<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the quarterly period ended March 31, 1998 or
Transition report pursuant to Section 13 or 15(d) of the Securities
--- Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 0-17171
URANIUM RESOURCES, INC.
(exact name of Registrant as specified in its Charter)
DELAWARE 75-2212772
(State of Incorporation) (I.R.S. Employer Identification No.)
12750 MERIT DRIVE, SUITE 1020, DALLAS, TEXAS 75251
(Address of principal executive offices, including zip code)
(972) 387-7777
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Title of Each Class of Common Stock Number of Shares Outstanding
----------------------------------- ----------------------------
<S> <C>
Common Stock, $.001 par value 12,053,027 as of May 11, 1998
</TABLE>
- -------------------------------------------------------------------------------
<PAGE> 2
URANIUM RESOURCES, INC.
1998 FIRST QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
March 31, 1998 (Unaudited) and
December 31, 1997 3
Consolidated Statements of Operations -
Three Months Ended March 31, 1998 and 1997
(Unaudited) 5
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1998
and 1997 (Unaudited) 6
Notes to Consolidated Financial
Statements - March 31, 1998 (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II -- OTHER INFORMATION 12
SIGNATURES 13
INDEX TO EXHIBITS E-1
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997 (NOTE 1)
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
---------------- ----------------
1998 1997
---------------- ----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 588,253 $ 2,325,158
Short-term investment:
Certificate of deposit, restricted 3,386,821 3,304,195
Receivables, net 4,519,536 4,507,090
Uranium inventory 1,793,013 2,260,200
Materials and supplies inventory 96,450 91,047
Prepaid and other current assets 279,475 253,910
------------ ------------
Total current assets 10,663,548 12,741,600
------------ ------------
Property, plant and equipment, at cost:
Uranium properties 99,415,460 97,100,015
Other property, plant and equipment 580,676 580,676
Less-accumulated depreciation and depletion (38,074,879) (36,235,274)
------------ ------------
Net property, plant and equipment 61,921,257 61,445,417
Other assets 693,539 676,952
------------ ------------
$ 73,278,344 $ 74,863,969
============ ============
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated balance sheets.
3
<PAGE> 4
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997 (NOTE 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
---------------- ----------------
1998 1997
---------------- ----------------
(Unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable $ 880,037 $ 3,233,277
Notes payable 2,100,000 1,950,000
Accrued interest payable 3,350 5,035
Current portion of long-term debt 7,000 7,000
Royalties payable 683,223 630,284
Current portion of restoration reserve 511,000 511,000
Other accrued liabilities 571,686 405,814
------------ ------------
Total current liabilities 4,756,296 6,742,410
------------ ------------
Other long-term liabilities and deferred credits 5,006,912 4,787,427
Long-term debt, less current portion 6,054,874 6,462,343
Deferred federal income taxes 5,036,810 4,967,000
Shareholders' equity:
Common stock, $.001 par value, shares authorized:
25,000,000 shares issued and outstanding
(net of treasury shares): 1998 - 12,053,027
1997 - 12,053,027 12,205 12,205
Paid-in capital 40,629,923 40,222,359
Retained earnings 11,790,742 11,679,643
Less: Treasury stock (152,500 shares), at cost (9,418) (9,418)
------------ ------------
Total shareholders' equity 52,423,452 51,904,789
------------ ------------
$ 73,278,344 $ 74,863,969
============ ============
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated balance sheets.
4
<PAGE> 5
URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (NOTE 1)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31,
-------------------------------------
1998 1997
-------------- --------------
<S> <C> <C>
Revenues:
Uranium sales -
Produced uranium $ 4,935,166 $ 3,796,400
Purchased uranium 1,126,800 3,413
------------ ------------
Uranium sales 6,061,966 3,799,813
Costs and expenses:
Cost of uranium sales -
Direct cost of purchased uranium 961,937 --
Royalties 224,270 219,543
Operating expenses 1,680,773 1,176,287
Provision for restoration and reclamation costs 262,841 248,058
Depreciation and depletion 2,203,668 1,842,249
------------ ------------
Total cost of uranium sales 5,333,489 3,486,137
------------ ------------
Earnings from operations before corporate expenses 728,477 313,676
Corporate expenses -
General and administrative 594,528 844,074
Depreciation 4,923 5,709
------------ ------------
Total corporate expenses 599,451 849,783
------------ ------------
Earnings (loss) from operations 129,026 (536,107)
Other income (expense):
Interest expense, net of capitalized interest (36,820) (66,918)
Interest and other income, net 46,893 167,284
------------ ------------
Total other income 10,073 100,366
------------ ------------
Earnings (loss) before federal income taxes 139,099 (435,741)
Federal income tax expense (benefit):
Current -- --
Deferred 28,000 (87,000)
------------ ------------
Net earnings (loss) $ 111,099 $ (348,741)
============ ============
Net earnings (loss) per common share and common equivalent share
(Basic and diluted) $ 0.01 $ (0.03)
============ ============
Weighted average common shares and common
equivalent shares per share data 12,056,233 10,917,694
============ ============
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated statements.
5
<PAGE> 6
URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (NOTE 1)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31,
-----------------------------------
1998 1997
---------------- ---------------
<S> <C> <C>
Cash flows from operations:
Net earnings (loss) $ 111,099 $ (348,741)
Reconciliation of net income to cash provided by operations-
Provision for restoration and reclamation costs 262,841 248,058
Depreciation and depletion 2,208,591 1,847,958
Provision (credit) for deferred income taxes 28,000 (87,000)
Decrease in restoration and reclamation accrual (1,051) (81,894)
Other non-cash items, net 159,409 (162,659)
------------ ------------
Cash flow provided by operations, before changes in
operating working capital items 2,768,889 1,415,722
Effect of changes in operating working capital items-
(Increase) decrease in receivables (12,446) (145,593)
(Increase) decrease in inventories 25,083 (498,037)
Increase in prepaid and other current assets (122,050) (145,455)
Decrease in payables and accrued liabilities (2,136,114) (1,084,780)
------------ ------------
Net cash provided by (used in) operations 523,362 (458,143)
------------ ------------
Investing activities:
Increase in investments (82,626) (37,014)
Additions to property, plant and equipment -
Kingsville Dome (1,200,641) (1,817,104)
Rosita (130,651) (699,358)
Vasquez (308,206) (29,620)
Alta Mesa (11,125) (182,503)
Churchrock (327,476) (261,965)
Crownpoint (148,920) (229,410)
Other property (189,291) (108,856)
Decrease (increase) in other assets (9,712) 4,228
------------ ------------
Net cash used in investing activities (2,408,648) (3,361,602)
------------ ------------
Financing activities:
Payments and refinancings of principal 148,351 (6,170,074)
Issuance of common stock and warrants, net -- 57,999
------------ ------------
Net cash provided by (used in) financing activities 148,351 (6,112,075)
------------ ------------
Net decrease in cash and cash equivalents (1,736,905) (9,931,820)
Cash and cash equivalents, beginning of period 2,325,158 16,934,276
------------ ------------
Cash and cash equivalents, end of period $ 588,253 $ 7,002,456
============ ============
</TABLE>
The accompanying notes to financial statements are an integral
part of these consolidated statements.
6
<PAGE> 7
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying statements should be read in conjunction
with the audited financial statements included in the Company's 1997 Annual
Report on Form 10-K. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended March 31, 1998 are
not necessarily indicative of the results that may be expected for the full
calendar year ending December 31, 1998.
2. LONG-TERM DEBT
EXTENSION OF NOTE TERMS
In March 1998, the Company entered into an agreement to extend the
maturity date from May 31, 1998 to May 31, 2000 on the $6,000,000 secured
convertible note that was issued from mutual funds managed by Ryback Management
Company. The note is convertible into shares of the Company's common stock. In
exchange for the extension in the term of the note, the conversion price was
adjusted from $4.00 per share to $3.00 per share. In the same transaction, the
exercise price for warrants held by the lenders to purchase 1,000,000 shares of
the Company's common stock has also been adjusted from $4.00 to $3.00 per share,
and the expiration date of the warrants has been extended from May 31, 1998 to
May 31, 2000. In connection with this transaction the Company allocated $408,000
for the value of the warrants resulting in an effective rate of 10% on the
refinanced note.
CAPITALIZED INTEREST
Interest capitalized in the three months ended March 31, 1998 and 1997
was $118,000 and $69,000, respectively. Total interest costs in these periods
were $155,000 and $136,000, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
This Item 2 contains "forward-looking statements" which are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These statements include, without limitation, statements
relating to liquidity, financing of operations, continued volatility of uranium
prices, estimates of future capital expenditures, proved undeveloped reserves
and other such matters. The words "believes," "expects," "projects," "targets,"
or "estimates" and similar expressions identify forward-looking statements. The
Company does not undertake to update, revise or correct any of the
forward-looking information. Readers are cautioned that such forward-looking
statements should be read in conjunction with the Company's disclosures under
the heading: "Cautionary Statement for the Purposes of the `Safe Harbor'
Provisions of the Private Securities Litigation Reform Act of 1995" in the
Company's 1997 Annual Report on Form 10-K.
CAPITAL RESOURCES AND LIQUIDITY
Operating Cash Flows
For the quarter ended March 31, 1998, the Company's cash and cash
equivalents were $588,000 a decrease of $1,737,000 as compared to a decrease of
$9,932,000 for the first quarter of 1997. The Company's uranium operations
generated cash flow from operations of $523,000 for the quarter ended March 31,
1998, in comparison to
7
<PAGE> 8
negative cash flow from operations in the same period in 1997 of $458,000. The
Company's net working capital at March 31, 1998 was $5,907,000.
Investing Cash Flows
South Texas Projects
During the three months ending March 31, 1998, development expenditures
totaling $1,201,000 and $131,000 were incurred at the Company's Kingsville Dome
and Rosita sites, respectively. The expenditures at the Kingsville Dome project
were primarily for activities on the wellfields in the recently obtained PAA #3
and on the acquisition and construction of the remote ion exchange plants to be
used in production from PAA #3. Capital expenditures incurred on the Alta Mesa
project for the three months ended March 31, 1998 were minimal and were related
primarily to permitting and licensing activities. The Company expects to fund
its 1998 operating and capital expenditures at its Kingsville Dome, Rosita, and
Alta Mesa projects from cash on hand, sales proceeds under 1998 uranium
deliveries and through existing financing arrangements.
New Mexico Projects
Capital expenditures at the Company's Churchrock and Crownpoint
projects for permitting and land holding costs totaled approximately $476,000
for the three months ending March 31, 1998 compared to costs of $491,000 for the
first quarter of 1997. Capital requirements for 1998 and beyond for these
projects are expected to be met through future sales proceeds from current and
additional uranium delivery contracts and through future sources of debt and/or
equity financing.
Financing Cash Flows
In May 1996, the Company entered into a $3.0 million revolving credit
facility. This facility was renewed and expanded for a two year term to a $5.0
million credit facility in July 1997. This facility is secured by the Company's
uranium inventory and/or by 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%. Borrowings under this facility at
March 31, 1998 totaled $2,100,000.
In June 1996, the Company received $4.0 million in proceeds from the
one-year note entered into with the Lindner Dividend Fund. The terms of the note
provided for the payment of both the principal and accrued interest by June 1997
with interest on the note accruing at a rate of 6.5% per annum. The $4.0 million
principal amount and accrued interest on this note was paid in January 1997.
The Company was obligated to pay a production payment royalty of $1.00
per pound on the first three million pounds of uranium produced and sold from
either Kingsville Dome or Rosita. The Company has cumulatively 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.
In the first quarter of 1997 the Company generated $58,000 from the
issuance of 14,500 shares of common stock associated with the exercise of
certain stock warrants.
Other Non-Cash Transactions
In March 1997, the Company acquired from Santa Fe Pacific Gold
Corporation ("Santa Fe") certain mineral interests covering approximately
500,000 acres in northwestern New Mexico in exchange for 1.2 million shares of
the Company's common stock and a commitment for certain exploration
expenditures. Approximately one-third of the acreage comprises uranium mineral
rights and the remaining acreage comprises exploration rights with rights to
purchase and develop any uranium mineral interests found. Included in the
purchase is an existing royalty obligation from the Company to Santa Fe on
certain properties currently under lease from Santa Fe. The Company estimates
that there is approximately 14.7 million pounds of proven in-place uranium
reserves on 37,000 acres of the property on which it acquired the entire mineral
estate (excluding coal). Also included in the 500,000 acres is the fee interest
in uranium on approximately 140,000 acres and the exclusive uranium rights, for
17 years, on approximately 346,000 acres.
8
<PAGE> 9
ENVIRONMENTAL ASPECTS
The Company utilizes ISL solution mining technology as its only mining
method. Unlike conventional uranium mining companies, the Company's mining
technology does not create "tailings". Nevertheless, the Company is highly
regulated. Its primary environmental costs to date have been related to
obtaining and complying with environmental mining permits and, once mining is
completed, the reclamation and restoration of the surface areas and underground
water quality to a condition consistent with applicable requirements. Accruals
for the estimated future cost of such activities are made on a per-pound basis
as part of production costs. See the Consolidated Statements of Operations for
the applicable provisions for such future costs. See also Note 1 - "Restoration
and Reclamation Costs" of Notes to Consolidated Financial Statements in the
Company's Form 10-K as of December 31, 1997.
RESULTS OF OPERATIONS
Revenues, earnings from operations and net income for the Company can
fluctuate significantly on a quarter to quarter basis during the year because of
the timing of deliveries requested by its utility customers. The Company's
customers have generally elected, where possible, to take delivery of the bulk
of the annual deliveries under their long-term sales contracts later in each
year. Accordingly, operating results for any quarter or year-to-date period are
not necessarily comparable and may not be indicative of the results which may be
expected for future quarters or for the entire year.
Three Months Ended March 31, 1998 and 1997
The following is a summary of the key operational and financial
statistics related to the Results of Operations:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1998 1997
----------- ------------
(In thousands, except per
pound data)
<S> <C> <C>
Uranium sales revenue $ 6,062 $ 3,800
Total pounds delivered 370 232
Average sales price/pound $ 16.37 $ 16.38
Pounds produced 227 247
Pounds purchased 100 --
Average production cost of produced pounds $ 15.87 $ 15.37
Average cost of purchased pounds $ 10.50 N/A
Average cost of produced pounds sold $ 14.88 $ 13.96
Average cost of purchased pounds sold $ 10.50 N/A
</TABLE>
Revenue from uranium sales in the first quarter of 1998 increased by
$2,262,000 from 1997 amounts. The average sales price for total uranium
deliveries in the first quarter ending March 31, 1998 and 1997 was $16.37 per
pound and $16.38 per pound, respectively. Total uranium deliveries in the first
quarter of 1998 of 370,000 pounds was 138,000 pounds higher than those made in
the same period in 1997.
9
<PAGE> 10
Details of the cost of uranium sales were as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1998 1997
------------ -----------
(In thousands)
<S> <C> <C>
Cost of purchased uranium $ 962 $ --
Royalties 224 220
Operating expenses 1,681 1,176
Provision for restoration and reclamation costs 263 248
Depreciation and depletion of uranium properties 2,204 1,842
------- -------
Total cost of uranium sales $ 5,334 $ 3,486
======== =======
</TABLE>
The Company produced 227,000 pounds of uranium from the Rosita and
Kingsville Dome facilities in the three months ending March 31, 1998, compared
to 247,000 pounds in the same quarter of 1997. The average per pound production
cost for the first quarter of 1998 of $15.87 was slightly higher than the
corresponding period of 1997 ($15.37 per pound).
In January 1998, the Company received the necessary regulatory permits
at Kingsville Dome to expand its production into PAA #3, located northwest of
the current production fields. This new production area is expected to contain
approximately 2.0 million in-place pounds (70% of which are projected to be
produced). Wellfield development is currently underway in this area and
production is projected to begin in June 1998. Beginning with the first
wellfield in PAA #3, the Company will implement new operating techniques which
will utilize a remote ion exchange plant concept. This change in technique is
expected to increase production efficiency and reduce overall production costs.
There can be no assurance that such methods will enhance production or reduce
overall production costs.
Operating expenses attributable directly to the sale of Kingsville Dome
and Rosita produced pounds totaled $1,681,000 ($6.03 per pound) in the first
quarter ended March 31, 1998 compared to $1,176,000 ($5.07 per pound) for
Kingsville Dome and Rosita produced pounds that were sold in the same period in
1997.
The provision for restoration and reclamation in the first three months
ended March 31, 1998 consists of $263,000 ($0.94 per pound) for production sold
during 1998. The provision for restoration and reclamation in the first quarter
ended March 31, 1997 consists of $219,000 ($0.95 per pound) for Rosita
production sold and $29,000 for costs associated with reclamation at the
Benavides project (a previous mining location).
The depreciation and depletion provision in the quarter ended March 31,
1998 consisted of $2,204,000 ($7.91 per pound) for Rosita and Kingsville Dome
production sold. The depreciation and depletion provision in the first quarter
of 1997 consisted of $1,842,000 ($7.94 per pound) for Rosita and Kingsville Dome
production sold.
Royalty expenses in the first three months of 1998 totaled $213,000
compared to $220,000 in 1997.
The average cost of uranium purchases made in the first quarter of 1998
was $10.50. No pounds were purchased in the same period in 1997. Total
deliveries in the first three months of 1998 consisted of 279,000 produced
pounds at an average cost per pound of $14.88 and 100,000 purchased pounds at a
cost of $10.50 per pound. During the same period in 1997, the Company delivered
232,000 produced pounds, at an average cost per pound of $13.96. No purchased
pounds were delivered during the first quarter of 1997.
10
<PAGE> 11
Corporate expenses consisting of general and administrative ("G&A")
expenses decreased to $595,000 in the first quarter of 1998 from $844,000 in the
first quarter of 1997. This reduction resulted primarily from employee incentive
awards paid in the first quarter of 1997 of $168,000 compared to no such awards
in 1998.
Total other income for the first quarter of 1998 decreased by $90,000
from the same period in 1997. This change resulted from lower interest income
and was offset by a reduction in net interest of $120,000 and $30,000,
respectively for the first three months of 1998. The lower interest income
resulted from reductions in average available cash and investment balances which
were generated from the Company's equity placement in December 1996.
11
<PAGE> 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Financial Data Schedule
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
URANIUM RESOURCES, INC.
Dated: May 11, 1998 By: /S/ Paul K. Willmott
-------------------------
Paul K. Willmott
Director, President and
Chief Executive Officer
Dated: May 11, 1998 By: /S/ Thomas H. Ehrlich
--------------------------
Thomas H. Ehrlich
Vice President - Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
13
<PAGE> 14
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 FINANCIAL DATA SCHEDULE
</TABLE>
E-1
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 588,253
<SECURITIES> 3,386,821
<RECEIVABLES> 4,519,536
<ALLOWANCES> 0
<INVENTORY> 96,450
<CURRENT-ASSETS> 10,663,548
<PP&E> 99,415,460
<DEPRECIATION> (38,074,879)
<TOTAL-ASSETS> 73,278,344
<CURRENT-LIABILITIES> 4,756,296
<BONDS> 6,462,438
0
0
<COMMON> 12,205
<OTHER-SE> 52,003,683
<TOTAL-LIABILITY-AND-EQUITY> 73,278,344
<SALES> 6,061,966
<TOTAL-REVENUES> 6,061,966
<CGS> 5,333,489
<TOTAL-COSTS> 5,932,940
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,820
<INCOME-PRETAX> 139,099
<INCOME-TAX> 28,000
<INCOME-CONTINUING> 111,099
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 111,099
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
