Westwater Resources Inc (WWR) 2011 Q2 法說會逐字稿

Greetings and welcome to the Uranium Resources Inc. second-quarter 2011 quarterly update conference call.

At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. (Operator Instructions)

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Deborah Pawlowski, Investor Relations for Uranium Resources Inc. Thank you. You may begin.

Thank you, Diego, and good morning, everyone. We appreciate your time today and your interest in Uranium Resources.

On the call with me today I have President and CEO Don Ewigleben who will discuss the quarter and recent events as well as our strategy and outlook as we move forward. We also have Tom Ehrlich, Chief Financial Officer; Rick Van Horn, Senior Vice President of Operations and Exploration; as well as Mark Pelizza, Senior Vice President of Environmental Safety and Public Affairs.

I will conclude the call with an opportunity for questions and answers. If you don't have today's release, it can be found on our website at uraniumresources.com.

As you are aware, we may make some forward-looking statements during the formal presentation and the Q&A portion of this teleconference. Those statements apply to future events which are subject to risks and uncertainties as well as other factors that could cause the actual results to differ materially from where we are today.

These factors are outlined in the news release as well as in documents filed by the Company with the Securities and Exchange Commission. You can find those on our website where we regularly post information about the Company as well as on the SEC's website at sec.gov. So please review our forward-looking statements in conjunction with these cautionary factors.

With that, let me turn the call over to Don to begin the discussion. Don?

Thanks, Debbie. And thanks to all of you participating this morning.

I guess it's an understatement to say that we live in very interesting times. These past few weeks have been more [pointed] than usual.

Let me start with a review of the current environment and particularly what the state of the industry is like and then I will update you on our progress in Texas and New Mexico. There's no question that we have continued uncertainty resulting from Fukushima and the general events and perceptions that ultimately translate into a reality of inventory buildup for now.

In the near term, we see that the typical slowed purchasing activity in the summer months -- as you all know, spring is the heaviest purchasing period for uranium historically, combined with the resulting inventory buildup from the shutdowns in Japan and Germany and maintenance safety reviews around the globe as well as the continued effort by the Department of Energy to sell its inventories has continued to weigh on the price of uranium.

Current spot price is down to about $51.50 and has been fluctuating in the lower $50s since our last call when prices had been in the range of the upper $50s.

Long-term contract price has dropped somewhat to about $68 as of August 8. But there could be pressure there as well as buyers [are like] short-term markets for purchasing activity with the current price differential. An interesting scenario that could help repair prices would be if Kazakhstan were to choose to limit production.

None of us know if that will come to fruition. It's not a typical behavior to be expected from them, but they do appear to be holding at their original production goal of [52 million] pounds rather than exceeding it as they had been in years past.

Current estimates are that long-term reduction in demand as a result of the Fukushima incident and the reactions that followed in Japan, Germany and Sweden could be about 8% lower over the next 20 years. China, India, Russia and South Korea's nuclear plans can more than offset this decline but the market still needs a better understanding of how much China actually can build and how quickly it can build it.

Of course as pricing softens, it gives us uncertainty and it assumes lower expectations in demand. The impact of prices also drives uncertainty regarding financing for supply expansion. This should become another offsetting factor and support and improving in prices most especially when the [Russian ATU] contract comes to an end at the end of 2013.

What's the impact on Uranium Resources? From a capital requirement standpoint, clearly uranium stocks have been seriously damaged since Fukushima.

The HSBC Uranium Mining Index was down about 45% since mid-March and URRE is down about 46%; so right in the average. That's actually an improvement from the 58% decline during last week's roller coaster ride.

We are firm believers in the long-term picture for nuclear power and ultimately this industry must meet the needs of the growing base of the nuclear power and to continue to develop projects around the world. We think that US-based production should become a more critical consideration for US utilities.

Based on inquiries we get, we continue to receive from India and Asia and other places. We believe that because of our large base of assets which I think you all know is among the top 10 of the largest in world, that we must continue to pursue our projects just as planned. And we continue to operate with this conviction.

Our strategy is still to grow value by developing a larger resource base through our exploration activities in our existing operating areas of Texas and New Mexico as well as through acquisition opportunities on a very site-specific basis.

As we noted in our last call, the challenge of course will be the financing of our large project in New Mexico and our other strategic efforts.

We continue to evaluate and pursue a variety of approaches including joint ventures, strategic partners as well as capital market scenarios. We expect as time moves on that market forces and general intelligence will realign expectations to correct the current pricing issues.

Let me talk about Texas for just a moment. Los Finados project is comprised of the 54,867 acres we previously discussed that we leased in Kennedy County under a three-year agreement that also includes an option to lease the acreage for uranium production.

The exploration activity there is being accomplished in a partnership with Cameco under a three-phase, three-year joint venture project funded by Cameco who can in return for their investment earn up to a 70% property rights interest.

The agreement also has a provision for operating and toll milling so that as the project moves from exploration to development, assuming of course successful definition of resources, the uranium will be produced through our facilities at either Kingsville Dome, Rosita or both.

The first phase of the drilling program began on June 21 and it's expected to be completed by the end of September at a cost of approximately $1 million. This phase of the exploratory core drilling will be done using a widely and evenly spaced program covering a grid designed to test the potential for uranium mineralization over the entire area.

The objective in this phase is to identify oxidation reduction interfaces within the wide space drilling. As of last week, we had completed 10 holes averaging 1250 feet each.

We are encountering drilling conditions that are difficult, so our penetration rates have been lower than expected. Specifically ground conditions have been creating some challenges for us.

At this point, it's still too early in the drill program though it's too soon to comment on any findings. We could accelerate the future phases of this program if the joint venture steering committee determines that is in the best interest of the project.

Now just trying to keep things in perspective here, this is a greenfield exploration project. The water testing that we'd previously completed was quite encouraging.

Yet as in all exploration projects, [identifying] the roll fronts necessary for success in this project requires the completion of the entire exploratory program plan. We expect that once we can identify the assets, permitting, wellfield development and satellite facility construction would take approximately 18 to 24 months but it could take as much as 24 to 36 months and we are being conservative about our approach.

Let me turn to restoration in Texas. As you know, one of the strongest aspects of our business is the maintenance of our credibility due to our ability to restore the wellfields.

As of June 30, we had treated 120 million gallons of water at our Kingsville site in full compliance with our county agreement. Since December 2004, we've created 1.5 billion gallons of water in our groundwater restoration efforts.

PA1 and PA2 restoration has been completed and the fields are now in stabilization period. At Vasquez, we treated 76.5 million gallons of water up from the 31 million gallons treated in the first quarter. Since we started groundwater restoration, we've treated over 361 million gallons of groundwater at Vasquez.

At Rosita, we're still in stabilization at PA1 and PA2. We have submitted the required regulatory information for our restoration activities to the TCEQ so that we can finalize groundwater restoration in these two production areas.

Considering the market conditions, we don't have any immediate plan to return to production in Texas. We do have plans on the board allowing us to go back into production sometime between now and the production that will come through our plans from Los Finados.

But it will take a return in the neighborhood of a $50 spot price and some other maintenance activities for us to consider that plan. I've said this before, I do not want the shareholders to have an expectation that we will have production in Texas from the existing plans in the existing -- not Los Finados -- but the existing resource base unless we can have a stabilized production rate of about 500,000 pounds per year from the two facilities until Los Finados comes in.

Moving on to New Mexico. In June, the New Mexico Environmental Department or NMED as it's known, confirmed that our discharge plan which is New Mexico's terminology for an underground injection control permit under the Federal Safe Drinking Water Act is in timely renewal and that the NMED is currently conducting technical review of its renewal application.

We think the renewal is confirmation that the State of New Mexico recognizes the significant value that could be generated for the people of the state through the development of its natural resources. As is to continually be expected in our industry, however, the issue in for the confirmation stirred the pot a bit.

ENDAUM or Eastern Navajo Dine Against Uranium Mining which has been a party to much of the New Mexico-based litigation filed against us in the past decade filed a complaint for declaratory and injunctive relief and a motion for preliminary injunction against the New Mexico Environment Department in mid-July.

They claim that the NMED has misinterpreted its own regulations governing groundwater discharge permits that have been issued to our subsidiary Hydro Resources Inc.

The motion for preliminary injunction seeks to prevent NMED from allowing us to conduct any discharges on our Church Rock Section 8 property prior to NMED making a determination to grant a new discharge permit application from HRI. We will of course intervene in this case.

This was an expected action by ENDAUM and we believe it is without merit. So we move forward with the project knowing that it is in timely renewal.

Our Nuclear Regulatory Commission license is in timely renewal as well and we expect confirmation by the NRC of reactivation before the end of the year. All of you on this call are aware that we have been working diligently on the feasibility study for New Mexico.

Our focus is on the completion of this feasibility study and our first priority is on the development of our Church Rock/Crownpoint project specifically Section 8 which is a property with about 6.5 million of identified pounds of uranium. Section 8 Church Rock will be the first uranium production in New Mexico in over 30 years.

The feasibility study will provide parameters for human capital, financial requirements, equipment needs, and all project timelines. The study will also evaluate the Company's conventional mining properties so that it is able to better position itself to accept proposals and partnerships in capitalizing New Mexico's vast uranium resource base.

We have reviewed a preliminary draft of the Section 8 feasibility study which provided recommendations for various scenarios. It would be inappropriate to discuss the specifics of that because it is a draft plan and we will discuss the specifics in late December or early January when the feasibility study is completed.

In order to stay on our present plan, we are planning to accelerate the engineering requirements for Church Rock. We estimate that these engineering costs could be an additional $2 million relative to our original 2011 budget.

But I emphasize this is part of the expected total estimate of between $30 million and $50 million that we planned to spend on the project. We are just looking to accelerate some activities of engineering to ensure that we stay on time in our plan.

There's also a scenario proposing the acceleration of production on an earlier commercialization and restoration project. We are currently evaluating this option as well as others. A complete study will be completed as we anticipate by the end of the year.

Assuming the necessary economic conditions have been met and the financial resources are in place, we're now expecting to begin construction of Church Rock/Crownpoint in first ISR wellfield and its processing facilities in the latter half of 2012, aiming to be in production by mid-2013 or so. Given the most recent projections, construction costs are likely to be more towards the $50 million estimate than the $30 million estimate.

Some strategic issues. We expect to have the basis for addressing the royalty issue at Church Rock as the details of our feasibility study are finalized. This of course would be beneficial to the economics of that project and we will pursue all necessary avenues to ensure that this project has a appropriate rate of return for our shareholders.

Concurrently we've had some conversations with Itochu regarding the contract that we have in Texas and the potential that exists with other projects for them. We've been aggressively pursuing a variety of acquisition prospects as we continue to believe that consolidating assets in New Mexico is necessary to truly unlock the value of the measurable uranium assets that state holds.

We expect to be a leader in this effort. We are as well not adverse to other opportunities ideally within mining-friendly jurisdictions. But we're focused on Texas and New Mexico at this time.

Let me assure you that we are staying within the US borders at this time. While there are excellent prospects outside the US, we have a large resource base that must be brought to production. And the only acquisition activities that we will do in the future will be related to enhancing those existing projects and improving the rate of return for our shareholders.

Nonetheless, these efforts take time and given the present circumstances, I'm sure you can empathize with the challenges in valuation. As it were, the market itself is struggling significantly with this issue.

We believe we are undervalued. Most other asset holders believe they are undervalued.

Yet the market forces are not showing within the values of the assets themselves when we begin to look at them for acquisition purposes. There are of course associated costs with these activities and given our plans to accelerate our engineering and the efforts associated with the opportunities we are pursuing, we are exceeding our original 2011 budget.

That said, we are only doing so where it's absolutely necessary to enhance our position. Let me turn it to -- one second to Tom Ehrlich our CFO for a discussion of our liquidity. Tom?

Thanks, Don. In talking a little bit about our cash position at the end of the quarter and our liquidity for the quarter, we had about $8.2 million in cash at the end of June 2011. That compares to $11.1 million at the end the previous quarter. Our cash reduction was about $2.9 million.

$0.5 million of that was related to the continuing funding of our financial surety obligations to collateralize the bond agreements that we have in place. Taking that in consideration, the remaining $2.4 million that was a reduction in cash works out to be about $800,000 a month in a monthly burn rate.

The cash expenditures were utilized for a number of different reasons that Don just mentioned, the ongoing reclamation activities, the costs associated with the feasibility study, costs associated with the various strategic initiatives associated with the consolidation Don mentioned. During the quarter -- during the third quarter we will continue to have payments related to the Los Finados exploration program joint venture, but those costs will be offset by reimbursements of the program from our joint venture partner.

Given the plans that Don mentioned to accelerate our engineering activities for the Church Rock project and our existing cash requirements for the evaluation of the various strategic initiatives, we're currently exploring various financing alternatives that may be available and are also evaluating the timing associated with the need to raise the capital in 2011 or early 2012.

Don?

Thanks, Tom. Although we expect the price of uranium to begin to recover this fall, we aren't anticipating any great strength unless the most bullish scenarios for price improvement play themselves out.

We continue to progress our plans given our long-term perspective of nuclear power and uranium and the value of our US-based assets. As noted, we will continue to pursue our strategy to grow the asset base in New Mexico and Texas and could expand this effort beyond our base geographically.

Given our outlook on the future of uranium, we don't see that as such a bad thing. We continue to remain focused in our efforts being a small company with limited resources albeit absolutely significant potential.

We would rather be disciplined in our approach to growth than to haphazardly waste our energy. But whatever we do with regard to our strategic acquisition plans, it will be on a very rightful oriented basis and not be a shotgun approach.

Let me open it up for questions at this time.

(Operator Instructions) David Snow, Energy Equities.

Yes, I have got some random questions that came up during the call. You had mentioned that you were having difficult ground conditions in Texas. I visualize that as being sandy soil. Is it clay or granite or something? What's going on there?

David, first of all, thanks for joining us today, good to hear your voice again. I'm going to ask Rick Van Horn to respond to that. He's been on the site daily and [watching to] try to describe those ground conditions. Rick?

Our ground condition problems at Los Finados are as you said, David, mostly sand related. We are losing circulation very early in the hole.

We're having to stand the surface casing and actually cement the casing in place down to a depth of about 250 feet. This takes a lot of time.

You have to let the cement cure and that's basically the only problem we are having is at surface. Drilling rates are a little bit slower than we had anticipated, but basically it all turns around the loss of circulation at the top of the hole.

And so that doesn't affect the potential for the sand to hold uranium, I guess?

No, this is all loose alluvial sand up on top of the surface.

Okay. Is that likely to be the case throughout this project do you think or --?

It's certainly the case where we are drilling now. We're stepping out drilling right now and we'll have to see if that continues through the rest of the property or not.

Has that been your experience anywhere else in Texas or anyone else's experience?

It has not but again this is the first time we've really been in this kind of an environment.

Okay, and then I think I heard you say that you've got to do the whole plan for three years to identify the roll fronts and then after that, there's an 18 to as much as 36 months period to get it to production, into wellfield production?

That's correct.

Okay, and then I'm trying to move to New Mexico, and I'm wondering -- you mentioned you have costs for strategic -- for your -- looking at your various financing alternatives. What kind of costs could you be incurring at this point in that whole effort?

Sorry, David, I need you to repeat that last part of the question. Costs related to what?

Well, you mentioned that there were extra costs for I guess looking at your strategic alternatives.

Okay, because there's two basic thoughts here. One is with regard to the existing feasibility study, we are on target, we're on plan, we're not having any additional costs there.

But we are looking at accelerating some of our engineering studies that would have been completed in 2012 in 2011 to determine if there is an opportunity for some accelerated production and/or accelerated restoration. Because as you know, the way that permit works for us, we can increase from 1 million to 3 million pounds the amount of production in future years if we prove commercial restoration.

So we're looking at a variety of scenarios that would improve our opportunity to produce sooner but also to produce at a greater volume sooner.

Now with regard to other acquisition opportunities from a strategic standpoint, as you might know, with the precipitous drop in the market in recent times, particularly after Fukushima, the resetting of values on all uranium assets has taken place.

And while it's an unfortunate aspect for the industry in general, for companies that are looking to do limited acquisition, such as URI, we could enhance a particular asset by increasing the recoverable resource amount and improving the overall economics of a project either through some acquisition, through some joint venture, some other arrangement.

It's actually an opportunity for us, but those activities require studies and we have had some expenditures this year and we will continue to do this throughout the third and fourth quarter to try to determine as part of our feasibility study and our general business development plans what of those assets in our two existing districts in Texas and New Mexico could give us that enhanced ability to produce at a greater rate of return and overall improvement in the asset base.

That is the kind of costs we are talking about.

So these are in-house studies pretty much or with consultants?

Yes, there are limited external studies that would be contemplated after we have done our preliminary analysis in-house. But Tom mentioned the increased cost per month of our burn rate.

A portion of that is related to additional staff persons that we brought on to conduct the feasibility study but fortunately for us have been able to assist us in some of these looks at other assets. So most of this is in-house. If we get to a point where we need a third-party authentication of those resource bases, of course we will step outside and get that third party.

And then it sounds today what you were talking about was that you were going to not really consummate any royalty issues or opportunities until the feasibility study is finalized. Is that still the case or are you likely to consummate something in the meantime?

There is a possibility. I would not rule out that we would look towards doing something before construction occurs.

Could it happen before the feasibility is completed? The answer is yes it could because as you know, we're conducting the feasibility study in multiple phases.

So as we have absolute definition of our position on Church Rock Section 8, which is where those royalties come into play, we will then determine the best approach to dealing with those in either a buy down or a buyout fashion and of course there could be some joint relationship that might improve that royalty position.

At this stage of the game, we believe the project is economic with the royalties. But our purpose is to improve the rate of return for our shareholders, so we will of course look at whether or not yet in this year there might be an opportunity for a buy down or a buyout.

In terms of where we stand, remember that that's a production royalty. So we actually have time to do so before this project goes into production.

Okay, is there anything new with [Hitachi] or is this just an ongoing open dialogue?

You mean Itochu and it's a continuing dialogue. You have to look at it from the perspective that -- and I know you personally are aware -- the historical contracts that we have with Itochu on the spot price and UG on the long-term price have been there for many years.

They are contracts in which we have no obligation to deliver resources into the contract. But if we do produce from certain of our properties, not Los Finados particularly, but from certain of our properties in Texas, that a royalty -- excuse me, confusing New Mexico -- the discount does apply under those contracts.

They are not getting any material at this time. So it's to their benefit to find a discussion that makes sense for us.

It's to our benefit to try to take advantage of two fully permitted operating facilities, processing facilities, in Texas so there is a mutual meeting of the minds here that for them to get additional resources under those contracts, we need to have a revised discussion. So they recognize that and have been open to that discussion on both fronts.

Wouldn't that be a little bit contradictory relative to the current inventory buildup going on that you referred to in the market?

It would be but for the fact that these two entities, as you well know, are entities that look at a global demand scale. Itochu has continued its purchasing.

It's gotten in other projects throughout the world. I know their expectation is to continue in this business for a long time. So what we've been seeing is their willingness to discuss our position is because of their desire to have future resources come out of Texas.

Are you giving them any new input on what you would be willing to do or is it just pretty much --?

Well, it's the same that we have previously discussed with many others and this has been discussed in public forums. That is there are some properties near our existing asset base that we do not have permitting for but we might have land control.

There are some that we might have land control but we don't have fully permitted. So there are opportunities to have from our existing asset base as some other areas that we would bring in for production an opportunity to put material into those contracts.

But in order to do so, as I mentioned earlier, we want to ensure to our shareholders that we are not going to open just for the purposes of opening those facilities. We want to know that we can do it on a sustainable basis with a decent rate of return.

That means a revised set of contractual obligations and the knowledge that we can produce within a approximate 500,000 pound per year production rate. So that is the thinking about how we'll get back into production in Texas whether we revise these contracts or not.

And are they also still considering anything in New Mexico with you?

At this stage of the game, it would be premature for me to speak to that.

Okay, and you mentioned you are pursuing other talks in the area yet everybody thinks you're undervalued. I mean what else is new? Is there anything else new?

(multiple speakers) case.

In terms of the talks, is there anything else new in terms of what you can expect to be hearing?

Well the only thing I can tell you is we initiated discussions with everybody in our respective districts early on when we produced our strategic plan in the beginning of Q1 of 2010, discussing this idea of how to deal with the conventional issues in New Mexico particularly because of the need for a mill there, and whether or not one entity or multiple entities were going to build mills. I can only tell you at this point everyone has been willing to have a discussion on that topic and that typically leads to a variety of other similar discussions about other joint venture possibilities and ways to make respective assets more economic for production purposes.

Nothing has really come out of that from what I can gather from your tone of voice.

I'm not in a position to describe anything specific at this point.

Okay. Would a consolidation be more likely when the market is weak like this or when it recovers?

Well, I can tell you from personal experience rather than from a URI experience that in the 30 plus years that I've been doing this, it is certainly more likely that consolidation occurs when there are weak pricing scenarios because they are preparing for what is an expected improvement in pricing.

Since we all expect the production to increase after the HEU agreement goes away and pricing accordingly rises, I would expect between now and the end of 2013 to be an interesting time in the uranium industry for consolidation.

Okay, that's very interesting. And then just going back to the -- New Mexico, I was trying to catch what you said, water permits will be suspended again until they review this or until this case goes through the court or what?

No, they are not suspended. They sit in timely renewal at this time.

And as you know, because we are not going into construction or production at this time, this is more about a litigation strategy and procedural issues than it is about practical impacts on the ground. So there is no practical impact today on the ground as a result of the action filed by ENDAUM.

I thought that ENDAUM -- because of that, the permit was gonna have to be done over again when it was just issued or something.

No, that is not the case, David.

I misheard.

Let me just -- for clarity because it is a question on the minds of many people, let me ask Mark Pelizza, our Senior Vice President, to speak to the existing status of that permit.

Yes, the NMED has approved our timely renewal status or ratified our timely renewal status for the discharge plan. We can now use that permit.

Regardless of any type of litigation that's been filed, there would still be a renewal of our existing permit and the technical information has been filed for that renewal. But in the meantime, we are positioned to use the existing discharge plan or UIC permit as a permit which is in timely renewal.

It's the exact same status that our NRC license is in. It can be used in the interim while the agencies renew the permit for future use.

Okay, so the interim would cover a startup in your 2013 timeframe? Is that --?

Or earlier, yes.

I mean but you're not able to get into production earlier I guess in New Mexico?

No, but in the event that the renewal process is underway, which it is, the existing permit can be used as a timely renewal permit.

Okay and this -- have they got any impact on the renewal process itself, this ENDAUM?

Oh, it would be expected that they would at least be vocal in the renewal process, yes.

Okay, alright. Does that suggest your renewal timing will be stretched out?

It could. But that is the beauty of a permit in timely renewal; that in the interim, you can use your existing permit.

Okay, I see. Alright, thank you very much then.

(Operator Instructions) [Kurt Giorgiotti].

Yes, I'm a stockholder living out of Denver, Colorado and do you see -- have you had anybody approach you as an acquisition at this point? Or is that something that doesn't happen at this point? Are they waiting for some of the dust to settle on these future drilling you're doing?

Kurt, first off, I don't think we've met, so hello to you. And at some point in time, I'd like to meet you as a shareholder and chat with you just to get to know you. But let me answer the question directly.

We have no ongoing discussions about being acquired. That said, we do have one of the top 10 resource bases in the entire world and the largest collective deposit in the United States. So of course we do believe that we are in a target position.

We have as an objective to ensure that long before this Company gets acquired by some other entity that we have brought appropriate value back to the shareholders from the long awaited production of Church Rock and Crownpoint and for the production in Texas, meaning, I mentioned earlier that we believe are undervalued as does everyone else.

But from practical purpose, we are significantly undervalued and any acquisition at this time would have to be able to recognize that value to our shareholders.

Of course we have a fiduciary responsibility to take anything to our Board and our shareholders that comes to us that is of a reasonable offer. But at this time, there's no ongoing discussion.

Do you also feel that -- for me as a small investor, we have ran through these ups and downs of course in the last couple of weeks as you've talked about earlier, and of course I'm sure that scared a lot of people out. Me, as I hear the reports that there's not even enough uranium now to satisfy the need of the world, what can you tell me to make me hang in there with you rather than going and look for another investment?

It's a very good question. It's a question that every shareholders of URI must ask every single day. The answer has been for some time and will continue to be that uranium is a long-term play and the best opportunity to realize your investment potential from uranium is to hang in there until we see this HEU agreement fully out of the marketplace, when DOE is no longer putting its material into the marketplace and the prices recover driven by that expected demand.

And while we do mention that there will be a lesser demand over the next 30 years than expected, it's just one year ago, call it the Fukushima effect, it still does not lessen the possibility or probability that the demand will be far greater than the production rate.

So when you have a company with 100 million pounds plus that can produce into that timeframe in 2013, as we will be doing, as a low-cost producer of ISR pounds, then you have a positive investment vehicle for a long-term play on uranium and the nuclear energy industry.

We sit at the top of the list in my opinion, of course prejudiced by what we hold, but when you have such a large asset, we sit at the top of the list for bringing back a very strong potential to your investment over the long term.

But at this point right now, are we producing any uranium that is being sold on the market?

No, we are not. Our last production was mid-2009.

It was not production from the best of our asset base, that having been a 9 million pound asset-based in Texas that we had exploited. We have about 600,000 or 700,000 pounds recoverable left of that particular resource. That's pre-Los Finados.

And as a result, the rate of return was not appropriate to continue. So we decided to stop that production until prices returned. That's why the discussion of when would we reopen Texas, and the answer is not until we have looked at those contract provisions, tried to determine if there is a way to improve that position and the price recoveries to a point that gives us a responsible rate of return for that asset base.

Well -- and I'm far from a rocket scientist, however, don't you have to have revenue in order to continue to function?

Very good point, Kurt. And the fact of the matter is this Company is at this time a development company without production. Despite our having had a 34-year history, 20 plus years of that in production, we are not a producing company today, we are a development company.

So we live by the existing asset base that we have and do so by very, very limited capital raise opportunities, and/or in the case of Texas, we determined it was best to go for a joint venture so that the funding for that exploration was paid by our joint venture partner for them to earn an interest.

So we have to look at other methodologies since we don't have funding coming in from actual sales at this time.

Alright, well, the other thing that is somewhat of a concern -- I mean at some point I think you touched this, I didn't read the full report, but at some point you've got to come back to us stockholders to raise more capital. Is that correct?

That would be correct. There are other opportunities other than doing so, but that is one of the scenarios; would we seek additional funding from the shareholders to, for example, build the Church Rock/Crownpoint project of which we publicly stated it's somewhere between $30 million and $50 million to build that project.

Now there are other opportunities for financing other than doing so. But as you know last year we did have two successful capital raises to maintain our development activities and move towards our strategic plan to be able to produce in 2013 and have that income.

Alright, well I appreciate you answering my questions. I guess as a stockholder, I'm looking for something -- some material information to come out soon, or as you know, I mean 30 years is a long time. I'm somewhat of a young guy, but I'm sure a lot of the investors aren't. And I need -- hopefully we're gonna see some positive information, not that we haven't seen that, but something in concrete that would allow us to hang in there and enjoy the fruit when it's done.

Understood, and that is the point taken from every one of our shareholders, many of which who have been with us for 15 plus years. They've been waiting for this production at Church Rock/Crownpoint and it is our job to get on with it.

Gentlemen, good luck. Thanks for answering my questions today.

[Lan Mei Xang], Platts.

I just want to clarify on what you mean when you say the timely renewal either in New Mexico [and the states where it all] how many renewal has been [confirmed]. That doesn't mean the renewal has been approved, right?

Again, let me ask Mark to respond to that question.

This is specifically New Mexico, but it's the same answer for our NRC license as well. And typical in the regulatory world is a license or a permit, an operating license or permit, if a operator requests that the license or permit be placed in timely renewal at a certain point before exploration, it's placed in timely renewal and can be used until the renewal permit has been issued.

That is the case with both our NRC license and our Church Rock discharge plan or UIC permit. They are in timely renewal, they can be used until the renewal process runs its course and the new permit is renewed for the new term.

Okay, first, when do the current permits expire for those [that known]?

The current permits have expired (multiple speakers) according to their term but they have been placed in timely renewal which means they are in timely renewal, they will continue to be effective until the renewed permits have been issued.

[As well as the you said] the state government and NRC are considering the applications, the current permits are valid.

That's exactly right.

Okay, and they haven't been indicated or given you an estimate when are they going to make a decision?

They wouldn't do that (multiple speakers) they wouldn't give you an exact time on that.

Okay, got it, thank you.

David Snow, Energy Equities.

Just to follow up, would you need a contract to get into production? You mentioned $68 long-term but it could see some pressure. Is it possible to take such a price and would you need that to get into production?

David, let's differentiate that question into the two regions. Within Texas, I believe the answer is yes, we would maintain a contractual relationship likely with Itochu and UG for our existing production if we come back from our existing asset base.

For Los Finados, not the case. There's no contractual obligation. We would look to see as a joint venture how best to deal with that, understanding right now we don't know what the percentage ownership of that production would be.

If Cameco as our joint venture partner invests to the full extent, they could own 70% of that production, we could own 30%. They can do with their 70% what they care to do, we can do with our 30% what we care to do.

In the case of New Mexico, we have resisted opportunities wherein persons are looking for off-take agreements on that asset base. And the main reason for resisting that at this time is just what you stated.

The long-term setting at $68 is not ideal. Would it make money? Yes, but it is not ideal.

Our belief is the price will be significantly higher after the HEU agreement goes away in 2013 when we are up in production. So it would not make sense to lock in a long-term price and would in fact not be beneficial to our shareholders to do so at this time.

That could change if the prices go up. And let's recall that pre-Fukushima, long-term pricing was somewhere in the neighborhood of $75.

So it could easily happen before the end of this year as things improve, but it still would not be beneficial for us to look at off-take agreements until we are certain that that is the best vehicle for moving a portion of that production. Now is it one of the opportunities from a financing consideration for building the project?

Of course it is. But we are looking at an array of ideas how to deal with that, and I will likely continue to resist off-take agreements unless it is a very beneficial contractual relationship that brings assurance to our shareholders at a reasonable rate of return.

Would you be able to do the $30 million to $50 million financing without a -- such a contract?

We believe at this time there are opportunities to do so; yes, sir.

Okay, and the $800,000 a month or $9.6 million a year will put you out of cash by I guess year-end. Is there a -- are you going to do a small placement again in the near term to tide you over or what's --?

We have a number of opportunities for short-term issues as opposed to the capital expenditures necessary for construction of Church Rock/Crownpoint. So we would look to have some form of additional funding source prior to the larger need for the capital to build Church Rock.

But I must emphasize that does not necessarily mean a financing. There are other opportunities but we are going to look at all opportunities including financing, yes.

How else could you raise money? An advance downpayment or something like that?

Well, we've discussed for many, many years that we are not adverse to joint venture relationships, to some other construction arrangement -- constructed arrangement, if you will, in the way partnerships and you know that this particular property had previously had an interest expressed by Itochu, our contractual participant, in Texas. So there are opportunities other than financing. But like I said, we're going to look at every opportunity and do what we believe is best for the shareholders.

Ladies and gentlemen, there are no further questions at this time. I will turn the conference back to management for closing remarks. Thank you.

Thank you, Diego, and once again, thanks to all for your participation today. Your time and interest in URI is extremely important to us. We are listening.

As we've discussed, we continue to believe in the long-term future of the nuclear industry. The need for the development of more uranium projects exists and we plan to fully capitalize the large resource base we have in New Mexico as these market driving factors converge.

It will improve price, it will improve demand and therefore we need to be timing ourselves for production as we are in 2013 and to take full advantage of full production in 2014 when the HEU agreement is gone and the prices return.

At any time if you have questions about URI, you can contact Debbie Pawlowski with KEI Advisors who assists us, but you can certainly contact any one of us, and you'll note that there is no particular note of hierarchy in our Company.

You can get your questions answered from people like Mark, Rick, Tom and others at any given time. Simply submit a question through our website or call. You'll see our numbers are there.

We appreciate your feedback at all times and thanks for your participation this morning. Thank you.

Ladies and gentlemen, this does conclude today's conference. You may disconnect your lines at this time. Thank you all for your participation.