valid authorization, execution and delivery by URI)
constitutes the legal, valid and binding agreement of Uranco,
enforceable in accordance with its terms except to the extent
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
of general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
(iii) The execution and performance by Uranco of this
Agreement will not violate the Certificate of Incorporation or By-Laws
of Uranco, respectively, and, to the knowledge of such counsel, will
not violate, result in a breach of or constitute a default
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<PAGE> 12
under any material lease, mortgage, contract, agreement, instrument,
law, rule, regulation, judgment, order or decree to which Uranco is a
party or by which they or any of their properties or assets may be
bound.
(iv) After inquiry of the directors and officers of Uranco,
such counsel has no knowledge of any consent, approval, authorization
or order of any court or governmental agency or body which has not
been obtained but which is required on behalf of Uranco for the
consummation of the transactions contemplated by this Agreement.
(v) After inquiry of the directors and officers of
Uranco, such counsel has no knowledge of any actions, suits or
proceedings, pending or threatened against or affecting Uranco by any
governmental entity which seek to restrain, prohibit or invalidate the
transactions contemplated by this Agreement.
(b) Certificate representing all of the issued and outstanding
Uranco Common Stock duly endorsed for transfer to URI by Santa Fe.
SECTION 4.4. CLOSING DOCUMENTS DELIVERED BY URI.
At the Closing URI delivered the following:
(a) The opinion of Baker & Hostetler LLP, counsel to URI, dated
the Closing Date, substantially to the effect that:
(i) The incorporation, existence and good standing of URI
are as stated in this Agreement.
(ii) URI has full corporate power and authority to
execute, deliver and perform this Agreement and this Agreement has
been duly authorized, executed and delivered by URI and (assuming due
and valid authorization, execution and delivery by Uranco) constitutes
the legal, valid and binding agreement of URI, enforceable in
accordance with its terms except to the extent enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights and by
the effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(iii) The execution and performance by URI of this
Agreement will not violate the Certificates of Incorporation or
By-Laws of URI, respectively, and, to the knowledge of such counsel,
will not violate, result in a breach of or constitute a default under
any material lease, mortgage, contract, agreement, instrument, law,
rule, regulation, judgment, order or decree to which URI is a party or
by which they or any of their properties or assets may be bound.
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<PAGE> 13
(iv) To the knowledge of such counsel, no consent,
approval, authorization or order of any court or governmental agency
or body which has not been obtained is required on behalf of URI for
the consummation of the transactions contemplated by this Agreement.
(v) To the knowledge of such counsel, there are no
actions, suits or proceedings, pending or threatened against or
affecting URI by any governmental entity which seek to restrain,
prohibit or invalidate the transactions contemplated by this
Agreement.
(vi) The Shares have been duly authorized and are validly
issued and outstanding and are fully paid and nonassessable.
(vii) The shares of URI Common Stock issued in the Exchange
have been listed on the Nasdaq National Market subject to official
notice of issuance.
(b) A Certificate representing the Shares registered in the name
of Santa Fe.
ARTICLE 5
GENERAL PROVISIONS
SECTION 5.1. ASSIGNABILITY AND PARTIES IN INTEREST.
This Agreement shall inure to the benefit of and be binding upon URI
and Uranco and their respective successors and assigns.
SECTION 5.2. CHOICE OF LAW AND CHOICE OF FORUM.
This Agreement shall be governed by and construed in accordance with
the internal law of the State of New Mexico without giving effect to conflicts
of law principles thereof. Uranco and URI agree that all litigation arising
out of or related to this Agreement for the performance or non-performance of
actions contemplated by this Agreement shall be brought in a federal or state
court of competent jurisdiction within the state of New Mexico. Uranco and URI
consent to jurisdiction by such a court.
SECTION 5.3. COUNTERPARTS.
This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one and the same instrument.
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SECTION 5.4. COMPLETE AGREEMENT.
This agreement is entered into by the parties in connection with a
transaction involving the transfer of common stock of Uranco owned by Santa Fe
to URI in exchange for common stock of URI, the grant by URI to Santa Fe of
registration rights with respect to the stock of URI to be issued to Santa Fe,
the grant by Santa Fe to Uranco of a license to explore and an option to
purchase in exchange for certain commitments by Uranco, and the guarantee by
URI of certain obligations of Uranco to Santa Fe. In order to effect this
transaction, certain of the parties have contemporaneously entered into certain
agreements, specifically, the Stock Exchange Agreement and Plan of
Reorganization (URI and Uranco), the Agreement of Santa Fe as Uranco
Shareholder and Guarantee of URI (Santa Fe and URI); the License to Explore and
Option to Purchase (Santa Fe and Uranco); and the Registration Rights Agreement
(Santa Fe and URI). All of such agreements, together with all exhibits or
schedules thereto and documents delivered pursuant thereto, contain the entire
agreement among the parties with respect to the contemplated transaction, and
shall supersede all previous writings and all previous or contemporaneous oral
negotiations, commitments, and understandings.
SECTION 5.5. INTERPRETATION.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
SECTION 5.6. SEVERABILITY.
Any provision of this Agreement which is invalid, illegal, or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality, or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction.
SECTION 5.7. KNOWLEDGE, DUE DILIGENCE INVESTIGATION.
All representations and warranties contained herein which are made to
the "knowledge" of Uranco or URI shall mean to the actual present knowledge of
Uranco's or URI'S, as the case may be, executive officers after due inquiry
with respect to such matters.
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<PAGE> 15
IN WITNESS WHEREOF, the undersigned duly execute this Agreement as of
the date first written above.
URANCO INC.
Date: March 25, 1997 By: /s/ Bruce D. Hansen
---------------------------------
Name: Bruce D. Hansen
---------------------------------
Title: President
---------------------------------
URANIUM RESOURCES, INC.
Date: March 25, 1997 By: /s/ Paul K. Willmott
---------------------------------
Name: Paul K. Willmott
---------------------------------
Title: President
---------------------------------
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Schedule 1.5: Litigation
Navajo Nation land and jurisdictional claims: Since 1982, the Navajo
Nation has asserted title and jurisdictional claims over lands in the
checkerboard area in northwestern New Mexico outside the boundaries of the
recognized Navajo Reservation, including portions of McKinley County, where
some of the mineral interests subject to this Agreement are located. While the
federal courts have rejected claims to title to lands, see Navajo Tribe v. New
Mexico, 809 F.2d 1455 (10th Cir. 1987), the courts have acknowledged the
potential for the exercise of off-reservation civil jurisdiction over
non-Indians by the Navajo Nation. See Pittsburg & Midway Coal Mining Co. v.
Watchman, 52 F.3d 1531 (10th Cir. 1995); Texaco, Inc. v. Zah, 5 F.3d 1374 (10th
Cir. 1993).
In view of these assertions, there is the potential that the Navajo
Nation will assert title to, or jurisdiction over, the mineral interests
subject to this Agreement located in McKinley County, New Mexico. While title
claims were rejected, the decision was not on the merits, but was founded on
the fact that the United States was immune from suit, that the suit should have
been brought under the Indian Claims Commission Act of 1946, and the suit could
not proceed against the remaining defendants, including Santa Fe Mining, Inc. ,
because the United States was an indispensable party.. Accordingly, the
decision could be read to have barred the claim or remedy, but not the
underlying rights to title to the lands. As reflected in Pittsburg & Midway,
the Navajo Nation aggressively asserts civil jurisdiction, including taxation
and regulatory authority, to off -reservation areas within the territorial
confines of the "Navajo Nation" as the Nation defines that term in 7 N.N.C.
Section 254. While Santa Fe Pacific Gold Corporation and Uranco Inc. have not
attempted to determine whether the mineral interests subject to this agreement
would fall within the area over which the Navajo Nation would assert title or
jurisdiction, neither company are presently aware of any Navajo Nation claim
that would include the mineral interests subject to this Agreement that are
located in Bernalillo, Cibola, or Sandoval Counties.
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<PAGE> 1
EXHIBIT 10.21
LICENSE TO EXPLORE AND OPTION TO PURCHASE
THIS LICENSE TO EXPLORE AND OPTION TO PURCHASE ("LICENSE") is dated
and effective March 21, 1997 by and between Santa Fe Pacific Gold Corporation,
a Delaware corporation ("Licensor") and Uranco, Inc., a Delaware corporation
("Licensee").
RECITALS
A. The property interest which is the subject of this License is
described in Exhibit A to this License and shall be referred to as "Licensed
Premises" for purposes of this License unless otherwise specified.
B. Licensor wishes to allow Licensee to explore for uranium on
the Licensed Premises, all on the terms and conditions hereinafter set forth.
C. In consideration for the grant of the License and other
valuable consideration, Licensor shall require exploration by Licensee on the
Licensed Premises and other designated lands set forth in Exhibit B as to which
Licensor has conveyed the uranium estate to Licensee (the "Category II
Property"), all on the terms and conditions hereinafter set forth. The
Licensed Premises and the Category II Property shall be collectively referred
to herein as the "Exploration Property."
D. Licensor wishes to grant Licensee the option to purchase the
mineral estate owned by Licensor, (except coal in place, including development
or mining rights related to coal) in the Licensed Premises and to impose on
Licensee the obligation to purchase the mineral estate owned by Licensor,
(except coal in place, including development or mining rights related to coal)
before Licensee obtains any mining permit or performs any activities which
would require a mining permit on any portion of the Licensed Premises.
NOW, THEREFORE, for adequate consideration, the receipt and
sufficiency of which is hereby acknowledged, and in consideration for the
mutual promises of Licensor and Licensee stated in this License, Licensor and
Licensee agree as follows:
1. GRANT OF LICENSE.
a. Licensor hereby grants to Licensee, for a term of seventeen
(17) years, commencing on the date of the execution hereof, the exclusive right
to explore, sample and test the Licensed Premises for uranium and to use
geological, geophysical and geochemical data and interpretive data (except data
relating to coal, including the development or mining of coal), which has been
provided from Licensor to Licensee.
b. Licensor does not warrant the title to or quiet possession by
Licensee of the Licensed Premises or the uranium or any other minerals on or in
the Licensed Premises. Except
<PAGE> 2
as provided in that certain Agreement of Santa Fe Pacific Gold Corporation, as
Uranco, Inc. Shareholder and Uranium Resources, Inc. dated effective as of
March 25, 1997 (the "Shareholder Agreement") and under this License, Licensor
shall in no event become liable for damages arising from any lack or failure of
title in the Licensor to the Licensed Premises, the inability of Licensee to
explore for uranium or eviction of the Licensee from the Licensed Premises for
any reason.
c. The rights of Licensee under this License shall be subject to
the right of Licensor to use the Licensed Premises for any and all purposes not
detrimental to Licensee's use of the Licensed Premises for the purposes
permitted in Paragraph 1 of this License. Licensor may lease to third parties
the mineral estate other than uranium on the Exploration Property; provided,
however, that except for coal in place, including development or mining rights
related to coal, Licensor shall not sell any of the mineral estate on the
Exploration Property to any party except Licensee, its successors and assigns
until such time as Licensee's right and obligation to purchase the remaining
mineral estate is relinquished or terminated pursuant to the terms of this
License.
d. Licensee accepts this License subject to the aforesaid terms
and provisions and also subject to the terms and provisions of the deed or
deeds by which Licensor reserved the minerals in the Licensed Property and all
other grants and encumbrances set forth in Exhibit C to this License.
2. LICENSEE'S OBLIGATIONS.
As a part of the consideration for the grant of this License, Licensee
agrees:
a. Assumption of Licensor's Obligations to Others: By commencing
operations on any part of the Licensed Premises, Licensee assumes all
obligations of Licensor related to or arising out of Licensee's operations, if
any, to the surface owner or third party minerals owners of that portion of the
Licensed Premises to be affected by such operation(s), and agrees to pay any
such third party surface and mineral owners for any and all damages for which
it or Licensor would be liable as a result of Licensee's operations. Any
amounts which Licensor shall be required to pay to any surface or mineral
owners by reason of the action or inaction of Licensee, its agents, employees,
subcontractors and representatives, related to or arising out of Licensee's
activities, shall be reimbursed to Licensor within thirty (30) days after
written demand for reimbursement is made by Licensor upon Licensee.
b. Approval of Agreements Affecting Licensor: To obtain
Licensor's approval of any proposed agreement prior to Licensee entering into
any permanent arrangement with any owner of the surface overlying any of the
Licensed Premises, which approval will not be unreasonably withheld.
c. Insurance: To carry and maintain at all times the following
insurance coverage which shall name Licensor as an additional named insured:
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<PAGE> 3
(i) Worker's Compensation including Occupational
Disease with a minimum limit liability of $100,000
for Employers Liability or an amount required by
the State of New Mexico, whichever is higher;
(ii) Comprehensive General Liability with limits not
less than $1,000,000 combined single limit,
including:
(a) Blanket Contractual Liability
(b) Personal Injury
(c) Independent Contractors
(d) Removal of the "XCU" Exclusions;
(iii) Automobile Liability with limits not less than
$1,000,000 combined single limit including all
owned, non-owned and hired automobiles;
(iv) "All Risk" physical damage insurance on all
surface facilities,
(v) Excess Umbrella Liability coverage with limits of
not less than $5 million covering its operations
under this License.
Prior to January 1 of each year during the term, Licensee shall
provide to Licensor evidence that the required insurance is in effect.
d. OPERATIONS IN ACCORDANCE WITH LAW: To comply with all
applicable statutes, regulations, rules and orders of all governmental bodies
with jurisdiction over the Licensed Premises related to Licensee's operations
on the Licensed Premises, regardless of when they become or became effective,
including, without limitation, those relating to health, safety, noise,
environmental protection, waste disposal, and water and air quality. Licensee
shall furnish Licensor with satisfactory evidence of such compliance upon
request of Licensor. Should any discharge, leakage, spillage, emission or
pollution of any type occur upon or from the Licensed Premises due to
Licensee's use and occupance, Licensee, at its expense, shall clean and restore
the Licensed Premises to standards equal to or exceeding standards imposed by
any governmental body having jurisdiction over the Licensed Premises.
e. MINING PERMIT: Licensee shall not perform any activities which
require a mining permit on any portion of the Licensed Premises until the
Purchase Price has been paid and a deed as set forth in Paragraph 4 of this
License has been recorded.
f. DISCHARGE OF LIENS: To discharge, remove, satisfy and take all
other action to eliminate and prevent any and all liens and encumbrances,
except those existing prior to the date of this License or resulting from taxes
not yet due and payable, which attach to or are imposed against any interest
owned by Licensor in any portion of the Licensed Premises, that arise out of
Licensee's acts or omissions. If any person threatens any action which might
result in the imposition or attachment of any such lien or encumbrance,
Licensee shall, at its sole expense,
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<PAGE> 4
take all reasonable action necessary to prevent the imposition or attachment of
any such lien or encumbrance. Licensee shall have the right to contest in good
faith the imposition of any such lien or encumbrance.
g. Upon purchase by Licensee pursuant to Section 4 of this
License of the remaining mineral estate (except coal in place, including
development or mining rights related to coal) in all or a portion of the
Licensed Premises, such property purchased shall no longer be subject to the
terms of this License, except for the provisions of Section 6 of this License.
3. MULTIPLE USE.
a. Licensee shall carry out all activities and operations on the
Exploration Property in a manner compatible with the multiple use of the
Exploration Property and shall avoid interference with the operations of any
third parties who began or begin operations on the Exploration Property before
Licensee. If Licensee knowingly encounters any minerals that are owned by a
party other than Licensor, Licensee shall report such substances in its
semi-annual report to Licensor pursuant to Paragraph 6 of this License and
shall take all reasonable steps necessary to prevent any waste of such
minerals. If any portion of the Exploration Property is determined to contain
any substance owned by a third party, and that third party desires to explore
for, develop, mine, remove or process such substance, Licensee shall in good
faith attempt to adjust the timing, planning, location and construction of its
operations to permit the exploration, development, mining, removing or
processing of the substance.
b. Licensor shall include a provision substantially similar to
3(a) herein in any grant of rights to any third party affecting any part of the
Exploration Property to the end that the obligations placed upon Licensee under
the terms hereof shall be mutually binding upon Licensee and any party
hereafter acquiring an interest in the lands within the Exploration Property.
4. GRANT OF OPTION TO PURCHASE AND OBLIGATION TO PURCHASE.
a. The "Spot Price" of uranium as used in this License shall mean
that price at which uranium may be purchased for delivery within one year, as
reported by TradeTech or its successor in interest or, in the absence of
TradeTech or a successor in interest, another accepted industry publication.
b. At such time as Licensee applies for a mining permit with
respect to any of the Licensed Premises or performs any activities which would
require a mining permit, Licensor shall have the right to require the Licensee
to purchase all of the mineral estate (except coal in place, including
development or mining rights related to coal) owned by Licensor in the Licensed
Premises which is the subject of a mining permit or activities which would
require a mining permit. The purchase price shall be $200 per acre (the
"Purchase Price"). Licensee shall purchase such portions of property as entire
sections of land, or as much of the section as is licensed pursuant to this
License. The Purchase Price shall be paid within 30 days after Licensor gives
notice to Licensee that it elects to exercise the option to require purchase.
The
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<PAGE> 5
Purchase Price shall be increased by the same percentage as the percentage
increase in the Spot Price of uranium on the date of Licensor's exercise of
such option over $15.80 per pound. Upon payment of the full Purchase Price,
Licensor shall (i) execute and deliver to Licensee a deed in the form of
Exhibit D attached to this License which shall be made subject to all matters
of which Licensor has notice at the time of the conveyance, including but not
limited to the instruments set forth in Exhibit C attached to this License, and
(ii) convey title to all geological, geophysical and geochemical data and
interpretive data (except data relating to coal, including the development or
mining of coal) related to the mineral interests being conveyed.
c. Licensor grants to Licensee during the term of this License
the sole and exclusive option to purchase all of the remaining mineral estate
(except coal in place, including development or mining rights related to coal)
owned by Licensor in the Licensed Premises, or any part thereof, under the same
terms and conditions set forth in Section 4(b) of this Agreement, except that
Licensee shall not be obligated to apply for a mining permit before exercising
this option.
d. The exercise of this option as to a part of the Licensed
Premises shall not extinguish Licensee's option to thereafter acquire, from
time to time, all or any part of the remainder of the Licensed Premises.
5. EXPLORATION COMMITMENT.
a. Licensee shall expend not less than $200,000 per year in
exploration on the Exploration Property for License Years 1 through 10.
Licensee shall expend not less than $400,000 per year on the Exploration
Property for License Years 11 through 17. A License Year shall run from the
date this License is signed and each anniversary of that date through the day
preceding the anniversary date of the signing of this License. A breach of
Licensee's obligation to perform the exploration requirements set forth in this
Paragraph 5 shall only give rise to a right by Santa Fe to terminate this
License and shall not give rise to any other remedies in law or in equity.
b. Additionally, if the Spot Price for uranium shall exceed $25
per pound for any consecutive twelve-month period, Licensee shall spend on
exploration (or pay to Licensor) during the 5 years following an aggregate of
$5 million on the Licensed Premises. In the event that the Spot Price for
uranium shall exceed $30 per pound for any twelve-month period, Licensee shall
commit to spend on exploration (or shall pay Licensor) during the following 5
years an aggregate of $10 million on the Licensed Premises, (All expenditures
on exploration required pursuant to this Paragraph 5 shall be referred to
herein as the "Exploration Expenditures").
c. Licensee shall have the right to credit any Exploration
Expenditures in one year in excess of required amounts to future years. The
requirements for Exploration Expenditures shall be separate from any amounts
paid for the purchase of the uranium or mineral estate from Licensor, and any
such purchase price shall not be credited toward the Exploration Expenditures.
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<PAGE> 6
The obligations in this Section 5 regarding Exploration Expenditures shall
terminate upon the termination of this License.
d. Licensee shall determine the manner, places and means by which
Licensee makes Exploration Expenditures. Such Exploration Expenditures shall
be made and conducted reasonably in accordance with mining industry standards.
6. [ ]
7. INSPECTION OF LICENSED PREMISES, BOOKS AND RECORDS OF LICENSEE.
Licensor or its authorized representatives may enter, during ordinary
business hours, into or upon all parts of the Licensed Premises for the
purposes of making inspections or visual surveys or taking samples. Licensee
shall, at Licensee's cost, assist Licensor or its representatives in the
conduct of any inspections, visual surveys or samplings. Licensee shall
furnish summary reports to Licensor, including maps, drill hole logs and
reports showing all factual data concerning exploration activities on the
Exploration Property, including, but not limited to, amounts spent on
exploration. Licensee shall furnish such reports at semiannual intervals on
January I and July 1 of each year of the License. Each report shall be
complete as of the preceding calendar half. Licensee shall maintain complete
and accurate books and records of Licensee's activities on or related to the
Exploration Property and the exploration or discovery of uranium or other
minerals and amounts expended in exploration. Licensor shall have the right to
inspect, review and copy, at Licensor's expense, during ordinary business
hours, all books and records related to Licensee's activities on the
Exploration Property. While Licensee shall faithfully and truthfully report to
Licensor the information required by this paragraph, no liability will be
incurred by Licensee because of the inaccuracy of any analysis or
interpretation of any such information or the inadvertent omission of any
information, the omission of which will not make the information furnished
substantially misleading. The requirements of this section are not applicable
to any portion of the Licensed Premises purchased by Uranco pursuant to this
License after the date it is purchased.
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<PAGE> 7
8. LICENSEE'S INDEMNIFICATION OF LICENSOR.
a. Licensee shall indemnify, hold harmless and defend Licensor
against all liability, cost and expense (including without limitation any
fines, penalties, judgments, third party claims, litigation cost and attorney
fees) incurred by Licensor as a result of:
(i) the use of the Exploration Property by Licensee,
its agents, employees or invitees; or any
discharge, leakage, spillage, emission or
pollution, caused by Licensee's operation on the
Licensed Premises, regardless of whether such
liability, cost or expense arises during or after
the term of this License.
(ii) Licensee's breach of any provision of this License.
b. Licensee shall pay all amounts due Licensor under this
Paragraph within 30 days after any such amounts become due and, upon failure to
make such payment within such time, all amounts due shall become a lien upon
all property of the Licensee upon the Licensed Premises.
c. Licensor may post notices of non-liability on the Licensed
Premises to the extent that such posting is permitted by applicable law, and
Licensee shall not disturb or damage any of Licensor's postings.
9. LIMITATION ON INDEMNIFICATION.
a. To the extent, if at all, that a court of competent
jurisdiction determines that NMSA 1978, Section 56-7-2 (Repl. Pamp. 1996)
applies to any provision of this Agreement, then any and all provisions of
indemnification shall not indemnify any indemnitee against loss or damages,
for:
(i) death of bodily injury to persons; or
(ii) injury to property; or
(iii) any other loss, damage or expense arising under
(i) or (ii) or both; or
(iv) any combination of these, arising from the sole or
concurrent negligence of the indemnitee or the
agents or employees of the indemnitee or any
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<PAGE> 8
independent contractor who is directly responsible
to the indemnitee, or from any accident which
occurs in operations carried on at the direction
or under the supervision of the indemnitee or an
employee or representative of the indemnitee or in
accordance with methods and means specified by the
indemnitee or employees or representations of the
indemnitee.
b. To the extent, if at all, that a court of competent
Jurisdiction determines that NMSA 1978, Section 56-7-1 applies to the
indemnification set forth in this License, the indemnification does not apply
to liability, claims, damages, losses or expenses, including attorney fees
arising out of:
(i) the preparation or approval of maps, drawings,
opinions, reports, surveys, change orders, designs
or specifications by the indemnitee, or the agents
or employees of the indemnitee; or
(ii) the giving of or failure to give directions or
instructions by the indemnitee, or the agents or
employees of the indemnitee, where such giving or
failure to give directions or instructions is the
primary cause of bodily injury to persons or
damage to property.
10. LICENSEE'S OBLIGATIONS UPON SURRENDER.
Upon expiration, termination or cancellation of this License, Licensee
shall surrender the Licensed Premises in good order and condition and with
respect to Licensee's operations conducted thereon, in compliance with all
governmental laws, ordinances, rules, regulations, requirements and orders
affecting conditions or the activities of Licensee on the Licensed Premises,
including, but not limited to, those relating to conservation of lands and
waters and air and water quality, which are in effect and become effective
during the term hereof. Licensee shall have 3 months from the date of
expiration, termination or cancellation to remove all its machinery, tools,
facilities and improvements from the Licensed Premises; provided, however, that
no tools, machinery, facilities or improvements shall be removed while Licensee
may be in any manner indebted to Licensor under any obligation imposed by this
License. Licensee shall also post appropriate warning signs at or near all
surface openings created by it and provide such other safeguards to persons and
property.
11. NOTICES.
a. Any notice to be given by Licensor to Licensee shall be
property served when addressed to Uranco, Inc., c/o Uranium Resources, Inc. at
12750 Merit Drive, Suite 1020, Dallas, Texas 75251, Attn: President or any
other address Licensee provides in writing to Licensor.
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<PAGE> 9
With a copy to Alfred C. Chidester, Baker and Hostetler LLP,
303 East 17th Avenue, Suite 1100, Denver, Colorado 80203-1264.
With a copy to J.W. Cooper, Cooper and Cooper, Suite 1550,
Frost Bank Plaza, Corpus Christi, Texas 78470.
b. Any notice to be given by Licensee to Licensor shall be
properly served when addressed to Santa Fe Pacific Gold Corporation, 6200
Uptown Boulevard, NE, Suite 400, Albuquerque, New Mexico 87110, Attn: Wayne
Jarke or any other address Licensor provides in writing to Licensee.
With a copy to Modrall, Sperling, Roehl, Harris & Sisk, P.A.,
P. 0. Box 2168, Albuquerque, New Mexico 87103, Attn: John R. Cooney.
c. Notices shall be effective upon personal delivery or other
receipt by either party.
12. LICENSEE NOT RELEASED BY TERMINATION.
No termination, expiration or cancellation of this License shall
release Licensee from any liability or obligation under this License, whether
of indemnity or otherwise, resulting from or relating to any acts, omissions or
events happening prior to the date of termination, expiration or cancellation,
except that the requirements to pay Exploration Expenditures terminate upon
termination of the License.
13. EVENTS OF DEFAULT.
a. If Licensee (i) performs any actions which give rise to the
need for a mining permit pursuant to any applicable law without obtaining a
mining permit, (ii) releases hazardous substance or waste, as those terms are
defined in any applicable federal, state or local law or ordinance, on the
Licensed Premises, (iii) contaminates ground or surface water so that it does
not meet drinking water standards of applicable law, (iv) causes harm to an
endangered species as defined in applicable law, or (v) fails to comply with
any term or condition of this License or fulfill any obligation under this
License, including without limitation Section 2(d) and Section 3(a) of this
License (other than failure to make a payment of money when due), Licensee is
in default under the terms of this License. If Licensee fails to cure such
default within 30 days after the completion of the conference set forth in
Section 18 herein and the receipt of notice from Licensor specifying the nature
of the default, Licensor may cancel this License by written notice to Licensee.
If the default cannot be completely corrected within the 30 day period, this
License shall not be cancelled, provided Licensee commences correction or
mitigation of the default fall within the 30 day period and thereafter proceeds
with reasonable diligence and in good faith and effects the remedy as soon as
practicable.
-9-
<PAGE> 10
b. In the event correction is not reasonably possible, adequate
mitigation satisfactory to Licensor which is commenced and completed pursuant
to Section 13a of this License shall be accepted as a cure for default.
c. If Licensee fails to make any payment of money to Licensor
when due, Licensor may cancel this License upon written notice to Licensee and
Licensee's failure to pay the full amount due within 30 days after Licensee's
receipt of Licensor's notice. In no event shall cancellation be the exclusive
remedy of Licensor.
d. Commercial frustration, commercial impracticability or the
occurrence of unforeseen events, rendering performance of this License
uneconomical, shall not constitute an excuse of nonperformance of any
obligation imposed by this License. In the event Licensor or Licensee is
prevented from performing any obligations under this License other than payment
of money, by an event or occurrence which is beyond the reasonable control of
the prevented party and which cannot reasonably be overcome through the
exercise of due diligence, performance of that obligation shall be excused for
so long as the effects of the event or occurrence prevent performance.
14. CONTINUATION OF PERFORMANCE DURING PERIOD OF BREACH.
Licensor and Licensee shall continue to perform and not withhold
performance during periods of breach. Continuation of performance, including
the receipt of any payment by a nonbreaching party with knowledge of the
breach, shall not constitute a waiver of any rights under this License.
Notwithstanding the foregoing, if Licensee breaches this License, Licensor may
seek to obtain appropriate judicial action, including restraining orders,
injunctions and other decrees, to prevent Licensee from continuing operations
on the Licensed Premises which cause or imminently threaten to cause
irreparable damage to the Licensed Premises or waste of minerals.
15. CHOICE OF LAW AND CHOICE OF FORUM.
This License shall be governed by and construed in accordance with the
internal law of the State of New Mexico without giving effect to conflicts of
law principles thereof. Licensor and Licensee agree that all litigation
arising out of or related to this License for the performance or
non-performance of actions contemplated by this License shall be brought in a
federal or state court of competent jurisdiction within the state of New
Mexico. Licensor and Licensee consent to Jurisdiction of such a court. In any
action or proceeding brought to enforce any provision of this License, or where
any provision hereof is validly asserted as a defense, the prevailing party
shall be entitled to recover reasonable attorneys' fees in addition to any
other available remedy.
16. ASSIGNMENT OF LICENSE.
Licensee shall not assign its rights and/or obligations under this
License without the prior written consent of Licensor, which consent shall not
be unreasonably withheld.
-10-
<PAGE> 11
17. MODIFICATION OF LICENSE.
Only written modification of this License duly authorized and signed
by Licensor and Licensee shall be effective. No writing shall constitute a
modification unless the writing is expressly identified as a modification with
specific reference to the provisions of this License to be modified. No
modification shall be effective prior to the date the modification is signed by
Licensor and Licensee, unless the modification expressly provides.
18. EXECUTIVE CONFERENCE.
In the event of any dispute arising between the parties regarding
matters set forth in this License, the parties agree that before a request for
relief is filed in a court of law or this License is terminated for an Event of
Default, an executive from each party with the authority to address and attempt
to resolve the dispute will meet in an attempt to reach a resolution of the
dispute satisfactory to both parties. This provision shall not be construed to
require a meeting with any third parties, such as a mediator or arbitrator.
19. INTEGRATION CLAUSE.
This License is entered into by the parties in connection with a
transaction involving the transfer of common stock of Licensee owned by
Licensor to Uranium Resources, Inc. ("URI") in exchange for common stock of
URI, the grant by URI to Licensor of registration rights with respect to the
stock of URI to be issued to Licensor, the grant by Licensor to Licensee of a
license to explore and an option to purchase in exchange for certain
commitments by Licensee, and the guarantee by URI of certain obligations of
Licensee to Licensor. In order to effect this transaction, certain of the
parties have contemporaneously entered into certain agreements, specifically,
the Stock Exchange Agreement and Plan of Reorganization (URI and Licensee), the
Agreement of SFPG as Uranco Shareholder and Guarantee of URI (Licensor and
URI); the License to Explore and Option to Purchase (Licensor and Licensee);
and the Registration Rights Agreement (Licensor and URI). All of such
agreements, together with all exhibits or schedules thereto and documents
delivered pursuant thereto, contain the entire agreement among the parties with
respect to the contemplated transaction, and shall supersede all previous
writings and all previous or contemporaneous oral negotiations, commitments,
and understandings.
20. MEMORANDUM OF LICENSE.
Contemporaneously with executing this License, Licensor and Licensee
shall execute a Memorandum of License setting forth certain provisions of this
License, and either party may choose to record such Memorandum.
21. COUNTERPARTS.
This License may be executed in any number of counterparts, each of
which shall be deemed to be an original.
-11-
<PAGE> 12
LICENSOR:
SANTA FE PACIFIC GOLD CORPORATION
By:/s/ Bruce D. Hansen
------------------------------
Title: Senior Vice President -
------------------------
Corporate Development
------------------------
LICENSEE:
URANCO, INC.
By:/s/ Bruce D. Hansen
------------------------------
Title:President
---------------------------
-12-
<PAGE> 13
LIST OF EXHIBITS TO BE ATTACHED:
Exhibit A Description of Licensed Premises
Exhibit B Description of Category II Property
Exhibit C Matters to Which the License is Made Subject
Exhibit D Form of Deed
Exhibit E Instruments Granting Surface Rights and Retaining
Mineral Rights
-13-
<PAGE> 14
EXHIBIT A
TO LICENSE TO EXPLORE AND OPTION TO PURCHASE
CATEGORY 3 LANDS
(REVISED 03/10/97)
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C>
Township 17 North, Range 5 West
-------------------------------
Section 5 LOTS 1-4,S/2 NE/4, S/2 NW/4, SE/4, SW/4 639.68
Section 7 LOTS 1-4, E/2, E/2 W/2 649.16
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 17 ALL 640.00
Section 18 ALL 647.16
Section 19 LOTS 1-4, E/2, E/2 W/2 644.48
Section 20 ALL 640.00
Section 21 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 ALL 641.44
Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 639.76
Section 32 S/2 SW/4 80.00
Section 33 ALL 640.00
Township 19 North, Range 5 West
-------------------------------
Section 19 LOTS 1, 2, E/2 NW/4 162.06
</TABLE>
A-1
<PAGE> 15
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 19 LOTS 3, 4, E/2 SW/4 162.02
Section 29 ALL 640.00
Section 30 ALL 645.24
Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 649.04
Section 33 ALL 640.00
Township 14 North, Range 6 West
-------------------------------
Section 5 LOTS 1-8, S/2 N/2, S/2 648.24
Township 15 North, Range 6 West
-------------------------------
Section 5 LOTS 1, 2, NW/4 NW/4 102.24
Section 6 LOTS 1, 2, 3, NE/4, NW/4 SE/4, W/2 611.13
Section 7 LOTS 1-4, NE/4 NW/4, W/2 NW/4 237.80
Section 8 LOT 1 14.66
Section 15 LOTS 1-4 142.76
Section 17 LOT 1 4.78
Section 17 LOTS 2-8, W/2 SE/4 357.96
Section 19 LOTS 1-4 114.38
Section 19 SE/4 SE/4 40.00
Section 21 ALL 640.00
Section 22 SE/4, W/2 480.00
Section 23 ALL 640.00
Section 27 ALL 640.00
Section 29 LOTS 1-4 28.00
Section 29 LOTS 5-8, W/2 E/2, W/2 666.40
</TABLE>
A-2
<PAGE> 16
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 31 ALL 640.00
Section 33 N-E/4, W/2 480.00
Township 16 North, Range 6 West
-------------------------------
Section 1 ALL 640.00
Section 3 ALL 640.00
Section 4 ALL 640.00
Section 5 LOTS 1-4,W/2 E/2, W/2 584.00
Section 5 LOTS 5-8 45.16
Section 6 ALL 640.00
Section 7 LOTS 1-4,E/2 NW/4, E/2 SW/4, NE/4, SE/4 639.46
Section 8 ALL 628.56
Section 9 ALL 640.00
Section 10 ALL 640.00
Section 11 ALL 640.00
Section 13 ALL 640.00
Section 14 NE/4, N/2 SE/4 240.00
Section 15 ALL 640.00
Section 17 LOTS 1-4, W/2 E/2 267.40
Section 17 W/2 320.00
Section 17 LOTS 5-8 42.12
Section 18 ALL 638.66
Section 19 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 639.84
Section 20 ALL 632.20
</TABLE>
A-3
<PAGE> 17
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 21 W/2 320.00
Section 21 NE/4 160.00
Section 22 NE/4, W/2 480.00
Section 23 ALL 640.00
Section 25 LOTS 1-4, N/2, N/2 S/2 521.12
Section 26 LOTS 1-4, N/2, N/2 S/2 530.20
Section 27 LOTS 1-4, N/2, N/2 S/2 537.88
Section 28 N/2, N/2 SE/4 400.00
Section 29 LOTS 1-7, W/2 NE/4, NW/4, NW/4 SE/4, N/2 SW/4 582.82
Section 29 LOTS 8-14 131.60
Section 30 LOTS 1-6, 9-11, NE/4, E/2 NW/4, N/2 SE/4,
NE/4 SW/4 666.50
Section 31 ALL 640.00
Township 17 North, Range 6 West
-------------------------------
Section 1 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 640.72
Section 3 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 641.12
Section 4 ALL 641.12
Section 5 LOTS 1-7, SW/4 NE/4, S/2 NW/4, W/2 SE/4, SW/4 588.88
Section 5 LOTS 8-11 43.26
Section 6 ALL 641.44
Section 7 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 641.00
Section 12 ALL 640.00
Section 13 ALL 640.00
</TABLE>
A-4
<PAGE> 18
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Township 18 North, Range 6 West
-------------------------------
Section 1 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 640.28
Section 2 LOTS 1-4 160.98
Section 3 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 640.64
Section 4 ALL 640.76
Section 5 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 640.80
Section 6 ALL 638.76
Section 7 NE/4, E/2 SE/4 240.00
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 11 ALL 640.00
Section 13 W/2 W/2 160.00
Section 14 NE/4 160.00
Section 15 N/2 320.00
Section 17 NE/4, N/2 NW/4 240.00
Section 27 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 ALL 633.20
Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 631.76
Section 32 ALL 640.00
Section 33 ALL 640.00
Section 35 ALL 640.00
</TABLE>
A-5
<PAGE> 19
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 36 N/2, SW/4 480.00
Township 19 North, Range 6 West
-------------------------------
Section 8 SE/4 160.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 18 ALL 639.44
Section 19 LOTS 1-4,-E/2 NW/4, E/2 SW/4, NE/4, SE/4 638.88
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 25 ALL 640.00
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 ALL 639.68
Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 639.28
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
</TABLE>
A-6
<PAGE> 20
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Township 15 North, Range 7 West
-------------------------------
Section 12 N/2 SW/4, SE/4 240.00
Section 12 S/2 SW/4, N/2 400.00
Township 17 North, Range 7 West
-------------------------------
Section 1 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 638.68
Section 3 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 642.40
Section 4 ALL 642.96
Section 5 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 643.80
Section 6 ALL 635.07
Section 7 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 645.36
Section 8 ALL 640.00
Section 9 N/2, SE/4 480.00
Section 9 SW/4 160.00
Section 10 ALL 640.00
Section 11 ALL 640.00
Section 12 ALL 640.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 18 ALL 644.24
Section 19 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 642.52
Section 20 ALL 640.00
</TABLE>
A-7
<PAGE> 21
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 25 ALL 640.00
Section 26 N/2 NE/4, SW/4 NE/4, NW/4, S/2 600.00
Section 27 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 ALL 640.88
Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 640.20
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 18 North, Range 7 West
-------------------------------
Section 1 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 639.60
Section 3 LOTS 1-4, S/2 NE/4, S/2 NW/4, S/2 636.40
Section 4 ALL 635.60
Section 5 LOTS 1-4, S/2 NE/4, S/2 NW/4, S/2 633.38
Section 9 NW/4 160.00
Section 19 LOTS 1-4, E/2 NW/4, E/2 SW/4, E/2 642.88
Section 20 ALL 640.00
Section 21 ALL 640.00
</TABLE>
A-8
<PAGE> 22
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 25 ALL 640.00
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 E/2 320.00
Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, E/2 644.56
Section 32 ALL 640.00
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 19 North, Range 7 West
-------------------------------
Section 13 LOTS 1-4, W/2 NE/4, W/2 SE/4, W/2 635.96
Section 14 S/2, NE/4 480.00
Section 23 ALL 640.00
Section 25 LOTS 1-4, W/2 NE/4, W/2 SE/4, W/2 637.88
Section 27 SE/4 160.00
Section 29 ALL 640.00
Section 31 LOTS 1-14, NE/4, E/2 NW/4 692.02
Section 33 N/2 320.00
Section 33 LOTS 1-12 362.88
</TABLE>
A-9
<PAGE> 23
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 34 ALL 669.80
Section 35 LOTS 1-4, N/2 SE/4, N/2 SW/4, N/2 657.80
Township 20 North, Range 7 West
-------------------------------
Section 22 ALL 640.00
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 17 North, Range 8 West
-------------------------------
Section 1 LOTS 1-4, S/2 N/2, S/2 639.60
Section 2 ALL 639.04
Section 3 LOTS 1-4, S/2 N/2, S/2 637.12
Section 5 LOTS 1-4, S/2 N/2, S/2 636.88
Section 7 LOTS 1-4, E/2 W/2, E/2 637.56
Section 9 ALL 640.00
Section 10 ALL 640.00
Section 11 ALL 640.00
Section 12 ALL 640.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 21 ALL 640.00
Section 22 ALL 640.00
</TABLE>
A-10
<PAGE> 24
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 25 ALL 640.00
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 28 ALL 640.00
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 18 North, Range 8 West
-------------------------------
Section 13 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 18 LOTS 1-4, E/2, E/2 W/2 637.40
Section 19 LOTS 1-4, E/2, E/2 W/2 638.18
Section 20 ALL 640.00
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 25 ALL 640.00
Section 26 ALL 640.00
Section 27 ALL 640.00
</TABLE>
A-11
<PAGE> 25
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 ALL 638.66
Section 31 LOTS 1-4, E/2 W/2, E/2 628.48
Section 32 ALL 640.00
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 19 North, Range 8 West
-------------------------------
Section 4 ALL 621.87
Section 5 LOTS 1-7, S/2 NE/4, SE/4 NW/4, SE/4, E/2 SW/4 656.01
Section 6 ALL 624.29
Section 7 LOTS 1-7, NE/4, E/2 NW/4, N/2 SE/4, NE/4 SW/4 616.89
Section 8 ALL 647.46
Section 9 LOTS 1-4, E/2 NW/4 209.56
Section 17 ALL 640.00
Section 21 NE/4, N/2 SE/4, W/2 560.00
Township 20 North, Range 8 West
-------------------------------
Section 5 LOTS 1-4, S/2 N/2, S/2 642.00
Section 6 ALL 639.60
Section 7 LOTS 1-4, E/2 W/2, E/2 641.08
Section 8 ALL 640.00
Section 17 ALL 640.00
</TABLE>
A-12
<PAGE> 26
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 18 ALL 642.52
Section 19 LOTS 1-4, E/2 W/2, E/2 642.64
Section 20 ALL 640.00
Section 21 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 ALL 640.64
Section 31 LOTS 1-4, E/2 W/2, E/2 644.44
Section 33 ALL 640.00
Township 16 North, Range 9 West
-------------------------------
Section 18 ALL 620.56
Section 20 ALL 640.00
Township 17 North, Range 9 West
-------------------------------
Section 1 LOTS 1-11, SW/4 NE/4, S/2 NW/4, W/2 SE/4, SW/4, 675.87
LESS 11.928 ACRES IN NW/4 SW/4 AND W/2 NW/4
Section 1 11.928 ACRES IN NW/4 SW/4 AND W/2 NW/4 11.93
Section 3 LOTS 1-4, S/2 N/2, S/2 637.44
Section 4 ALL 637.92
Section 5 ALL 637.44
Section 6 ALL 628.36
Section 7 LOTS 1-4, E/2 W/2, E/2 628.64
Section 8 ALL 640.00
</TABLE>
A-13
<PAGE> 27
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 9 ALL 640.00
Section 10 ALL 640.00
Section 11 NE/4 160.00
Section 11 NW/4, S/2 480.00
Section 13 LOTS 1-8, W/2 E/2, W/2 686.12
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 18 ALL 632.56
Section 19 LOTS 1-4, E/2, E/2 W/2 636.16
Section 20 ALL 640.00
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 ALL 686.68
Section 25 LOTS 1-8, W/2 E/2, W/2 688.28
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Township 18 North, Range 9 West
-------------------------------
Section 1 LOTS 1-4, S/2 N/2, S/2 640.36
Section 3 LOTS 1-4, S/2 N/2, S/2 639.76
</TABLE>
A-14
<PAGE> 28
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 5 LOTS 1-4, S/2 N/2, S/2 638.88
Section 6 ALL 664.77
Section 7 LOTS 1-4, E/2 W/2, E/2 669.40
Section 8 ALL 640.00
Section 9 S/2 320.00
Section 9 N/2 320.00
Section 11 ALL 640.00
Section 13 ALL 640.00
Section 15 ALL 640.00
Section 17 N/2 320.00
Section 17 S/2 320.00
Section 18 LOTS 1, 2, NE/4, E/2 NW/4 336.17
Section 18 LOTS 3, 4, SE/4, E/2 SW/4 337.23
Section 19 LOTS 1-4, E/2 W/2, E/2 677.92
Section 21 ALL 640.00
Section 23 ALL 640.00
Section 25 ALL 640.00
Section 27 ALL 640.00
Section 29 ALL 640.00
Section 30 LOTS 1-4, E/2 W/2, E/2 682.32
Section 31 LOTS 1-4, E/2, E/2 W/2 686.44
Section 33 ALL 640.00
Section 35 ALL 640.00
</TABLE>
A-15
<PAGE> 29
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Township 19 North, Range 9 West
-------------------------------
Section 1 LOTS 1-4, S/2 N/2, S/2 639.08
Section 4 ALL 641.44
Section 5 LOTS 1-4, S/2 N/2, S/2 642.28
Section 6 ALL 645.29
Section 7 LOTS 1-4, E/2, E/2 W/2 646.72
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 17 ALL 640.00
Section 18 ALL 649.92
Section 19 LOTS 1-4, E/2, E/2 W/2 653.84
Section 20 ALL 640.00
Section 21 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 LOTS 3, 4, E/2, E/2 W/2 569.41
Section 31 LOTS 1-4, E/2, E/2 W/2 661.76
Section 33 ALL 640.00
Township 20 North, Range 9 West
-------------------------------
Section 1 LOTS 1-4, S/2 N/2, S/2 641.04
Section 2 NW/4 SE/4, S/2 SE/4 120.00
Section 3 LOTS 1-4, S/2 N/2, S/2 643.40
Section 5 LOTS 1-4, S/2 N/2, SE/4 483.76
</TABLE>
A-16
<PAGE> 30
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 7 LOTS 3, 4, E/2 SW/4 154.64
Section 10 ALL 640.00
Section 11 ALL 640.00
Section 12 ALL 640.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 S/2 320.00
Section 18 LOTS 1-4, SE/4, E/2 W/2 471.32
Section 19 LOTS 1-4, E/2, E/2 W/2 634.60
Section 20 S/2 320.00
Section 20 N/2 320.00
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 25 ALL 640.00
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 29 ALL 640.00
Section 31 LOTS 1-4, E/2, E/2 W/2 640.36
Section 33 ALL 640.00
Section 34 ALL 640.00
</TABLE>
A-17
<PAGE> 31
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 35 ALL 640.00
Township 16 North, Range 10 West
--------------------------------
Section 3 ALL 625.92
Section 11 ALL 640.00
Section 13 ALL 640.00
Township 17 North, Range 10 West
--------------------------------
Section 1 LOTS 1-4, S/2 N/2, S/2 639.44
Section 2 LOTS 1-4, S/2 N/2, S/2 638.56
Section 3 LOTS 1-4, S/2 N/2, S/2 638.08
Section 4 LOTS 1-4, S/2 N/2, S/2 638.48
Section 5 LOTS 1-4, S/2 N/2, S/2 638.72
Section 6 LOTS 1-7, S/2 NE/4, SE/4 NW/4, SE/4, E/2 SW/4 636.95
Section 7 LOTS 1-4, E/2 W/2, E/2 637.76
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 10 ALL 640.00
Section 11 ALL 640.00
Section 12 ALL 640.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 18 LOTS 1-4, E/2 W/2, E/2 638.32
</TABLE>
A-18
<PAGE> 32
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 30 LOT 4, SE/4 SW/4, S/2 SE/4 160.09
Section 33 ALL 640.00
Section 34 S/2, SE/4 NW/4, W/2 NW/4, SE/4 NE/4 480.00
Township 18 North, Range 10 West
--------------------------------
Section 1 ALL 622.23
Section 3 ALL 629.36
Section 4 LOTS 1, 2, S/2 NE/4, SE/4 316.90
Section 5 ALL 639.76
Section 6 ALL 621.18
Section 7 ALL 621.52
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 10 SW/4 160.00
Section 10 N/2, SE/4 480.00
Section 11 ALL 640.00
Section 12 ALL 648.29
Section 13 LOTS 3, 4, W/2 SE/4, SW/4 323.12
Section 13 LOTS 1, 2, W/2 NE/4, NW/4 323.12
Section 14 N/2 320.00
Section 14 S/2 320.00
Section 15 N/2 320.00
</TABLE>
A-19
<PAGE> 33
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 15 S/2 320.00
Section 17 N/2 320.00
Section 17 S/2 NORTH OF NM STATE HWY 57 162.60
Section 17 S/2 SOUTH OF NM STATE HWY 57 157.40
Section 19 LOTS 1-4, E/2 W/2, E/2 626.88
Section 21 ALL 640.00
Section 22 E/2, SW/4 480.00
Section 22 SE/4 NW/4 40.00
Section 23 ALL 640.00
Section 24 LOTS 1-4, W/2 E/2, W/2 642.86
Section 25 LOTS 1-4, W/2 E/2, W/2 639.56
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 28 E/2 320.00
Section 28 W/2 320.00
Section 29 ALL 640.00
Section 30 LOTS 1-4, E/2 W/2, E/2 631.20
Section 31 LOTS 1-4, E/2 W/2, E/2 635.04
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 19 North, Range 10 West
--------------------------------
Section 1 ALL 639.60
</TABLE>
A-20
<PAGE> 34
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 3 ALL 638.72
Section 4 ALL 639.00
Section 5 ALL 639.32
Section 6 ALL 636.84
Section 7 ALL 637.52
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 10 N/2 N/2, SE/4 NE/4, SW/4 NW/4, NE/4 SE/4, NW/4 480.00
SW/4, S/2 S/2
Section 11 ALL 640.00
Section 12 ALL 640.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 18 ALL 637.32
Section 19 ALL 637.92
Section 20 ALL 640.00
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 25 ALL 640.00
</TABLE>
A-21
<PAGE> 35
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 26 NW/4 SE/4, S/2 SE/4, SW/4 280.00
Section 26 N/2, NE/4 SE/4 360.00
Section 27 ALL 640.00
Section 28 NE/4, N/2 SE/4, SW/4 SE/4, W/2 600.00
Section 29 ALL 640.00
Section 30 ALL 637.68
Section 31 ALL 637.32
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 20 North, Range 10 West
--------------------------------
Section 3 ALL, EXCEPT 50.20 ACRES IN THE NE/4 LYING 592.96
NORTHEASTERLY OF THE 6400' ELEVATION
CONTOUR LINE, DESCRIBED IN QUITCLAIM
DEED DATED 3/3/1987 TO USA
Section 4 ALL 642.00
Section 5 ALL 641.48
Section 7 ALL 638.28
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 10 ALL 640.00
Section 11 ALL 640.00
Section 12 ALL, EXCEPT 192.4 ACRES IN N/2 AND SE/4 447.60
LYING NORTHEASTERLY OF THE 6400'
ELEVATION CONTOUR LINE, DESCRIBED IN
QUITCLAIM DEED DATED 3/3/1987 TO USA
</TABLE>
A-22
<PAGE> 36
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 18 ALL 638.84
Section 19 ALL 638.92
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 25 ALL 640.00
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 29 ALL 640.00
Section 31 ALL 637.40
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 18 North, Range 11 West
--------------------------------
Section 1 ALL 639.36
Section 3 ALL 638.32
Section 4 ALL 639.04
Section 5 ALL 638.80
</TABLE>
A-23
<PAGE> 37
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 6 ALL 636.64
Section 7 ALL 637.84
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 10 ALL 640.00
Section 11 ALL 640.00
Section 12 ALL 640.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 19 ALL 639.36
Section 20 ALL 640.00
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 SW/4 160.00
Section 25 ALL 640.00
Section 26 ALL 640.00
Section 27 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 ALL 638.40
</TABLE>
A-24
<PAGE> 38
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 31 ALL 638.80
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 19 North, Range 11 West
--------------------------------
Section 1 ALL 639.76
Section 3 ALL 638.68
Section 4 ALL 639.20
Section 5 ALL 639.88
Section 6 ALL 636.80
Section 7 ALL 637.88
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 12 ALL 640.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 21 ALL 640.00
Section 22 ALL 640.00
Section 23 ALL 640.00
Section 24 ALL 640.00
Section 25 ALL 640.00
Section 26 NE/4, N/2 NW/4, SE/4 NW/4, S/2 600.00
Section 27 ALL 640.00
</TABLE>
A-25
<PAGE> 39
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 28 ALL 640.00
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 20 North, Range 11 West
--------------------------------
Section 1 ALL 642.56
Section 3 ALL 642.32
Section 4 ALL 643.16
Section 5 ALL 643.64
Section 6 ALL 644.20
Section 7 ALL 639.16
Section 8 ALL 640.00
Section 9 ALL 640.00
Section 10 NW/4, S/2 480.00
Section 10 NE/4 160.00
Section 11 ALL 640.00
Section 12 S/2 320.00
Section 12 N/2 320.00
Section 13 ALL 640.00
Section 14 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 18 ALL 638.40
</TABLE>
A-26
<PAGE> 40
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 19 ALL 637.32
Section 20 ALL 640.00
Section 21 ALL 640.00
Section 22 S/2, NW/4, S/2 NE/4, NW/4 NE/4 600.00
Section 23 E/2, SW/4, E/2 NW/4, SW/4 NW/4, E/2 NW/4 NW/4 620.00
Section 24 ALL 640.00
Section 25 ALL 640.00
Section 26 N/2, SW/4, W/2 SE/4 560.00
Section 27 ALL 640.00
Section 28 ALL 640.00
Section 29 ALL 640.00
Section 30 ALL 636.12
Section 31 ALL 635.16
Section 33 ALL 640.00
Section 34 ALL 640.00
Section 35 ALL 640.00
Township 20 North, Range 13 West
--------------------------------
Section 1 LOTS 1-4, S/2 N/2, S/2 641.74
Section 3 LOTS 1-4, S/2 N/2, S/2 643.20
Section 5 LOTS 1-4, S/2 N/2, S/2 648.22
Section 7 LOTS 1, 3, 4, NE/4 NW/4, E/2 SW/4, SE/4, N/2 NE/4, 529.57
SE/4 NE/4, E/2 SW/4 NE/4
Section 9 ALL 640.00
</TABLE>
A-27
<PAGE> 41
COMPANY: GOLD
STATE: NM
COUNTY: MCKINLEY
<TABLE>
<S> <C> <C>
Section 11 ALL 640.00
Section 13 ALL 640.00
Section 15 ALL 640.00
Section 17 ALL 640.00
Section 19 LOTS 1-4,.E/2 W/2, E/2 622.34
Section 21 ALL 640.00
Section 23 ALL 640.00
Section 25 ALL 640.00
Section 27 ALL 640.00
Section 29 ALL 640.00
Section 31 LOTS 1-4, E/2 W/2, E/2 621.18
Section 33 ALL 640.00
Section 35 ALL 640.00
------------
GRAND TOTAL 344,323.88
</TABLE>
A-28
<PAGE> 42
EXHIBIT 10.21
EXHIBIT B
TO LICENSE TO EXPLORE AND OPTION TO PURCHASE
CATEGORY 2 LANDS
(REVISED 03/13/97)
COMPANY: GOLD
STATE: NM
COUNTY: McKINLEY
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C> <C>
Township 14 North, Range 8 West
-------------------------------
Section 10 All 640.00
Township 13 North, Range 10 West
--------------------------------
Section 5 Lots 1-4, S/2 N/2, S/2 639.36
Section 7 Lots 1-4, E/2, E/2 W/2 650.24
Section 9 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 21 W/2 SW/4 SE/4 NE/4, N/2 NE/4, SW/4 595.00
NE/4, N/2 SE/4 NE/4, NW/4, S/2
SE/4, NW/4 SE/4
Section 27 All 640.00
Section 29 All 640.00
Section 31 Lots 1-4, E/2 W/2, E/2 640.56
Section 33 All 640.00
Section 35 All 640.00
Township 15 North, Range 10 West
--------------------------------
Section 1 All, except 31.07 acres in Baca 608.93
Rail Spur
Section 3 All 641.00
Section 13 All 640.00
Section 23 All, except 29.81 ac. in Baca Rail 610.19
Spur
</TABLE>
B-1
<PAGE> 43
<TABLE>
<S> <C> <C> <C>
Section 25 All, except 25.79 ac. in Baca Rail 614.21
Spur
Section 31 All 663.60
Section 33 All 640.00
Section 35 All 640.00
Township 16 North, Range 10 West
--------------------------------
Section 5 All 639.76
Section 9 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 21 All 640.00
Section 23 All 640.00
Section 25 All 640.00
Section 27 All 640.00
Section 29 All 640.00
Section 31 All 667.68
Section 33 All 640.00
Section 35 All 640.00
Township 17 North, Range 10 West
--------------------------------
Section 31 Lots 1-4, E/2 W/2, E/2 640.32
Township 13 North, Range 11 West
--------------------------------
Section 3 Lots 3, 4, S/2 NW/4 160.98
Section 5 All, except 24.71 ac. in Baca Rail 610.17
Spur
Section 7 All that portion lying North and 495.00
East of the AT&SF Railway Co. R/W
Section 9 NE/4, N/2 NW/4, N/2 SE/4, SE/4 SE/4 360.00
</TABLE>
B-2
<PAGE> 44
<TABLE>
<S> <C> <C> <C>
Section 9 S/2 NW/4, SW/4, SW/4 SE/4 280.00
Section 15 All 640.00
Section 17 All that portion lying North and 96.71
East of the AT&SF Railway Co. R/W,
except 39.63 ac. in Baca Rail Spur
Section 17 Lots 5-8, SW/4 SE/4, SW/4 275.53
Section 19 All 640.06
Section 21 All that part lying North and East 199.59
of the AT&SF Railway Co. R/W
Section 21 Lots 5-10, NW/4 SW/4 155.74
Section 22 All 640.00
Section 23 All 640.00
Section 24 SE/4, W/2 480.00
Section 25 All 640.00
Section 26 All 640.00
Section 27 All that part lying North and East 549.31
of the AT&SF Railway Co. R/W
Section 29 All 640.00
Section 31 All 640.96
Section 33 All 640.00
Section 34 That portion of the E/2 lying South 23.70
and West of the AT&SF Railway Co.
R/W
Section 34 That portion of the E/2 lying North 283.09
and East of the AT&SF Railway Co.
R/W
Section 35 All 640.00
Township 15 North, Range 11 West
--------------------------------
Section 27 E/2 E/2 160.00
Section 35 NW/4 NW/4 40.00
</TABLE>
B-3
<PAGE> 45
<TABLE>
<S> <C> <C> <C>
Township 14 North, Range 13 West
--------------------------------
Section 31 All, except 200 ft. R/W of AT&SF 619.15
Ry. Co.
Section 35 All that portion lying North and 531.25
East of R/W of AT&SF Ry. Co.
Township 14 North, Range 14 West
--------------------------------
Section 7 Lots 3, 4, that portion of E/2 SW/4 139.78
lying South & West of AT&SF RR R/W
Section 21 All that portion lying North & East 114.06
of AT&SF RR R/W
Section 25 All that portion lying North & East 494.75
of AT&SF RR R/W
Township 17 North, Range 14 West
--------------------------------
Section 1 Lots 1-4 2.02
Section 31 Lots 1-4, S/2 S/2 321.60
Section 33 Lots 1-4, S/2 S/2 317.76
Section 35 Lots 1-4, S/2 S/2 318.20
Township 14 North, Range 15 West
--------------------------------
Section 1 Part Northeast of Northeast line of 96.34
AT&SF station grounds at S. Guam,
said line parallel to & 1320 ft.
northeasterly from centerline of
original AT&SF main track, except
portion conveyed by SFPR to AT&SF
8-29-17, recorded in Bk. 5, Pg.
152, and portion of SE SE
northeasterly of AT&SF R/W and
southeasterly of southeast end of
station grounds at S. Guam
Township 15 North, Range 15 West
--------------------------------
Section 25 All, except 26.55 ac. in R/W 613.45
Section 27 All that portion lying North & East 515.85
of AT&SF RR R/W
Section 35 All that portion lying North & East 197.84
of AT&SF RR R/W
</TABLE>
B-4
<PAGE> 46
<TABLE>
<S> <C> <C> <C> <C>
Township 17 North, Range 15 West
--------------------------------
Section 31 All 315.20
Section 33 All 317.98
Section 35 All 315.20
Township 15 North, Range 16 West
--------------------------------
Section 1 All 639.52
Section 3 All 641.90
Section 5 All 638.82
Section 7 All 616.18
Section 9 All 640.00
Section 11 All 640.00
Section 13 Lots 1-4 195.60
Section 15 Lots 1-4 185.28
Section 17 Lots 1-4 174.16
Township 16 North, Range 16 West
---------------------------------
Section 1 All 595.20
Section 5 All 606.88
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 19 All 602.52
Section 21 All 640.00
Section 23 All 640.00
Section 25 All 640.00
Section 27 All 640.00
</TABLE>
B-5
<PAGE> 47
<TABLE>
<S> <C> <C> <C>
Section 29 All 640.00
Section 33 All 640.00
Section 35 All 640.00
Township 17 North, Range 16 West
--------------------------------
Section 31 Lots 1-4, S/2 S/2 305.28
Section 33 Lots 1-4, S/2 S/2 308.21
Township 14 North, Range 17 West
--------------------------------
Section 3 Lots 1-5, SW/4 NW/4, W/2 SW/4 235.56
Section 5 Lots 1-4, S/2 N/2, E/2 SE/4, NW/4 598.88
SE/4, N/2 SW/4 SE/4, W/2 SW/4, NE/4
SW/4, N/2 SE/4 SW/4
Section 7 All 638.12
Section 9 W/2, E/2 SE/4, SW/4 SE/4, N/2 NE/4 480.00
NE/4, E/2 NW/4 NE/4
Section 9 SW/4 NE/4, NW/4 SE/4 80.00
Section 9 S/2 NE/4 NE/4 20.00
Section 9 NW/4 NW/4 NE/4 10.00
Section 9 SW/4 NW/4 NE/4 10.00
Section 15 Lots 1-4, W/2 W/2 236.88
Section 17 All 640.00
Section 19 All 640.88
Section 21 All 640.00
Section 27 Lots 1-4, W/2 W/2 239.82
Section 29 N/2, SW/4 480.00
Section 33 S/2 320.00
Township 15 North, Range 17 West
--------------------------------
Section 1 All 689.84
Section 3 All 640.42
</TABLE>
B-6
<PAGE> 48
<TABLE>
<S> <C> <C> <C>
Section 7 All 639.94
Section 9 NE/4, S/2 480.00
Section 13 Lots 1-4 164.48
Section 15 Lots 1-6, W/2 W/2, less 24.24 ac. 300.37
in AT&SF RR R/W for East bound main
track
Section 19 Lots 1, 2, E/2, E/2 NW/4 481.09
Section 21 E/2, W/2 NW/4, S/2 SW/4 480.00
Section 27 W/2 SW/4 80.00
Section 29 All 640.00
Section 31 All 638.84
Township 16 North, Range 17 West
--------------------------------
Section 1 All 614.40
Section 3 All 622.04
Section 5 All 624.52
Section 7 All 632.52
Section 9 All 640.00
Section 11 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 19 All 636.44
Section 21 All 640.00
Section 25 All 640.00
Section 27 All 640.00
Section 29 All 640.00
Section 31 All 637.44
Section 33 All 640.00
</TABLE>
B-7
<PAGE> 49
<TABLE>
<S> <C> <C> <C>
Section 35 All 640.00
Township 17 North, Range 17 West
--------------------------------
Section 31 Lots 1-4, S/2 S/2 297.38
Section 33 Lots 1-4, S/2 S/2 307.78
Section 35 Lots 1-4, S/2 S/2 306.02
Township 14 North, Range 18 West
--------------------------------
Section 5 All 639.48
Township 15 North, Range 18 West
--------------------------------
Section 1 All 638.56
Section 11 NE/4, E/2 NW/4 240.00
Section 23 All 640.00
Section 27 SE/4, NE/4 SW/4 200.00
Section 27 S/2 NE/4, NE/4 NE/4 120.00
Section 27 SE/4 NW/4, S/2 NW/4 NE/4, NW/4 NW/4 70.00
NE/4
Section 27 S/2 NE/4 NW/4 20.00
Section 27 N/2 NE/4 NW/4 20.00
Section 31 NE/4 NE/4 40.00
Section 31 Lots 1-4, SE/4 NE/4, NE/4 NW/4, 436.40
SE/4, SE/4 SW/4
Section 35 E/2, E/2 NW/4 400.00
Township 16 North, Range 18 West
--------------------------------
Section 1 All 622.84
Section 3 All 622.72
Section 5 All, except 10.30 acres 614.26
</TABLE>
B-8
<PAGE> 50
<TABLE>
<S> <C> <C> <C>
Section 5 That portion lying within 40 ft. & 10.30
on both sides of survey line of
Road 32, Section 2 as relocated for
construction and known as F.A.P.
#146-A
Section 7 All, except 10.00 ac. quitclaimed 620.16
to County of McKinley by deed dated
6-19-25
Section 7 That portion lying within 40 ft. & 10.00
on both sides of survey line of
Road 32, Section 2 as relocated for
construction and known as F.A.P.
#146
Section 9 All 640.00
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 19 All 634.08
Section 21 N/2 320.00
Section 23 All 640.00
Section 25 All 640.00
Township 17 North, Range 18 West
--------------------------------
Section 31 Lots 1-4, S/2 S/2 290.40
Section 33 Lots 1-4, SW/4 SE/4, S/2 SW/4 255.58
Section 33 N/2 SE/4 SE/4, SE/4 SE/4 SE/4 30.00
Section 35 Lots 1-4, S/2 S/2 298.78
Township 15 North, Range 19 West
--------------------------------
Section 7 Lots 3, 4, E/2 SW/4 156.27
Section 17 NE/4, E/2 NW/4, S/2 560.00
Section 19 All 633.40
</TABLE>
B-9
<PAGE> 51
<TABLE>
<S> <C> <C> <C>
Section 21 NW/4, SE/4, SW/4 NE/4, W/2 SE/4 389.00
NE/4, W/2 E/2 SE/4 NE/4, except 1
ac. in W/2 E/2 SE/4 NE/4
Section 21 1 ac. tract in W/2 E/2 SE/4 NE/4 1.00
Section 29 All, except AT&SF RR R/W and 512.25
station grounds
Section 31 SE/4, NW/4, except AT&SF RR R/W 288.91
Section 33 All 640.00
Section 35 N/2, SW,/4 480.00
Township 16 North, Range 19 West
--------------------------------
Section 1 All 630.12
Section 3 All 636.30
Section 5 All 637.60
Section 7 All 629.24
Section 9 All 640.00
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 17 All 640.00
Section 19 All 630.48
Section 23 All 640.00
Section 25 All 640.00
Section 31 All 629.80
Township 17 North, Range 19 West
--------------------------------
Section 31 Lots 1-4, S/2 S/2 288.60
Section 33 Lots 1-4, S/2 S/2 290.40
Section 35 Lots 1-4, S/2 S/2 295.58
</TABLE>
B-10
<PAGE> 52
<TABLE>
<S> <C> <C> <C>
Township 16 North, Range 20 West
--------------------------------
Section 1 All 638.12
Section 13 All 640.00
Section 17 SW/4 160.00
Section 19 All 640.92
Section 21 W/2 W/2 160.00
Section 25 All 640.00
Section 27 S/2 SW/4, NW/4 SW/4, S/2 SE/4, 240.00
NE/4 SE/4
Section 29 All 640.00
Section 31 All 638.00
Section 33 All 640.00
Section 35 All 640.00
Township 16 North, Range 21 West
--------------------------------
Section 1 W/2 322.00
Section 3 All 123.86
Section 11 N/2, N/2 SW/4, SW/4 SW/4 440.00
Section 15 Lots 1-4 128.06
Section 23 All 640.00
Section 25 All 640.00
Section 27 Lots 1-4 128.80
Section 35 All 640.00
----------
County Total 105,447.60
==========
</TABLE>
B-11
<PAGE> 53
EXHIBIT B
TO LICENSE TO EXPLORE AND OPTION TO PURCHASE
CATEGORY 2 LANDS
(Revised 03/13/97)
COMPANY: GOLD
STATE: NM
COUNTY: CIBOLA
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C> <C>
Township 11 North, Range 7 West
-------------------------------
Section 31 Lots 1-4, E/2 NW/4, E/2 SW/4, NE/4, 634.52
SE/4
Township 11 North, Range 8 West
-------------------------------
Section 25 All 640.00
County Total 1,274.52
--------
</TABLE>
B-12
<PAGE> 54
EXHIBIT B
TO LICENSE TO EXPLORE AND OPTION TO PURCHASE
CATEGORY 2 LANDS
(Revised 03/13/97)
<TABLE>
<S> <C> <C> <C>
Township 13 North, Range 8 West
-------------------------------
Section 25 Lots 5, 6, 8, 9, 10, E/2 NE/4 234.52
**Royalty Interest Only**
</TABLE>
B-13
<PAGE> 55
EXHIBIT B
TO LICENSE TO EXPLORE AND OPTION TO PURCHASE
CATEGORY 2 LANDS
(Revised 3/13/97)
COMPANY: GOLD
STATE: NM
COUNTY: SANDOVAL
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C> <C>
Township 12 North, Range 1 East
-------------------------------
Section 5 Lots 7, 8 SE/4, S/2 NW/4, Lot 6 451.11
NE/4, Lot 3 NW/4, Lot 5 NE/4, Lot 4
NW/4, SW/4
Section 6 All 614.74
Section 7 All 615.68
Section 8 Lots 1-4, NW/4, W/2 SW/4 354.06
Section 17 Lots 1-4 171.63
Section 18 All 614.56
Section 19 All 611.44
Section 20 Lots 1-4 178.14
Section 29 Lots 1-4, W/2 SW/4, SE/4 SW/4 253.05
Section 30 All 613.28
Section 31 All 616.80
Township 13 North, Range 1 East
-------------------------------
Section 4 All 647.16
Section 5 All 650.80
Section 6 All 615.05
Section 7 All 599.88
Section 8 All 640.00
Section 9 All 640.00
Section 17 All 640.00
</TABLE>
B-14
<PAGE> 56
<TABLE>
<S> <C> <C> <C>
Section 18 All 600.68
Section 19 All 602.52
Section 20 All 640.00
Section 21 All 640.00
Section 28 All 640.00
Section 29 All 640.00
Section 30 All 606.27
Section 31 All, except North 300 ft. of 555.09
Section
Section 33 All 534.92
Township 14 North, Range 1 East
-------------------------------
Section 5 Lots 1-4, S/2 N/2, SE/4, NE/4 SW/4 531.88
Section 5 NW/4 SW/4, S/2 SW/4 120.00
Township 12 North, Range 1 West
-------------------------------
Section 1 Lots 1-4,, S/2 N/2, S/2 641.98
Section 3 Lots 1-4, S/2 N/2, S/2 647.18
Section 4 Lots 1-8 343.57
Section 9 Lots 1-8 341.56
Section 10 NE/4, NE/4 SE/4, W/2 SE/4, W/2 600.00
Section 11 All 640.00
Section 12 All 640.00
Section 13 All 640.00
Section 14 NE/4, S/2 480.00
Section 15 All 640.00
Section 21 Lots 1-8 341.64
Section 22 All 640.00
</TABLE>
B-15
<PAGE> 57
<TABLE>
<S> <C> <C>
Section 23 All 640.00
Section 24 All 640.00
Section 25 All 640.00
Section 26 All 640.00
Section 27 E/2, E/2 SW/4 400.00
Section 27 NW/4, W/2 SW/4 240.00
Section 28 Lots 1-8 345.84
Section 33 Lots 1-8 344.52
Section 34 All 640.00
Section 35 W/2 320.00
Section 35 E/2 320.00
Township 13 North, Range 1 West
-------------------------------
Section 12 All 640.00
Section 14 All 640.00
Section 22 N/2 320.00
Section 22 E/2 SE/4, N/2 SW/4 160.00
Section 24 All 640.00
Section 26 N/2, W/2 SE/4, SW/4 560.00
Section 28 Lots 1-4, E/2 338.88
Section 34 All, except North 300 ft. of 603.64
Section ------
County Total 31,307.55
---------
</TABLE>
B-16
<PAGE> 58
EXHIBIT B
TO LICENSE TO EXPLORE AND OPTION TO PURCHASE
CATEGORY 2 LANDS
(Revised 3/13/97)
COMPANY: GOLD
STATE: NM
COUNTY: BERNALILLO
<TABLE>
<CAPTION>
MERIDIAN: NMPM ACRES
-----
<S> <C> <C> <C>
Township 11 North, Range 1 East
-------------------------------
Section 5 Lots 3-7, SW/4 NW/4, NW/4 SW/4 257.09
Section 7 All 623.58
Section 19 All 622.72
Township 11 North, Range 1 West
-------------------------------
Section 1 Lots 1-4, S/2 NE/4, S/2 NW/4, SE/4, 634.78
SW/4
Section 3 Lots 1-4, S/2 NE/4, S/2 NW/4, SE/4, 626.78
SW/4
Section 9 Lots 1-4, E/2 NE/4, E/2 SE/4 332.78
Section 11 All 640.00
Section 13 All 640.00
Section 15 All 640.00
Section 21 Lots 1-4, E/2 NE/4, E/2 SE/4 319.66
Section 23 All 640.00
Section 25 Lots 1-4, N/2 NE/4, N/2 NW/4 181.60
Section 27 Lots 1-4, N/2 NE/4, N/2 NW/4 180.40
--------
County Total 6,339.39
--------
</TABLE>
B-17
<PAGE> 59
McKinley County, New Mexico
EXHIBIT C
LICENSE TO EXPLORE AND OPTION TO PURCHASE
Lease Option Agreement dated October 8, 1987, between Cerrillos Land Company
and Santa Fe Energy Company, as amended on July 1, 1988, and as amended on
December 1, 1989, a memorandum of which is recorded in Book 2, Page 1630, in
the official records of McKinley County, New Mexico.
Special Warranty Deed dated June 25, 1993, from Hospah Coal Company, Santa Fe
Pacific Minerals Corporation, Santa Fe Pacific Mining, Inc., The Atchison,
Topeka and Santa Fe Railway Company, and the Star Lake Railroad Company to San
Juan Basin Coal Holding Company, recorded in Book 6 Comp., Page 8560, of the
official records of McKinley County, New Mexico, covering coal and coal
development rights or mining rights.
Special Warranty Deed dated June 24, 1993, from Santa Fe Pacific Minerals
Corporation to Hanson Natural Resources Company covering coal and related
mining rights in Section 18, T.17N., R.10W., Section 31, T.18N., R.10W.,
Sections 19, 20, 21, 26, 27, 28, 29, 30, 31, 33, 34 and 35, T.18N., R.11 W.,
McKinley County, New Mexico.
Special Warranty Deed dated June 24, 1993, from Santa Fe Pacific Minerals
Corporation to Hanson Natural Resources Company covering coal and related
mining rights in Sections 18 and 20, T.16N., R.9W., Section 13, T.16N., R.10W.,
Sections 6, 7, 8, 15 and 17, T.17N., R.10W., Sections 13 and 14, T.19N., R.6W.,
Section 31, T.15N., R.6W., recorded in Book 6 Comp., Page 8480, in the official
records of McKinley County, New Mexico.
Amended and Restated San Juan Basin Agreement dated June 25, 1993, by and
between Hospah Coal Company and Chaco Energy Company.
Grazing Lease dated October 1, 1973, from Santa Fe Pacific Railroad Company to
Tesoro Petroleum, covering Section 1, T.17N., R.9W., McKinley County, New
Mexico.
Surface Lease dated April 23, 1992, from Cerrillos Land Company to Giant
Industries covering 2.96 acres in Section 1, T.17N., R.9W., McKinley County,
New Mexico.
Easement dated May 1, 1974, from Santa Fe Pacific Railroad Company to Tenneco
Oil Company, covering 2.17 acres in NE/4 of Section 1, T.17N., R.9W., McKinley
County, New Mexico.
Right of Way Agreement dated March 4, 1957, from Santa Fe Pacific Railroad
Company to El Paso Natural Gas Products Company, covering a portion of Section
1, T.17N., R.9W.,
C-1
<PAGE> 60
McKinley County, New Mexico.
Oil and Gas Lease dated July 19, 1979, from Santa Fe Pacicific Railroad Company
to Rio Colorado Oil and Gas Company, covering Sections 19, 20, 21, 28 and 29,
T17N, R9W, McKinley County, New Mexico.
Oil and Gas Lease dated September 16, 1953, from Santa Fe Pacific Railroad
Company to N.T. Grier and Marjorie M. Grier (Brana Corp.), covering the S/2 of
Section 20, and the N/2 of Section 29, T20N, R9W, McKinley County, New Mexico.
Oil and Gas Lease dated May 26, 1967, from Santa Fe Pacific Railroad Company to
Henry S. Birdseye (Brana Corp.), covering the SE/4 of Section 21, SW/4 of
Section 22, and the NW/4 of Section 27, from the surface to 600 feet, McKinley
County, New Mexico.
Oil and Gas Lease dated January 1, 1966, from Santa Fe Pacific Railroad Company
to Tenneco Oil Company, covering the W2, SW/4 of Section 11, Sections 13 and
24, T17N, R9W, and Section 7, T17N, R8W, McKinley County, New Mexico.
Oil and Gas Lease dated June 1, 1972, from Santa Fe Pacific Railroad Company to
Tenneco Oil Company covering the S/2 of Section 29, the N/2 NE/4 of Section 31,
and the NW/4 NW/4 of Section 33, T20N, R9W, McKinley County, New Mexico.
Oil and Gas Lease dated October 10, 1973, from Santa Fe Pacific Railroad
Company to Tenneco Oil Company, covering Sections 17, 18, 19, 20, the N12, SW/4
of Section 21, Section 27, the N/2, N/2 SE/4 of Section 28, Sections 29 and 30,
T16N, R6W, McKinley County, New Mexico.
Oil and Gas Lease dated May 1, 1975, from Santa Fe Pacific Railroad Company to
Tenneco Oil Company, covering Sections 18 and 20, T16N, R9W, and Section 13,
T16N, R10W, McKinley County, New Mexico.
Oil and Gas Lease dated November 23, 1923 from Santa Fe Pacific Railroad
Company to Paul C. Hancock, covering Section 1, T17N, R9W, McKinley County, New
Mexico.
Oil and Gas Lease dated February 1, 1938, from Santa Fe Pacific Railroad
Company to Clarence B. Osborne, et al, covering Lots 2, 3 and 4, the E/2 SW/4
of Section 31, T18N, R8W, McKinley County, New Mexico.
Oil and Gas Lease dated March 3, 1965, from Santa Fe Pacific Railroad Company
to Tesoro Petroleum Corporation, covering the N/2 and SW/4 of Section 5, the
N/2 and SW/4 of Section 7, and the N/2 and SW/4 of Section 9, T17N, R8W,
McKinley County, New Mexico.
C-2
<PAGE> 61
Surface Owners Agreement by and between Santa Fe Pacific Railroad Company and
Fernandez Company, Ltd., dated July 31, 1979, a memorandum of which was
recorded at Book 76, Page 938 of the official records of Mckinley County, New
Mexico, which agreement was partially released on April 2, 1982, which release
is recorded at Book 52, Pages 961-962 of the official records of Mckinley
County New Mexico, and which Agreement was amended on March 2, 1987, a
memorandum of which was recorded in Book 90 Misc., Pages 639-642 of the
official records of McKinley County, New Mexico.
Surface Use Agreement by and between Santa Fe Pacific Railroad Company and R.M.
Albers, et al., dated June 3, 1980, a memorandum of which was recorded at Book
78, Page 252-253 of the official records of McKinley County, New Mexico.
C-3
<PAGE> 62
EXHIBIT D
TO LICENSE TO EXPLORE AND OPTION TO PURCHASE
DEED Category III
STATE OF NEW MEXICO )
COUNTY OF McKINLEY )
SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name
change to Santa Fe Pacific Minerals corporation, which is successor by merger
to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard
N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS
to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite
400, Albuquerque, New Mexico 87110, all of the interest reserved by Santa Fe
Pacific Railroad Company in the instruments described in Exhibit A hereto but
only so far as such reservations and exceptions pertain to and cover the real
estate in McKinley County, New Mexico more particularly described in Exhibit B
hereto, less and except the interests described in Exhibit C hereto and subject
to the grants and interests set forth in the instruments set forth in Exhibit D
hereto, all of which exhibits are incorporated herein by reference.
LIMITATION OF REMEDY. Any warranty of title by the Grantor and any
remedies of the Grantee or its successors and assigns related to the property
covered by this Deed shall be limited to the remedies set forth in that certain
AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER,
AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that
certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and
Grantee, dated effective as of March 21, 1997 (copies of which are maintained
in the offices of Grantor and Grantee and attorneys for Grantor, Modrall,
Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New
Mexico 87102) and shall not include any other rights, damages or claims than
those specifically set forth therein. Any rights asserted under the terms of
such agreements must be brought within the time period set forth in those
agreements.
CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR
MINING RIGHTS. This conveyance does not and is not intended to affect or
purport to affect, in any way, coal in place, including development or mining
rights related to coal, in any of the property of Grantor or any of its
subsidiaries or affiliates
<PAGE> 63
including, but not limited to, the San Juan Basin Coal Holding Company, and
coal in place and all such rights are EXCEPTED herefrom and RESERVED to
Grantor.
WITNESS its hand and seal this ________ day of March, 1997.
SANTA FE PACIFIC GOLD CORPORATION
By:
-----------------------------------
(Seal) Bruce D. Hansen
Senior Vice President-Corporate
Development
STATE OF NEW MEXICO
COUNTY OF BERNALILLO
This instrument was acknowledged before me on March ________, 1997, by
Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe
Pacific Gold Corporation.
---------------------------------------
(Seal) Notary Public
My commission expires:
----------------
<PAGE> 64
McKinley County, New Mexico
EXHIBIT E
LICENSE TO EXPLORE AND OPTION TO PURCHASE
Warranty Deed dated April 11, 1922, from Santa Fe Pacific Railroad Company to
Ruby Oil Company, recorded in Book 6 of Deeds, Page 240, in the official
records of McKinley County, New Mexico.
Warranty Deed dated May 4, 1927, from Santa Fe Pacific Railroad Company to
Frances E. Nixon, recorded in Book 7 of Deeds, Page 70, in the official records
of McKinley County, New Mexico.
Warranty Deed dated December 12, 1928, from Santa Fe Pacific Railroad Company
to Geo. E. Bruce and H.F. Prewitt.
Warranty Deed dated March 15, 1938, from Santa Fe Pacific Railroad Company to
Mike Michael.
Warranty Deed dated February 27, 1941, from Santa Fe Pacific Railroad Company
to Mike Michael and Azize Michael, recorded in Book 12 of Deeds, Page 37, in
the official records of McKinley County, New Mexico.
Warranty deed dated January 7, 1942, from Santa Fe Pacific Railroad Company to
R. G. Smith, Jr., recorded in Book 12 of Deeds, Page 456, in the official
records of McKinley County, New Mexico.
Warranty Deed dated October 1, 1942, from Santa Fe Pacific Railroad Company to
I.K. Westbrook, recorded in Book 12 of Deeds, Page 208, in the official records
of McKinley County, New Mexico.
Warranty Deed dated May 1, 1944, from Santa Fe Pacific Railroad Company to
Edward Sargent, recorded in Book 12 of Deeds, Page 365, in the official records
of McKinley County, New Mexico.
Warranty Deed dated April 10, 1945, from Santa Fe Pacific Railroad Company to
Harold F. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds, Page 476,
in the official records of McKinley County, New Mexico.
Warranty Deed dated July 7, 1945, from Santa Fe Pacific Railroad Company to
Muriel E. Buck, recorded in Book 12 of Deeds, Page 499, in the official records
of McKinley County, New Mexico.
E-1
<PAGE> 65
Warranty Deed dated June 1, 1946, from Santa Fe Pacific Railroad Company to
Emery Floyd Burnham, recorded in Book 10 of Warranty Deeds, Page 368, in the
official records of McKinley County, New Mexico.
Warranty Deed dated January 15, 1947, from Santa Fe Pacific Railroad Company to
John Snyder and George E. Wood, recorded in Book 13 of Deeds, Page 172, in the
official records of McKinley County, New Mexico.
Warranty Deed dated January 15, 1947, from Santa Fe Pacific Railroad Company to
Tom Snyder, recorded in Book 13 of Deeds, Page 173, in the official records of
McKinley County, New Mexico.
Warranty Deed dated March 15, 1947, from Santa Fe Pacific Railroad Company to
R. E. Albers and W. M. B. Albers, recorded in Book 13 of Deeds, Page 235, in
the official records of McKinley County, New Mexico.
Warranty Deed dated June 1, 1948, from Santa Fe Pacific Railroad Company to Tom
Morris, recorded in Book 9 of Warranty Deeds, Page 23, in the official records
of McKinley County, New Mexico.
Warranty Deed dated December 28, 1948, from Santa Fe Pacific Railroad Company
to Jean Carrica and Company, recorded in Book 13 of Deeds, Page 339, in the
official records of McKinley County, New Mexico.
Warranty Deed dated January 4, 1949, from Santa Fe Pacific Railroad Company to
I.K. Westbrook, recorded in Book 13 of Deeds, Page 341, in the official records
of McKinley County, New Mexico.
Warranty Deed dated April 22, 1949, from Santa Fe Pacific Railroad Company to
Gates A. Davis, recorded in Book 9 of Warranty Deeds, Page 87, in the official
records of McKinley County, New Mexico.
Warranty Deed dated May 13, 1949, from Santa Fe Pacific Railroad Company to
Chaco Land and Cattle Company, recorded in Book 9 of Warranty Deeds, Page 90,
in the official records of McKinley County, New Mexico.
Warranty Deed dated August 1, 1949, from Santa Fe Pacific Railroad Company to
Chaco Land and Cattle Company, recorded in Book 10 of Warranty Deeds, Page 325,
in the official records of McKinley County, New Mexico.
Warranty Deed dated August 1, 1949, from Santa Fe Pacific Railroad Company to
Star Lake Land and Livestock Company, recorded in Book 10 of Warranty Deeds,
Page 327, in the official records of McKinley County, New Mexico.
E-2
<PAGE> 66
Warranty Deed dated January 2, 1950, from Santa Fe Pacific Railroad Company to
Charlie Arviso, recorded in Book 10 of Warranty Deeds, Page 354, in the
official records of McKinley County, New Mexico.
Warranty Deed dated January 1, 1950, from Santa Fe Pacific Railroad Company to
Emery Floyd Burnham, recorded in Book 11 of Misc., page 195, in the official
records of McKinley County, New Mexico.
Warranty Deed dated August 10, 1988, from Santa Fe Pacific Railroad Company to
State Highway Department of New Mexico.
Warranty Deed dated October 15, 1945, from Santa Fe Pacific Railroad Company to
Fernandez Company, recorded in Book 12 DR, Page 536, in the official records of
McKinley County, New Mexico.
Warranty Deed dated March 4, 1952, from Santa Fe Pacific Railroad Company to
Hazel W. Prewitt, recorded in Book 11 Misc., Page 370, in the official records
of McKinley County, New Mexico.
Warranty Deed dated March 15, 1947, from Santa Fe Pacific Railroad Company to
Hazel W. Prewitt, an individual, and Hazel W. Prewitt, Guardian Estate of Joan
M. Prewitt, a minor, recorded in Book 13 of Deeds, Page 240, in the official
records of McKinley County, New Mexico.
Warranty Deed dated November 1, 1948, from Santa Fe Pacific Railroad Company to
W. F. Pitt and Susie Bell Pitt, husband and wife, recorded in book 9 of W. D.,
Page 53, in the official records of McKinley County, New Mexico.
Warranty Deed dated January 20, 1947, from Santa Fe Pacific Railroad Company to
Frank Bond & Son, Inc., recorded in book 13 of Deeds, Page 219, in the official
records of McKinley County, New Mexico.
E-3
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
URI, Inc., a Delaware corporation
URI Minerals, Inc., a Delaware corporation
Beltline Resources, Inc., a Texas corporation
Hydro Restoration Corporation, a Delaware corporation
Hydro Resources, Inc., a Delaware corporation
Uranco Inc., a Delaware corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 14, 1997, included in the Company's
1996 Form 10-K, into the Company's previously filed Registration Statements on
Form S-8 File Nos. 333-05617, 333-00403 and 333-00349, and the Company's
previously filed Registration Statements on Form S-3 File Nos. 333-05619 and
333-01371.
/s/ ARTHUR ANDERSEN LLP
-----------------------
Arthur Andersen
Dallas, Texas
March 27, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 16,934,276
<SECURITIES> 2,779,840
<RECEIVABLES> 1,829,539
<ALLOWANCES> 0
<INVENTORY> 3,575,285
<CURRENT-ASSETS> 25,446,858
<PP&E> 71,911,546
<DEPRECIATION> (29,335,818)
<TOTAL-ASSETS> 68,793,670
<CURRENT-LIABILITIES> 10,177,635
<BONDS> 6,407,054
0
0
<COMMON> 10,966
<OTHER-SE> 45,285,726
<TOTAL-LIABILITY-AND-EQUITY> 68,793,670
<SALES> 24,264,309
<TOTAL-REVENUES> 24,264,309
<CGS> 20,122,719
<TOTAL-COSTS> 23,177,413
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 610,403
<INCOME-PRETAX> 758,863
<INCOME-TAX> 0
<INCOME-CONTINUING> 758,863
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 758,863
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
