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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, 1997 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 __________
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 [ ].
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. [ ]
The aggregate market value of the Common Stock of the Registrant held by
nonaffiliates at March 24, 1998 was approximately $19,743,168.
Number of shares of Common Stock outstanding as of March 24, 1998: 12,053,027
shares.
Documents Incorporated by Reference:
Document Location in 10-K
-------- ----------------
Proxy Statement for 1998 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, 1997
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
Market Price Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Sources of Supply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Required Primary Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Uranium Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ITEM 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
South Texas Producing Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
South Texas Development Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
New Mexico Development Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Santa Fe Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Reclaimed Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Reclamation and Restoration Costs and Bonding Requirements . . . . . . . . . . . . . . . . . . 19
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Longoria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ProBank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Benton Bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . . . . . . . . . . . . . . 21
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . 29
Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . 32
Forward Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Capital Resources and Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Environmental Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>
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<TABLE>
<S> <C>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . 38
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . 39
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . 39
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . 39
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K . . . . . . . . . . . 39
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Index to Consolidated Financial Statements,
Auditors' Report, Financial Statements
and Supplemental Data F-1 to F-22
Index to Exhibits E-1 to E-3
</TABLE>
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URANIUM RESOURCES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
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 22.
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.
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. 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 1997 the Company has
produced approximately 1.3 million pounds
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from Rosita and 1.5 million pounds from Kingsville Dome at average production
costs of $11.90 and $13.65 per pound, respectively. During 1997 the Company
produced 640,000 pounds from Kingsville Dome at an average cost of $15.47 and
production from Rosita was 230,000 pounds at an average cost of $16.92.
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." 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, 1998, the Company had 115 employees, including its
professional staff consisting of 10 geologists, 6 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. The Company is implementing its strategy through (i)
continued production at its existing production sites; (ii) making capital
expenditures for property exploration, acquisition and development; (iii)
permitting additional development sites; 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, 1997, the Company produced approximately
871,000 million pounds of uranium at an average cost of $15.85 per pound. The
Company estimates that for 1997, its uranium production was approximately 15%
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 March 1997, the Company acquired for exploration and development
potential certain uranium mineral interests covering approximately 500,000
acres in northwestern New Mexico from Santa Fe Pacific Gold Corporation ("Santa
Fe"). In this transaction, the Company issued 1.2 million shares of it's
Common Stock and undertook a commitment to expend certain amounts on
exploration. Approximately one-third of this acreage comprises uranium mineral
rights and the remaining acreage comprises exploration rights with rights to
purchase and develop any mineral interests found excluding coal. Included in
the purchase was the acquisition of a previously existing royalty obligation
from the Company to Santa Fe on certain properties that were leased from Santa
Fe.
The Company has two development projects in South Texas, Vasquez and
Alta Mesa, both targeted to commence production in the latter part of 1998 or
early 1999. The Company also has three development projects in two districts
in New Mexico, the Churchrock district and the Crownpoint district. Permitting
and licensing is in process at all such projects. Commencement of production
at these properties is subject to timely permitting, the availability of sales
contracts and the availability of capital.
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MARKETING STRATEGY/URANIUM SALES CONTRACTS
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 up 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, 1997, based on prices escalated in accordance with
the contract terms through that date, the Company had long-term contracts for
approximately $54,542,000 of future sales for deliveries through 2002, as
compared with contracts for approximately $73,359,000 as of December 31, 1996,
in each case excluding the revenue related to the sale of Russian uranium under
the matched sale program. The Company's long-term sales contract portfolio
includes a mix of various pricing terms. 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, 1998 through 2002 (excluding the
delivery of Russian uranium) with prices escalated through December 31, 1997
and using the December 31, 1997 spot price of uranium for the market price
based contracts:
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002 Total
-------- -------- ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Number of customers 8 5 4 3 2 N/A
Total long-term contracted
Deliveries (thousands of
Pounds) 1,439 872 753 568 250 3,882
Total sales (thousands) $21,517 $12,090 $10,033 $7,398 $3,504 $ 54,542
Average minimum sales
Price per pound $ 14.95 $ 13.86 $ 13.32 $13.04 $14.01 $ 14.05
</TABLE>
For deliveries in periods subsequent to 1998, 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.
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, 1998 through December 31, 2002 are represented by nine
long-term contracts with eight different customers, three of which represented
18%, 15% and 13% of sales for the year ended December 31, 1997 and five of
which represented 20%, 16%, 15%, 12% and 11% of sales for the year ended
December 31, 1996.
As of December 31, 1997, the Company had two outstanding long-term
purchase contracts for Russian origin uranium totaling 90,000 pounds with
deliveries in 1998. These contracts have a price escalation factor related to
future inflation.
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RESERVES
The following table sets forth the Company's total in-place proven and
probable uranium reserves as of December 31, 1997. The reserves are generally
based on estimated recovery factors of 65%-75%, certain cut-off grades and a
price of $16 per pound.
<TABLE>
<CAPTION>
In-Place Reserves
As of Recoverable
December 31, 1997 Reserves as of
Producing (P) / ------------------------------ December 31,
Properties Development (D) Proven Probable 1997
---------- --------------- ------ -------- ----
(Amounts in thousands of pounds of U3O8)
<S> <C> <C> <C> <C>
Texas
Kingsville Dome P 1,053 2,212 2,607
Rosita P 1,407 -- 914
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
Santa Fe D 1,418 13,306 9,571
------- ------ -------
TOTALS 54,374 32,013 57,287
======= ====== =======
</TABLE>
The foregoing table does not include approximately 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 ratification by the U.S. Bureau of Indian Affairs (the "BIA"). 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, capital and labor intensive and are not cost competitive with the
majority of non-U.S. conventional producers.
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:
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ORE BODY EVALUATION
Ore bodies which are currently being mined by the ISL process are
associated with groundwater saturated permeable sandstone formations typically
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 oxidizing environment 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 loaded uranium is removed and placed into the elution
circuit where the uranium is 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.
The Company has historically utilized a central plant for the ion
exchange portion of the production process. In order to increase operating
efficiency and reduce future capital expenditures, the Company began the design
and development of wellfield-specific remote ion exchange methodology. Instead
of piping the solutions for miles through large diameter pipe lines and mixing
the waters of several wellfields together, each wellfield will be mined using a
dedicated satellite ion exchange facility. This will allow for ion exchange to
take place in the wellfield instead of at the central plant.
Nominal design flow will be in the range of 1,200 gpm, about 25% of
the design flow of the central plant at the Kingsville Dome project. Each of
these units will consist of several ion-exchange columns and a resin transfer
facility. When fully loaded with uranium, the resin will be transferred to a
trailer and the resin trucked to the central plant for elution. After
stripping the uranium from the resin, the resin will be transferred into the
trailer and transported back to the satellite plant in the wellfield.
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These satellite facilities will allow each wellfield to be mined using
its own native groundwater only, thus eliminating the problems associated with
progressive buildup of dissolved solids in the groundwaters and enhancing
mining efficiencies and uranium recoveries.
WELLFIELD RESTORATION
At the conclusion of mining, the mine site is decommissioned and
decontaminated and the well-field 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 of the mine site entails 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
6
<PAGE> 10
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 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, the radioactive materials license required for ISL uranium
mining is granted by the Texas Department of Health ("TDH") and the UIC permits
are granted by the Texas Natural Resource Conservation Commission ("TNRCC").
The TNRCC also regulates air quality and surface deposition or discharge of
treated waste water associated with the ISL mining process. In order for a
licensee to receive final release from further radioactive materials license
obligations after all of its mining and post-mining clean-up has been
completed, approval must be issued by the TDH along with concurrence from the
NRC.
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 permitting 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 a sufficient quantity of water to fulfill the applicant's
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
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<PAGE> 11
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 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 1996, up from less than 2% in
1970. 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. Prospects for growth beyond 2000 are good.
Pressure to reduce greenhouse gases that are primarily caused by the burning of
fossil fuels makes nuclear power generation an increasingly important energy
source alternative to coal, oil or natural gas. In addition, new generation
reactor designs are more standardized which could result in more predictable
capital outlays, streamlined start up schedules and inherently safe operations.
As of November 30, 1997, there were 364 nuclear reactors operating in
the Western World, 106 of which are in the United States and another 32 under
construction outside of the United States. Estimates for uranium consumption
by Western World commercial reactors was approximately 142 million pounds of
uranium in 1997 representing an increase of 51% over the rate of consumption
recorded for 1987. Western World consumption is estimated to range between 135
to 150 million pounds annually during the next five years.
MARKET PRICE FORMATION
1997 represented a volatile year in terms of price formation. At
December 31, 1996, the spot price was $14.70 per pound compared to $12.05 per
pound at December 31, 1997. The spot price recorded its low for the year of
$10.20 at August 30, 1997 but rebounded $2.55 to $12.75 by November 30, 1997.
During May of 1996, spot prices reached a high of $16.50 per pound, a
level which had not been reached since December of 1987, but began a slow
decline from August 1996 to its current level ($10.75 per pound at February 28,
1998). The first half of 1996 was characterized by increased utility demand
together with relatively illiquid inventories. As prices approached their
highs for the year, more inventory became available and demand became satisfied
at lower prices.
The heavy utility contracting in 1996 resulted in weakened contract
demand during 1997 and thus weakening prices. (The volume of spot transactions
world wide during the first quarter of 1997 was only 32% of that during the
first quarter of 1996). In addition, aggressive selling by the Russian
Executive Agent to fill portions of their allotted HEU derived uranium import
quota led to a bottoming of prices in
8
<PAGE> 12
August of 1997 of $10.20 per pound. Utility and producer demand entered at
that time helping to fuel a quick recovery to $12.75 per pound at November 30,
1997.
The majority of uranium is sold under long-term contracts. However,
the spot price affects the price level at which such long-term contracts can be
attained. In rising markets, base price escalated contracts are sought by
buyers while spot price related term contracts have been their preference
during declining markets.
SOURCES OF SUPPLY
Western World production of uranium in 1996 reached 74 million pounds
and is estimated to have increased to approximately 77 million pounds in 1997.
Production at this level would represent approximately 54% of estimated
consumption for that year. Since 1985 Western World consumption has
outstripped Western World production by over 500 million pounds. This gap has
been met through inventory drawdowns, imports of CIS uranium product and to a
lesser extent, imports from China and former East Bloc countries. Liquidation
of government stockpiles has also played a role since approximately 1995 and
could be a more significant source of supply in the future.
Inventory Drawdowns: From the early 1970's to 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 declined from highs of above $40.00 per pound to below $8.00 per pound
in 1991. As prices fell, Western World production was reduced dramatically
from a high of 115 million pounds in 1980 to a low of 57 million pounds by
1994. As production fell, consumption increased quickening the pace of
commercial inventory drawdown. Currently it is estimated that excess inventory
levels (levels in excess of preferred inventories) are less than two years of
forward reactor requirements. Preferred inventories are by nature, a function
of policy and price. In rising markets, consumers tend to build inventories as
a hedge and in falling markets, tend to reduce inventories thereby reducing
carrying costs. Both actions tend to exacerbate price movements.
CIS Imports: A rapid increase in the quantity of CIS imports
beginning in the late 1980's significantly countered the effect of inventory
drawdowns and led to the filing of an anti-dumping suit by the U.S. in late
1991. In October of 1992, suspension agreements were signed limiting CIS
access to the U.S. market via strict quotas and anti- circumvention measures.
Agreements with the primary uranium producing CIS republics remain in place
through at least 2002.
Amendment to Russian Suspension Agreement: On March 11, 1994, the
suspension agreement with Russia was amended allowing for up to 43 million
pounds of uranium to be imported into the U.S. over ten years, only if it is
matched with an equal volume of newly produced U.S. uranium. Although this
amendment may increase the supply of uranium to the U.S. market place, it has
proven to be an important program for most domestic producers.
CIS Production: Primary uranium production in Russia, Kazakhstan and
Uzbekistan, the major CIS producing republics has declined steadily. In 1993,
these republics produced a total of approximately 20 million pounds of uranium.
By 1996, production had fallen to approximately 12.5 million pounds
representing a 37% decline.
Highly Enriched Uranium: In January of 1994, the U.S. and Russia
entered into an Agreement (the "Russian HEU Agreement"), to convert highly
enriched uranium ("HEU") derived from dismantling Russian nuclear weapons into
low enriched uranium ("LEU"), suitable for use in nuclear power plants. At a
projected maximum conversion rate for HEU, approximately 24 million pounds of
uranium could be available to Western World markets on an annual basis.
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<PAGE> 13
Legislative Disposition of HEU: 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. market place at an annual rate not
to exceed 2 million pounds in 1998 increasing gradually to 20 million pounds in
2009 and thereafter. At this maximum rate, HEU material could supply
approximately 51% of annual U.S. reactor requirements projected for 2009. In
addition, HEU is allowed to be used in the U.S. as a source of Russian uranium
for matching sales without reducing maximum quotas allowed under the
legislation. This legislation also sets forth the procedures/restrictions on
sales of U.S. government stockpiles including previously purchased Russian HEU
and LEU and natural uranium inventories. The controlled disposition of these
government stockpiles is designed to mitigate any adverse impact on the domestic
uranium industry as determined by the Secretary of the United States Department
of Energy (the "DOE").
Reprocessing: Reprocessing of spent nuclear fuel meets approximately
5-7 million pounds of Western World demand each year. This activity is
primarily focused in Western Europe and Japan and it is not expected to
increase significantly in the near future.
REQUIRED PRIMARY PRODUCTION
Industry analysts expect annual Western World consumption to range
between 135 million and 150 million pounds annually for the near future. The
Company estimates that between 30 million and 40 million pounds of this demand
could be filled by a combination of government stockpiles (including converted
Russian and United States HEU and inventory sold by the DOE), and imports from
CIS republics and former East Bloc countries. To achieve market equilibrium,
primary production in the Western World will need to supply between 95 million
and 120 million pounds on an annual basis subject to adjustments for any
remaining excess inventory drawdown and limited uranium reprocessing.
Production from existing facilities in the Western World however, is projected
to decline from current levels of 77 million to approximately 57 million pounds
by 2001 as existing reserves are depleted. New production therefore will have
to be brought on line to fill the potential annual gap of between 38 million
and 63 million pounds. 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> 14
The following table shows U.S. production and Western World production
and consumption for the years presented.
PRODUCTION AND CONSUMPTION OF U3O8(1)
(Western World Countries)
(Amounts in millions of pounds of U3O8)
<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 6.3 45.5 74.0 138.7
1997 (est.) 5.8 53.1 77.0 142.1
</TABLE>
- ----------
(1) Source: Industry - various publications of Department of Energy/Energy
Information Administration ("DOE/EIA"), Trade Tech, UxCo, the Uranium Institute
and Nuclear Assurance Corporation.
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, 1998 was $10.75.
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<PAGE> 15
The following graph shows spot prices per pound from 1978 to December
31, 1997, 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 1997 its
uranium production was approximately 15% of the total U.S. production and
approximately 2% of the total Western World production.
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 3,068 gross
(3,043 net) acres located in central Kleberg County, Texas. The leases provide
for royalties based upon uranium sales. The leases have expiration dates
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<PAGE> 16
ranging from February 1998 to 2007. 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.
Reserves. As of December 31, 1997, the property contained
approximately 3.3 million pounds of in-place proven and probable uranium
reserves (estimated 2.6 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. Production at Kingsville Dome was
approximately 1.5 million pounds from recommencement of production in March
1996 through December 31, 1997 with 640,000 pounds produced in 1997.
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 1998. The Company spent approximately $9.0 million in
capital expenditures in 1997 and anticipates spending approximately $4.3
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 1998. The Company anticipates spending approximately
$430,000 in 1998 on such restoration activities.
ROSITA
The Property. The Rosita property consists of mineral leases on 3,359
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.
Reserves. As of December 31, 1997, the property contained
approximately 1.4 million pounds of in-place proven and probable uranium
reserves (estimated 900,000 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 December 31, 1997
approximately 1.3 million pounds were produced with 230,000 pounds produced in
1997.
Further Development Potential. The Company estimates that there are
approximately 900,000 pounds of uranium remaining to be produced from the
Rosita project. The Company expects its existing reserves at Rosita to
continue in production beyond 1999. The Company spent approximately $2.5
million for development activities, permitting and land holding costs in 1997
and projects expenditures of over $750,000 in 1998.
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<PAGE> 17
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.
Restoration and Reclamation. The Company expects to commence initial
groundwater restoration in early 1998 and expects to expend approximately
$100,000 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 1999, 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
which had arisen on the Vasquez property regarding a party who owns 50% of the
mineral estate has been substantially concluded and such party has disclaimed
its interest in the uranium on this property. The Company leases are with the
owner of both the surface of the land and 50% of the minerals. As a result of
these leases, the Company has the right to mine 100% of the minerals on this
property .
Reserves. As of December 31, 1997, 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 late 1998 or
early 1999. The Company spent approximately $400,000 in capital expenditures in
1997 and anticipates spending approximately $440,000 in 1998 for permitting,
development and land holding costs. The Company anticipates having to
demonstrate financial surety in connection with the commencement of production
at this project 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 and the TDH. These applications are
currently under review and the Company expects the permits to be in place in
1998.
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 annual royalties if production
does not begin by certain specified times. The Company made such a payment in
1997. 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, 1997, 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 anticipated to begin in the fourth
quarter of 1998 depending on the progress in licensing and permitting. The
Company spent approximately $515,000 in 1997 for permitting and land holding
costs and anticipates spending approximately $680,000 in 1998 for plant
construction, permitting and development costs. The
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<PAGE> 18
Company anticipates having to demonstrate financial surety in connection with
these activities 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 the
latter part of 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, in March 1997, the Company acquired 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.
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, the
availability of sales contracts and the availability of capital. The Company
plans to develop the Churchrock district first and the Crownpoint district
next.
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 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 NRC issued an operating license in January 1998
which would allow operations to begin in the Churchrock district, however, the
effective date of the license has been temporarily stayed pending a decision by
the NRC. As a result of the current stay in place, there can be no assurance
that the license will be maintained in its current form allowing the Company to
proceed with its planned operations or that the NRC process will be concluded
on a timely basis.
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.
In addition to the EPA's assertions, the Navajo Nation claims
regulatory jurisdiction over a significant portion of the Company's New Mexico
development properties. These claims subject the development of those
properties within the area claimed as "Indian country" to further
uncertainties, including a potential for delays in UIC permitting. For certain
properties not permitted by the EPA at the time a Navajo regulatory program is
promulgated and accepted by the EPA for a determination of primacy,
15
<PAGE> 19
the Company would then apply to the Navajo EPA for its UIC permits. 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.
In February 1998, the United States Supreme Court in Alaska v. Native
Village of Venetie Tribal Government interpreted the terms "Indian country" and
"dependent Indian Communities". Such interpretation stated that "Indian
country" includes "all dependent Indian communities within the United States"
and that such lands refer to a specific category of Indian lands that are not
reservation nor allotted lands. Such lands must meet the following two
criteria; (i) they must have been set aside by the Federal Government for the
use of Indians as Indian land; and (ii) they must be under federal
superintendence. On the basis of this ruling the Company believes that its
private fee lands and federal claims positions in New Mexico may fall under the
jurisdiction of the State of New Mexico for regulatory purposes.
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 the mineral estate in fee for both Sections 17
and the Mancos properties. The surface estate on Section 17 is owned by the
U.S. Government and held in trust for 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 to remain in full force and effect and are subject to certain
overrides. On March 25, 1997, the Company acquired from Santa Fe, the fee
mineral interests in Section 17 and Mancos thereby acquiring the position owned
by the lessor and extinguished certain of the royalty obligations on those
properties.
Reserves. As of December 31, 1997, 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 approximately $1.0 million in 1997. The
Company anticipates spending approximately $320,000 in 1998 for permitting and
land holding costs. The Company anticipates having to demonstrate financial
surety in connection with production activities 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
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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 reapplied and
revised its water budget to be consistent with the rights of UNC as determined
by the State Engineer. The State Engineer is currently conducting a hearing
regarding the application for the transfer of the water rights. A claim by the
Navajo Nation to jurisdiction over these water rights was denied by the State
Engineer's hearing officer and in the prior proceeding, the state district
court. These decisions do not preclude a contrary claim from being made in
another proceeding.
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 Navajo Nation has asserted jurisdiction over Section 8 as being a
"dependent Indian community". The EPA has informed the Company that the
regulatory jurisdiction of the property is considered to be in "dispute" and
would require an EPA-issued permit prior to the commencement of mining. The
Company does not plan to pursue permits for Mancos at this time.
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. 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." While the EPA has not yet
taken a final position on this issue, they have determined that a dispute does
exist between the NMED and the Navajo tribe. As a result of this dispute, the
EPA has indicated that an EPA permit will be required on this property. 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. The State of New Mexico has filed 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 unpatented mining claims. This acreage is subject to an
obligation of the
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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
license. 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, 1997, 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 license conditions issued by the NRC. Under the license, the
first operating property will be Churchrock followed by Unit 1 and Crownpoint.
Costs relating to permitting activities and land holding costs for Crownpoint
were $1,153,000 in 1997, and are expected to total $210,000 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 may likely involve the claim 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.
Permitting Status. The NRC license is part of the overall development
plan for both the Churchrock and Crownpoint districts discussed above. 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 U.S. Government and held in trust
for the Navajo Nation and may be subject to the same jurisdictional dispute as
for Section 17 in Churchrock.
SANTA FE PROPERTIES
GENERAL
In March 1997 the Company acquired from Santa Fe certain uranium
mineral interests and exploration rights for uranium in New Mexico.
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 and other minerals
excluding coal (the "Category III Properties").
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The Company is obligated to spend on exploration $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 integrate
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 deposits are not delineated,
development costs are uncertain.
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
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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, 1997 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
$3.3 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, 1997
approximates $4.7 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 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 will be subject to annual
review and revision by the NRC and State of New Mexico.
ITEM 3. LEGAL PROCEEDINGS
LONGORIA
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 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 has been completed and the Company has made
application to the TDH for final release of its obligations on the property and
anticipates to receive such release in early 1998.
The suit is pending at March 31, 1998 and the Company does not believe
the conclusion of this lawsuit will have a material operating or financial
impact on the Company.
PROBANK
On July 12, 1995, the Company filed a lawsuit in the federal district
court in Colorado against Professional Bank, a Colorado chartered bank
("ProBank"). In the action styled Uranium Resources, Inc. v. Professional Bank,
the Company alleged 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 Oren L.
Benton. The Company recovered $300,000 of the total in 1995 and recovered
$575,000 from ProBank in June 1997 in settlement of the action against ProBank.
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BENTON BANKRUPTCY
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"). On February 19, 1998, David J.
Beckman, as Liquidating Trustee for the CSI Liquidating Trust and the NTC
Liquidating Trust commenced an action against the Company in the United States
Bankruptcy Court for the District of Colorado seeking to recover certain
transfers made from CSI Enterprises, Inc. ("CSI") and Nuexco Trading
Corporation ("NTC") to the Company. The Adversary Proceeding is styled David
J. Beckman v. Uranium Resources, Inc., Adversary Proceeding No. 98- 1131 SBB
("Adversary Proceeding"). Specifically, the Liquidating Trustee seeks to
recover (a) $1,400,000 paid by NTC to the Company on or about November 7, 1994
and (b) transfers by CSI to the Company of $80,000 (12/2/94), $40,000
(12/9/94), $45,000 (12/16/94), $36,150 (2/10/95) and $1,900 (2/14/95). The
Liquidating Trustee seeks to recover these amounts pursuant to 11 U.S.C.
Section 547, 11 U.S.C. Section 544(b), 11 U.S.C. Section 550 and state law.
The Company has not yet responded to the Adversary Proceeding. The Company
intends to vigorously defend this action. The Company is unable to assess what
adverse consequences, if any, might result from such assertion.
The Company has asserted certain 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 1997 Annual Meeting of Stockholders was held on May 1, 1997, in
Dallas, Texas. Shares representing 9,303,484 votes (86% 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
ratified Arthur Andersen LLP as independent accountants for the Company in
1997. The ratification of Arthur Andersen LLP as independent accountants was
approved by a vote of 9,276,570 shares in favor, 2,216 opposed and 24,788
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 its 1998 capital requirements from cash
flow from operations and existing working capital financing arrangements.
However, certain capital requirements for new development projects in 1998 and
beyond may 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 regulations 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 materially 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 $4.7 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
totaling approximately $5.6 million at December 31, 1997, $3.3 million 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 financial 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 decline 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 at the Company's currently producing sites are
expected to be depleted in 1999,
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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 United States 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 producing 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 demonstrated a large range 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, 1998 was $10.75 per pound. The current spot prices of uranium are at
levels which would allow for sales contracts that are priced above the
Company's cash cost of uranium production, allowing the Company to achieve a
positive cash flow of operations. The Company's cash flow from operations for
the year ended December 31, 1997 was $4,931,000. There is no assurance that
such price level will remain at this level.
URANIUM CONTRACTS PROFITABILITY
As of December 31, 1997, the Company had contracts for delivery of an
estimated 3.9 million pounds of uranium (exclusive of 90,000 pounds of Russian
uranium sales made pursuant to the matched sales program) to domestic utilities
from January 1, 1998 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 utilities that operate nuclear power plants.
The United States is the world's largest producer of nuclear-generated
electricity. As of November 1997, there
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were 106 nuclear units in the United States. Currently, there are no new
nuclear power plants under construction in the U.S. As of November 1997, there
were 364 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, 1998 through December 31, 2002 are represented by nine
long-term contracts with eight different customers, three of which represented
18%, 15% and 13% of sales for the year ended December 31, 1997; 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 U3 O8.
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.
26
<PAGE> 30
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.
27
<PAGE> 31
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.
28
<PAGE> 32
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, 1997 7-1/8 2-1/2
September 30, 1997 7 3-7/8
June 30, 1997 6-3/8 4-3/4
March 31, 1997 8 5
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
</TABLE>
The high and low sales prices for the common stock for the period
January 1, 1998 through March 24, 1998, was $4.375 and $2.125, respectively.
HOLDERS
As of March 24, 1998, the Company had 12,053,027 shares of Common
Stock outstanding held of record by 114 persons.
DIVIDENDS
The Company did not declare or pay any cash or other dividends on its
Common Stock during the years ending December 31, 1995, 1996 or 1997. The
Company does not anticipate paying dividends for the foreseeable future.
29
<PAGE> 33
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
(In thousands, except per share and per pound amounts)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA
Uranium sales:
Produced uranium $ 14,738 $ 17,827 $ 7,195 $ 959 $ 1,341
Purchased uranium 15,003 6,437 14,634 16,375 11,881
Cost of uranium sales (29,269) (20,122) (17,235) (13,466) (10,216)
Writedown of uranium properties -- -- (163) -- (1,945)
---------- ---------- ---------- ---------- ----------
Earnings (loss) from operations
Before corporate expenses 471 4,142 4,431 3,868 1,061
Corporate expenses (2,937) (3,055) (3,496) (2,177) (1,903)
---------- ---------- ---------- ---------- ----------
Earnings (loss) from operations (2,466) 1,087 935 1,691 (842)
Interest and other, net (868) (328) (324) 163 387
Loss on acceleration of uranium contract -- -- -- (349) --
Loss on termination of joint venture
and transfer to stockholders -- -- (1,781) -- --
---------- ---------- ---------- ---------- ----------
Earnings (loss) before income taxes (1,598) 759 1,170 1,505 (455)
Federal income tax (benefit) (273) -- (234) 300 (107)
---------- ---------- ---------- ---------- ----------
Net earnings (loss) $ (1,325) $ 759 $ (936) $ 1,205 $ (348)
========== ========== ========== ========== ==========
Earnings (loss) per common share:
Basic $ (0.11) $ 0.09 $ (0.12) $ 0.17 $ (0.05)
========== ========== ========== ========== ==========
Diluted $ (0.11) $ 0.08 $ (0.12) $ 0.17 $ (0.05)
========== ========== ========== ========== ==========
Weighted average common stock
And equivalents outstanding:
Basic 11,760 8,789 8,098 6,929 6,640
Diluted 11,760 10,031 8,098 7,193 6,640
CONSOLIDATED OPERATING AND OTHER DATA
Cash provided by operations $ 4,931 $ 9,294 $ 5,301 $ 5,080 $ 6,283
Pounds of uranium produced 871 1,360 612 -- --
Pounds of uranium purchased 1,275 488 660 1,329 510
Pounds of uranium delivered 2,240 1,656 1,633 1,081 753
Capital expenditures $ 14,901 $ 14,607 $ 3,583 $ 3,183 $ 3,101
Average sales price per pound(1) $ 13.71 $ 16.35 $ 15.64 $ 16.03 $ 17.56
Average cost of produced
pounds sold (2) $ 15.61 $ 11.34 $ 10.28 $ 13.60 $ 12.96
Average cost of purchased
pounds sold $ 10.40 $ 10.21 $ 9.41 $ 10.68 $ 10.88
Cash cost per produced pound(3) $ 12.17 $ 8.51 $ 7.11 N/A N/A
Average cost per produced
pound(2) $ 15.85 $ 12.12 $ 10.09 N/A N/A
Average cost per purchased
pound $ 10.40 $ 10.21 $ 9.52 $ 10.07 $ 11.24
</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.
30
<PAGE> 34
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
(In thousands)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA
Cash and cash equivalents $ 2,325 $ 16,934 $ 4,716 $ 2,528 $ 2,530
Working capital (deficit) 5,999 15,269 4,710 (2,545) (2,777)
Uranium properties (net) 61,303 42,444 37,200 37,230 34,420
Total assets 74,864 68,794 48,085 44,850 40,846
Total debt (1) 8,419 12,577 7,487 9,227 11,286
Total liabilities 22,959 23,497 18,214 16,632 20,563
Total shareholders' equity 51,905 45,297 29,872 28,218 20,283
</TABLE>
(1) Includes current portion of long-term debt and notes payable.
31
<PAGE> 35
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 22.
CAPITAL RESOURCES AND LIQUIDITY
Operating Cash Flows
At December 31, 1997, the Company's cash and cash equivalents were
$2,325,000 compared to $16,934,000 at year end 1996. Cash and cash equivalents
in 1996 increased by $12,218,000 from 1995 year end levels. The Company's
uranium operations generated positive cash flow of $4,931,000 for the year
ended December 31, 1997, in comparison to positive cash flow from operations in
1996 and 1995 of $9,294,000 and $5,301,000, respectively. The Company's net
working capital at December 31, 1997 and 1996 was $5,999,000 and $15,269,000,
respectively.
In March 1998, the Company entered into an agreement to extend the
maturity date of its $6,000,000 secured convertible note from May 31, 1998 to
May 31, 2000. As a result of this two year extension, the Company reclassified
this obligation as a long-term obligation and had a positive impact of
$6,000,000 to its net working capital at December 31, 1997. The note is
convertible into shares of the Company's common stock. In return for the
extension in the maturity of the note, the conversion price was adjusted from
$4.00 per share to $3.00. The exercise price of certain outstanding warrants
held by the noteholder to purchase 1,000,000 shares of the Company's common
stock was also adjusted from $4.00 per share to $3.00 per share, and the
expiration date of the warrants was extended by two years, to May 31, 2000.
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. The Company has recovered $875,000
related to the unauthorized transfer ($300,000 in 1995 and $575,000 in 1997);
however, the remaining $1.2 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 of $1.78 million was recorded in 1995 and the
recovery of $575,000 in 1997 resulted in an increase to other income in the
second quarter of this year.
32
<PAGE> 36
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 and 1997, $2,002,000 and $2,450,000 in capital expenditures were incurred
at Rosita, respectively. Capital expenditures to be incurred for 1998 at
Rosita, primarily for satellite plant and additional wellfield development, are
expected to be approximately $763,000. 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 and 1997 totaled $6,695,000 and $8,998,000,
respectively and are expected to be $4,280,000 in 1998. The Company expects to
fund its 1998 operations and capital expenditures at its Kingsville Dome and
Rosita projects from cash on hand, sales proceeds under 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 activities and
land holding costs have totaled approximately $400,000 and $515,000,
respectively in 1996 and 1997. Capital expenditures for permitting, plant
construction and wellfield development are expected to be $680,000 in 1998.
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 to commence in late 1998 with an annual capacity of 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
below $10.00 per pound.
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 and $2,900,000 in 1996 and 1997, respectively and are expected to be
$1,200,000 in 1998. 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.
Cash used for other investing activities for 1996 and 1997 totaled
$2,070,000 and $524,000, respectively and was for 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 one-year $3.0 million
revolving credit facility. This facility was renewed and expanded to a $5.0
million credit facility which concludes July, 1999. This agreement is secured
by the Company's uranium inventory and/or by receivables from its uranium sales
33
<PAGE> 37
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 the facility amounted to $1,950,000 in 1997.
In June 1996, the Company received $4.0 million in proceeds from the
one-year note entered into with the Lindner Dividend Fund, noted previously.
The terms of the note provided for the payment of both the principal and
accrued interest by June 1997 with interest on the note accruing at a rate of
6.5% per annum. The 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 was 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 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.
34
<PAGE> 38
Years Ended December 31, 1997, 1996 and 1995
The following is a summary of the key operational and financial
statistics related to the Results of Operations:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
(In thousands, except per pound data)
<S> <C> <C> <C>
Uranium sales revenue (1) $ 29,741 $ 24,264 $ 21,829
Total pounds delivered 2,240 1,656 1,633
Average sales price/pound(2) $ 13.71 $ 16.35 $ 15.64
Pounds produced 871 1,360 612
Pounds purchased 1,275 488 660
Average production cost of produced pounds $ 15.85 $ 12.12 $ 10.09
Average cost of purchased pounds $ 10.40 $ 10.21 $ 9.52
Average cost of produced pounds sold $ 15.61 $ 11.34 $ 10.28
Average cost of purchased pounds sold $ 10.40 $ 10.21 $ 9.41
</TABLE>
(1) 1997, 1996 and 1995 uranium sales revenues include approximately $2.8
million, $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 1997 increased by $5,477,000 from 1996
amounts. This increase resulted primarily from higher uranium deliveries this
year compared to 1996. Deliveries were comprised of produced pounds, purchased
uranium sold into existing contracts and purchased uranium whose economic
benefit is essentially treated as a "pass through" sale (this includes the
delivery of Russian origin uranium under the Company's matched sales
contracts). The quantity of the pass through sales increased from 390,000
pounds in 1996 to 685,000 pounds in 1997 and while such sales have a positive
impact on revenues they have virtually no impact on earnings from operations or
net income.
The deliveries of the Company's produced pounds and non-pass through
purchased pounds in 1996 was approximately 1,266,000 pounds compared to
1,555,000 in 1997. The average sales price for such sales in 1996 was $16.35
per pound compared to $14.68 in 1997. The deliveries in 1996 included 250,000
pounds of spot sales made pursuant to matched sale agreements, the average
price for these deliveries was $17.95 per pound. No spot sales under the
matched sales agreements were made in 1997. The average sales price for total
uranium deliveries (including Russian origin uranium) in 1997 and 1996 was
$13.28 per pound and $14.65 per pound, respectively.
Revenue from uranium sales in 1995 was $21,829,000 on deliveries of
1,633,000 pounds. Sales made in 1995 under the matched sales agreements 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 at an average sales price of $17.50
per pound. The deliveries in 1995 also included 137,000 pounds sold in the
spot market.
35
<PAGE> 39
Details of the cost of uranium sales were as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
(In thousands)
<S> <C> <C> <C>
Cost of purchased uranium $13,258 $ 4,979 $10,315
Royalties 834 1,198 432
Operating expenses 6,564 4,866 2,738
Provision for restoration and reclamation costs 1,032 1,480 597
Depreciation and depletion of uranium properties 7,581 7,599 3,154
Writedown of uranium properties -- -- 163
------- ------- -------
Total cost of uranium sales $29,269 $20,122 $17,399
======= ======= =======
</TABLE>
The Company produced approximately 871,000 pounds from its two South
Texas facilities in 1997. During the first half of 1997, the Company
experienced certain severe production challenges resulting from operating
inefficiencies and operating techniques in dealing with the subsurface
geochemical conditions at Kingsville Dome and Rosita. As a result, the
Company's 1997 production fell compared to the 1,360,000 pounds produced in
1996.
Starting in the second quarter of 1997, a number of organizational and
operating changes, including plant design modifications, were implemented to
address specific production inefficiencies. The main operating changes related
to the water quality of the mine areas under wellfield at each site. Certain
redesign of the plants and wellfield patterns were performed to mitigate the
effects of continuously recycled ground water utilized in the production
process by minimizing the amount of mine water that previously was used in
multiple wellfields. By focusing on mining each wellfield with its own native
groundwater, the efficiency of the mining process is increased. This change in
methodology required a brief shut-down during the year at the Kingsville Dome
plant to allow for a re-piping of the facility. This change in technique is
expected to permit future mining from this and future sites to utilize less
capital intensive remote ion exchange facilities to mine new wellfields at
Kingsville Dome and Rosita and at the Alta Mesa and Vasquez projects once their
production begins. The utilization of these modified techniques is projected
to reduce capital requirements for new projects such as Alta Mesa and Vasquez
by approximately $4.0 million at each project. The change to the remote ion
exchange methods is also projected to lower operating costs for mining new
wellfields located farther away from the main plant at each location. The
results from these changes were first demonstrated in the operations results
achieved in the fourth quarter of 1997. The fourth quarter saw increases in
average monthly production from approximately 55,000 pounds in the third
quarter to nearly 95,000 pounds per month in the fourth quarter. With this
increase in production, the average per pound production cost fell from $16.65
in the third quarter to $14.55 in the fourth quarter.
Production from Rosita totaled 230,000 pounds in 1997 compared to
500,000 pounds in 1996. The Company will continue production at Rosita in its
current mine areas, such areas are expected to contain the majority of the
remaining uranium reserves at this site with projected production from this
area continuing beyond 1999.
The Company expects that as production options in new wellfields at
Rosita become limited, that the latter stages of production 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.
36
<PAGE> 40
Kingsville Dome production for 1997 of 640,000 pounds as compared to
860,000 pounds in 1996. The Company is continuing to develop and produce from
this facility and in January 1998 received authorization to begin production at
its next production area ("PAA #3"). Wellfield drilling and development in PAA
#3 is underway and production is expected from these wellfields by mid-1998.
The average cost of uranium purchases made in 1997 was $10.40 per
pound compared to $10.21 in 1996. Total deliveries in 1997 consisted of
1,275,400 purchased pounds, at an average cost per pound of $10.40, and 965,000
produced pounds at $15.61 per pound. During 1996, the Company delivered
487,500 purchased pounds at an average cost per pound of $10.21 and 1,168,000
pounds of produced uranium at an average cost of $11.34 per pound.
Operating expenses totaled $6,564,000 ($6.80 per pound) in 1997
compared to $4,866,000 ($4.92 per pound) for produced pounds that were sold in
1996. Total operating expenses and depreciation and depletion include standby
costs for the Kingsville Dome and Rosita facilities when these facilities are
not in production. These costs have been recorded as direct charges to
operations. Standby costs for 1996 and 1995 were $313,000 and $875,000,
respectively.
The provision for restoration and reclamation in 1997 consists of
$910,000 ($0.95 per pound) for production sold in 1997 and $120,000 for costs
associated with reclamation activities related to the Benavides project (a
previous mining location). 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. 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 depreciation and depletion provision in 1997 consisted of
$7,580,000 (an average rate of $7.86 per pound). 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.
Royalties in 1997 totaled $834,000 compared to $1,198,000 in 1996 and
$432,000 in 1995. The decrease in 1997 is directly attributable to the lower
production from Rosita and Kingsville Dome and the corresponding reduction in
sales of produced uranium compared to 1996. Similarly, the increase in 1996
over 1995 amounts resulted from the startup of Kingsville Dome production in
1996 and the increased sales of produced uranium compared to 1995 deliveries.
Corporate expenses consisting of general and administrative ("G&A")
expenses decreased to $2,914,000 in 1997 from $3,055,000 in 1996. This
decrease resulted primarily from legal and accounting fees and other expenses
incurred in 1996 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. Corporate expenses decreased
to $3,055,000 in 1996 from $3,496,000 in 1995. This decrease resulted from a
reduction of activities related to the Benton Companies transactions in 1996
and the costs associated with the issuance of the Lindner Notes incurred in
1995.
Interest and other income increased by $754,000 in 1997 compared to
1996. This increase resulted primarily from the settlement in June 1997 of the
Company's lawsuit against the Professional Bank of Denver, Colorado ($575,000)
and an increase in interest income for the current year. The higher interest
income resulted from higher average available cash and investment balances that
were generated from the Company's equity placement in December 1996. Interest
and other income in 1996 increased to $282,000 from $201,000 in 1995 primarily
resulting from uranium drying services provided during 1996.
37
<PAGE> 41
Total interest costs for 1997, net of capitalized amounts decreased
from 1996. This decrease resulted from the repayment in January 1997 of the
additional $4.0 million borrowed in June 1996 to finance the purchase of the
Alta Mesa property ($134,000 reduction in interest cost). Interest cost in
1997 increased as a result of the Company entering into a financial surety
agreement with USF&G for the issuance of surety bonds related to the Company's
reclamation and restoration commitments at its current and prior mine locations
(increase of $85,000). Net interest cost in 1997 also decreased compared to
1996 because of higher capitalized interest during the current year
(approximately $367,000). The increase in permitting and development
activities in New Mexico and Texas properties required the additional
capitalization of interest related to these projects. Total interest costs for
1996 including capitalized amounts increased from the prior year primarily
because of the $4.0 million borrowings received in June 1996 and from advances
received under the Company's credit facility with NationsBank which commenced
May 1996.
The Company currently utilizes computer software in the management of
its operations and in accounting for its operating results that could be
affected by the date change in the year 2000. All critical software utilized
by the Company has been purchased from and is supported by third party vendors.
The Company has conducted a review of the potential impact of the year 2000,
and believes that it will not encounter significant operational or financial
costs related to compliance with this issue.
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.
38
<PAGE> 42
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, 1997.
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
None.
39
<PAGE> 43
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, 1998
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.
<TABLE>
<CAPTION>
Signature Date
- --------- ----
<S> <C>
/s/ Paul K. Willmott March 27, 1998
- ---------------------------------------------------
Paul K. Willmott,
Director, President and Chief Executive Officer
/s/ Thomas H. Ehrlich March 27, 1998
- ---------------------------------------------------
Thomas H. Ehrlich,
Vice President - Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
/s/ Leland O. Erdahl March 27, 1998
- ---------------------------------------------------
Leland O. Erdahl, Director
/s/ George R. Ireland March 27, 1998
- ---------------------------------------------------
George R. Ireland, Director
/s/ James B. Tompkins March 27, 1998
- ---------------------------------------------------
James B. Tompkins, Director
</TABLE>
40
<PAGE> 44
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 Shareholders' 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, 1997, 1996 and 1995
II - Valuation and qualifying accounts and reserves . . F-22
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> 45
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,
1997 and 1996, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 1997. 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, 1997 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1997, 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 23, 1998 (except with respect to the matters discussed in Note 5
and Note 7 as to which the date is March 23, 1998)
F-2
<PAGE> 46
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,325,158 $ 16,934,276
Short-term investment:
Certificate of deposit, restricted 3,304,195 2,779,840
Receivables, net 4,507,090 1,829,539
Uranium inventory 2,260,200 3,575,285
Materials and supplies inventory 91,047 88,483
Prepaid and other current assets 253,910 239,435
------------ ------------
Total current assets 12,741,600 25,446,858
------------ ------------
Property, plant and equipment, at cost:
Uranium properties 97,100,015 71,364,561
Other property, plant and equipment 580,676 546,985
Less-accumulated depreciation and depletion (36,235,274) (29,335,818)
------------ ------------
Net property, plant and equipment 61,445,417 42,575,728
Other assets 676,952 771,084
------------ ------------
$ 74,863,969 $ 68,793,670
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part
of these consolidated statements.
F-3
<PAGE> 47
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 3,233,277 $ 2,201,145
Notes payable 1,950,000 5,440,000
Accrued interest payable 5,035 185,186
Current portion of long-term debt 7,000 730,074
Royalties payable 630,284 746,113
Current portion of restoration reserve 511,000 368,000
Other accrued liabilities 405,814 507,117
------------ ------------
Total current liabilities 6,742,410 10,177,635
------------ ------------
Other long-term liabilities and deferred credits 4,787,427 4,279,289
Long-term debt, less current portion 6,462,343 6,407,054
Deferred federal income taxes 4,967,000 2,633,000
Shareholders' equity:
Common stock, $.001 par value, shares authorized:
25,000,000 shares issued and outstanding
(net of treasury shares): 1997 - 12,053,027;
1996 - 10,813,027 12,205 10,966
Paid-in capital 40,222,359 32,290,630
Retained earnings 11,679,643 13,004,514
Less: Treasury stock (152,500 shares), at cost (9,418) (9,418)
------------ ------------
Total shareholders' equity 51,904,789 45,296,692
------------ ------------
$ 74,863,969 $ 68,793,670
============ ============
</TABLE>
The accompanying notes to financial statements are an integral part
of these consolidated statements.
F-4
<PAGE> 48
URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Revenues:
Uranium sales -
Produced uranium $ 14,737,579 $ 17,827,204 $ 7,194,655
Purchased uranium 15,002,838 6,437,105 14,634,591
------------ ------------ ------------
Uranium sales 29,740,417 24,264,309 21,829,246
Costs and expenses:
Cost of uranium sales -
Direct cost of purchased uranium 13,257,989 4,979,407 10,314,611
Royalties 833,534 1,197,890 432,050
Operating expenses 6,564,363 4,866,436 2,738,420
Provision for restoration and reclamation costs 1,032,587 1,479,939 596,482
Depreciation and depletion 7,580,809 7,599,047 3,153,793
Writedown of uranium properties and
other uranium assets -- -- 163,145
------------ ------------ ------------
Total cost of uranium sales 29,269,282 20,122,719 17,398,501
------------ ------------ ------------
Earnings from operations before corporate expenses 471,135 4,141,590 4,430,745
Corporate expenses -
General and administrative 2,913,776 3,033,819 3,467,639
Depreciation 22,956 20,875 28,235
------------ ------------ ------------
Total corporate expenses 2,936,732 3,054,694 3,495,874
------------ ------------ ------------
Earnings (loss) from operations (2,465,597) 1,086,896 934,871
Other income (expense):
Interest expense, net of capitalized interest (168,789) (610,403) (525,369)
Interest and other income, net 1,036,290 282,370 201,263
Loss on termination of joint venture -- -- (1,000,953)
Loss on transfer to stockholder -- -- (780,000)
------------ ------------ ------------
Earnings (loss) before federal income taxes (1,598,096) 758,863 (1,170,188)
Federal income tax provision (benefit):
Current 44,775 25,000 18,000
Deferred (318,000) (25,000) (252,000)
------------ ------------ ------------
Net earnings (loss) $ (1,324,871) $ 758,863 $ (936,188)
============ ============ ============
Net earnings (loss) per common share:
Basic $ (0.11) $ 0.09 $ (0.12)
============ ============ ============
Diluted $ (0.11) $ 0.08 $ (0.12)
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part
of these consolidated statements.
F-5
<PAGE> 49
URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
----------------------------- Paid-In Retained Treasury
Shares Amount Capital Earnings Stock
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Balances, December 31, 1994 7,954,683 $ 8,142 $ 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 $ 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 $ 32,290,630 $ 13,004,514 $ (9,418)
Net loss -- -- -- (1,324,871) --
Common stock issuance 1,200,000 1,200 7,798,800 -- --
Common stock issuance for
employee stock option plans 25,500 25 74,944 -- --
Common stock issuance
for stock warrants 14,500 14 57,985 -- --
------------ ------------ ------------ ------------ ------------
Balances, December 31, 1997 12,053,027 $ 12,205 $ 40,222,359 $ 11,679,643 $ (9,418)
============ ============ ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part
of these consolidated statements.
F-6
<PAGE> 50
URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from operations:
Net earnings (loss) $ (1,324,871) $ 758,863 $ (936,188)
Reconciliation of net income to cash provided by operations-
Provision for restoration and reclamation costs 1,032,587 1,479,939 596,482
Depreciation and depletion 7,603,765 7,619,922 3,182,028
Writedown of uranium properties and other assets -- -- 163,145
Provision (credit) for deferred income taxes (318,000) (25,000) (252,000)
Decrease in restoration and reclamation accrual (317,270) (513,975) (104,108)
Other non-cash items, net 205,169 274,243 401,711
------------ ------------ ------------
Cash flow provided by operations, before changes in
operating working capital items 6,881,380 9,593,992 3,051,070
Effect of changes in operating working capital items-
(Increase) decrease in receivables (2,677,551) 2,175,652 (3,952,451)
(Increase) decrease in inventories 496,100 (1,000,793) 3,761,066
Increase in prepaid and other current assets (446,910) (367,894) (238,201)
Increase (decrease) in payables and accrued liabilities 677,795 (1,107,157) 2,679,313
------------ ------------ ------------
Net cash provided by operations 4,930,814 9,293,800 5,300,797
Investing activities:
Increase in investments (524,355) (2,067,746) (149,883)
Additions to property, plant and equipment -
Kingsville Dome (8,998,305) (6,695,472) (560,772)
Rosita (2,450,105) (2,001,722) (2,108,508)
Alta Mesa (514,503) (4,403,070) --
Churchrock (1,013,257) (596,725) (477,686)
Crownpoint (1,152,783) (709,590) (291,394)
Other property (771,571) (200,457) (144,833)
Increase in other assets (25,487) (156,593) (99,218)
------------ ------------ ------------
Net cash used in investing activities (15,450,366) (16,831,375) (3,832,294)
Financing activities:
Proceeds from borrowings 3,500,000 10,869,000 6,135,000
Payments and refinancings of principal (7,722,535) (5,779,379) (7,874,225)
Issuance of common stock and warrants, net 132,969 14,666,288 2,459,064
------------ ------------ ------------
Net cash provided by (used in) financing activities (4,089,566) 19,755,909 719,839
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents (14,609,118) 12,218,334 2,188,342
Cash and cash equivalents, beginning of period 16,934,276 4,715,942 2,527,600
------------ ------------ ------------
Cash and cash equivalents, end of period $ 2,325,158 $ 16,934,276 $ 4,715,942
============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part
of these consolidated statements.
F-7
<PAGE> 51
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
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, 1997.
INVENTORIES
Uranium inventory consists of uranium concentrates (U3O8) 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 1997, 1996 and 1995 were $120,000, $116,000 and
$4,000, respectively.
F-8
<PAGE> 52
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
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,
1997, 1996 and 1995 amounted to $378,000, $11,000 and $11,000, respectively.
Total interest costs in these periods were $547,000, $621,000 and $536,000,
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
Effective with the year ended December 31, 1997, the Company adopted
Statement of Financial Accounting Standards No. 128 ("FAS 128"), "Earnings per
Share", which sets standards for the calculation and presentations of earnings
per share. FAS 128 supercedes APB Opinion No.15, Earnings per Share. Net
earnings (loss) per common share - basic has been calculated based on the
weighted average shares outstanding during the year and net earnings (loss) per
common share - diluted has been calculated assuming the exercise or conversion
of all dilutive securities on January 1 of each year presented or as of the
date of issuance if later.
F-9
<PAGE> 53
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
The weighted average number of shares used to calculate basic earnings
per share were 11,760,000, 8,789,000 and 8,098,000 in 1997, 1996 and 1995,
respectively. The weighted average number of shares used to calculate diluted
earnings per share were 11,760,000, 10,031,000 and 8,098,000 in 1997, 1996 and
1995, respectively. The potential common stock that was excluded from the
calculation of diluted earnings per share were 2,413,977, 46,000 and 1,321,940
in 1997, 1996 and 1995, respectively.
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,
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Cash paid during the period for:
Interest $687,000 $501,000 $524,000
</TABLE>
The change in inventories in the Consolidated Statements of Cash Flows
during 1997, 1996 and 1995 excludes the changes in uranium inventories for
non-cash capitalized restoration and depreciation and depletion provisions.
Such increases (decreases) totaled $(816,000), $1,923,000 and $391,000,
respectively.
Certain additional non-cash transactions occurred in 1997 and 1995,
and such major transactions are summarized as follows:
In March 1997, 1,200,000 common shares were issued to Santa Fe
Pacific Gold in exchange for certain uranium mineral interests and
exploration rights covering approximately 523,000 acres in New
Mexico. $7,800,000
In May 1995, 35,000 treasury shares were issued to financial
advisors in connection with the Lindner Note (Note 5). $ 130,200
RESTRICTED CASH
At December 31, 1997, 1996 and 1995, the Company had pledged a
certificate of deposit of $3,304,000, $2,780,000 and $713,000, 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.
F-10
<PAGE> 54
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
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.
RISKS AND UNCERTAINTIES
Historically, the market for uranium has experienced significant price
fluctuations. Prices are significantly impacted by global supply and demand
which is affected by the demand for nuclear power, political and economic
conditions, governmental legislation in uranium producing and consuming
countries, and production levels and costs of production of other producing
companies. Increases or decreases in prices received could have a significant
impact on the Company's future results of operations.
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.
Production in 1997 totaled 640,000 pounds at an average cost of approximately
$15.47 per pound.
Cost of uranium sales in 1996, and 1995 in the Consolidated Statements
of Operations includes $293,000 and $512,000, respectively of costs incurred to
maintain the facility while Kingsville Dome was on standby and not in
production. At December 31, 1997 the property contained approximately 2.6
million pounds of estimated recoverable proved and probable reserves and the
net carrying value of the property was approximately $19,098,000.
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. Production in 1997 totaled
230,000 pounds at an average cost of approximately $16.92 per pound.
Cost of uranium sales at December 31, 1995 in the Consolidated
Statements of Operations includes $246,000 of Rosita standby costs. At
December 31, 1997, the property contained approximately 900,000 pounds of
estimated recoverable proved and probable uranium reserves and the net carrying
value of the property at December 31, 1997 was approximately $7,443,000.
F-11
<PAGE> 55
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
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, 1997 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, 1997 was approximately $4,918,000.
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, 1997
was approximately $7,914,000.
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, 1997, 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,
1997 was approximately $8,317,000.
SANTA FE PROPERTIES
In March 1997 the Company acquired from Santa Fe certain uranium
mineral interests and exploration rights for uranium in New Mexico. 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").
F-12
<PAGE> 56
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
The Company is obligated to spend on exploration $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 net carrying value of the property
at December 31, 1997 was approximately $11,038,000.
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.
PROPERTY REALIZABILITY
The Company's ability to recover its investment in its uranium
properties is dependent upon a number of factors, including, the sales price of
uranium, the Company's ability to deliver profitable uranium production to its
existing and future sales contracts and the Company's ability to access the
financing/capital that may be necessary to develop and produce future projects.
As discussed in Note 1, the market price of uranium has been volatile in recent
years and there can be no assurance that the Company can continue to enter into
new sales contracts at prices that are above the Company's existing or future
production costs or that it will be able to recover its investment in its
uranium properties.
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 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 Russian origin uranium are
not expected to have a significant impact on the future profitability of the
Company's operations but they are an important aspect of the Company's ability
to sell its uranium at prices that exceed market. Total future sales of
uranium concentrates (excluding the Russian component of sales made under the
Amendment) of approximately 3,882,000 pounds represent future revenues of
approximately $54,542,000 over the various contract periods from January 1,
1998 through 2002. The average current price of such future contracted
deliveries, with escalation calculated through December 31, 1997, is $14.05.
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, 1997 were from
sales to nine customers, four of which represented more than 10% of total
revenues. Sales to these four customers totaled $5,500,000, $4,650,000,
$4,445,000 and $3,851,000 in 1997.
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.
F-13
<PAGE> 57
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
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
carried 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, 1997, 90,000 pounds remain to
be purchased with deliveries in 1998.
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"). In July, 1997 the facility was
renewed and expanded to $5.0 million and for a two-year term. This facility is
secured by the Company's uranium inventory and/or its 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, 1997, $1,950,000 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 accrued 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 DEBT RESTRUCTURING AND EQUITY CONVERSION
On August 19, 1994 Nuexco Exchange, A.G., ("NEAG"), a company then
owned by Mr. Benton, acquired a note (the "Note") outstanding to Citibank, N.A.
("Citibank") for $6,500,000. To fund this acquisition of the Note and for an
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
F-14
<PAGE> 58
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
collateral that had secured the original Citibank Note. The balance of the
notes was paid in full by October 1995.
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 was initially issued for a term
of three years and bore interest at an annual rate of 6.5% and was 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. In 1995, the
Lender 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. As of December
31, 1997, these certain other financial advisors have exercised 62,500 shares
of warrants under the agreement.
In March 1998, the Company entered into an agreement with the Lender
to extend the maturity date of the Lindner Note to May 31, 2000. The note is
convertible at any time during this term into 2.0 million shares of the
Company's common stock at a conversion price of $3.00 per share. The exercise
price and expiration date of the warrant was also adjusted. The remaining
1,000,000 shares under the warrant can be purchased by the Lender at $3.00 per
share at any time during the term of the agreement which was extended to May
31, 2000.
The Lindner Note is secured by a mortgage on the Company's Rosita and
Kingsville Dome uranium properties in Texas. Part of the proceeds from 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 at the Company's
Kingsville Dome facility to permit commencement of production in 1996.
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. The balance of the production payment was repaid in January
1997 ($730,074).
SUMMARY OF LONG-TERM DEBT
<TABLE>
<CAPTION>
At December 31,
----------------------------
1997 1996
----------- -----------
<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
Crownpoint property (Note 2) 407,054 407,054
Other 62,289 --
----------- -----------
6,469,343 7,137,128
Less - Current portion (7,000) 730,074
----------- -----------
Total long-term debt $ 6,462,343 $ 6,407,054
=========== ===========
</TABLE>
F-15
<PAGE> 59
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
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, 1998 7,000 December 31, 2001 $ 450,000
December 31, 1999 7,000 December 31, 2002 and beyond --
December 31, 2000 6,005,000
</TABLE>
6. RELATED-PARTY TRANSACTIONS
During January 1995, a control group of companies based in Denver, Colorado (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. In February 1995, the Benton Companies filed
for bankruptcy (the "Benton Bankruptcy"). Because of the 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. The Company recovered
$300,000 in June 1995 and $575,000 in mid-1997 from the $1.08 million transfer,
but $1.2 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.
The $575,000 recovered in 1997 was recorded to other income in the second
quarter of this year.
In connection with the Benton Bankruptcy, the bankrupt estates have
commenced an action against the Company in the United Stated Bankruptcy Court
for the District of Colorado. The action seeks to recover approximately
$1,600,000 from various transactions entered into with the Benton Companies.
The Company intends to vigorously defend this action. The Company is unable to
assess what adverse consequences, if any, might result from such action. The
Company has asserted claims against Benton and the Benton Companies in the
bankruptcy proceedings.
7. SHAREHOLDERS' EQUITY
COMMON STOCK
Common Stock Issued in 1997
In March 1997, the Company issued 1,200,000 shares of common stock to
Santa Fe Pacific Gold Corporation in exchange for certain uranium mineral
interests in New Mexico. The value of the common stock for the transaction was
$6.50 per share and resulted in an increase to shareholders equity of $7.8
million.
F-16
<PAGE> 60
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
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.
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 were initially exercisable at any time through May 1998. In 1995,
500,000 warrants were exercised. In addition, the Lindner Note was 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, 1997. In March 1998, the Company extended
the maturity date of the Lindner Note and revised the terms of the warrants and
the convertible securities. See Note 5 - Long-Term Debt "Lindner Note" for
further discussion.
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, 1997, 62,500 warrants have
been exercised.
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
were originally scheduled to expire May 24, 1998 or 30 days after the holder
ceases to be a director of the Company or one year after such holder's death,
whichever occurs first. In November 1997, the term of these options was
revised for three years and the exercise price was increased to $4.75 per
share. None of these options have been exercised as of December 31, 1997.
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 were
originally scheduled to 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. In November 1997, the term of these options was revised for three years
and the exercise price was increased to $8.63 per share. None of these options
have been exercised as of December 31, 1997.
F-17
<PAGE> 61
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
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. All of these options were exercised in 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, 1997, 1996 and 1995 would have been reduced to the
following pro forma amounts:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- ------------
<S> <C> <C> <C> <C>
Net Earnings (Loss): As reported $(1,324,871) $ 758,863 $ (936,188)
Pro forma $(2,983,028) $ (519,164) $ 1,414,842)
Basic EPS: As reported $ (0.11) $ 0.08 $ (0.12)
Pro forma $ (0.25) $ (0.06) $ (0.16)
Diluted EPS: As reported $ (0.11) $ 0.08 $ (0.12)
Pro forma $ (0.25) $ (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 1997, 1996 and 1995, respectively: expected
volatility of 70%, 65% and 71% and risk-free interest rates of 6.4%, 6.0% and
6.1%. An expected life of 5.0, 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:
F-18
<PAGE> 62
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
------------------------------------------------
At December 31, 1997
------------------------------------------------
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 $2.94 617,248 104,623 327,625 185,000 104,623
May 22, 1992 $3.00 2,000 -- 1,000 1,000 --
- -----------------------------------------------------------------------------------------------------------
Balances at December 31, 1992 619,248 104,623 328,625 186,000 104,623
- -----------------------------------------------------------------------------------------------------------
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 631,248 104,623 331,625 195,000 104,623
- -----------------------------------------------------------------------------------------------------------
July 11, 1994 $4.38 20,000 15,000 -- -- 20,000
August 10, 1994 $4.25 140,000 14,000 1,000 120,000 19,000
December 15, 1994 $5.88 3,000 1,500 -- 1,000 2,000
- -----------------------------------------------------------------------------------------------------------
Balances at December 31, 1994 794,248 135,123 332,625 316,000 145,623
- -----------------------------------------------------------------------------------------------------------
February 24, 1995 $4.13 210,000 50,000 -- 110,000 100,000
April 12, 1995 $3.88 10,000 5,000 -- -- 10,000
May 26, 1995 $3.75 40,000 20,000 -- -- 40,000
August 16, 1995 $8.38 100,000 50,000 -- -- 100,000
August 31, 1995 $6.88 127,508 53,792 -- 19,924 107,584
October 11, 1995 $6.94 35,000 17,500 -- -- 35,000
December 19, 1995 $5.50 3,000 1,500 -- -- 3,000
- -----------------------------------------------------------------------------------------------------------
Balances at December 31, 1995 1,319,756 332,915 332,625 445,924 541,207
- -----------------------------------------------------------------------------------------------------------
February 22, 1996 $9.75 178,810 40,238 -- 17,880 160,930
May 29, 1996 $17.00 3,000 750 -- -- 3,000
May 30, 1996 $16.13 75,000 18,750 -- -- 75,000
July 22, 1996 $11.13 50,000 12,500 -- -- 50,000
- -----------------------------------------------------------------------------------------------------------
Balances at December 31, 1996 1,626,566 405,153 332,625 463,804 830,137
- -----------------------------------------------------------------------------------------------------------
February 10, 1997 $7.125 182,405 -- -- 10,700 171,705
April 1, 1997 $5.50 55,000 -- -- -- 55,000
May 1, 1997 $5.00 3,000 -- -- -- 3,000
- -----------------------------------------------------------------------------------------------------------
Balances at December 31, 1997 1,866,971 405,153 332,625 474,504 1,059,842
===========================================================================================================
</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.
F-19
<PAGE> 63
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
9. FEDERAL INCOME TAXES
The deferred federal income tax liability consists of the following:
<TABLE>
<CAPTION>
December 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Property development costs - net of amortization $ 6,775,000 $ 6,745,000
Property acquisition costs $ 2,652,000 --
Accelerated depreciation 210,000 180,000
Restoration reserves (1,605,000) (1,362,000)
Net operating loss and percentage
depletion carryforwards (5,396,000) (5,296,000)
Valuation allowance and other - net 2,331,000 2,366,000
----------- -----------
Total deferred income tax liability $ 4,967,000 $ 2,633,000
=========== ===========
</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,
-------------------------------------------------------------------------------------------------
1997 1996 1995
--------------------------- ---------------------------- ----------------------------
% of Pretax % of Pretax % of Pretax
Amount Income Amount Income Amount Income
----------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Pretax income (loss) $(1,598,096) $ 758,863 $(1,170,188)
----------- ---------- ----------- ---------- ----------- ----------
Pretax income (loss)
times statutory tax rate (543,000) 34.0% 258,000 34.0% (398,000) (34.0%)
Increases (reductions) in
taxes resulting from:
Percentage depletion 543,000 (34.0%) (258,000) (34.0%) 398,000
34.0%
Alternative minimum
Tax (273,225) 0.0% -- 0.0% (234,000) (20.0%)
----------- ---------- ----------- ---------- ----------- ----------
Income tax
expense (benefit) $ (273,225) (17.1%) $ -- 0.0% $ (234,000) (20.0%)
=========== ========== =========== ========== =========== ==========
</TABLE>
The Company's net operating loss carryforwards generated in 1997 and
in prior years have generally been valued, net of valuation allowance, at
Alternative Minimum Tax ("AMT") rates imposed by the 1986 Tax Reform Act ("the
86 ACT"). It is expected that these deferred tax assets will be realized at
such rates.
At December 31, 1997, approximately $8,300,000 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. The
Company paid $45,000 in federal income taxes in 1997. No tax payments were
required in 1996 or 1995.
The Company also has available for regular federal income tax purposes
at December 31, 1997 estimated net operating loss carryforwards of
approximately $10,400,000 which expire primarily in 1999 through 2011, if not
previously utilized. At December 31, 1997, the Company had investment tax
credit carryforwards of approximately $14,000, after adjusting for the
reductions required by the 86 ACT, which expire for regular tax purposes in
1998 through 2000.
F-20
<PAGE> 64
URANIUM RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1997
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,
-----------------------------------
1997 1996
---------------- -----------------
<S> <C> <C>
Reserve for future restoration and reclamation costs,
net of current portion of $511,000 and $368,000 in
1997 and 1996 (Note 1) $ 4,251,108 $ 3,768,495
Unearned revenue from Russian matched sales (Note 1) 536,318 510,794
---------------- -----------------
$ 4,787,427 $ 4,279,289
================ =================
</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.
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, 1997. 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.
F-21
<PAGE> 65
SCHEDULE II
URANIUM RESOURCES, INC.
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Additions
---------------------------
Balance at Charged to Charged to
Beginning Costs Other Balance at End
Description of Period and Expenses Accounts Deductions (a) of Period
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1997:
Accrued restoration costs ... $4,136,495 $1,032,587 $ 89,703(b) $ 317,271 $4,762,108(d)
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)
</TABLE>
- -----------
(a) Deductions represent costs incurred in the restoration process.
(b) Increase (decrease) 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, 1997, 1996 and
1995 are $511,000, $368,000 and $544,000, respectively.
F-22
<PAGE> 66
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
<S> <C> <C>
3.1* Restated Certificate of Incorporation of the Company, as amended
(filed with the Company's Annual Report on Form 10-K dated March 27,
1997).
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 (filed with the
Company's Annual Report on Form 10-K dated March 27, 1997).
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).
</TABLE>
E-1
<PAGE> 67
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
<S> <C> <C>
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)
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 (filed with the Company's Annual Report on Form 10-K
dated March 27, 1997).
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
(filed with the Company's Annual Report on Form 10-K dated March 27, 1997). (1)
10.20* Stock Exchange Agreement and Plan of Reorganization dated as
of March 25, 1997 (filed with the Company's Annual Report on
Form 10-K dated March 27, 1997).
</TABLE>
E-2
<PAGE> 68
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
<S> <C> <C>
10.21* License to Explore and Option to Purchase dated March 21, 1997 between
Santa Fe Pacific Gold Corporation and Uranco, Inc. (filed with the Company's
Annual Report on Form 10-K dated March 27, 1997). (1)
10.22 Amendment #1 to Nonqualified Stock Option Agreement dated November 17, 1997
between the Company and Leland O. Erdahl.
10.23 Amendment #1 to Nonqualified Stock Option Agreement dated November 17, 1997
between the Company and George R. Ireland.
10.24 Amendment #1 to Nonqualified Stock Option Agreement dated November 17, 1997
between the Company and James B. Tompkins.
10.25 Compensation Agreement dated June 2, 1997 between the Company and
Paul K. Willmott.
10.26 Compensation Agreement dated June 2, 1997 between the Company and
Richard F. Clement, Jr.
10.27 Compensation Agreement dated June 2, 1997 between the Company and
Joe H. Card.
10.28 Compensation Agreement dated June 2, 1997 between the Company and
Richard A. Van Horn.
10.29 Compensation Agreement dated June 2, 1997 between the Company and
Thomas H. Ehrlich.
10.30 Compensation Agreement dated June 2, 1997 between the Company and
Mark S. Pelizza.
10.31 Note and Warrant Exchange Agreement dated March 23, 1998 between the
Company and Lindner Investments.
10.32 6.5% Secured Convertible Note for $1,500,000 dated March 23, 1998 between
the Company and Lindner Investments.
10.33 6.5% Secured Convertible Note for $4,500,000 dated March 23, 1998 between
the Company and Lindner Investments.
10.34 Warrant to Purchase Common Stock for 625,000 shares dated March 23, 1998
between the Company and Lindner Investments.
10.35 Warrant to Purchase Common Stock for 325,000 shares dated March 23, 1998
between the Company and Lindner Investments.
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-3
<PAGE> 1
EXHIBIT 10.22
<PAGE> 2
AMENDMENT #1
TO
NONQUALIFIED STOCK OPTION AGREEMENT
LELAND O. ERDAHL
THIS AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT is
entered into November 17, 1997, between Uranium Resources, Inc., a Delaware
corporation (the "the Company"), and Leland O. Erdahl, an individual (the
"Optionee").
RECITALS:
A. The Company and Optionee are parties to a Non-Qualified Stock
Option Agreement dated May 25, 1997 (the "May 1995 Option").
B. The Company desires to amend the May 1995 option to extend the
expiration date to May 24, 2001, to increase the exercise price by $.25 per
share and to provide for substitute stock options in certain circumstances; and
C. Optionee desires to accept such amendments to the May 1995
Option.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Section 1 of the May 1995 Option is hereby amended by deleting
"$4.50" and substituting in its place "$4.75."
2. Section 2 of the May 1995 Option is hereby amended by deleting
from subsection (a) thereof "1998" and substituting in its place "2001".
3. Section 11 of the May 1995 Option is hereby amended to read in
its entirety as follows:
"1 1. Adjustments.
(a) Stock Splits etc. The number of shares of Common
Stock covered by the Option, as well as the price per share of
Common Stock covered by the Option, shall be proportionately
adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock of the Company. Such
adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive.
(b) Mergers, etc. If, at any time subsequent to
the hereof, shares of Common Stock are changed into or
exchanged for a different number or kind of shares of stock or
other securities of another entity (whether as a result of
exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or otherwise): (i) there shall
automatically be substituted for each Common Share subject to
this option (in whole or in part), the number and kind of
shares of stock or other securities into which each
outstanding share of Common Stock shall be changed or for
which each such share of Common Stock shall be exchanged; and
(ii) the option price per share of Common Stock or unit of
securities shall be increased or decreased proportionately so
that the aggregate purchase price for the securities subject
to this option shall remain the same as immediately prior to
such event. In addition to the foregoing, the Committee shall
be entitled in the event of any such increase, decrease or
exchange of Common Stock to make other adjustments to the
securities subject this option (including adjustments which
may provide for the elimination of fractional shares), where
necessary to preserve the terms and conditions of this option.
<PAGE> 3
(c) Liquidation. In the event of the dissolution
or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed
action. To the extent it has not been previously exercised,
the option will terminate immediately prior to the
consummation of such proposed action."
4. Except as expressly amended hereby the May 1995 Option shall
remain in full force and effect.
IN WITNESS WHEREOF, the Company and Optionee have executed this
Amendment #1 to Non-Qualified Stock Option Agreement effective as of the date
first set forth above.
URANIUM RESOURCES, INC.
/s/ Paul K. Willmott
----------------------------------------
President
The Optionee
/s/ Leland O. Erdahl
----------------------------------------
<PAGE> 1
EXHIBIT 10.23
<PAGE> 2
AMENDMENT #1
TO
NONQUALIFIED STOCK OPTION AGREEMENT
GEORGE R. IRELAND
THIS AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT is
entered into November 17, 1997, between Uranium Resources, Inc., a Delaware
corporation (the "the Company"), and George R. Ireland, an individual (the
"Optionee").
RECITALS:
A. The Company and Optionee are parties to a Non-Qualified Stock
Option Agreement dated May 25, 1997 (the "May 1995 Option").
B. The Company desires to amend the May 1995 option to extend the
expiration date to May 24, 2001, to increase the exercise price by $.25 per
share and to provide for substitute stock options in certain circumstances; and
C. Optionee desires to accept such amendments to the May 1995
Option.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Section 1 of the May 1995 Option is hereby amended by deleting
"$4.50" and substituting in its place "$4.75."
2. Section 2 of the May 1995 Option is hereby amended by deleting
from subsection (a) thereof "1998" and substituting in its place "2001".
3. Section 11 of the May 1995 Option is hereby amended to read in
its entirety as follows:
"1 1. Adjustments.
(a) Stock Splits etc. The number of shares of Common
Stock covered by the Option, as well as the price per share of
Common Stock covered by the Option, shall be proportionately
adjusted for any increase or decrease in the number of issued
and outstanding shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock of the Company. Such
adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive.
(b) Mergers, etc. If, at any time subsequent to
the hereof, shares of Common Stock are changed into or
exchanged for a different number or kind of shares of stock or
other securities of another entity (whether as a result of
exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or otherwise): (i) there shall
automatically be substituted for each Common Share subject to
this option (in whole or in part), the number and kind of
shares of stock or other securities into which each
outstanding share of Common Stock shall be changed or for
which each such share of Common Stock shall be exchanged; and
(ii) the option price per share of Common Stock or unit of
securities shall be increased or decreased proportionately so
that the aggregate purchase price for the securities subject
to this option shall remain the same as immediately prior to
such event. In addition to the foregoing, the Committee shall
be entitled in the event of any such increase, decrease or
exchange of Common Stock to make other adjustments to the
securities subject this option (including adjustments which
may provide for the elimination of fractional shares), where
necessary to preserve the terms and conditions of this option.
<PAGE> 3
(c) Liquidation. In the event of the dissolution
or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed
action. To the extent it has not been previously exercised,
the option will terminate immediately prior to the
consummation of such proposed action."
4. Except as expressly amended hereby the May 1995 Option shall
remain in full force and effect.
IN WITNESS WHEREOF, the Company and Optionee have executed this
Amendment #1 to Non-Qualified Stock Option Agreement effective as of the date
first set forth above.
URANIUM RESOURCES, INC.
/s/ Paul K. Willmott
----------------------------------------
President
The Optionee
/s/ George R. Ireland
----------------------------------------
<PAGE> 1
EXHIBIT 10.24
<PAGE> 2
AMENDMENT #1
TO
NONQUALIFIED STOCK OPTION AGREEMENT
James B. Tompkins
THIS AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT is
entered into November 17, 1997, between Uranium Resources, Inc., a Delaware
corporation (the "the Company"), and James B. Tompkins, an individual (the
"Optionee").
RECITALS:
A. The Company and Optionee are parties to a Non-Qualified Stock
Option Agreement dated May 25, 1997 (the "May 1995 Option").
B. The Company desires to amend the May 1995 option to extend the
expiration date to May 24, 2001, to increase the exercise price by $.25 per
share and to provide for substitute stock options in certain circumstances; and
C. Optionee desires to accept such amendments to the May 1995
Option.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Section 1 of the May 1995 Option is hereby amended by deleting
"$4.50" and substituting in its place "$4.75."
2. Section 2 of the May 1995 Option is hereby amended by deleting
from subsection (a) thereof "1998" and substituting in its place "2001".
3. Section 11 of the May 1995 Option is hereby amended to read in
its entirety as follows:
"1 1. Adjustments.
(a) Stock Splits etc. The number of shares of
Common Stock covered by the Option, as well as the price per
share of Common Stock covered by the Option, shall be
proportionately adjusted for any increase or decrease in the
number of issued and outstanding shares of Common Stock
resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock
of the Company. Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding
and conclusive.
(b) Mergers, etc. If, at any time subsequent to
the hereof, shares of Common Stock are changed into or
exchanged for a different number or kind of shares of stock or
other securities of another entity (whether as a result of
exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or otherwise): (i) there shall
automatically be substituted for each Common Share subject to
this option (in whole or in part), the number and kind of
shares of stock or other securities into which each
outstanding share of Common Stock shall be changed or for
which each such share of Common Stock shall be exchanged; and
(ii) the option price per share of Common Stock or unit of
securities shall be increased or decreased proportionately so
that the aggregate purchase price for the securities subject
to this option shall remain the same as immediately prior to
such event. In addition to the foregoing, the Committee shall
be entitled in the event of any such increase, decrease or
exchange of Common Stock to make other adjustments to the
securities subject this option (including adjustments which
may provide for the elimination of fractional shares), where
necessary to preserve the terms and conditions of this option.
<PAGE> 3
(c) Liquidation. In the event of the dissolution
or liquidation of the Company, the Board shall notify the
Optionee at least fifteen (15) days prior to such proposed
action. To the extent it has not been previously exercised,
the option will terminate immediately prior to the
consummation of such proposed action."
4. Except as expressly amended hereby the May 1995 Option shall
remain in full force and effect.
IN WITNESS WHEREOF, the Company and Optionee have executed this
Amendment #1 to Non-Qualified Stock Option Agreement effective as of the date
first set forth above.
URANIUM RESOURCES, INC.
/s/ Paul K. Willmott
----------------------------------------
President
The Optionee
/s/ James B. Tompkins
----------------------------------------
<PAGE> 1
EXHIBIT 10.25
<PAGE> 2
URANIUM RESOURCES, INC.
COMPENSATION AGREEMENT
(Willmott)
This Compensation Agreement (this "Agreement") made and entered into
June 2, 1997 by and between Uranium Resources, Inc., a Delaware corporation
(the "Company") and Paul K. Willmott, ("Executive").
R E C I T A L S:
A. The Company's Board of Directors (the "Board") acknowledges the
Executive's contributions to the success of the Company have been, and will
continue to be substantial. As a publicly-held corporation, the Board
recognizes that there exists a possibility of change in control of the Company.
The Board also recognizes that the possibility of such a change in control may
contribute to uncertainty on the part of senior management of the Company and
may result in the departure or distraction of senior management from operating
responsibilities.
B. Further, the Board recognizes that a significant concern of senior
managers is providing for their post- retirement years. This concern likewise
may result in the departure or distraction of senior management.
C. The Board recognizes that outstanding management of the Company is
essential to advancing the best interests of the Company and its shareholders.
The Board believes that the objectives of securing and retaining outstanding
management will be achieved if the Company's key management employees are given
assurances of employment and post- employment security, so that they will not
be distracted by personal uncertainties and risks.
D. The Compensation Committee (the "Committee") of the Board has
recommended, and the Board has approved, entering into compensation agreements
with certain of the Company's key management executives in order to achieve the
foregoing objectives. The Company and the Executive enter into this Agreement
to induce the Executive to remain an employee of the Company and to continue to
devote full energy to the Company's affairs.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Term. The term of this Agreement (the "Term") shall commence
upon a Change in Control (as hereinafter defined) and continue until the date
that is thirty six (36) months after the date of such Change in Control.
2. Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following:
(a) any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 51% or
more of the combined voting power of the then outstanding
securities of the Company; or
(b) a change in the composition of a majority of
the Board (after the date hereof) within twelve months after
any person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the then outstanding
securities of the Company.
3. Termination of Employment Before Commencement of Term. This
Agreement shall not in any way confer upon the Executive any rights with
respect to the continuation of employment by the Company prior to commencement
of the Term or interfere in any way with the right of the Company at any time
to terminate such employment or adjust the compensation of the Executive prior
to commencement of the Term.
<PAGE> 3
4. Termination of Employment During Term. Except as provided in
Section 8 hereof, the Company will provide or cause to be provided to the
Executive the rights and benefits described in Section 5 hereof in the event
that the Executive's employment by the Company is terminated at any time during
the Term or in connection with a Change in Control either:
(a) by the Company; or
(b) by the Executive following the occurrence of any of the
following events without the Executive's consent:
(i) The Executive is assigned substantial duties or
responsibilities that are materially inconsistent with the Executive's
position, duties, responsibilities or status during the twelve-month
period immediately prior to the commencement of the Term;
(ii) The Executive's base compensation is reduced or the
Executive experiences in any year a reduction in the ratio of the
Executive's incentive compensation payment to the Executive's base
compensation in such year which is greater than the average reduction
in the ratio of incentive compensation payments to base compensation
in such year experienced by all of the Company's other salaried
officers; or
(iii) The Executive is transferred to a location (other
than Albuquerque, New Mexico) which is an unreasonable distance from
the Executive's current principal work location.
5. Rights and Benefits upon Termination.
(a) Base Salary and Incentive Compensation.
(i) After termination of the Executive's employment as
provided in Section 4 above and until the expiration of the Term, the
Company will pay to the Executive, as severance compensation and in
lieu of any separation payments otherwise provided upon termination of
employment under any other severance pay or similar plan or policy of
the Company:
(A) monthly payments equal to one-twelfth of the
greater of (x) the Executive's annual base salary at the rate
in effect immediately prior to the Executive's termination, or
(y) if the termination shall have been effected pursuant to
Paragraph 4(b)(ii), the Executive's annual base salary at the
rate in effect immediately prior to the reduction described in
such Paragraph 4(b)(ii) ("Base Salary"), and
(B) annual incentive compensation payments
(individually, an "Incentive Payment") in an amount determined
by multiplying the Executive's annual Base Salary by the
average of the percentages calculated by dividing the
incentive compensation payment paid or committed to be paid to
the Executive in each of the three calendar years (or such
fewer calendar years as to which the Executive received or had
a commitment to receive incentive compensation payments)
immediately preceding the Executive's termination, by the
Executive's Base Salary in each of such calendar years.
(ii) The first Incentive Payment following termination of
employment shall be made no later than one year from the date of the
most recent payment to the Executive of incentive compensation
preceding the Executive's termination or, if no such payment was made
during the twelve-month period preceding such termination, on the date
of such termination; and payments shall be made each year thereafter
on the same calendar date until the expiration of the Term; provided,
however, that if the Term expires on a date other than December 31 of
any calendar year, payment of the Incentive Payment attributable to
such partial calendar year shall be made on the date of expiration of
the Term, and the amount of such Incentive Payment due to the
Executive for such partial calendar year shall be prorated by
multiplying the full amount of an annual Incentive Payment by a
fraction, the numerator of which shall be the number of days from and
including January 1 of the calendar year in which the Term expires
through and including the date on which the expires, and the
denominator of which shall be 365.
<PAGE> 4
(iii) Compensation (including base compensation and
incentive or bonus compensation) received by the Executive from a
subsequent employer following the termination of the Executive's
employment as provided in Section 4 above shall not reduce the amount
of any compensation that the Executive is entitled to receive under
this Section 5.
(b) Welfare Benefit Plans. During the Term, the Company will
maintain in full force and effect for the continued benefit of the Executive
each employee welfare benefit plan (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended) in which the Executive was
entitled to participate immediately prior to the date of the Executive's
termination, unless an essentially equivalent and no less favorable benefit is
provided by a subsequent employer at no additional cost to the Executive. If
the terms of any welfare benefit plan of the Company do not permit continued
participation by the Executive, then the Company (at its expense) will arrange
to provide to the Executive a benefit substantially similar to and no less
favorable than the benefit the Executive was entitled to receive under such
plan at the end of the period of coverage.
(c) Retirement Benefits. During the Term, the Company (i) will
include or cause to be included the base salary received by the Executive in
determining "Average Salary" and (ii) will treat the Executive for all purposes
as an employee under all of the Company's retirement plans in which, the
Executive was a participant at the time of the commencement of the Term or
under which the Executive would become eligible during the Term (hereinafter
referred to collectively as the "Plan"). Benefits due to the Executive under
the Plan shall be computed as if the Executive had continued to be an employee
of the Company for the entire Term receiving Average Salary until expiration of
the Term. If under the terms of the Plan such continued coverage is not
permitted, the Company will pay to the Executive, or the Executive's personal
representative or the executor or administrator of the Executive's estate in
the case of survivor benefits, a supplemental benefit in an amount which, when
added to the benefits that the Executive is entitled to receive under the Plan,
shall equal the amount that the Executive (or the Executive's personal
representative or executor or administrator of the Executive's estate) would
have received under the Plan had the Executive remained an employee of the
Company during the Term. The Company shall fund its obligation to pay
supplemental benefits hereunder through purchase of an annuity contract or
otherwise; provided, however, that the Company shall be the sole legal and
beneficial owner of any such funding mechanism and neither the Executive nor
anyone else claiming under, by or through the Executive shall have any right,
title or interest therein. The obligations of the Company contained in the
second, third and fourth sentences of this Section 5(c) shall survive the
expiration of the Term.
(d) Plan Changes. The Company may, in its sole discretion,
change, replace or eliminate any plan or policy described in Sections 5(b)
or 5(c) hereof at any time, but shall not do so in a manner which would prevent
the Executive from receiving any benefit which the Executive would otherwise
have been entitled to receive either at the beginning of the Term or upon
termination of the Executive's employment thereafter.
(e) No Amendment to Disability Provisions of the Plan. Nothing
herein shall be construed to amend any provision of the Plan applicable to
disability of the Executive as defined in the Plan.
6. Indemnification. The Company shall pay all costs and expenses
(including legal fees and expenses), if any, incurred by Executive as a result
of any claim, action or proceeding arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any other agreement
between Executive and the Company, or any provision hereof or thereof. In
addition, if any excise tax imposed under Internal Revenue Code Section 4999 or
any successor provision, as amended after the date hereof, is provoked by any
amount paid or payable to or for the benefit of the Executive under this
Agreement or any other agreement between Executive and the Company, the Company
shall indemnify the Executive and hold the Executive harmless against all
claims, losses, damages, penalties, expenses and excise taxes.
7. Benefits Upon Death. In the event of the death of the
Executive following the termination of the Executive's employment but prior to
the expiration of the Term, for the balance of the Term the Company will pay
all amounts required under Section 5 to the Executive's personal representative
or the executor or administrator of the Executive's estate.
<PAGE> 5
8. Conditions to the Obligations of the Company. The Company
shall have no obligations to provide or cause to be provided to the Executive
the rights and benefits described in Section 5 hereof if any of the following
events shall occur:
(a) The Company shall terminate the Executive's
employment for "cause", which shall mean action by the Executive
involving willful malfeasance or failure to act by the Executive
involving willful nonfeasance, tending to have a material adverse
effect on the Company.
(b) The Executive shall not, promptly after termination
of the Executive's employment and upon receiving a written request to
do so, resign as a director and/or officer of each subsidiary and
affiliate of the Company of which the Executive is then serving as a
director and/or officer.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
10. Amendment. This Agreement may not be amended except by
written agreement of both the Company and the Executive.
11. Binding, Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns and on the
Executive and the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees, legatees, and trustees, provided,
however, the Executive may not assign, alienate or otherwise encumber any
rights, duties, or amounts which the Executive may be entitled to receive under
this Agreement.
12. Notices. Any notice or filing required or permitted to be
given to the Company shall be sufficient if in writing and hand delivered or
sent by registered or certified mail, return receipt requested, postage
prepaid, to the principal office of the Company, directed to the attention of
the Chairman of the Board. Any notice to the Executive must be in writing and
shall be effective when delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the Executive or the Executive's
personal representatives at the Executive's last known address.
13. Severability. In the event any provision of this Agreement is
held invalid, void or unenforceable, the same shall not affect in any respect
whatsoever the validity of any other provision of this Agreement.
14. Captions. The captions to the articles, sections, and
paragraphs of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
15. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
URANIUM RESOURCES, INC.
/s/ Leland O. Erdahl
----------------------------------------
Chairman of the Compensation Committee
EXECUTIVE:
/s/ Paul K. Willmott
----------------------------------------
Name: Paul K. Willmott
Title: Chairman, President and Chief
Executive Officer
<PAGE> 1
EXHIBIT 10.26
<PAGE> 2
URANIUM RESOURCES, INC.
COMPENSATION AGREEMENT
(Clement)
This Compensation Agreement (this "Agreement") made and entered into
June 2, 1997 by and between Uranium Resources, Inc., a Delaware corporation
(the "Company") and Richard F. Clement, Jr., ("Executive").
R E C I T A L S:
A. The Company's Board of Directors (the "Board") acknowledges the
Executive's contributions to the success of the Company have been, and will
continue to be substantial. As a publicly-held corporation, the Board
recognizes that there exists a possibility of change in control of the Company.
The Board also recognizes that the possibility of such a change in control may
contribute to uncertainty on the part of senior management of the Company and
may result in the departure or distraction of senior management from operating
responsibilities.
B. Further, the Board recognize that a significant concern of senior
managers is providing for their post-retirement years. This concern likewise
may result in the departure or distraction of senior management.
C. The Board recognizes that outstanding management of the Company is
essential to advancing the best interests of the Company and its shareholders.
The Board believes that the objectives of securing and retaining outstanding
management will be achieved if the Company's key management employees are given
assurances of employment and post-employment security, so that they will not
be distracted by personal uncertainties and risks.
D. The Compensation Committee (the "Committee") of the Board has
recommended, and the Board has approved, entering into compensation agreements
with certain of the Company's key management executives in order to achieve the
foregoing objectives. The Company and the Executive enter into this Agreement
to induce the Executive to remain an employee of the Company and to continue to
devote full energy to the Company's affairs.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Term. The term of this Agreement (the "Term") shall commence
upon a Change in Control (as hereinafter defined) and continue until the date
that is twenty four (24) months after the date of such Change in Control.
2. Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following:
(a) any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 51% or
more of the combined voting power of the then outstanding
securities of the Company; or
(b) a change in the composition of a majority of
the Board (after the date hereof) within twelve months after
any person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the then outstanding
securities of the Company.
3. Termination of Employment Before Commencement of Term. This
Agreement shall not in any way confer upon the Executive any rights with
respect to the continuation of employment by the Company prior to commencement
of the Term or interfere in any way with the right of the Company at any time
to terminate such employment or adjust the compensation of the Executive prior
to commencement of the Term.
<PAGE> 3
4. Termination of Employment During Term. Except as provided in
Section 8 hereof, the Company will provide or cause to be provided to the
Executive the rights and benefits described in Section 5 hereof in the event
that the Executive's employment by the Company is terminated at any time during
the Term or in connection with a Change in Control either:
(a) by the Company; or
(b) by the Executive following the occurrence of any of the
following events without the Executive's consent:
(i) The Executive is assigned substantial duties or
responsibilities that are materially inconsistent with the Executive's
position, duties, responsibilities or status during the twelve-month
period immediately prior to the commencement of the Term;
(ii) The Executive's base compensation is reduced or the
Executive experiences in any year a reduction in the ratio of the
Executive's incentive compensation payment to the Executive's base
compensation in such year which is greater than the average reduction
in the ratio of incentive compensation payments to base compensation
in such year experienced by all of the Company's other salaried
officers; or
(iii) The Executive is transferred to a location (other
than Albuquerque, New Mexico) which is an unreasonable distance from
the Executive's current principal work location.
5. Rights and Benefits upon Termination.
(a) Base Salary and Incentive Compensation.
(i) After termination of the Executive's employment as
provided in Section 4 above and until the expiration of the Term, the
Company will pay to the Executive, as severance compensation and in
lieu of any separation payments otherwise provided upon termination of
employment under any other severance pay or similar plan or policy of
the Company:
(A) monthly payments equal to one-twelfth of the
greater of (x) the Executive's annual base salary at the rate
in effect immediately prior to the Executive's termination, or
(y) if the termination shall have been effected pursuant to
Paragraph 4(b)(ii), the Executive's annual base salary at the
rate in effect immediately prior to the reduction described in
such Paragraph 4(b)(ii) ("Base Salary"), and
(B) annual incentive compensation payments
(individually, an "Incentive Payment") in an amount determined
by multiplying the Executive's annual Base Salary by the
average of the percentages calculated by dividing the
incentive compensation payment paid or committed to be paid to
the Executive in each of the three calendar years (or such
fewer calendar years as to which the Executive received or had
a commitment to receive incentive compensation payments)
immediately preceding the Executive's termination, by the
Executive's Base Salary in each of such calendar years.
(ii) The first Incentive Payment following termination of
employment shall be made no later than one year from the date of the
most recent payment to the Executive of incentive compensation
preceding the Executive's termination or, if no such payment was made
during the twelve-month period preceding such termination, on the date
of such termination; and payments shall be made each year thereafter
on the same calendar date until the expiration of the Term; provided,
however, that if the Term expires on a date other than December 31 of
any calendar year, payment of the Incentive Payment attributable to
such partial calendar year shall be made on the date of expiration of
the Term, and the amount of such Incentive Payment due to the
Executive for such partial calendar year shall be prorated by
multiplying the full amount of an annual Incentive Payment by a
fraction, the numerator of which shall be the number of days from and
including January 1 of the calendar year in which the Term expires
through and including the date on which the expires, and the
denominator of which shall be 365.
<PAGE> 4
(iii) Compensation (including base compensation and
incentive or bonus compensation) received by the Executive from a
subsequent employer following the termination of the Executive's
employment as provided in Section 4 above shall not reduce the amount
of any compensation that the Executive is entitled to receive under
this Section 5.
(b) Welfare Benefit Plans. During the Term, the Company will
maintain in full force and effect for the continued benefit of the Executive
each employee welfare benefit plan (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended) in which the Executive was
entitled to participate immediately prior to the date of the Executive's
termination, unless an essentially equivalent and no less favorable benefit is
provided by a subsequent employer at no additional cost to the Executive. If
the terms of any welfare benefit plan of the Company do not permit continued
participation by the Executive, then the Company (at its expense) will arrange
to provide to the Executive a benefit substantially similar to and no less
favorable than the benefit the Executive was entitled to receive under such
plan at the end of the period of coverage.
(c) Retirement Benefits. During the Term, the Company (i) will
include or cause to be included the base salary received by the Executive in
determining "Average Salary" and (ii) will treat the Executive for all purposes
as an employee under all of the Company's retirement plans in which, the
Executive was a participant at the time of the commencement of the Term or
under which the Executive would become eligible during the Term (hereinafter
referred to collectively as the "Plan"). Benefits due to the Executive under
the Plan shall be computed as if the Executive had continued to be an employee
of the Company for the entire Term receiving Average Salary until expiration of
the Term. If under the terms of the Plan such continued coverage is not
permitted, the Company will pay to the Executive, or the Executive's personal
representative or the executor or administrator of the Executive's estate in
the case of survivor benefits, a supplemental benefit in an amount which, when
added to the benefits that the Executive is entitled to receive under the Plan,
shall equal the amount that the Executive (or the Executive's personal
representative or executor or administrator of the Executive's estate) would
have received under the Plan had the Executive remained an employee of the
Company during the Term. The Company shall fund its obligation to pay
supplemental benefits hereunder through purchase of an annuity contract or
otherwise; provided, however, that the Company shall be the sole legal and
beneficial owner of any such funding mechanism and neither the Executive nor
anyone else claiming under, by or through the Executive shall have any right,
title or interest therein. The obligations of the Company contained in the
second, third and fourth sentences of this Section 5(c) shall survive the
expiration of the Term.
(d) Plan Changes. The Company may, in its sole discretion,
change, replace or eliminate any plan or policy described in Sections 5(b)
or 5(c) hereof at any time, but shall not do so in a manner which would prevent
the Executive from receiving any benefit which the Executive would otherwise
have been entitled to receive either at the beginning of the Term or upon
termination of the Executive's employment thereafter.
(e) No Amendment to Disability Provisions of the Plan. Nothing
herein shall be construed to amend any provision of the Plan applicable to
disability of the Executive as defined in the Plan.
6. Indemnification. The Company shall pay all costs and expenses
(including legal fees and expenses), if any, incurred by Executive as a result
of any claim, action or proceeding arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any other agreement
between Executive and the Company, or any provision hereof or thereof. In
addition, if any excise tax imposed under Internal Revenue Code Section 4999 or
any successor provision, as amended after the date hereof, is provoked by any
amount paid or payable to or for the benefit of the Executive under this
Agreement or any other agreement between Executive and the Company, the Company
shall indemnify the Executive and hold the Executive harmless against all
claims, losses, damages, penalties, expenses and excise taxes.
7. Benefits Upon Death. In the event of the death of the
Executive following the termination of the Executive's employment but prior to
the expiration of the Term, for the balance of the Term the Company will pay
all amounts required under Section 5 to the Executive's personal representative
or the executor or administrator of the Executive's estate.
<PAGE> 5
8. Conditions to the Obligations of the Company. The Company
shall have no obligations to provide or cause to be provided to the Executive
the rights and benefits described in Section 5 hereof if any of the following
events shall occur:
(a) The Company shall terminate the Executive's
employment for "cause", which shall mean action by the Executive
involving willful malfeasance or failure to act by the Executive
involving willful nonfeasance, tending to have a material adverse
effect on the Company.
(b) The Executive shall not, promptly after termination
of the Executive's employment and upon receiving a written request to
do so, resign as a director and/or officer of each subsidiary and
affiliate of the Company of which the Executive is then serving as a
director and/or officer.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
10. Amendment. This Agreement may not be amended except by
written agreement of both the Company and the Executive.
11. Binding, Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns and on the
Executive and the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees, legatees, and trustees, provided,
however, the Executive may not assign, alienate or otherwise encumber any
rights, duties, or amounts which the Executive may be entitled to receive under
this Agreement.
12. Notices. Any notice or filing required or permitted to be
given to the Company shall be sufficient if in writing and hand delivered or
sent by registered or certified mail, return receipt requested, postage
prepaid, to the principal office of the Company, directed to the attention of
the Chairman of the Board. Any notice to the Executive must be in writing and
shall be effective when delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the Executive or the Executive's
personal representatives at the Executive's last known address.
13. Severability. In the event any provision of this Agreement is
held invalid, void or unenforceable, the same shall not affect in any respect
whatsoever the validity of any other provision of this Agreement.
14. Captions. The captions to the articles, sections, and
paragraphs of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
15. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
URANIUM RESOURCES, INC.
/s/ Leland O. Erdahl
----------------------------------------
Chairman of the Compensation Committee
EXECUTIVE:
/s/ Richard F. Clement, Jr.
----------------------------------------
Name: Richard F. Clement, Jr.
Title: Senior Vice President - Exploration
<PAGE> 1
EXHIBIT 10.27
<PAGE> 2
URANIUM RESOURCES, INC.
COMPENSATION AGREEMENT
(Card)
This Compensation Agreement (this "Agreement") made and entered into
June 2, 1997 by and between Uranium Resources, Inc., a Delaware corporation
(the "Company") and Joe H. Card, ("Executive").
R E C I T A L S:
A. The Company's Board of Directors (the "Board") acknowledges
the Executive's contributions to the success of the Company have been, and will
continue to be substantial. As a publicly-held corporation, the Board
recognizes that there exists a possibility of change in control of the Company.
The Board also recognizes that the possibility of such a change in control may
contribute to uncertainty on the part of senior management of the Company and
may result in the departure or distraction of senior management from operating
responsibilities.
B. Further, the Board recognizes that a significant concern of
senior managers is providing for their post-retirement years. This concern
likewise may result in the departure or distraction of senior management.
C. The Board recognizes that outstanding management of the
Company is essential to advancing the best interests of the Company and its
shareholders. The Board believes that the objectives of securing and retaining
outstanding management will be achieved if the Company's key management
employees are given assurances of employment and post-employment security, so
that they will not be distracted by personal uncertainties and risks.
D. The Compensation Committee (the "Committee") of the Board has
recommended, and the Board has approved, entering into compensation agreements
with certain of the Company's key management executives in order to achieve the
foregoing objectives. The Company and the Executive enter into this Agreement
to induce the Executive to remain an employee of the Company and to continue to
devote full energy to the Company's affairs.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Term. The term of this Agreement (the "Term") shall commence
upon a Change in Control (as hereinafter defined) and continue until the date
that is twenty four (24) months after the date of such Change in Control.
2. Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following:
(a) any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 51% or
more of the combined voting power of the then outstanding
securities of the Company; or
(b) a change in the composition of a majority of
the Board (after the date hereof) within twelve months after
any person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the then outstanding
securities of the Company.
3. Termination of Employment Before Commencement of Term. This
Agreement shall not in any way confer upon the Executive any rights with
respect to the continuation of employment by the Company prior to commencement
of the Term or interfere in any way with the right of the Company at any time
to terminate such employment or adjust the compensation of the Executive prior
to commencement of the Term.
<PAGE> 3
4. Termination of Employment During Term. Except as provided in
Section 8 hereof, the Company will provide or cause to be provided to the
Executive the rights and benefits described in Section 5 hereof in the event
that the Executive's employment by the Company is terminated at any time during
the Term or in connection with a Change in Control either:
(a) by the Company; or
(b) by the Executive following the occurrence of any of the
following events without the Executive's consent:
(i) The Executive is assigned substantial duties or
responsibilities that are materially inconsistent with the Executive's
position, duties, responsibilities or status during the twelve-month
period immediately prior to the commencement of the Term;
(ii) The Executive's base compensation is reduced or the
Executive experiences in any year a reduction in the ratio of the
Executive's incentive compensation payment to the Executive's base
compensation in such year which is greater than the average reduction
in the ratio of incentive compensation payments to base compensation
in such year experienced by all of the Company's other salaried
officers; or
(iii) The Executive is transferred to a location (other
than Albuquerque, New Mexico) which is an unreasonable distance from
the Executive's current principal work location.
5. Rights and Benefits upon Termination.
(a) Base Salary and Incentive Compensation.
(i) After termination of the Executive's employment as
provided in Section 4 above and until the expiration of the Term, the
Company will pay to the Executive, as severance compensation and in
lieu of any separation payments otherwise provided upon termination of
employment under any other severance pay or similar plan or policy of
the Company:
(A) monthly payments equal to one-twelfth of the
greater of (x) the Executive's annual base salary at the rate
in effect immediately prior to the Executive's termination, or
(y) if the termination shall have been effected pursuant to
Paragraph 4(b)(ii), the Executive's annual base salary at the
rate in effect immediately prior to the reduction described in
such Paragraph 4(b)(ii) ("Base Salary"), and
(B) annual incentive compensation payments
(individually, an "Incentive Payment") in an amount determined
by multiplying the Executive's annual Base Salary by the
average of the percentages calculated by dividing the
incentive compensation payment paid or committed to be paid to
the Executive in each of the three calendar years (or such
fewer calendar years as to which the Executive received or had
a commitment to receive incentive compensation payments)
immediately preceding the Executive's termination, by the
Executive's Base Salary in each of such calendar years.
(ii) The first Incentive Payment following termination of
employment shall be made no later than one year from the date of the
most recent payment to the Executive of incentive compensation
preceding the Executive's termination or, if no such payment was made
during the twelve-month period preceding such termination, on the date
of such termination; and payments shall be made each year thereafter
on the same calendar date until the expiration of the Term; provided,
however, that if the Term expires on a date other than December 31 of
any calendar year, payment of the Incentive Payment attributable to
such partial calendar year shall be made on the date of expiration of
the Term, and the amount of such Incentive Payment due to the
Executive for such partial calendar year shall be prorated by
multiplying the full amount of an annual Incentive Payment by a
fraction, the numerator of which shall be the number of days from and
including January 1 of the calendar year in which the Term expires
through and including the date on which the expires, and the
denominator of which shall be 365.
<PAGE> 4
(iii) Compensation (including base compensation and
incentive or bonus compensation) received by the Executive from a
subsequent employer following the termination of the Executive's
employment as provided in Section 4 above shall not reduce the amount
of any compensation that the Executive is entitled to receive under
this Section 5.
(b) Welfare Benefit Plans. During the Term, the Company will
maintain in full force and effect for the continued benefit of the Executive
each employee welfare benefit plan (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended) in which the Executive was
entitled to participate immediately prior to the date of the Executive's
termination, unless an essentially equivalent and no less favorable benefit is
provided by a subsequent employer at no additional cost to the Executive. If
the terms of any welfare benefit plan of the Company do not permit continued
participation by the Executive, then the Company (at its expense) will arrange
to provide to the Executive a benefit substantially similar to and no less
favorable than the benefit the Executive was entitled to receive under such
plan at the end of the period of coverage.
(c) Retirement Benefits. During the Term, the Company (i) will
include or cause to be included the base salary received by the Executive in
determining "Average Salary" and (ii) will treat the Executive for all purposes
as an employee under all of the Company's retirement plans in which, the
Executive was a participant at the time of the commencement of the Term or
under which the Executive would become eligible during the Term (hereinafter
referred to collectively as the "Plan"). Benefits due to the Executive under
the Plan shall be computed as if the Executive had continued to be an employee
of the Company for the entire Term receiving Average Salary until expiration of
the Term. If under the terms of the Plan such continued coverage is not
permitted, the Company will pay to the Executive, or the Executive's personal
representative or the executor or administrator of the Executive's estate in
the case of survivor benefits, a supplemental benefit in an amount which, when
added to the benefits that the Executive is entitled to receive under the Plan,
shall equal the amount that the Executive (or the Executive's personal
representative or executor or administrator of the Executive's estate) would
have received under the Plan had the Executive remained an employee of the
Company during the Term. The Company shall fund its obligation to pay
supplemental benefits hereunder through purchase of an annuity contract or
otherwise; provided, however, that the Company shall be the sole legal and
beneficial owner of any such funding mechanism and neither the Executive nor
anyone else claiming under, by or through the Executive shall have any right,
title or interest therein. The obligations of the Company contained in the
second, third and fourth sentences of this Section 5(c) shall survive the
expiration of the Term.
(d) Plan Changes. The Company may, in its sole discretion,
change, replace or eliminate any plan or policy described in Sections 5(b)
or 5(c) hereof at any time, but shall not do so in a manner which would prevent
the Executive from receiving any benefit which the Executive would otherwise
have been entitled to receive either at the beginning of the Term or upon
termination of the Executive's employment thereafter.
(e) No Amendment to Disability Provisions of the Plan. Nothing
herein shall be construed to amend any provision of the Plan applicable to
disability of the Executive as defined in the Plan.
6. Indemnification. The Company shall pay all costs and expenses
(including legal fees and expenses), if any, incurred by Executive as a result
of any claim, action or proceeding arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any other agreement
between Executive and the Company, or any provision hereof or thereof. In
addition, if any excise tax imposed under Internal Revenue Code Section 4999 or
any successor provision, as amended after the date hereof, is provoked by any
amount paid or payable to or for the benefit of the Executive under this
Agreement or any other agreement between Executive and the Company, the Company
shall indemnify the Executive and hold the Executive harmless against all
claims, losses, damages, penalties, expenses and excise taxes.
7. Benefits Upon Death. In the event of the death of the
Executive following the termination of the Executive's employment but prior to
the expiration of the Term, for the balance of the Term the Company will pay
all amounts required under Section 5 to the Executive's personal representative
or the executor or administrator of the Executive's estate.
<PAGE> 5
8. Conditions to the Obligations of the Company. The Company
shall have no obligations to provide or cause to be provided to the Executive
the rights and benefits described in Section 5 hereof if any of the following
events shall occur:
(a) The Company shall terminate the Executive's
employment for "cause", which shall mean action by the Executive
involving willful malfeasance or failure to act by the Executive
involving willful nonfeasance, tending to have a material adverse
effect on the Company.
(b) The Executive shall not, promptly after termination
of the Executive's employment and upon receiving a written request to
do so, resign as a director and/or officer of each subsidiary and
affiliate of the Company of which the Executive is then serving as a
director and/or officer.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
10. Amendment. This Agreement may not be amended except by
written agreement of both the Company and the Executive.
11. Binding, Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns and on the
Executive and the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees, legatees, and trustees, provided,
however, the Executive may not assign, alienate or otherwise encumber any
rights, duties, or amounts which the Executive may be entitled to receive under
this Agreement.
12. Notices. Any notice or filing required or permitted to be
given to the Company shall be sufficient if in writing and hand delivered or
sent by registered or certified mail, return receipt requested, postage
prepaid, to the principal office of the Company, directed to the attention of
the Chairman of the Board. Any notice to the Executive must be in writing and
shall be effective when delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the Executive or the Executive's
personal representatives at the Executive's last known address.
13. Severability. In the event any provision of this Agreement is
held invalid, void or unenforceable, the same shall not affect in any respect
whatsoever the validity of any other provision of this Agreement.
14. Captions. The captions to the articles, sections, and
paragraphs of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
15. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
URANIUM RESOURCES, INC.
/s/ Leland O. Erdahl
-------------------------------------------
Chairman of the Compensation Committee
EXECUTIVE:
/s/ Joe H. Card
-------------------------------------------
Name: Joe H. Card
Title: Senior Vice President - Marketing
<PAGE> 1
EXHIBIT 10.28
<PAGE> 2
URANIUM RESOURCES, INC.
COMPENSATION AGREEMENT
(Van Horn)
This Compensation Agreement (this "Agreement") made and entered into
June 2, 1997 by and between Uranium Resources, Inc., a Delaware corporation
(the "Company") and Richard A. Van Horn, ("Executive").
R E C I T A L S:
A. The Company's Board of Directors (the "Board") acknowledges
the Executive's contributions to the success of the Company have been, and will
continue to be substantial. As a publicly-held corporation, the Board
recognizes that there exists a possibility of change in control of the Company.
The Board also recognizes that the possibility of such a change in control may
contribute to uncertainty on the part of senior management of the Company and
may result in the departure or distraction of senior management from operating
responsibilities.
B. Further, the Board recognizes that a significant concern of
senior managers is providing for their post-retirement years. This concern
likewise may result in the departure or distraction of senior management.
C. The Board recognizes that outstanding management of the
Company is essential to advancing the best interests of the Company and its
shareholders. The Board believes that the objectives of securing and retaining
outstanding management will be achieved if the Company's key management
employees are given assurances of employment and post-employment security, so
that they will not be distracted by personal uncertainties and risks.
D. The Compensation Committee (the "Committee") of the Board has
recommended, and the Board has approved, entering into compensation agreements
with certain of the Company's key management executives in order to achieve the
foregoing objectives. The Company and the Executive enter into this Agreement
to induce the Executive to remain an employee of the Company and to continue to
devote full energy to the Company's affairs.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Term. The term of this Agreement (the "Term") shall commence
upon a Change in Control (as hereinafter defined) and continue until the date
that is twenty four (24) months after the date of such Change in Control.
2. Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following:
(a) any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 51% or
more of the combined voting power of the then outstanding
securities of the Company; or
(b) a change in the composition of a majority of
the Board (after the date hereof) within twelve months after
any person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the then outstanding
securities of the Company.
3. Termination of Employment Before Commencement of Term. This
Agreement shall not in any way confer upon the Executive any rights with
respect to the continuation of employment by the Company prior to commencement
of the Term or interfere in any way with the right of the Company at any time
to terminate such employment or adjust the compensation of the Executive prior
to commencement of the Term.
<PAGE> 3
4. Termination of Employment During Term. Except as provided in
Section 8 hereof, the Company will provide or cause to be provided to the
Executive the rights and benefits described in Section 5 hereof in the event
that the Executive's employment by the Company is terminated at any time during
the Term or in connection with a Change in Control either:
(a) by the Company; or
(b) by the Executive following the occurrence of any of the
following events without the Executive's consent:
(i) The Executive is assigned substantial duties or
responsibilities that are materially inconsistent with the Executive's
position, duties, responsibilities or status during the twelve-month
period immediately prior to the commencement of the Term;
(ii) The Executive's base compensation is reduced or the
Executive experiences in any year a reduction in the ratio of the
Executive's incentive compensation payment to the Executive's base
compensation in such year which is greater than the average reduction
in the ratio of incentive compensation payments to base compensation
in such year experienced by all of the Company's other salaried
officers; or
(iii) The Executive is transferred to a location (other
than Albuquerque, New Mexico) which is an unreasonable distance from
the Executive's current principal work location.
5. Rights and Benefits upon Termination.
(a) Base Salary and Incentive Compensation.
(i) After termination of the Executive's employment as
provided in Section 4 above and until the expiration of the Term, the
Company will pay to the Executive, as severance compensation and in
lieu of any separation payments otherwise provided upon termination of
employment under any other severance pay or similar plan or policy of
the Company:
(A) monthly payments equal to one-twelfth of the
greater of (x) the Executive's annual base salary at the rate
in effect immediately prior to the Executive's termination, or
(y) if the termination shall have been effected pursuant to
Paragraph 4(b)(ii), the Executive's annual base salary at the
rate in effect immediately prior to the reduction described in
such Paragraph 4(b)(ii) ("Base Salary"), and
(B) annual incentive compensation payments
(individually, an "Incentive Payment") in an amount determined
by multiplying the Executive's annual Base Salary by the
average of the percentages calculated by dividing the
incentive compensation payment paid or committed to be paid to
the Executive in each of the three calendar years (or such
fewer calendar years as to which the Executive received or had
a commitment to receive incentive compensation payments)
immediately preceding the Executive's termination, by the
Executive's Base Salary in each of such calendar years.
(ii) The first Incentive Payment following termination of
employment shall be made no later than one year from the date of the
most recent payment to the Executive of incentive compensation
preceding the Executive's termination or, if no such payment was made
during the twelve-month period preceding such termination, on the date
of such termination; and payments shall be made each year thereafter
on the same calendar date until the expiration of the Term; provided,
however, that if the Term expires on a date other than December 31 of
any calendar year, payment of the Incentive Payment attributable to
such partial calendar year shall be made on the date of expiration of
the Term, and the amount of such Incentive Payment due to the
Executive for such partial calendar year shall be prorated by
multiplying the full amount of an annual Incentive Payment by a
fraction, the numerator of which shall be the number of days from and
including January 1 of the calendar year in which the Term expires
through and including the date on which the expires, and the
denominator of which shall be 365.
<PAGE> 4
(iii) Compensation (including base compensation and
incentive or bonus compensation) received by the Executive from a
subsequent employer following the termination of the Executive's
employment as provided in Section 4 above shall not reduce the amount
of any compensation that the Executive is entitled to receive under
this Section 5.
(b) Welfare Benefit Plans. During the Term, the Company will
maintain in full force and effect for the continued benefit of the Executive
each employee welfare benefit plan (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended) in which the Executive was
entitled to participate immediately prior to the date of the Executive's
termination, unless an essentially equivalent and no less favorable benefit is
provided by a subsequent employer at no additional cost to the Executive. If
the terms of any welfare benefit plan of the Company do not permit continued
participation by the Executive, then the Company (at its expense) will arrange
to provide to the Executive a benefit substantially similar to and no less
favorable than the benefit the Executive was entitled to receive under such
plan at the end of the period of coverage.
(c) Retirement Benefits. During the Term, the Company (i) will
include or cause to be included the base salary received by the Executive in
determining "Average Salary" and (ii) will treat the Executive for all purposes
as an employee under all of the Company's retirement plans in which, the
Executive was a participant at the time of the commencement of the Term or
under which the Executive would become eligible during the Term (hereinafter
referred to collectively as the "Plan"). Benefits due to the Executive under
the Plan shall be computed as if the Executive had continued to be an employee
of the Company for the entire Term receiving Average Salary until expiration of
the Term. If under the terms of the Plan such continued coverage is not
permitted, the Company will pay to the Executive, or the Executive's personal
representative or the executor or administrator of the Executive's estate in
the case of survivor benefits, a supplemental benefit in an amount which, when
added to the benefits that the Executive is entitled to receive under the Plan,
shall equal the amount that the Executive (or the Executive's personal
representative or executor or administrator of the Executive's estate) would
have received under the Plan had the Executive remained an employee of the
Company during the Term. The Company shall fund its obligation to pay
supplemental benefits hereunder through purchase of an annuity contract or
otherwise; provided, however, that the Company shall be the sole legal and
beneficial owner of any such funding mechanism and neither the Executive nor
anyone else claiming under, by or through the Executive shall have any right,
title or interest therein. The obligations of the Company contained in the
second, third and fourth sentences of this Section 5(c) shall survive the
expiration of the Term.
(d) Plan Changes. The Company may, in its sole discretion,
change, replace or eliminate any plan or policy described in Sections 5(b)
or 5(c) hereof at any time, but shall not do so in a manner which would prevent
the Executive from receiving any benefit which the Executive would otherwise
have been entitled to receive either at the beginning of the Term or upon
termination of the Executive's employment thereafter.
(e) No Amendment to Disability Provisions of the Plan. Nothing
herein shall be construed to amend any provision of the Plan applicable to
disability of the Executive as defined in the Plan.
6. Indemnification. The Company shall pay all costs and expenses
(including legal fees and expenses), if any, incurred by Executive as a result
of any claim, action or proceeding arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any other agreement
between Executive and the Company, or any provision hereof or thereof. In
addition, if any excise tax imposed under Internal Revenue Code Section 4999 or
any successor provision, as amended after the date hereof, is provoked by any
amount paid or payable to or for the benefit of the Executive under this
Agreement or any other agreement between Executive and the Company, the Company
shall indemnify the Executive and hold the Executive harmless against all
claims, losses, damages, penalties, expenses and excise taxes.
7. Benefits Upon Death. In the event of the death of the
Executive following the termination of the Executive's employment but prior to
the expiration of the Term, for the balance of the Term the Company will pay
all amounts required under Section 5 to the Executive's personal representative
or the executor or administrator of the Executive's estate.
<PAGE> 5
8. Conditions to the Obligations of the Company. The Company
shall have no obligations to provide or cause to be provided to the Executive
the rights and benefits described in Section 5 hereof if any of the following
events shall occur:
(a) The Company shall terminate the Executive's
employment for "cause", which shall mean action by the Executive
involving willful malfeasance or failure to act by the Executive
involving willful nonfeasance, tending to have a material adverse
effect on the Company.
(b) The Executive shall not, promptly after termination
of the Executive's employment and upon receiving a written request to
do so, resign as a director and/or officer of each subsidiary and
affiliate of the Company of which the Executive is then serving as a
director and/or officer.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
10. Amendment. This Agreement may not be amended except by
written agreement of both the Company and the Executive.
11. Binding, Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns and on the
Executive and the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees, legatees, and trustees, provided,
however, the Executive may not assign, alienate or otherwise encumber any
rights, duties, or amounts which the Executive may be entitled to receive under
this Agreement.
12. Notices. Any notice or filing required or permitted to be
given to the Company shall be sufficient if in writing and hand delivered or
sent by registered or certified mail, return receipt requested, postage
prepaid, to the principal office of the Company, directed to the attention of
the Chairman of the Board. Any notice to the Executive must be in writing and
shall be effective when delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the Executive or the Executive's
personal representatives at the Executive's last known address.
13. Severability. In the event any provision of this Agreement is
held invalid, void or unenforceable, the same shall not affect in any respect
whatsoever the validity of any other provision of this Agreement.
14. Captions. The captions to the articles, sections, and
paragraphs of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
15. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
URANIUM RESOURCES, INC.
/s/ Leland O. Erdahl
----------------------------------------
Chairman of the Compensation Committee
EXECUTIVE:
/s/ Richard A. Van Horn
----------------------------------------
Name: Richard A. Van Horn
Title: Senior Vice President-Operations
<PAGE> 1
EXHIBIT 10.29
<PAGE> 2
URANIUM RESOURCES, INC.
COMPENSATION AGREEMENT
(Ehrlich)
This Compensation Agreement (this "Agreement") made and entered into
June 2, 1997 by and between Uranium Resources, Inc., a Delaware corporation
(the "Company") and Thomas H. Ehrlich, ("Executive").
R E C I T A L S:
A. The Company's Board of Directors (the "Board") acknowledges
the Executive's contributions to the success of the Company have been, and will
continue to be substantial. As a publicly-held corporation, the Board
recognizes that there exists a possibility of change in control of the Company.
The Board also recognizes that the possibility of such a change in control may
contribute to uncertainty on the part of senior management of the Company and
may result in the departure or distraction of senior management from operating
responsibilities.
B. Further, the Board recognizes that a significant concern of
senior managers is providing for their post-retirement years. This concern
likewise may result in the departure or distraction of senior management.
C. The Board recognizes that outstanding management of the
Company is essential to advancing the best interests of the Company and its
shareholders. The Board believes that the objectives of securing and retaining
outstanding management will be achieved if the Company's key management
employees are given assurances of employment and post-employment security, so
that they will not be distracted by personal uncertainties and risks.
D. The Compensation Committee (the "Committee") of the Board has
recommended, and the Board has approved, entering into compensation agreements
with certain of the Company's key management executives in order to achieve the
foregoing objectives. The Company and the Executive enter into this Agreement
to induce the Executive to remain an employee of the Company and to continue to
devote full energy to the Company's affairs.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Term. The term of this Agreement (the "Term") shall commence
upon a Change in Control (as hereinafter defined) and continue until the date
that is twenty four (24) months after the date of such Change in Control.
2. Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following:
(a) any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 51% or
more of the combined voting power of the then outstanding
securities of the Company; or
(b) a change in the composition of a majority of
the Board (after the date hereof) within twelve months after
any person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the then outstanding
securities of the Company.
3. Termination of Employment Before Commencement of Term. This
Agreement shall not in any way confer upon the Executive any rights with
respect to the continuation of employment by the Company prior to commencement
of the Term or interfere in any way with the right of the Company at any time
to terminate such employment or adjust the compensation of the Executive prior
to commencement of the Term.
<PAGE> 3
4. Termination of Employment During Term. Except as provided in
Section 8 hereof, the Company will provide or cause to be provided to the
Executive the rights and benefits described in Section 5 hereof in the event
that the Executive's employment by the Company is terminated at any time during
the Term or in connection with a Change in Control either:
(a) by the Company; or
(b) by the Executive following the occurrence of any of the
following events without the Executive's consent:
(i) The Executive is assigned substantial duties or
responsibilities that are materially inconsistent with the Executive's
position, duties, responsibilities or status during the twelve-month
period immediately prior to the commencement of the Term;
(ii) The Executive's base compensation is reduced or the
Executive experiences in any year a reduction in the ratio of the
Executive's incentive compensation payment to the Executive's base
compensation in such year which is greater than the average reduction
in the ratio of incentive compensation payments to base compensation
in such year experienced by all of the Company's other salaried
officers; or
(iii) The Executive is transferred to a location (other
than Albuquerque, New Mexico) which is an unreasonable distance from
the Executive's current principal work location.
5. Rights and Benefits upon Termination.
(a) Base Salary and Incentive Compensation.
(i) After termination of the Executive's employment as
provided in Section 4 above and until the expiration of the Term, the
Company will pay to the Executive, as severance compensation and in
lieu of any separation payments otherwise provided upon termination of
employment under any other severance pay or similar plan or policy of
the Company:
(A) monthly payments equal to one-twelfth of the
greater of (x) the Executive's annual base salary at the rate
in effect immediately prior to the Executive's termination, or
(y) if the termination shall have been effected pursuant to
Paragraph 4(b)(ii), the Executive's annual base salary at the
rate in effect immediately prior to the reduction described in
such Paragraph 4(b)(ii) ("Base Salary"), and
(B) annual incentive compensation payments
(individually, an "Incentive Payment") in an amount determined
by multiplying the Executive's annual Base Salary by the
average of the percentages calculated by dividing the
incentive compensation payment paid or committed to be paid to
the Executive in each of the three calendar years (or such
fewer calendar years as to which the Executive received or had
a commitment to receive incentive compensation payments)
immediately preceding the Executive's termination, by the
Executive's Base Salary in each of such calendar years.
(ii) The first Incentive Payment following termination of
employment shall be made no later than one year from the date of the
most recent payment to the Executive of incentive compensation
preceding the Executive's termination or, if no such payment was made
during the twelve-month period preceding such termination, on the date
of such termination; and payments shall be made each year thereafter
on the same calendar date until the expiration of the Term; provided,
however, that if the Term expires on a date other than December 31 of
any calendar year, payment of the Incentive Payment attributable to
such partial calendar year shall be made on the date of expiration of
the Term, and the amount of such Incentive Payment due to the
Executive for such partial calendar year shall be prorated by
multiplying the full amount of an annual Incentive Payment by a
fraction, the numerator of which shall be the number of days from and
including January 1 of the calendar year in which the Term expires
through and including the date on which the expires, and the
denominator of which shall be 365.
<PAGE> 4
(iii) Compensation (including base compensation and
incentive or bonus compensation) received by the Executive from a
subsequent employer following the termination of the Executive's
employment as provided in Section 4 above shall not reduce the amount
of any compensation that the Executive is entitled to receive under
this Section 5.
(b) Welfare Benefit Plans. During the Term, the Company will
maintain in full force and effect for the continued benefit of the Executive
each employee welfare benefit plan (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended) in which the Executive was
entitled to participate immediately prior to the date of the Executive's
termination, unless an essentially equivalent and no less favorable benefit is
provided by a subsequent employer at no additional cost to the Executive. If
the terms of any welfare benefit plan of the Company do not permit continued
participation by the Executive, then the Company (at its expense) will arrange
to provide to the Executive a benefit substantially similar to and no less
favorable than the benefit the Executive was entitled to receive under such
plan at the end of the period of coverage.
(c) Retirement Benefits. During the Term, the Company (i) will
include or cause to be included the base salary received by the Executive in
determining "Average Salary" and (ii) will treat the Executive for all purposes
as an employee under all of the Company's retirement plans in which, the
Executive was a participant at the time of the commencement of the Term or
under which the Executive would become eligible during the Term (hereinafter
referred to collectively as the "Plan"). Benefits due to the Executive under
the Plan shall be computed as if the Executive had continued to be an employee
of the Company for the entire Term receiving Average Salary until expiration of
the Term. If under the terms of the Plan such continued coverage is not
permitted, the Company will pay to the Executive, or the Executive's personal
representative or the executor or administrator of the Executive's estate in
the case of survivor benefits, a supplemental benefit in an amount which, when
added to the benefits that the Executive is entitled to receive under the Plan,
shall equal the amount that the Executive (or the Executive's personal
representative or executor or administrator of the Executive's estate) would
have received under the Plan had the Executive remained an employee of the
Company during the Term. The Company shall fund its obligation to pay
supplemental benefits hereunder through purchase of an annuity contract or
otherwise; provided, however, that the Company shall be the sole legal and
beneficial owner of any such funding mechanism and neither the Executive nor
anyone else claiming under, by or through the Executive shall have any right,
title or interest therein. The obligations of the Company contained in the
second, third and fourth sentences of this Section 5(c) shall survive the
expiration of the Term.
(d) Plan Changes. The Company may, in its sole discretion,
change, replace or eliminate any plan or policy described in Sections 5(b)
or 5(c) hereof at any time, but shall not do so in a manner which would prevent
the Executive from receiving any benefit which the Executive would otherwise
have been entitled to receive either at the beginning of the Term or upon
termination of the Executive's employment thereafter.
(e) No Amendment to Disability Provisions of the Plan. Nothing
herein shall be construed to amend any provision of the Plan applicable to
disability of the Executive as defined in the Plan.
6. Indemnification. The Company shall pay all costs and expenses
(including legal fees and expenses), if any, incurred by Executive as a result
of any claim, action or proceeding arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any other agreement
between Executive and the Company, or any provision hereof or thereof. In
addition, if any excise tax imposed under Internal Revenue Code Section 4999 or
any successor provision, as amended after the date hereof, is provoked by any
amount paid or payable to or for the benefit of the Executive under this
Agreement or any other agreement between Executive and the Company, the Company
shall indemnify the Executive and hold the Executive harmless against all
claims, losses, damages, penalties, expenses and excise taxes.
7. Benefits Upon Death. In the event of the death of the
Executive following the termination of the Executive's employment but prior to
the expiration of the Term, for the balance of the Term the Company will pay
all amounts required under Section 5 to the Executive's personal representative
or the executor or administrator of the Executive's estate.
<PAGE> 5
8. Conditions to the Obligations of the Company. The Company
shall have no obligations to provide or cause to be provided to the Executive
the rights and benefits described in Section 5 hereof if any of the following
events shall occur:
(a) The Company shall terminate the Executive's
employment for "cause", which shall mean action by the Executive
involving willful malfeasance or failure to act by the Executive
involving willful nonfeasance, tending to have a material adverse
effect on the Company.
(b) The Executive shall not, promptly after termination
of the Executive's employment and upon receiving a written request to
do so, resign as a director and/or officer of each subsidiary and
affiliate of the Company of which the Executive is then serving as a
director and/or officer.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
10. Amendment. This Agreement may not be amended except by
written agreement of both the Company and the Executive.
11. Binding, Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns and on the
Executive and the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees, legatees, and trustees, provided,
however, the Executive may not assign, alienate or otherwise encumber any
rights, duties, or amounts which the Executive may be entitled to receive under
this Agreement.
12. Notices. Any notice or filing required or permitted to be
given to the Company shall be sufficient if in writing and hand delivered or
sent by registered or certified mail, return receipt requested, postage
prepaid, to the principal office of the Company, directed to the attention of
the Chairman of the Board. Any notice to the Executive must be in writing and
shall be effective when delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the Executive or the Executive's
personal representatives at the Executive's last known address.
13. Severability. In the event any provision of this Agreement is
held invalid, void or unenforceable, the same shall not affect in any respect
whatsoever the validity of any other provision of this Agreement.
14. Captions. The captions to the articles, sections, and
paragraphs of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
15. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
URANIUM RESOURCES, INC.
/s/ Leland O. Erdahl
----------------------------------------
Chairman of the Compensation Committee
EXECUTIVE:
/s/ Thomas H. Ehrlich
----------------------------------------
Name: Thomas H. Ehrlich
Title: Vice President, Secretary,
Treasurer and Chief Financial
Officer
<PAGE> 1
EXHIBIT 10.30
<PAGE> 2
URANIUM RESOURCES, INC.
COMPENSATION AGREEMENT
(Pelizza)
This Compensation Agreement (this "Agreement") made and entered into
June 2, 1997 by and between Uranium Resources, Inc., a Delaware corporation
(the "Company") and Mark S. Pelizza, ("Executive").
R E C I T A L S:
A. The Company's Board of Directors (the "Board") acknowledges
the Executive's contributions to the success of the Company have been, and will
continue to be substantial. As a publicly-held corporation, the Board
recognizes that there exists a possibility of change in control of the Company.
The Board also recognizes that the possibility of such a change in control may
contribute to uncertainty on the part of senior management of the Company and
may result in the departure or distraction of senior management from operating
responsibilities.
B. Further, the Board recognizes that a significant concern of
senior managers is providing for their post-retirement years. This concern
likewise may result in the departure or distraction of senior management.
C. The Board recognizes that outstanding management of the
Company is essential to advancing the best interests of the Company and its
shareholders. The Board believes that the objectives of securing and retaining
outstanding management will be achieved if the Company's key management
employees are given assurances of employment and post-employment security, so
that they will not be distracted by personal uncertainties and risks.
D. The Compensation Committee (the "Committee") of the Board has
recommended, and the Board has approved, entering into compensation agreements
with certain of the Company's key management executives in order to achieve the
foregoing objectives. The Company and the Executive enter into this Agreement
to induce the Executive to remain an employee of the Company and to continue to
devote full energy to the Company's affairs.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Term. The term of this Agreement (the "Term") shall commence
upon a Change in Control (as hereinafter defined) and continue until the date
that is twenty four (24) months after the date of such Change in Control.
2. Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following:
(a) any "person" (as such term is used in
Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act
of 1934) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 51% or
more of the combined voting power of the then outstanding
securities of the Company; or
(b) a change in the composition of a majority of
the Board (after the date hereof) within twelve months after
any person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or
more of the combined voting power of the then outstanding
securities of the Company.
3. Termination of Employment Before Commencement of Term. This
Agreement shall not in any way confer upon the Executive any rights with
respect to the continuation of employment by the Company prior to commencement
of the Term or interfere in any way with the right of the Company at any time
to terminate such employment or adjust the compensation of the Executive prior
to commencement of the Term.
<PAGE> 3
4. Termination of Employment During Term. Except as provided in
Section 8 hereof, the Company will provide or cause to be provided to the
Executive the rights and benefits described in Section 5 hereof in the event
that the Executive's employment by the Company is terminated at any time during
the Term or in connection with a Change in Control either:
(a) by the Company; or
(b) by the Executive following the occurrence of any of the
following events without the Executive's consent:
(i) The Executive is assigned substantial duties or
responsibilities that are materially inconsistent with the Executive's
position, duties, responsibilities or status during the twelve-month
period immediately prior to the commencement of the Term;
(ii) The Executive's base compensation is reduced or the
Executive experiences in any year a reduction in the ratio of the
Executive's incentive compensation payment to the Executive's base
compensation in such year which is greater than the average reduction
in the ratio of incentive compensation payments to base compensation
in such year experienced by all of the Company's other salaried
officers; or
(iii) The Executive is transferred to a location (other
than Albuquerque, New Mexico) which is an unreasonable distance from
the Executive's current principal work location.
5. Rights and Benefits upon Termination.
(a) Base Salary and Incentive Compensation.
(i) After termination of the Executive's employment as
provided in Section 4 above and until the expiration of the Term, the
Company will pay to the Executive, as severance compensation and in
lieu of any separation payments otherwise provided upon termination of
employment under any other severance pay or similar plan or policy of
the Company:
(A) monthly payments equal to one-twelfth of the
greater of (x) the Executive's annual base salary at the rate
in effect immediately prior to the Executive's termination, or
(y) if the termination shall have been effected pursuant to
Paragraph 4(b)(ii), the Executive's annual base salary at the
rate in effect immediately prior to the reduction described in
such Paragraph 4(b)(ii) ("Base Salary"), and
(B) annual incentive compensation payments
(individually, an "Incentive Payment") in an amount determined
by multiplying the Executive's annual Base Salary by the
average of the percentages calculated by dividing the
incentive compensation payment paid or committed to be paid to
the Executive in each of the three calendar years (or such
fewer calendar years as to which the Executive received or had
a commitment to receive incentive compensation payments)
immediately preceding the Executive's termination, by the
Executive's Base Salary in each of such calendar years.
(ii) The first Incentive Payment following termination of
employment shall be made no later than one year from the date of the
most recent payment to the Executive of incentive compensation
preceding the Executive's termination or, if no such payment was made
during the twelve-month period preceding such termination, on the date
of such termination; and payments shall be made each year thereafter
on the same calendar date until the expiration of the Term; provided,
however, that if the Term expires on a date other than December 31 of
any calendar year, payment of the Incentive Payment attributable to
such partial calendar year shall be made on the date of expiration of
the Term, and the amount of such Incentive Payment due to the
Executive for such partial calendar year shall be prorated by
multiplying the full amount of an annual Incentive Payment by a
fraction, the numerator of which shall be the number of days from and
including January 1 of the calendar year in which the Term expires
through and including the date on which the expires, and the
denominator of which shall be 365.
<PAGE> 4
(iii) Compensation (including base compensation and
incentive or bonus compensation) received by the Executive from a
subsequent employer following the termination of the Executive's
employment as provided in Section 4 above shall not reduce the amount
of any compensation that the Executive is entitled to receive under
this Section 5.
(b) Welfare Benefit Plans. During the Term, the Company will
maintain in full force and effect for the continued benefit of the Executive
each employee welfare benefit plan (as such term is defined in the Employee
Retirement Income Security Act of 1974, as amended) in which the Executive was
entitled to participate immediately prior to the date of the Executive's
termination, unless an essentially equivalent and no less favorable benefit is
provided by a subsequent employer at no additional cost to the Executive. If
the terms of any welfare benefit plan of the Company do not permit continued
participation by the Executive, then the Company (at its expense) will arrange
to provide to the Executive a benefit substantially similar to and no less
favorable than the benefit the Executive was entitled to receive under such
plan at the end of the period of coverage.
(c) Retirement Benefits. During the Term, the Company (i) will
include or cause to be included the base salary received by the Executive in
determining "Average Salary" and (ii) will treat the Executive for all purposes
as an employee under all of the Company's retirement plans in which, the
Executive was a participant at the time of the commencement of the Term or
under which the Executive would become eligible during the Term (hereinafter
referred to collectively as the "Plan"). Benefits due to the Executive under
the Plan shall be computed as if the Executive had continued to be an employee
of the Company for the entire Term receiving Average Salary until expiration of
the Term. If under the terms of the Plan such continued coverage is not
permitted, the Company will pay to the Executive, or the Executive's personal
representative or the executor or administrator of the Executive's estate in
the case of survivor benefits, a supplemental benefit in an amount which, when
added to the benefits that the Executive is entitled to receive under the Plan,
shall equal the amount that the Executive (or the Executive's personal
representative or executor or administrator of the Executive's estate) would
have received under the Plan had the Executive remained an employee of the
Company during the Term. The Company shall fund its obligation to pay
supplemental benefits hereunder through purchase of an annuity contract or
otherwise; provided, however, that the Company shall be the sole legal and
beneficial owner of any such funding mechanism and neither the Executive nor
anyone else claiming under, by or through the Executive shall have any right,
title or interest therein. The obligations of the Company contained in the
second, third and fourth sentences of this Section 5(c) shall survive the
expiration of the Term.
(d) Plan Changes. The Company may, in its sole discretion,
change, replace or eliminate any plan or policy described in Sections 5(b)
or 5(c) hereof at any time, but shall not do so in a manner which would prevent
the Executive from receiving any benefit which the Executive would otherwise
have been entitled to receive either at the beginning of the Term or upon
termination of the Executive's employment thereafter.
(e) No Amendment to Disability Provisions of the Plan. Nothing
herein shall be construed to amend any provision of the Plan applicable to
disability of the Executive as defined in the Plan.
6. Indemnification. The Company shall pay all costs and expenses
(including legal fees and expenses), if any, incurred by Executive as a result
of any claim, action or proceeding arising out of, or challenging the validity,
advisability or enforceability of, this Agreement or any other agreement
between Executive and the Company, or any provision hereof or thereof. In
addition, if any excise tax imposed under Internal Revenue Code Section 4999 or
any successor provision, as amended after the date hereof, is provoked by any
amount paid or payable to or for the benefit of the Executive under this
Agreement or any other agreement between Executive and the Company, the Company
shall indemnify the Executive and hold the Executive harmless against all
claims, losses, damages, penalties, expenses and excise taxes.
7. Benefits Upon Death. In the event of the death of the
Executive following the termination of the Executive's employment but prior to
the expiration of the Term, for the balance of the Term the Company will pay
all amounts required under Section 5 to the Executive's personal representative
or the executor or administrator of the Executive's estate.
<PAGE> 5
8. Conditions to the Obligations of the Company. The Company
shall have no obligations to provide or cause to be provided to the Executive
the rights and benefits described in Section 5 hereof if any of the following
events shall occur:
(a) The Company shall terminate the Executive's
employment for "cause", which shall mean action by the Executive
involving willful malfeasance or failure to act by the Executive
involving willful nonfeasance, tending to have a material adverse
effect on the Company.
(b) The Executive shall not, promptly after termination
of the Executive's employment and upon receiving a written request to
do so, resign as a director and/or officer of each subsidiary and
affiliate of the Company of which the Executive is then serving as a
director and/or officer.
9. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
10. Amendment. This Agreement may not be amended except by
written agreement of both the Company and the Executive.
11. Binding, Effect. This Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns and on the
Executive and the Executive's personal or legal representatives, executors,
administrators, successors, heirs, devisees, legatees, and trustees, provided,
however, the Executive may not assign, alienate or otherwise encumber any
rights, duties, or amounts which the Executive may be entitled to receive under
this Agreement.
12. Notices. Any notice or filing required or permitted to be
given to the Company shall be sufficient if in writing and hand delivered or
sent by registered or certified mail, return receipt requested, postage
prepaid, to the principal office of the Company, directed to the attention of
the Chairman of the Board. Any notice to the Executive must be in writing and
shall be effective when delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the Executive or the Executive's
personal representatives at the Executive's last known address.
13. Severability. In the event any provision of this Agreement is
held invalid, void or unenforceable, the same shall not affect in any respect
whatsoever the validity of any other provision of this Agreement.
14. Captions. The captions to the articles, sections, and
paragraphs of this Agreement are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.
15. Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
URANIUM RESOURCES, INC.
/s/ Leland O. Erdahl
----------------------------------------
Chairman of the Compensation Committee
EXECUTIVE:
/s/ Mark S. Pelizza
----------------------------------------
Name: Mark S. Pelizza
Title: Vice President-Health Safety and
Environmental Affairs
<PAGE> 1
EXHIBIT 10.31
<PAGE> 2
NOTE AND WARRANT EXCHANGE AGREEMENT
This Note and Warrant Exchange Agreement (the "Exchange Agreement") is
made between URANIUM RESOURCES, INC., a Delaware corporation (the "Company")
and LINDNER INVESTMENTS, a Massachusetts business trust, on behalf of its
series known as "Lindner Dividend Fund" and "Lindner Bulwark Fund"
(collectively, the "Purchaser"), as of March 23, 1998.
RECITALS:
A. Purchaser, through its various separate investment portfolios,
owns 2,219,525 shares of Common Stock of the Company, par value $0.001 per
share. Purchaser also owns warrants (the "Old Warrants") to acquire 1,000,000
additional shares of Common Stock of the Company at the price of $4.00 per
share of Common Stock. The Old Warrants expire at 5:00 p.m., Dallas, Texas,
time on May 31, 1998.
B. Purchaser, through the two of its investment portfolios
identified above, holds the Company's 6.5% Secured Convertible Notes Due May
31, 1998, which have an aggregate principal amount owing thereunder of
$6,000,000 (the "Old Notes"). The Old Notes are convertible into shares of
Common Stock of the Company at the conversion price of $4.00 per share of
Common Stock.
C. The Company has requested Purchaser to extend the maturity
date of the Notes and the Purchaser has agreed to do so on the condition that
the conversion price for shares of Common Stock of the Company be reduced, the
price payable upon exercise of the Old Warrants be reduced and the expiration
date of the Old Warrants be extended, all as provided hereafter.
Capitalized terms not defined herein shall have the meanings set forth
in the Note and Warrant Purchase Agreement, dated May 25, 1995, entered into by
and among the Company, the Purchaser and Lindner Dividend Fund, Inc., a
Missouri corporation (the "Agreement").
1. Exchange of Notes and Warrants. The Company has authorized and
proposes to issue and sell to the Purchaser two replacement notes (the
"Replacement Notes") in exchange for the surrender by the Purchaser of the Old
Notes. The Replacement Notes shall be dated their date of issue, shall mature
and bear interest and shall have such other terms and conditions as are set
forth in Exhibit A attached hereto. The Company has also authorized and
proposes to issue and sell to the Purchaser two replacement warrants (the
"Replacement Warrants") in exchange for the surrender by the Purchaser of the
Old Warrants. The Replacement Warrants shall be dated their date of issue and
shall have such other terms and conditions as are set forth in Exhibit B
attached hereto.
2. Amendment of Conversion Price. Section 3.1 of the Agreement
is hereby amended to read in its entirety as follows:
"3.1 Conversion Privilege. A Holder of a Note may convert the
unpaid principal balance of the Note into Common Stock of the Company
at any time. To determine the number of shares issuable upon
conversion of a Note, divide the principal amount to be converted by
the conversion price in effect on the conversion date and round the
result to the nearest 1/100 of a share. The conversion price shall
initially be $3.00 per share of Common Stock. A Holder may convert a
portion of a Note. Provisions of this Agreement that apply to
conversion of all of a Note also apply to conversion of a portion of
it."
3. Reaffirmation of the Agreement. Except as provided above and
in the Exhibits hereto, all of the terms and conditions of the Agreement and
the covenants and undertaking of the parties, are hereby reaffirmed and
confirmed. This Exchange Agreement shall constitute a supplement to the
Agreement.
<PAGE> 3
4. Counterparts. This Exchange 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 Exchange Agreement shall be deemed effective upon receipt
by each party hereto of a facsimile copy of this Exchange Agreement executed by
the other party hereto.
IN WITNESS WHEREOF, the parties have executed this Exchange Agreement.
URANIUM RESOURCES, INC.
By:
------------------------------
Its:
------------------------------
LINDNER INVESTMENTS, on behalf of
its series LINDNER DIVIDEND FUND
and LINDNER BULWARK FUND
By:
------------------------------
Its:
------------------------------
<PAGE> 4
EXHIBIT A
URANIUM RESOURCES, INC.
6.5% SECURED CONVERTIBLE NOTE
$__,000,000.00 March __, 1998
Note No. R-_____
FOR VALUE RECEIVED, the undersigned URANIUM RESOURCES, INC., a
Delaware corporation (the "Obligor" or "Uranium Resources"), hereby promises to
pay to ____________________ or its registered assigns (the "Purchaser") on May
31, 2000, the principal sum of ____________________________, and to pay
interest on the unpaid principal balance hereof from the date hereof at a rate
of 6.5% per annum, payable quarterly in arrears. This Note and any interest
thereon may not be transferred only as provided in the Note and Warrant
Purchase Agreement dated May 25, 1995, between Obligor and Purchaser, as
supplemented by the Note and Warrant Exchange Agreement, dated March 23, 1998
(the "Note and Warrant Purchase Agreement").
This Note is issued pursuant to the Note and Warrant Purchase
Agreement and this Note and the holder hereof is entitled, equally and ratably
with the holders of all other Notes outstanding under the Note and Warrant
Purchase Agreement, to all of the benefits provided for thereby, including, but
not limited to the security granted to the Purchaser therein, and the benefits
under the Guaranty executed by the Mortgaging Subsidiary in connection
therewith, and shall be bound by all of the provisions set forth therein, to
which Note Purchase and Warrant Agreement reference is hereby made for a
statement thereof.
This Note is supported by the Guaranty of the Mortgaging Subsidiary,
which Guaranty will be secured by a lien and security interest in and upon the
Mortgaging Subsidiary's interest in the Collateral and the Texas Real Property
Subject to and upon compliance with the provisions of the Note and
Warrant Purchase Agreement, the Holder of this Note is entitled, at its option,
at any time, to convert this Note into fully paid and non-assessable shares of
Common Stock of the Obligor at the initial Conversion Price of $3.00 per share,
subject to such adjustment or adjustments, if any, of such Conversion Price and
the Common Stock issuable upon conversion, as may be required by the Note and
Warrant Purchase Agreement, upon surrender of this Note, duly endorsed or
assigned to the Obligor or in blank, to the Obligor, with the conversion notice
attached hereto, or accompanied by a separate written notice substantially in
the form of such conversion notice, duly executed by the Holder and stating
that the Holder hereof elects to convert this Note, or if less than the entire
principal amount hereof is to be converted, the portion hereof to be converted,
all in accordance with the provisions of the Note and Warrant Purchase
Agreement. Except as otherwise provided in the Note and Warrant Purchase
Agreement, no payment or adjustment is to be made on conversion for interest
accrued hereon or for dividends issued on securities issued on conversion. No
fractional shares will be issued on conversion, but instead of any fractional
interest, the Obligor shall pay a cash adjustment as provided in the Note and
Warrant Purchase Agreement.
A-1
<PAGE> 5
In the event any action is taken to collect or enforce the
indebtedness evidenced by this Note (the "Indebtedness") or any part thereof,
the Obligor and each endorser hereof agrees to pay, in addition to the
principal and interest due and payable hereon, all costs of collecting this
Note, including reasonable attorneys' fees and expenses. These costs shall
include any expenses incurred by the Purchaser in any bankruptcy,
reorganization, or other insolvency proceeding.
Acceptance by the Purchaser of any payment in an amount less than the
amount then due and owing shall be deemed an acceptance on account only, and
the failure to pay the entire amount then due and owing shall cause the
Purchaser and endorsers to remain in default.
The liability of the Obligor and any endorsers hereof, shall be joint
and several, absolute and unconditional, without regard to the liability of any
other party hereunder or under any other document or instrument executed in
connection with this Note.
No delay or omission of any holder in exercising any right or rights,
shall operate as a waiver of such right or any other rights. Waiver on one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion.
The liability of the Obligor under this Note (and the liability of any
endorsers and/or Guarantors of this Note) shall not be discharged, diminished
or in any way impaired by: (a) the release, impairment, discharge,
substitution, exchange, modification of or failure to obtain foreclose or
realize on any guaranty or any security granted Purchaser by any party for the
Indebtedness; (b) any waiver by Purchaser or failure to enforce or exercise
rights under any of the terms, covenants or conditions of this Note or any
guaranty; (c) the granting of any renewal, indulgence, extension of time to
Obligor, or any other obligors of the Indebtedness; or (d) the addition or
release of any person or entity primarily or secondarily liable for the
Indebtedness.
In no event shall the interest rate charged or received hereunder at
any time exceed the maximum interest rate permitted under applicable law.
Payments of interest received by Purchaser hereunder which would otherwise
cause the interest rate hereunder to exceed such maximum interest rate shall,
to the extent of such excess, be deemed to be (and deemed to have been
contracted as being) prepayments of principal and applied as such.
Under certain circumstances, as specified in the Note and Warrant
Purchase Agreement, the principal of this Note may be declared due and payable
in the manner and with the effect provided in the Note and Warrant Purchase
Agreement.
This Note shall be binding upon the undersigned and its successors and
assigns and shall inure to the benefit of Purchaser, its successors and
assigns. Every person and entity at any time liable for the payment of this
Note hereby waives demand, presentment, protest, notice of protest, note of
nonpayment due and all other requirements otherwise necessary to hold them
immediately liable for payment hereunder.
A-2
<PAGE> 6
This Note and the Note and Warrant Purchase Agreement are governed by
and shall be construed and enforced in accordance with Missouri law.
URANIUM RESOURCES, INC.
By:
------------------------------
Its:
------------------------------
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS NOTE MAY NOT BE
PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER THE 1933
ACT PROVIDED, HOWEVER, THAT THIS NOTE MAY BE PLEDGED OR OTHERWISE TRANSFERRED
PURSUANT TO AN EXEMPTION FROM REGISTRATION, INCLUDING, BUT NOT LIMITED TO,
THOSE PROVIDED IN RULE 144, 144A OR 145 OR REGULATION S UNDER THE 1933 ACT.
TRANSFER OF THIS NOTE IS ALSO SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS
SET FORTH IN THAT CERTAIN NOTE AND WARRANT PURCHASE AGREEMENT DATED MAY 25,
1995, AMONG URANIUM RESOURCES, INC., LINDNER INVESTMENTS AND LINDNER FUND,
INC., A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICE OF URANIUM
RESOURCES, INC., AND WILL BE MADE AVAILABLE BY URANIUM RESOURCES, INC. UPON
WRITTEN REQUEST.
ASSIGNMENT
I/we assign and transfer $_______________ principal amount of this Note No.
R-___, to ____________________________________________________________________
_________________________________________ ___________________________
(Print or type name, address and zip code of
assignee) Insert social security or other identifying number of
assignee:_____________________ and irrevocably appoint
_____________________________ as my/our agent and attorney-in-fact to transfer
this Note, or the portion hereof which has been so assigned, on the books of
the Company. The agent may substitute another to act for him or her.
Dated: Signed:
--------------- ------------------------------------
Signature Guaranteed By: [Name of Noteholder--Sign exactly as name
appears on the first page of this Note]
By:
- ------------------------------ ------------------------------
Its:
-----------------------------
A-3
<PAGE> 7
NOTICE OF CONVERSION
To Uranium Resources, Inc.:
The undersigned owner of this Secured Convertible Note hereby
irrevocably exercises the option to convert $_____________ principal amount of
this Secured Convertible Note, into shares of Common Stock of Uranium
Resources, Inc., in accordance with its terms, and directs that the shares of
Common Stock issuable and deliverable upon conversion be issued and delivered
to the undersigned unless a different name has been indicated below. If shares
of Common Stock are to be registered in the name of a person other than the
undersigned, the undersigned will pay any transfer taxes payable with respect
thereto.
Dated:
----------------------- Signed:
----------------------------------
[Name of Noteholder]
By:
------------------------------
Its:
------------------------------
Fill in for registration of shares of Common Stock only if otherwise than in
name and address of the above named Noteholder:
- ------------------------------ ------------------------------
(Name) (Address)
- ------------------------------ ------------------------------
(City and State) (Tax Identification Number)
(Please print name and address including zip code number)
A-4
<PAGE> 8
EXHIBIT B
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES OR BLUE SKY LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED IN VIOLATION OF SUCH ACT AND LAWS OR THE
RULES AND REGULATIONS THEREUNDER
VOID AFTER 5:00 P.M., DALLAS, TEXAS TIME,
ON MAY 31, 2000
URANIUM RESOURCES, INC.
URIW- _________
WARRANT TO PURCHASE COMMON STOCK
This certifies that, FOR VALUE RECEIVED, ___________________________,
or its registered assigns ("Holder"), is entitled, subject to the terms of this
Warrant, to purchase from URANIUM RESOURCES, INC., a Delaware corporation (the
"Company"), at any time after the date of issuance hereof and prior to 5:00
p.m., Dallas, Texas time, on May 31, 2000 (the "Warrant Expiration Date"), up
to _________ fully paid and nonassessable shares of the Common Stock, $0.001
par value, of the Company (the "Common Stock"), at an initial purchase price of
$3.00 per share, payable in lawful money of the United States.
This Warrant may be exercised in whole or in part by presentation
hereof with the Notice of Exercise contained herein duly executed and with
simultaneous payment of the applicable aggregate Purchase Price (subject to
adjustment) at the office of the Company in Dallas, Texas. Payment of such
Purchase Price shall be made, at the option of the Holder hereof, by certified
check or bank draft payable in United States currency.
This Warrant is one of a duly authorized issue of common stock
purchase warrants issued under and in accordance with that certain Note and
Warrant Purchase Agreement), dated as of May 25, 1995, by and among Uranium
Resources, Inc., Lindner Investments (on behalf of its Lindner Bulwark Fund
series), and Lindner Dividend Fund, Inc., as supplemented by that certain Note
and Warrant Exchange Agreement, dated March 23, 1998 (the "Purchase
Agreement"), and is subject to the terms and provisions contained in the
Purchase Agreement, to all of which the Holder hereof, by acceptance hereof,
hereby consents. A copy of the Purchase Agreement may be obtained for
inspection upon written request to the Company by a Holder of this Warrant.
This Warrant does not entitle any Holder to any rights of a
shareholder of the Company. The number of shares of Common Stock to be
received upon the exercise of this Warrant and the price to be paid for a share
of Common Stock may be adjusted from time to time as set forth in the Purchase
Agreement. The shares of Common Stock deliverable upon such exercise, as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Stock" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Purchase Price".
As soon as practicable after any exercise of this Warrant and payment
of the sum payable upon such exercise, and in any event within 10 days
thereafter, the Company, at its expense (including the payment by it of any
applicable taxes), will cause to be issued in the name of and delivered to the
holder hereof, or in the name of such other person as such holder may direct, a
certificate or certificates for the number of fully paid and nonassessable
shares of Warrant Stock, or other securities or property to which such holder
shall be entitled upon such exercise, plus, in lieu of any fractional share of
Warrant Stock to which such holder would otherwise be entitled, cash equal to
such fraction multiplied by the Market Price (as defined in the Purchase
Agreement). Issuance and delivery of Warrant Stock deliverable on the due
exercise of this Warrant may be postponed by the Company and its transfer agent
during any period, not
B-1
<PAGE> 9
exceeding thirty (30) days, for which the transfer books of the Company for the
Common Stock are closed between (1) the record date set by the Board of
Directors for the determination of shareholders entitled to vote at or to
receive notice of any shareholders meeting, or entitled to receive payment of
any dividends or to any allotment of rights or to exercise rights in respect of
any change, conversion or exchange of capital stock, and (2) the date of such
meeting of shareholders, the date for the payment of such dividends, the date
for such allotment of rights, or the date when any such change or conversion or
exchange of capital stock shall go into effect, as the case may be.
Upon surrender for exchange of this Warrant (in negotiable form, if
not surrendered by the holder named on the face hereof) to the Company, the
Company, at its expense, will issue and deliver new Warrants of like tenor,
calling in the aggregate for the same amount of Warrant Stock, in the
denomination or denominations requested, to or on the order of such holder and
in the name of such holder as such holder may direct. Until this Warrant is
transferred on the books of the Company, the Company may treat the registered
holder of this Warrant as absolute owner for all purposes without being
affected by any notice to the contrary. Transfer of this Warrant is restricted
as provided in the Purchase Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name by the manual signatures of its Chairman or President or one of its
Vice Presidents, thereunto duly authorized, and its corporate seal to be
impressed or imprinted hereon, attested by the manual signature of its
Secretary or an Assistant Secretary.
Dated: , 1998 URANIUM RESOURCES, INC.
---------------
By:
---------------------------
ATTEST: Its:
-------------------------
By:
------------------------------
Secretary
[SEAL]
B-2
<PAGE> 10
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell, assigns and transfers
the within Warrant, and irrevocably appoints __________________ as agent and
attorney-in-fact to transfer such Warrant on the books of the Company, with
full power of substitution in the premises, to the following assignee(s):
- ------------------------------ ------------------------------
Name Address
- ---------------
SSN or EIN
----------------------------
[Name of Warrant holder]
By:
------------------------------
Its:
------------------------------
B-3
<PAGE> 11
NOTICE OF EXERCISE
The undersigned hereby exercises the right to purchase ________ shares
of Common Stock covered by this Warrant according to the conditions thereof and
herewith makes payment of the Purchase Price of such shares in full.
Date:
------------------- ---------------------------------
[Name of Warrant holder]
By:
-----------------------------
Its:
-----------------------------
The Company is requested to issue certificates for the Warrant Shares acquired
upon exercise of this Warrant as follows:
- ------------------------------ ------------------------------
Name Address
- ---------------
SSN or EIN
B-4
<PAGE> 1
EXHIBIT 10.32
<PAGE> 2
URANIUM RESOURCES, INC.
6.5% SECURED CONVERTIBLE NOTE
$1,500,000.00 March 23, 1998
Note No.____
FOR VALUE RECEIVED, the undersigned URANIUM RESOURCES, INC., a
Delaware corporation (the "Obligor" or "Uranium Resources"), hereby promises to
pay to LINDNER BULWARK FUND, a series of LINDNER INVESTMENTS, a Massachusetts
business trust, or its registered assigns (the "Purchaser") on May 31, 2000,
the principal sum of ONE MILLION FIVE HUNDRED THOUSAND and 00/100 Dollars
($1,500,000.00), and to pay interest on the unpaid principal balance hereof
from the date hereof at a rate of 6.5% per annum, payable quarterly in arrears.
This Note and any interest thereon may not be transferred only as provided in
the Note and Warrant Purchase Agreement dated May 25, 1995, between Obligor and
Purchaser, as supplemented by the Note and Warrant Exchange Agreement, dated
March 23, 1998 (the "Note and Warrant Purchase Agreement").
This Note is issued pursuant to the Note and Warrant Purchase
Agreement and this Note and the holder hereof is entitled, equally and ratably
with the holders of all other Notes outstanding under the Note and Warrant
Purchase Agreement, to all of the benefits provided for thereby, including, but
not limited to the security granted to the Purchaser therein, and the benefits
under the Guaranty executed by the Mortgaging Subsidiary in connection
therewith, and shall be bound by all of the provisions set forth therein, to
which Note Purchase and Warrant Agreement reference is hereby made for a
statement thereof.
This Note is supported by the Guaranty of the Mortgaging Subsidiary,
which Guaranty will be secured by a lien and security interest in and upon the
Mortgaging Subsidiary's interest in the Collateral and the Texas Real Property
Subject to and upon compliance with the provisions of the Note and
Warrant Purchase Agreement, the Holder of this Note is entitled, at its option,
at any time, to convert this Note into fully paid and non-assessable shares of
Common Stock of the Obligor at the initial Conversion Price of $3.00 per share,
subject to such adjustment or adjustments, if any, of such Conversion Price and
the Common Stock issuable upon conversion, as may be required by the Note and
Warrant Purchase Agreement, upon surrender of this Note, duly endorsed or
assigned to the Obligor or in blank, to the Obligor, with the conversion notice
attached hereto, or accompanied by a separate written notice substantially in
the form of such conversion notice, duly executed by the Holder and stating
that the Holder hereof elects to convert this Note, or if less than the entire
principal amount hereof is to be converted, the portion hereof to be converted,
all in accordance with the provisions of the Note and Warrant Purchase
Agreement. Except as otherwise provided in the Note and Warrant Purchase
Agreement, no payment or adjustment is to be made on conversion for interest
accrued hereon or for dividends issued on securities issued on conversion. No
fractional shares will be issued on conversion, but instead of any fractional
interest, the Obligor shall pay a cash adjustment as provided in the Note and
Warrant Purchase Agreement.
In the event any action is taken to collect or enforce the
indebtedness evidenced by this Note (the "Indebtedness") or any part thereof,
the Obligor and each endorser hereof agrees to pay, in addition to the
principal and interest due and payable hereon, all costs of collecting this
Note, including reasonable attorneys' fees and expenses. These costs shall
include any expenses incurred by the Purchaser in any bankruptcy,
reorganization, or other insolvency proceeding.
Acceptance by the Purchaser of any payment in an amount less than the
amount then due and owing shall be deemed an acceptance on account only, and
the failure to pay the entire amount then due and owing shall cause the
Purchaser and endorsers to remain in default.
<PAGE> 3
The liability of the Obligor and any endorsers hereof, shall be joint
and several, absolute and unconditional, without regard to the liability of any
other party hereunder or under any other document or instrument executed in
connection with this Note.
No delay or omission of any holder in exercising any right or rights,
shall operate as a waiver of such right or any other rights. Waiver on one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion.
The liability of the Obligor under this Note (and the liability of any
endorsers and/or Guarantors of this Note) shall not be discharged, diminished
or in any way impaired by: (a) the release, impairment, discharge,
substitution, exchange, modification of or failure to obtain foreclose or
realize on any guaranty or any security granted Purchaser by any party for the
Indebtedness; (b) any waiver by Purchaser or failure to enforce or exercise
rights under any of the terms, covenants or conditions of this Note or any
guaranty; (c) the granting of any renewal, indulgence, extension of time to
Obligor, or any other obligors of the Indebtedness; or (d) the addition or
release of any person or entity primarily or secondarily liable for the
Indebtedness.
In no event shall the interest rate charged or received hereunder at
any time exceed the maximum interest rate permitted under applicable law.
Payments of interest received by Purchaser hereunder which would otherwise
cause the interest rate hereunder to exceed such maximum interest rate shall,
to the extent of such excess, be deemed to be (and deemed to have been
contracted as being) prepayments of principal and applied as such.
Under certain circumstances, as specified in the Note and Warrant
Purchase Agreement, the principal of this Note may be declared due and payable
in the manner and with the effect provided in the Note and Warrant Purchase
Agreement.
This Note shall be binding upon the undersigned and its successors and
assigns and shall inure to the benefit of Purchaser, its successors and
assigns. Every person and entity at any time liable for the payment of this
Note hereby waives demand, presentment, protest, notice of protest, note of
nonpayment due and all other requirements otherwise necessary to hold them
immediately liable for payment hereunder.
2
<PAGE> 4
This Note and the Note and Warrant Purchase Agreement are governed
by and shall be construed and enforced in accordance with Missouri law.
URANIUM RESOURCES, INC.
By: /s/ Paul K. Willmott
-------------------------------
Its: President
------------------------------
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS NOTE MAY NOT BE
PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER THE 1933
ACT PROVIDED, HOWEVER, THAT THIS NOTE MAY BE PLEDGED OR OTHERWISE TRANSFERRED
PURSUANT TO AN EXEMPTION FROM REGISTRATION, INCLUDING, BUT NOT LIMITED TO,
THOSE PROVIDED IN RULE 144, 144A OR 145 OR REGULATIONS UNDER THE 1933 ACT.
TRANSFER OF THIS NOTE IS ALSO SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS
SET FORTH IN THAT CERTAIN NOTE AND WARRANT PURCHASE AGREEMENT DATED MAY 25,
1995, AMONG URANIUM RESOURCES, INC., LINDNER INVESTMENTS AND LINDNER FUND,
INC., A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICE OF URANIUM
RESOURCES, INC., AND WILL BE MADE AVAILABLE BY URANIUM RESOURCES, INC. UPON
WRITTEN REQUEST.
ASSIGNMENT
I/we assign and transfer $________ principal amount of this Note No. R-____, to
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Insert social security or other identifying number of assignee:______________
and irrevocably appoint ______________________ as my/our agent and attorney-in-
fact to transfer this Note, or the portion hereof which has been so assigned,
on the books of the Company. The agent may substitute another to act for
him or her.
Dated: Signed:
----------------------------- ---------------------------
Signature Guaranteed By: [Name of Noteholder--Sign exactly
as name appears on the first page
of this Note]
By:
- ----------------------------------- -------------------------------
Its:
------------------------------
3
<PAGE> 5
NOTICE OF CONVERSION
To Uranium Resources, Inc.:
The undersigned owner of this Secured Convertible Note hereby
irrevocably exercises the option to convert $_____________ principal
amount of this Secured Convertible Note, into shares of Common Stock
of Uranium Resources, Inc., in accordance with its terms, and directs
that the shares of Common Stock issuable and deliverable upon
conversion be issued and delivered to the undersigned unless a
different name has been indicated below. If shares of Common Stock
are to be registered in the name of a person other than the
undersigned, the undersigned will pay any transfer taxes payable with
respect thereto.
Dated: Signed:
----------------------------- ---------------------------
[Name of Noteholder]
By:
-------------------------------
Its:
------------------------------
Fill in for registration of shares of Common Stock only if otherwise than in
name and address of the above named Noteholder:
- ----------------------------------- -----------------------------------
(Name) (Address)
- ----------------------------------- -----------------------------------
(City and State) (Tax Identification Number)
(Please print name and address including zip code number)
4
<PAGE> 1
EXHIBIT 10.33
<PAGE> 2
URANIUM RESOURCES, INC.
6.5% SECURED CONVERTIBLE NOTE
$4,500,000.00 March 23, 1998
Note No.____
FOR VALUE RECEIVED, the undersigned URANIUM RESOURCES, INC., a
Delaware corporation (the "Obligor" or "Uranium Resources"), hereby promises to
pay to LINDNER BULWARK FUND, a series of LINDNER INVESTMENTS, a Massachusetts
business trust, or its registered assigns (the "Purchaser") on May 31, 2000,
the principal sum of FOUR MILLION FIVE HUNDRED THOUSAND and 00/100 Dollars
($4,500,000.00), and to pay interest on the unpaid principal balance hereof
from the date hereof at a rate of 6.5% per annum, payable quarterly in arrears.
This Note and any interest thereon may not be transferred only as provided in
the Note and Warrant Purchase Agreement dated May 25, 1995, between Obligor and
Purchaser, as supplemented by the Note and Warrant Exchange Agreement, dated
March 23, 1998 (the "Note and Warrant Purchase Agreement").
This Note is issued pursuant to the Note and Warrant Purchase
Agreement and this Note and the holder hereof is entitled, equally and ratably
with the holders of all other Notes outstanding under the Note and Warrant
Purchase Agreement, to all of the benefits provided for thereby, including, but
not limited to the security granted to the Purchaser therein, and the benefits
under the Guaranty executed by the Mortgaging Subsidiary in connection
therewith, and shall be bound by all of the provisions set forth therein, to
which Note Purchase and Warrant Agreement reference is hereby made for a
statement thereof.
This Note is supported by the Guaranty of the Mortgaging Subsidiary,
which Guaranty will be secured by a lien and security interest in and upon the
Mortgaging Subsidiary's interest in the Collateral and the Texas Real Property
Subject to and upon compliance with the provisions of the Note and
Warrant Purchase Agreement, the Holder of this Note is entitled, at its option,
at any time, to convert this Note into fully paid and non-assessable shares of
Common Stock of the Obligor at the initial Conversion Price of $3.00 per share,
subject to such adjustment or adjustments, if any, of such Conversion Price and
the Common Stock issuable upon conversion, as may be required by the Note and
Warrant Purchase Agreement, upon surrender of this Note, duly endorsed or
assigned to the Obligor or in blank, to the Obligor, with the conversion notice
attached hereto, or accompanied by a separate written notice substantially in
the form of such conversion notice, duly executed by the Holder and stating
that the Holder hereof elects to convert this Note, or if less than the entire
principal amount hereof is to be converted, the portion hereof to be converted,
all in accordance with the provisions of the Note and Warrant Purchase
Agreement. Except as otherwise provided in the Note and Warrant Purchase
Agreement, no payment or adjustment is to be made on conversion for interest
accrued hereon or for dividends issued on securities issued on conversion. No
fractional shares will be issued on conversion, but instead of any fractional
interest, the Obligor shall pay a cash adjustment as provided in the Note and
Warrant Purchase Agreement.
In the event any action is taken to collect or enforce the
indebtedness evidenced by this Note (the "Indebtedness") or any part thereof,
the Obligor and each endorser hereof agrees to pay, in addition to the
principal and interest due and payable hereon, all costs of collecting this
Note, including reasonable attorneys' fees and expenses. These costs shall
include any expenses incurred by the Purchaser in any bankruptcy,
reorganization, or other insolvency proceeding.
Acceptance by the Purchaser of any payment in an amount less than the
amount then due and owing shall be deemed an acceptance on account only, and
the failure to pay the entire amount then due and owing shall cause the
Purchaser and endorsers to remain in default.
<PAGE> 3
The liability of the Obligor and any endorsers hereof, shall be joint
and several, absolute and unconditional, without regard to the liability of any
other party hereunder or under any other document or instrument executed in
connection with this Note.
No delay or omission of any holder in exercising any right or rights,
shall operate as a waiver of such right or any other rights. Waiver on one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion.
The liability of the Obligor under this Note (and the liability of any
endorsers and/or Guarantors of this Note) shall not be discharged, diminished
or in any way impaired by: (a) the release, impairment, discharge,
substitution, exchange, modification of or failure to obtain foreclose or
realize on any guaranty or any security granted Purchaser by any party for the
Indebtedness; (b) any waiver by Purchaser or failure to enforce or exercise
rights under any of the terms, covenants or conditions of this Note or any
guaranty; (c) the granting of any renewal, indulgence, extension of time to
Obligor, or any other obligors of the Indebtedness; or (d) the addition or
release of any person or entity primarily or secondarily liable for the
Indebtedness.
In no event shall the interest rate charged or received hereunder at
any time exceed the maximum interest rate permitted under applicable law.
Payments of interest received by Purchaser hereunder which would otherwise
cause the interest rate hereunder to exceed such maximum interest rate shall,
to the extent of such excess, be deemed to be (and deemed to have been
contracted as being) prepayments of principal and applied as such.
Under certain circumstances, as specified in the Note and Warrant
Purchase Agreement, the principal of this Note may be declared due and payable
in the manner and with the effect provided in the Note and Warrant Purchase
Agreement.
This Note shall be binding upon the undersigned and its successors and
assigns and shall inure to the benefit of Purchaser, its successors and
assigns. Every person and entity at any time liable for the payment of this
Note hereby waives demand, presentment, protest, notice of protest, note of
nonpayment due and all other requirements otherwise necessary to hold them
immediately liable for payment hereunder.
2
<PAGE> 4
This Note and the Note and Warrant Purchase Agreement are governed
by and shall be construed and enforced in accordance with Missouri law.
URANIUM RESOURCES, INC.
By: /s/ Paul K. Willmott
-------------------------------
Its: President
------------------------------
THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"). THIS NOTE MAY NOT BE
PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER THE 1933
ACT PROVIDED, HOWEVER, THAT THIS NOTE MAY BE PLEDGED OR OTHERWISE TRANSFERRED
PURSUANT TO AN EXEMPTION FROM REGISTRATION, INCLUDING, BUT NOT LIMITED TO,
THOSE PROVIDED IN RULE 144, 144A OR 145 OR REGULATION S UNDER THE 1933 ACT.
TRANSFER OF THIS NOTE IS ALSO SUBJECT TO THE RESTRICTIONS, TERMS AND CONDITIONS
SET FORTH IN THAT CERTAIN NOTE AND WARRANT PURCHASE AGREEMENT DATED MAY 25,
1995, AMONG URANIUM RESOURCES, INC., LINDNER INVESTMENTS AND LINDNER FUND,
INC., A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT THE OFFICE OF URANIUM
RESOURCES, INC., AND WILL BE MADE AVAILABLE BY URANIUM RESOURCES, INC. UPON
WRITTEN REQUEST.
ASSIGNMENT
I/we assign and transfer $________ principal amount of this Note No. R-____, to
________________________________________________________________________________
(Print or type name, address and zip code of assignee)
Insert social security or other identifying number of assignee:_______________
and irrevocably appoint ______________________ as my/our agent and attorney-in-
fact to transfer this Note, or the portion hereof which has been so assigned,
on the books of the Company. The agent may substitute another to act for him
or her.
Dated: Signed:
--------------------------- -------------------------------
Signature Guaranteed By: [Name of Noteholder--Sign exactly as
name appears on the first page of this
Note]
By:
- --------------------------------- -----------------------------------
Its:
----------------------------------
3
<PAGE> 5
NOTICE OF CONVERSION
To Uranium Resources, Inc.:
The undersigned owner of this Secured Convertible Note hereby
irrevocably exercises the option to convert $_____________ principal
amount of this Secured Convertible Note, into shares of Common Stock
of Uranium Resources, Inc., in accordance with its terms, and directs
that the shares of Common Stock issuable and deliverable upon
conversion be issued and delivered to the undersigned unless a
different name has been indicated below. If shares of Common Stock
are to be registered in the name of a person other than the
undersigned, the undersigned will pay any transfer taxes payable with
respect thereto.
Dated: Signed:
----------------------------- ---------------------------
[Name of Noteholder]
By:
-------------------------------
Its:
------------------------------
Fill in for registration of shares of Common Stock only if otherwise than in
name and address of the above named Noteholder:
- ----------------------------------- -----------------------------------
(Name) (Address)
- ----------------------------------- -----------------------------------
(City and State) (Tax Identification Number)
(Please print name and address including zip code number)
4
<PAGE> 1
EXHIBIT 10.34
<PAGE> 2
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES OR BLUE SKY LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED IN VIOLATION OF SUCH ACT AND LAWS OR THE
RULES AND REGULATIONS THEREUNDER
VOID AFTER 5:00 P.M., DALLAS, TEXAS TIME,
ON MAY 31, 2000
URANIUM RESOURCES, INC.
URIW-______
WARRANT TO PURCHASE COMMON STOCK
This certifies that, FOR VALUE RECEIVED, LINDNER DIVIDEND FUND, a
series of LINDNER INVESTMENTS, a Massachusetts business trust, or its
registered assigns ("Holder"), is entitled, subject to the terms of this
Warrant, to purchase from URANIUM RESOURCES, INC., a Delaware corporation (the
"Company"), at any time after the date of issuance hereof and prior to 5:00
p.m., Dallas, Texas time, on May 31, 2000 (the "Warrant Expiration Date"), up
to 625,000 fully paid and nonassessable shares of the Common Stock, $0.001 par
value, of the Company (the "Common Stock"), at an initial purchase price of
$3.00 per share, payable in lawful money of the United States.
This Warrant may be exercised in whole or in part by presentation
hereof with the Notice of Exercise contained herein duly executed and with
simultaneous payment of the applicable aggregate Purchase Price (subject to
adjustment) at the office of the Company in Dallas, Texas. Payment of such
Purchase Price shall be made, at the option of the Holder hereof, by certified
check or bank draft payable in United States currency.
This Warrant is one of a duly authorized issue of common stock
purchase warrants issued under and in accordance with that certain Note and
Warrant Purchase Agreement), dated as of May 25, 1995, by and among Uranium
Resources, Inc., Lindner Investments (on behalf of its Lindner Bulwark Fund
series), and Lindner Dividend Fund, Inc., as supplemented by that certain Note
and Warrant Exchange Agreement, dated March 23, 1998 (the "Purchase
Agreement"), and is subject to the terms and provisions contained in the
Purchase Agreement, to all of which the Holder hereof, by acceptance hereof,
hereby consents. A copy of the Purchase Agreement may be obtained for
inspection upon written request to the Company by a Holder of this Warrant.
This Warrant does not entitle any Holder to any rights of a
shareholder of the Company. The number of shares of Common Stock to be
received upon the exercise of this Warrant and the price to be paid for a share
of Common Stock may be adjusted from time to time as set forth in the Purchase
Agreement. The shares of Common Stock deliverable upon such exercise, as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Stock" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Purchase Price".
As soon as practicable after any exercise of this Warrant and payment
of the sum payable upon such exercise, and in any event within 10 days
thereafter, the Company, at its expense (including the payment by it of any
applicable taxes), will cause to be issued in the name of and delivered to the
holder hereof, or in the name of such other person as such holder may direct, a
certificate or certificates for the number of fully paid and nonassessable
shares of Warrant Stock, or other securities or property to which such holder
shall be entitled upon such exercise, plus, in lieu of any fractional share of
Warrant Stock to which such holder would otherwise be entitled, cash equal to
such fraction multiplied by the Market Price (as defined in the Purchase
Agreement). Issuance and delivery of Warrant Stock deliverable on the due
exercise of this Warrant may be postponed by the Company and its transfer agent
during any period, not exceeding thirty (30) days, for which the transfer books
of the Company for the Common Stock are closed between (1) the record date set
by the Board of Directors for the determination of shareholders entitled to
vote at or to receive notice of any shareholders meeting, or entitled to
<PAGE> 3
receive payment of any dividends or to any allotment of rights or to exercise
rights in respect of any change, conversion or exchange of capital stock, and
(2) the date of such meeting of shareholders, the date for the payment of such
dividends, the date for such allotment of rights, or the date when any such
change or conversion or exchange of capital stock shall go into effect, as the
case may be.
Upon surrender for exchange of this Warrant (in negotiable form, if
not surrendered by the holder named on the face hereof) to the Company, the
Company, at its expense, will issue and deliver new Warrants of like tenor,
calling in the aggregate for the same amount of Warrant Stock, in the
denomination or denominations requested, to or on the order of such holder and
in the name of such holder as such holder may direct. Until this Warrant is
transferred on the books of the Company, the Company may treat the registered
holder of this Warrant as absolute owner for all purposes without being
affected by any notice to the contrary. Transfer of this Warrant is restricted
as provided in the Purchase Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name by the manual signatures of its Chairman or President or one of its
Vice Presidents, thereunto duly authorized, and its corporate seal to be
impressed or imprinted hereon, attested by the manual signature of its
Secretary or an Assistant Secretary.
Date: , 1998 URANIUM RESOURCES, INC.
-------------------
ATTEST: By: /s/ Paul K. Willmott
-------------------------------
Its: President
------------------------------
By:
-----------------------------
Secretary
[SEAL]
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell, assigns and transfers
the within Warrant, and irrevocably appoints _________________ as agent and
attorney-in-fact to transfer such Warrant on the books of the Company, with
full power of substitution in the premises, to the following assignee(s):
- ------------------------------ ------------------------------
Name Address
- --------------------
SSN or EIN
[Name of Warrant holder]
By:
------------------------------
Its:
-----------------------------
2
<PAGE> 4
NOTICE OF EXERCISE
The undersigned hereby exercises the right to purchase____________
shares of Common Stock covered by this Warrant according to the conditions
thereof and herewith makes payment of the Purchase Price of such shares in
full.
Dated: Signed:
----------------------------- ---------------------------
[Name of Noteholder]
By:
-------------------------------
Its:
------------------------------
The Company is requested to issue certificates for the Warrant Shares
acquired upon exercise of this Warrant as follows:
- ------------------------------ ------------------------------
Name Address
- --------------------
SSN or EIN
3
<PAGE> 1
EXHIBIT 10.35
<PAGE> 2
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES OR BLUE SKY LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED IN VIOLATION OF SUCH ACT AND LAWS OR THE
RULES AND REGULATIONS THEREUNDER
VOID AFTER 5:00 P.M., DALLAS, TEXAS TIME,
ON MAY 31, 2000
URANIUM RESOURCES, INC.
URIW-______
WARRANT TO PURCHASE COMMON STOCK
This certifies that, FOR VALUE RECEIVED, LINDNER BULWARK FUND, a
series of LINDNER INVESTMENTS, a Massachusetts business trust, or its
registered assigns ("Holder"), is entitled, subject to the terms of this
Warrant, to purchase from URANIUM RESOURCES, INC., a Delaware corporation (the
"Company"), at any time after the date of issuance hereof and prior to 5:00
p.m., Dallas, Texas time, on May 31, 2000 (the "Warrant Expiration Date"), up
to 375,000 fully paid and nonassessable shares of the Common Stock, $0.001 par
value, of the Company (the "Common Stock"), at an initial purchase price of
$3.00 per share, payable in lawful money of the United States.
This Warrant may be exercised in whole or in part by presentation
hereof with the Notice of Exercise contained herein duly executed and with
simultaneous payment of the applicable aggregate Purchase Price (subject to
adjustment) at the office of the Company in Dallas, Texas. Payment of such
Purchase Price shall be made, at the option of the Holder hereof, by certified
check or bank draft payable in United States currency.
This Warrant is one of a duly authorized issue of common stock
purchase warrants issued under and in accordance with that certain Note and
Warrant Purchase Agreement), dated as of May 25, 1995, by and among Uranium
Resources, Inc., Lindner Investments (on behalf of its Lindner Bulwark Fund
series), and Lindner Dividend Fund, Inc., as supplemented by that certain Note
and Warrant Exchange Agreement, dated March 23, 1998 (the "Purchase
Agreement"), and is subject to the terms and provisions contained in the
Purchase Agreement, to all of which the Holder hereof, by acceptance hereof,
hereby consents. A copy of the Purchase Agreement may be obtained for
inspection upon written request to the Company by a Holder of this Warrant.
This Warrant does not entitle any Holder to any rights of a
shareholder of the Company. The number of shares of Common Stock to be
received upon the exercise of this Warrant and the price to be paid for a share
of Common Stock may be adjusted from time to time as set forth in the Purchase
Agreement. The shares of Common Stock deliverable upon such exercise, as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Stock" and the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred to as the
"Purchase Price".
As soon as practicable after any exercise of this Warrant and payment
of the sum payable upon such exercise, and in any event within 10 days
thereafter, the Company, at its expense (including the payment by it of any
applicable taxes), will cause to be issued in the name of and delivered to the
holder hereof, or in the name of such other person as such holder may direct, a
certificate or certificates for the number of fully paid and nonassessable
shares of Warrant Stock, or other securities or property to which such holder
shall be entitled upon such exercise, plus, in lieu of any fractional share of
Warrant Stock to which such holder would otherwise be entitled, cash equal to
such fraction multiplied by the Market Price (as defined in the Purchase
Agreement). Issuance and delivery of Warrant Stock deliverable on the due
exercise of this Warrant may be postponed by the Company and its transfer agent
during any period, not exceeding thirty (30) days, for which the transfer books
of the Company for the Common Stock are closed between (1) the record date set
by the Board of Directors for the determination of shareholders entitled to
vote at or to receive notice of any shareholders meeting, or entitled to
<PAGE> 3
receive payment of any dividends or to any allotment of rights or to exercise
rights in respect of any change, conversion or exchange of capital stock, and
(2) the date of such meeting of shareholders, the date for the payment of such
dividends, the date for such allotment of rights, or the date when any such
change or conversion or exchange of capital stock shall go into effect, as the
case may be.
Upon surrender for exchange of this Warrant (in negotiable form, if
not surrendered by the holder named on the face hereof) to the Company, the
Company, at its expense, will issue and deliver new Warrants of like tenor,
calling in the aggregate for the same amount of Warrant Stock, in the
denomination or denominations requested, to or on the order of such holder and
in the name of such holder as such holder may direct. Until this Warrant is
transferred on the books of the Company, the Company may treat the registered
holder of this Warrant as absolute owner for all purposes without being
affected by any notice to the contrary. Transfer of this Warrant is restricted
as provided in the Purchase Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
in its name by the manual signatures of its Chairman or President or one of its
Vice Presidents, thereunto duly authorized, and its corporate seal to be
impressed or imprinted hereon, attested by the manual signature of its
Secretary or an Assistant Secretary.
Date: , 1998 URANIUM RESOURCES, INC.
-----------------
ATTEST: By: /s/ Paul K. Willmott
--------------------------------
Its:
-------------------------------
By:
------------------------------
Secretary
[SEAL]
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell, assigns and transfers
the within Warrant, and irrevocably appoints _________________ as agent and
attorney-in-fact to transfer such Warrant on the books of the Company, with
full power of substitution in the premises, to the following assignee(s):
- ------------------------------ ------------------------------
Name Address
- --------------------
SSN or EIN ------------------------------
[Name of Warrant holder]
By:
---------------------------
Its:
--------------------------
2
<PAGE> 4
NOTICE OF EXERCISE
The undersigned hereby exercises the right to purchase____________
shares of Common Stock covered by this Warrant according to the conditions
thereof and herewith makes payment of the Purchase Price of such shares in
full.
Dated: Signed:
----------------------------- ---------------------------
[Name of Noteholder]
By:
-------------------------------
Its:
------------------------------
The Company is requested to issue certificates for the Warrant Shares
acquired upon exercise of this Warrant as follows:
- ------------------------------ ------------------------------
Name Address
- --------------------
SSN or EIN
3
<PAGE> 1
EXHIBIT 21.1
<PAGE> 2
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
<PAGE> 2
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 23, 1998, included in the Company's
1997 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
Dallas, Texas
March 30, 1998
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