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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ---- Exchange Act of 1934
For the quarterly period ended September 30, 1999 or
Transition report pursuant to Section 13 or 15(d) of the Securities
- ---- Exchange Act of 1934
For the transition period from __________ to __________
Commission file number 0-17171
URANIUM RESOURCES, INC.
(exact name of Registrant as specified in its Charter)
DELAWARE 75-2212772
(State of Incorporation) (I.R.S. Employer Identification No.)
12750 MERIT DRIVE, SUITE 720, DALLAS, TEXAS 75251
(Address of principal executive offices, including zip code)
(972) 387-7777
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Title of Each Class of Common Stock Number of Shares Outstanding
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Common Stock, $0.001 par value 12,341,290 as of November 12, 1999
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URANIUM RESOURCES, INC.
1999 THIRD QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -
September 30, 1999 (Unaudited) and
December 31, 1998 3
Consolidated Statements of Operations -
Three and Nine Months Ended
September 30, 1999 and 1998 (Unaudited) 5
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1999
and 1998 (Unaudited) 6
Notes to Consolidated Financial
Statements - September 30, 1999 (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
INDEX TO EXHIBITS E-1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (NOTE 1)
ASSETS
September 30, December 31,
--------------- ---------------
1999 1998
--------------- ---------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 215,542 $ 3,713,566
Short-term investment:
Certificate of deposit, restricted 585,055 582,623
Receivables, net 84,046 1,482,806
Uranium inventory 1,400,962 956,590
Materials and supplies inventory 75,314 92,495
Prepaid and other current assets 101,076 244,301
--------------- ---------------
Total current assets 2,461,995 7,072,381
--------------- ---------------
Property, plant and equipment, at cost:
Uranium properties 99,751,130 98,073,350
Other property, plant and equipment 507,971 538,974
Less-accumulated depreciation and depletion (59,614,258) (59,059,968)
--------------- ---------------
Net property, plant and equipment 40,644,843 39,552,356
Other assets 4,299 4,299
Long-term investment:
Certificate of deposit, restricted 3,066,703 3,066,703
--------------- ---------------
$ 46,177,840 $ 49,695,739
=============== ===============
The accompanying notes to financial statements are an integral
part of these consolidated balance sheets.
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URANIUM RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (NOTE 1)
LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31,
--------------- ---------------
1999 1998
--------------- ---------------
(Unaudited)
Current liabilities:
Accounts payable $ 327,218 $ 1,829,255
Notes payable 450,000 1,685,000
Accrued interest payable 3,993 113,778
Current portion of long-term debt 7,000 8,000
Royalties payable -- 132,626
Current portion of restoration reserve 83,000 324,000
Other accrued liabilities 256,775 348,337
--------------- ---------------
Total current liabilities 1,127,986 4,440,996
--------------- ---------------
Other long-term liabilities and deferred credits 6,325,208 5,469,394
Long-term debt, less current portion 6,238,955 6,189,007
Deferred federal income taxes 19,810 263,810
Shareholders' equity:
Common stock, $0.001 par value, shares authorized:
1999 - 35,000,000 1998 - 25,000,000; shares
issued and outstanding (net of treasury shares):
1999 - 12,341,290 1998 - 12,053,027 12,494 12,205
Paid-in capital 40,737,736 40,629,923
Retained earnings (accumulated deficit) (8,274,931) (7,300,178)
Less: Treasury stock (152,500 shares), at cost (9,418) (9,418)
--------------- ---------------
Total shareholders' equity 32,465,881 33,332,532
--------------- ---------------
$ 46,177,840 $ 49,695,739
=============== ===============
The accompanying notes to financial statements are an integral
part of these consolidated balance sheets.
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URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (NOTE 1)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- --------------
Revenues:
Uranium sales -
Produced uranium $ 2,092,244 $ 2,579,457 $ 3,128,594 $ 8,689,883
Purchased uranium 1,036,350 1,924,100 1,037,862 4,321,400
-------------- -------------- -------------- --------------
Uranium sales 3,128,594 4,503,557 4,166,456 13,011,283
Other uranium revenues 1,289,600 -- 1,289,600 --
-------------- -------------- -------------- --------------
Total revenue 4,418,194 4,503,557 5,456,056 13,011,283
Costs and expenses:
Cost of uranium sales -
Direct cost of purchased uranium 2,500,046 1,574,701 2,500,046 3,591,371
Royalties 9,000 132,345 66,234 407,862
Operating expenses 417,979 1,358,149 2,125,599 3,979,050
Provision for restoration and reclamation costs 16,440 165,818 152,383 493,252
Depreciation and depletion 118,930 1,357,225 468,107 4,426,509
Writedown of uranium properties -- 18,034,694 -- 18,034,694
-------------- -------------- -------------- --------------
Total cost of uranium sales 3,062,395 22,622,932 5,312,369 30,932,738
-------------- -------------- -------------- --------------
Earnings (loss) from operations
before corporate expenses 1,355,799 (18,119,375) 143,687 (17,921,455)
Corporate expenses -
General and administrative 498,000 530,978 1,491,639 1,806,461
Depreciation 6,011 4,966 18,954 14,698
-------------- -------------- -------------- --------------
Total corporate expenses 504,011 535,944 1,510,593 1,821,159
-------------- -------------- -------------- --------------
Income (loss) from operations 851,788 (18,655,319) (1,366,906) (19,742,614)
Other income (expense):
Interest expense, net of capitalized interest (38,514) (37,863) (115,358) (114,270)
Interest and other income, net 158,705 47,513 263,511 144,317
-------------- -------------- -------------- --------------
Total other income 120,191 9,650 148,153 30,047
-------------- -------------- -------------- --------------
Income (loss) before federal income taxes 971,979 (18,645,669) (1,218,753) (19,712,567)
Federal income tax expense (benefit):
Deferred 19,810 (3,730,000) (244,000) (3,942,000)
-------------- -------------- -------------- --------------
Net income (loss) $ 952,169 $ (14,915,669) $ (974,753) $ (15,770,567)
============== ============== ============== ==============
Net income (loss) per common share and
common equivalent (basic and diluted) $ 0.08 $ (1.24) $ (0.08) $ (1.31)
============== ============== ============== ==============
Weighted average common shares and common
equivalent shares per share data:
Basic 12,257,310 12,053,027 12,122,614 12,053,027
============== ============== ============== ==============
Diluted 12,257,310 12,053,027 12,122,614 12,053,027
============== ============== ============== ==============
The accompanying notes to financial statements are an integral
part of these consolidated statements.
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URANIUM RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (NOTE 1)
(UNAUDITED)
September 30,
----------------------------
1999 1998
------------ ------------
Cash flows from operations:
Net loss $ (974,753) $(15,770,567)
Reconciliation of net income to cash provided by operations-
Provision for restoration and reclamation costs 152,383 493,252
Depreciation and depletion 487,061 4,441,207
Writedown of uranium property and other assets -- 18,034,694
Credit for deferred income taxes (244,000) (3,942,000)
Decrease in restoration and reclamation accrual (330,045) (23,891)
Other non-cash items, net 1,209,572 528,549
------------ ------------
Cash flow provided by operations, before changes in
operating working capital items 300,218 3,761,244
Effect of changes in operating working capital items-
Decrease in receivables 1,398,760 1,213,521
Increase in inventories (208,318) (170,220)
Increase in prepaid and other current assets (149,007) (219,030)
Decrease in payables and accrued liabilities (1,836,010) (2,009,514)
------------ ------------
Net cash provided by (used in) operations (494,357) 2,576,001
------------ ------------
Investing activities:
Increase in investments (2,432) (257,768)
Additions to property, plant and equipment -
Kingsville Dome (125,170) (2,974,452)
Rosita (59,622) (227,218)
Vasquez (50,656) (427,271)
Alta Mesa (33,724) (55,103)
Churchrock (558,361) (833,416)
Crownpoint (741,598) (594,670)
Other property (191,221) (405,672)
Increase in other assets -- (26,752)
------------ ------------
Net cash used in investing activities (1,762,784) (5,802,322)
------------ ------------
Financing activities:
Payments and refinancings of principal (3,390,883) (5,455,322)
Proceeds from borrowings 2,150,000 7,335,000
------------ ------------
Net cash provided by (used in) financing activities (1,240,883) 1,879,678
------------ ------------
Net decrease in cash and cash equivalents (3,498,024) (1,346,643)
Cash and cash equivalents, beginning of period 3,713,566 2,325,158
------------ ------------
Cash and cash equivalents, end of period $ 215,542 $ 978,515
============ ============
The accompanying notes to financial statements are an integral
part of these consolidated statements.
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1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying statements should be read in conjunction
with the audited financial statements included in the Company's 1998 Annual
Report on Form 10-K. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine months ended September
30, 1999 are not necessarily indicative of the results that may be expected for
the full calendar year ending December 31, 1999.
2. FUTURE OPERATIONS
The financial statements of the Company have been prepared on the basis
of accounting principles applicable to a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. Due to a continued period of depressed prices for uranium as
compared to the Company's cost to produce uranium, the Company has generated
operating losses in each of the last two years. Operating losses have continued
during the first nine months of 1999. Such price declines have reduced the
market price of uranium to levels that are currently below the Company's cost to
produce uranium and below levels needed by the Company to obtain the necessary
financing to allow development of new production areas at its South Texas sites.
Due to circumstances described above, during the first quarter of 1999 the
Company shut-in its current producing operations until uranium prices recover.
The Company has limited financial resources available to support its ongoing
operations, fund payments of debt, potential claims in litigation and provide
for restoration of its properties until such time, if ever, uranium prices
recover to profitable levels. Further, the Company will require additional
capital resources to fund the cost to resume production and to fund development
of its undeveloped properties. There is no assurance the Company will be
successful in raising such capital or that uranium prices will recover to levels
which would enable the Company to operate profitably. These factors, raise
substantial doubt concerning the ability of the Company to continue as a going
concern.
The financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern. The ability of the Company to continue as a going
concern is dependent upon a recovery of uranium prices, its ability to restart
its uranium production facilities and successfully produce uranium at
economically feasible levels and its ability to successfully raise capital to
support ongoing operations and future development efforts.
3. REALIZABILITY OF URANIUM PROPERTIES
VALUATION
The Company had uranium properties with a net carrying value of
approximately $40,557,000 at September 30, 1999. The Company's ability to
recover its investment in these properties will be dependent upon a number of
factors including an increase in the sales price of uranium, the Company's
ability to deliver profitable uranium production into its existing and future
sales contracts, the Company's ability to access the financing/capital that will
be necessary to develop and commence uranium production and ultimately, its
ability to continue to operate as a going concern.
The valuation of each of the Company's uranium properties at September
30, 1999 was performed assuming that uranium production would commence at each
property, at a future date. The valuation utilized a number of estimates and
assumptions, including an increase in uranium prices to levels significantly
above current uranium prices, the ability of the Company to secure the necessary
financing to bring these properties into production and projected the timing and
costs of future development and production activities. There can be no assurance
that the estimates and assumptions used in the valuation will be able to be
accomplished.
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If the Company is unable to bring any of these properties into
production it is unlikely that the Company would be able to realize its
investment in that property. Should the Company sell, dispose or otherwise
liquidate any of its uranium properties, the Company believes that the value
from such sale would be significantly below the carrying value of the property
and would result in a significant charge against operations.
WRITEDOWN OF URANIUM PROPERTIES
At September 30, 1998 the Company reviewed the carrying value of its
uranium properties and determined that a writedown was required at that date
with respect to its then producing properties (Kingsville Dome and Rosita
projects) of approximately $18,000,000. The writedown for the Kingsville Dome
and Rosita properties totaled $12,300,000 and $5,600,000 respectively.
4. LONG-TERM DEBT
RESTRUCTURING OF NOTE
In June 1999, the Company entered into an agreement to restructure the
$6,000,000 secured convertible note that was issued to mutual funds managed by
Ryback Management Company. The restructuring provides for the mandatory
conversion of the debt into 6,000,000 shares of the Company's common stock,
providing the Company obtains the necessary long-term uranium sales contracts
and financing to allow the commencement of production at one of its uranium
projects. Interest on the debt will accrue but not be payable until the maturity
date, which was extended to December 31, 2000. Upon the maturity or the date of
conversion, the noteholders will have the option to be paid the accrued interest
in eighteen monthly installments or to convert the interest into shares of
common stock at the lesser of the then market price for such stock or $1.00 per
share. The noteholders also granted to the Company a right of first offer on the
transfer of the notes or any shares into which the notes are convertible.
CAPITALIZED INTEREST
Interest capitalized in the nine months ended September 30, 1999 and
1998 was $462,000 and $497,000, respectively. Total interest costs in these
periods were $577,000 and $611,000, respectively.
5. SHAREHOLDERS' EQUITY
COMMON STOCK
In September and June 1999, the Company issued 84,903 and 203,360
shares, respectively, of common stock to certain officers and directors of the
Company in connection with the Uranium Resources, Inc. 1999 Deferred
Compensation Plan (the "Plan"). The Plan was approved by a vote of the
shareholders at the June 18, 1999 Annual Meeting.
6. OTHER URANIUM REVENUES
In June 1999 the Company assigned its rights to deliver uranium for the
years 2000 through 2002 (the final three years) under a uranium sales contract.
In exchange for the assignment, the Company received 124,000 pounds of uranium
inventory in July 1999. The transaction was valued at $10.40 per pound for the
uranium inventory received (the spot market price of uranium) and resulted in
increased revenue, earnings from operations and income before income taxes of
$1,290,000 in the third quarter of 1999.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward Looking Statements
This Item 2 contains "forward-looking statements" which are made
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These statements include, without limitation, statements
relating to liquidity, financing of operations, continued volatility of uranium
prices, estimates of future capital expenditures, proved undeveloped reserves
and other such matters. The words "believes," "expects," "projects," "targets,"
or "estimates" and similar expressions identify forward-looking statements.
Among the factors that could cause actual results to differ materially
include: the ability of the Company to meet its working capital and liquidity
needs, the availability of sufficient collateral to support borrowings under the
Company's existing $3.0 million revolving credit facility, the outcome of
rulings from state and federal regulatory bodies that regulate all aspects of
the Company's operations, the market price of uranium remaining at levels which
would preclude the Company from securing additional long-term sales contracts
and other risks which may have a significant impact on the Company, its property
development or its operations. The Company does not undertake to update, revise
or correct any of the forward-looking information. Readers are cautioned that
such forward-looking statements should be read in conjunction with the Company's
disclosures under the heading: "Cautionary Statement for the Purposes of the
`Safe Harbor' Provisions of the Private Securities Litigation Reform Act of
1995" in the Company's 1998 Annual Report on Form 10-K.
Going Concern
In connection with the issuance of the Company's December 31, 1998
audited financial statements the Company's Independent Public Accountants issued
a modified opinion regarding substantial doubt concerning the Company's ability
to continue as a going concern. The Company has implemented significant steps in
1999 to restructure its long-term debt, to reduce costs and to accelerate
revenues from future periods into this year which have allowed the Company to
maintain positive liquidity in 1999.
The Company's continuing viability as a going concern will be dependent
upon its ability to satisfy the terms of the restructured long-term debt, which
would allow for the conversion of the debt into common stock, its ability to
raise sufficient working capital through existing or alternative sources of
financing and to meet liquidity needs that may exceed the Company's availability
under its current revolving credit facility. In the event that the Company is
unable to conclude these steps and other sources of capital or financing are not
available the Company would not be able to continue as a going concern.
CAPITAL RESOURCES AND LIQUIDITY
Operating Cash Flows and Liquidity
For the quarter ended September 30, 1999, the Company's cash and cash
equivalents were $216,000 a decrease in the quarter of $131,000 as compared to
an decrease of $515,000 for the third quarter of 1998. Cash and cash equivalents
decreased by $3,498,000 for the nine months ended September 30, 1999 compared to
a decrease of $1,347,000 for the same period in 1998. The Company's uranium
operations generated cash flow from operations of $632,000 for the quarter ended
September 30, 1999, in comparison to negative cash flow from operations in the
same period in 1998 of $1,751,000. Net cash used in operations for the nine
months ended September 30, 1999 was $494,000 compared to net cash provided by
operations of $2,576,000 for the same period in 1998. The Company's net working
capital at September 30, 1999 was $1,334,000.
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As a result of the volatility of spot prices in the uranium
marketplace, during the first quarter of 1999 the Company shut-in and placed on
stand-by its two South Texas facilities. Nominal production from these sites
continued through July 1999 because their incremental production costs were at
or below the cost of purchasing uranium in the marketplace. The Company will
continue to maintain certain activities at these locations including its ongoing
groundwater restoration efforts.
Investing Cash Flows
South Texas Projects
During the nine months ending September 30, 1999, capital expenditures
at the Company's South Texas locations totaled $235,000. The Company's decision
to put its Kingsville Dome and Rosita sites on stand-by has significantly
reduced capital spending at these locations. The Company expects to fund its
1999 expenditures at its South Texas projects from cash on hand, sales proceeds
under 1999 uranium deliveries and through existing financing arrangements.
Funding of operations into 2000 will be dependent upon the Company's ability to
secure new or expand existing sources of financing, raise capital and/or
monetize the Company's existing assets.
New Mexico Projects
Capital expenditures at the Company's Churchrock and Crownpoint
projects for permitting and land holding costs totaled approximately $1,300,000
for the nine months ending September 30, 1999 compared to costs of $1,428,000
for the same period in 1998. Capital requirements for 1999 for these projects is
expected to be met from cash on hand, sales proceeds under 1999 uranium
deliveries and through existing financing arrangements. Funding into 2000 will
be dependent upon the Company's ability to secure new or expand existing sources
of financing, raise capital and/or monetize the Company's existing assets.
Financing Cash Flows
In May 1996, the Company entered into a $3.0 million revolving credit
facility. This facility was renewed and expanded for a two-year term to a $5.0
million credit facility in July 1997. In July 1999, the facility was amended to
extend the term for one year and to adjust the amount available under the
agreement to $3.0 million. This facility is secured by the Company's uranium
inventory and/or by receivables from its uranium sales contracts. Principal and
interest payments under the loan are due monthly, with interest on the loan
accruing at the prime rate plus 1%. Borrowings under this facility at September
30, 1999 totaled $450,000.
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 in the
Company's Form 10-K as of December 31, 1998.
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.
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Three and Nine Months Ended September 30, 1999 and 1998
The following is a summary of the key operational and financial
statistics related to the Results of Operations:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
1999 1998 1999 1998
------------ ------------- ------------ ------------
(In thousands, except per pound data)
Uranium sales revenue(a) $ 3,129 $ 4,504 $ 4,166 $ 13,011
Other uranium revenues 1,290 -- 1,290 --
Total pounds delivered 235 328 305 860
Average sales price/pound(b) $ 13.29 $ 15.00 $ 13.64 $ 15.66
Pounds produced 3 162 107 519
Pounds purchased 274 160 274 360
Average production cost of produced pounds (c) $ 16.69 (c) $ 17.23
Average cost of purchased pounds $ 10.59 $ 9.84 $ 10.59 $ 10.29
Average cost of produced pounds sold N/A $ 14.35 $ 13.01 $ 14.85
Average cost of purchased pounds sold $ 10.62 $ 9.84 $ 10.62 $ 10.29
(a) Revenues for the three and nine months ended September 30, 1998 include
approximately $655,000 for the sales of Russian uranium sold under the Matched
Sales Amendment.
(b) Average sales price in 1998 does not include the sale of Russian material
which is considered as a "pass through" sale under the Matched Sales Amendment.
(c) The Company ceased uranium production operations in the first quarter of
1999 when its South Texas projects were placed on stand-by. Costs while on
stand-by are expensed to operating expenses as they are incurred. A nominal
amount of production has occurred while the projects have been on stand-by, the
inventory resulting from such incidental production has been valued at the
current spot market cost.
The Company delivered 305,000 pounds of uranium in the nine months
ended 1999 at an average sales price of $13.64 per pound. The Company also
generated $1,290,000 in revenue in the third quarter of 1999 from the assignment
of future uranium deliveries under one of its long-term sales contracts. Total
uranium deliveries in the nine months of 1998 of 860,000 pounds were at an
average sales price of $15.66 per pound and generated revenues of $13,011,000.
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Details of the cost of uranium sales were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------- -----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
(In thousands) (In thousands)
Cost of purchased uranium $ 2,500 $ 1,575 $ 2,500 $ 3,591
Royalties 9 132 66 408
Operating expenses 418 1,358 2,126 3,979
Provision for restoration and reclamation costs 16 166 152 493
Depreciation and depletion of uranium properties 119 1,357 468 4,427
------------- ------------- ------------- -------------
$ 3,062 $ 4,588 $ 5,312 $ 12,898
------------- ------------- ------------- -------------
The Company placed its South Texas production facilities on stand-by in
the first quarter of 1999 but continued to maintain nominal production through
July 1999. Total production of 107,000 pounds during the first nine months of
1999 compared to 519,000 pounds of production in the nine months ended September
30, 1998. Certain production related activities continued in 1999 while the
facilities were on stand-by because the incremental cash costs (costs incurred
in addition to those required to maintain the projects while in a stand-by mode)
were below the cost uranium could be purchased in the spot market.
Operating expenses in the first nine months of 1999 were $2,126,000 and
consisted of stand-by costs ($1,131,000) production sold ($572,000 or $8.17 per
pound) and a lower of cost or market adjustment ($423,000). Operating expenses
in the nine months ended September 30, 1998 were attributable to the sale of
Kingsville Dome and Rosita produced pounds of $3,127,000 ($6.12 per pound) and
lower of cost or market adjustment of $852,000.
The provision for restoration and reclamation in the first nine months
of 1999 was $152,000 and consisted of $66,000 ($0.94 per pound) for production
sold and $86,000 for restoration related to a previous production site. The
costs incurred in the first nine months of 1998 were $493,000 and were made up
of $482,000 ($0.94 per pound) related to production sold during the period and
$11,000 for other restoration activities.
The depreciation and depletion provision in the nine months ended
September 30, 1999 was $468,000 and consisted of $273,000 ($3.90 per pound) for
produced uranium sold and $195,000 for depreciation while on stand-by.
Comparable costs for 1998 were $3,975,000 ($7.78 per pound) resulting from
Rosita and Kingsville Dome production sold during that period and a lower of
cost or market adjustment of $452,000.
The Company incurred royalty expenses of $66,000 in the first nine
months of 1999 compared to royalty expenses in the first nine months of 1998 of
$408,000. The reduction in expense in the first nine months of this year is
attributable to lower deliveries of produced pounds when compared to the same
period of 1998.
The Company purchased 274,000 pounds of uranium in the first three
quarters of 1999 at an average cost of $10.59 per pound. Uranium purchases of
360,000 were made in the first nine months of 1998 at an average cost of $10.29
per pound.
Corporate expenses consisting of general and administrative ("G&A")
expenses decreased by $310,000, to $1,511,000 in the first nine months of 1999
from $1,821,000 in the same period of 1998. This reduction resulted primarily
from the implementation of the Company's cost reduction program which began in
the fourth quarter of 1998 and continues throughout 1999.
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YEAR 2000 READINESS
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 (the "Y2K issue"). All critical
information technology software and systems utilized by the Company has been
purchased from and are supported by third party vendors. The Company has
conducted a review of the potential impact of the year 2000 on such systems, and
believes that it will not encounter significant operational or financial costs
related to compliance with this issue.
The Y2K issue also involves the impact of the date change in the year
2000 on machines and process controls which may utilize embedded technology as a
part of their components. The Company relies on certain non-information
technology systems such as telephones, facsimile machines, and other equipment
which may have embedded technology such as microprocessors, which may or may not
be year 2000 compliant. The assessment of this technology is outside of the
Company's control and such technology could adversely affect the Company's
ability to conduct business. Management believes any such disruption is not
likely to have a significant effect on the Company's financial position or
operations.
The Company may also be impacted by the Y2K issues of certain of the
Company's third-party suppliers and its customers. The third-party suppliers,
vendors, and customers area is currently in the assessment phase. Formal
communications have been initiated with the Company's vendors, customers and
others with whom the Company has significant business relationships. The Company
continues to evaluate responses and make additional inquiries as needed. As the
Company is in the process of collecting this information from third parties,
management cannot currently determine whether third party compliance issues will
materially affect its operations. However, the Company is not currently aware of
any third party issues that would cause a significant business disruption.
13
14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
In September 1999, the Company issued 84,903 shares of common stock to
certain officers and directors of the Company in connection with the Uranium
Resources, Inc. 1999 Deferred Compensation Plan (the "Plan"). The Plan was
approved by a vote of the shareholders at the June 18, 1999 Annual Meeting.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Financial Data Schedule
(b) Exhibits
See the Index to Exhibits on page E-1 for a listing of the
exhibits that are filed as part of this Quarterly Report.
14
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
URANIUM RESOURCES, INC.
Dated: November 18, 1999 By: /s/ Paul K. Willmott
--------------------------------------------
Paul K. Willmott
Director, President and
Chief Executive Officer
Dated: November 18, 1999 By: /s/ Thomas H. Ehrlich
--------------------------------------------
Thomas H. Ehrlich
Vice President - Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
15
16
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
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).
10.10* 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)
E-1
17
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.11* 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)
10.12* 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).
10.13* 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).
10.14* 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).
10.15* 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)
10.16* 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)
10.17* 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).
10.18* 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)
10.19* Amendment #1 to Nonqualified Stock Option Agreement dated
November 17, 1997 between the Company and Leland O. Erdahl
(filed with the Company's Annual Report on Form 10-K dated March
27, 1998) .
10.20* Amendment #1 to Nonqualified Stock Option Agreement dated
November 17, 1997 between the Company and George R. Ireland
(filed with the Company's Annual Report on Form 10-K dated March
27, 1998).
10.21* Amendment #1 to Nonqualified Stock Option Agreement dated
November 17, 1997 between the Company and James B. Tompkins
(filed with the Company's Annual Report on Form 10-K dated March
27, 1998).
10.22* Compensation Agreement dated June 2, 1997 between the Company
and Paul K. Willmott (filed with the Company's Annual Report on
Form 10-K dated March 27, 1998).
E-2
18
EXHIBIT
NUMBER DESCRIPTION
------- -----------
10.23* Compensation Agreement dated June 2, 1997 between the Company
and Richard F. Clement, Jr. (filed with the Company's Annual
Report on Form 10-K dated March 27, 1998).
10.24* Compensation Agreement dated June 2, 1997 between the Company
and Joe H. Card (filed with the Company's Annual Report on Form
10-K dated March 27, 1998).
10.25* Compensation Agreement dated June 2, 1997 between the Company
and Richard A. Van Horn (filed with the Company's Annual Report
on Form 10-K dated March 27, 1998).
10.26* Compensation Agreement dated June 2, 1997 between the Company
and Thomas H. Ehrlich (filed with the Company's Annual Report on
Form 10-K dated March 27, 1998).
10.27* Compensation Agreement dated June 2, 1997 between the Company
and Mark S. Pelizza (filed with the Company's Annual Report on
Form 10-K dated March 27, 1998).
10.28* Warrant to Purchase Common Stock for 625,000 shares dated March
23, 1998 between the Company and Lindner Investments (filed with
the Company's Annual Report on Form 10-K dated March 27, 1998).
10.29* Warrant to Purchase Common Stock for 325,000 shares dated March
23, 1998 between the Company and Lindner Investments (filed with
the Company's Annual Report on Form 10-K dated March 27, 1998).
10.30* Uranium Resources, Inc. 1999 Deferred Compensation Plan (filed
with the Company's Annual Report on Form 10-K dated March 31,
1999).
10.31* Certificate of Amendment of Restated Certificate of
Incorporation dated June 22, 1999 (filed with the Company's
Report on Form 10-Q dated June 30, 1999).
10.32* Note Exchange Agreement dated June 30, 1999 between the Company
and Lindner Investments (filed with the Company's Report on Form
10-Q dated June 30, 1999).
10.33* 6.5% Secured Convertible Note for $1,500,000 dated June 30, 1999
between the Company and Lindner Investments (filed with the
Company's Report on Form 10-Q dated June 30, 1999).
10.34* 6.5% Secured Convertible Note for $4,500,000 dated June 30, 1999
between the Company and Lindner Investments (filed with the
Company's Report on Form 10-Q dated June 30, 1999).
10.35 Uranium Resources, Inc. Amended and Restated 1999 Deferred
Compensation Plan.
27.1 Financial Schedule.
*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