Westwater Resources Inc (WWR) 2012 Q1 法說會逐字稿

Greetings and welcome to the Uranium Resources Inc. first-quarter 2012 update conference call.

At this time all participants are in a listen-only mode. A brief 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 Ms. Pawlowski, you may begin.

Thank you very much. Good morning, everyone. We certainly appreciate your time today and your interest in Uranium Resources.

On the call I have with me President and CEO, Jon Ewigleben, who will review the recent events of the last quarter, the great strides that we have made in the first part of this year, and what our focus and strategic initiatives are for the Company as we move forward. He will be joined by Tom Ehrlich, Chief Financial Officer; Rick Van Horn, Senior Vice President of Operations and Exploration; as well as Mark Pelizza, the Senior Vice President of Environment, Safety, and Public Affairs.

We will conclude the call with an opportunity for questions and answers. If you don't have yesterday's news release, it can be found on our website at www.UraniumResources.com.

As you are aware, we may make some forward-looking statements during the formal presentation and Q&A portion of this teleconference. Those statements apply to future events which are subject to risk and uncertainty, 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.

So with that I would like to turn the call over to Don to begin the discussion. Don?

Thanks, Debbie. I, too, appreciate all of you participating this morning on this call and taking the time to hear an update about URI and the various activities so far in 2012.

Let me start with some of the macro issues and then I will turn to the specifics. We are still very encouraged that the uranium market fundamentals remain strong for our industry. Although the uranium spot price is still trading in the $50 to $55 range according to UX, we still see a steady holding of that price pattern. What that tells us is that we are not likely to see a return to sub-$50 spot prices. That means we can plan to move forward.

If you look at the base case uranium worldwide requirements, it's still quite impressive in terms of growth. They will be increasing from 173 million pounds U308 in 2012 to 224 million pounds U308 by 2020, and if you take it all the way to 2030, we are up to 271 million pounds U308.

By comparison, the world market production for 2012 from all sources, such as new production, existing production, inventory drawdown, it's estimated to be in the 180 million to 195 million pound range comparable to those numbers I just suggested with regards to growth. The 2011 world production was approximately 140 million pounds under the middle case scenario in that report. We also note that the China Development Bank's investment arm is targeting resource deals in a number of areas including uranium. That is positive.

Regarding the situation in Japan, everyone is aware that in the wake of the Fukushima disaster a number of reactors in Japan were closed. What you might not be aware is that there is a new World Economic Forum report that asserts Japan will continue to rely on nuclear power. That report is based on costs and time associated with changing power sources, as well as the slowdown in industry and the Japanese economy that would result in the absence of nuclear power availability. We see that as a positive sign.

We are also encouraged to see that others are following our lead with regard to M&A activity. On the heels of our announcement to acquire Neutron Energy we see that Energy Fuels is buying Denison's US assets. We expect further consolidation activities in this sector in the future to get to the levels of production necessary to meet demand.

The Canadian Nuclear Safety Commission's authorization to power up Unit 2 of the Bruce A nuclear power plant in Ontario is also encouraging. The reactor effectively ends the construction and commissioning phases of the refurbishment project, and it has been off-line for more than 15 years.

It appears that our competitors are experiencing increased volumes and increasing their 2012 production forecast as well. Our joint venture partner, Cameco, announced that its earnings are up in the first quarter on higher production volumes and average selling prices. We also saw that ERA upped their 2012 production forecast. These are all positive signs for the coming year in the uranium industry in our view.

Let's take a look at the things happening a little bit closer to home for URI and I will start with the present status in Texas. As we have previously stated, our objective in Texas is quite simple, return to production as soon as the uranium price recovers.

All activities in Texas are putting URI in a position for that return to production. This includes the initiation of a pre-feasibility study on possible ore zones adjacent to our previously recovered 8 million pound areas. We are also in the midst of other maintenance activities to ensure that we are fully prepared to charge back into production in the near term as the price increases.

An example of that is our pond project; it's progressing well. We have initiated the refurbishment of existing equipment at Kingsville Dome with an objective to restore full operating capacity and extend the operational lifetime of the plant. Our work to date includes installation of filter presses, installation and testing of process pumps, various structural updates, including electrical and steelwork, installation of chemical lines and tanks, and bringing the dryer up to full operational capacity.

The cost is approximately $2.9 million and it will continue throughout the end of this year. It may generate up to 40,000, maybe 50,000 pounds of U308 as a byproduct of this pond project. It allows us to transport material from New Mexico when we begin production so that we can use the existing sunk capital in our two plants in Texas.

Looking at Los Finados exploration project; I mentioned before this is a joint venture with Cameco. We are in Phase II, which started in December of 2011 and it's scheduled for completion in November of 2012.

What are we doing under Phase II? We have got nine holes at an average depth of 1,300 feet so far, six shallow offset holes, and we have a plan for 10 more deep holes plus 34 offset shallow holes. We will spend about $1.5 million in the Phase II activities, of which $1 million has been funded by Cameco as part of their earn-in. Cameco has currently earned in about 40% of this project. Completion of Phase II will take their earn-in position to about 50%.

Reclamation and stabilization continues in Texas. It is a top priority for us. We have a terrific record of having closed well fields. We have a terrific record of having met the requirements of our permits and having had those permits completed.

Very few companies can boast that they have actually been able to go through the entire lifecycle of a mine from finding the material to exploration, developing the project, getting it permitted, operating it, and now having closed it. So this activity of stabilization through our reclamation process has to remain a top priority.

We think we are kind of unique in this country because of our experience in Texas restoration. It will help us in the state of New Mexico as we move forward. So we will continue that processing activity, moving more past production areas to stabilization, and hopefully getting those permits released as well.

On to New Mexico. I mentioned earlier the Neutron acquisition. We announce the signing of the definitive agreement on March 1 of this year. We also executed a financing agreement with Resource Capital Fund. Acquisition of -- requires URI and Neutron's shareholders to both approve this transaction and that is expected to close in the third quarter of 2012.

We would hope that it might be sooner than that, but there are certainly governmental processes that have to go through from an SEC standpoint for review, so we are preparing for a closure as late as the third quarter. It's going to position URI as one of the largest uranium developed companies in the US. Most of you are aware that we already had the largest position in terms of overall pounds in the ground. This will move our position up significantly.

But it's not just about getting more pounds in the ground. Our strategic belief is that consolidation in the New Mexico district is required in order to meet the economies of scale necessary to build the proper mills for the conventional assets.

Of course, we are going to be in production first in the Grants Mineral Belt as a result of our Churchrock project, but we have to plan forward for a pipeline of production as prices return after 2013. Therefore, we have to plan for having a mill location that was part of our consideration in looking at the Neutron acquisition since they had a prior mill location.

But let's be clear, the assets that were located in the Grants Mineral Belt in New Mexico, including Cebolleta and Juan Tafoya, were quite encouraging for us, over 18 million tons of non-reserved mineralized material at a weighted average grade of 0.15%. Combined the companies will have over 206,000 acres of uranium holdings in New Mexico, by far the largest.

We are preparing a Form S-4 to be filed with the SEC as part of the process and we will continue to move forward to get this project closed. I would like to take a moment now to turn it over to Rick who heads up our operations and development group to speak a little bit about Churchrock Section 8 and the feasibility study that has been completed. Rick?

The advancement of the Churchrock property, especially Section 8, which is where we have our license and permit, remain a top priority for the Company.

We have had an independent engineering firm validate the economics of the property with a feasibility study. That feasibility study was turned over to us. We have vetted it and we have it in for final edits right now. We expect in the next several days we shall have those edits taken care of and see it back in our hands again.

We are in the process right now of putting bid packages together for the drilling of the project or the pulling of core. We are doing the metallurgical work and mineralogical work. We are currently looking at financing plans and whatever.

As Don said, one of the critical path items here is to make sure that the ponds at Kingsville are in shape by the time we start up Churchrock production to receive the resin and treat the resin here and actually bake and package the yellowcake here in Texas.

The project will have seven well fields with staggered production. They will come in about one every year and the total number of wells drilled on this project to produce this 6.5 million pound ore body is going to be right at about 1,000 wells over a six-year period. So there is a lot of work here that has to be done with the drilling and the preparation.

We are still targeting production in the latter part of 2013. We are looking at about 60 people to be employed in New Mexico, about 30 to 35 in Texas. This does not include the contractors on the drill rigs, and we plan on having something like six drill rigs out there when we are in full tilt.

We are currently in negotiations with the Navajo on access rights. We are looking for an access turnout that will provide safety and better access for tractor trailers coming in and out of the property so there are no safety concerns on the highway. Capital necessary for this project is -- including bonding and working capital and everything, is right at $50 million. And that is where we are there.

Thanks, Rick. I have had a couple of questions that were provided to us before we got on this conference call. I am going to address one of them right now because we are talking about it in view of where we are on the Churchrock Section 8 feasibility. We will come back to Q&A a little bit later, but I will address this one right now.

Someone had asked about a violation that we had received from the Navajo Nation regarding access issues. Just to be clear, April 5 of this year our wholly-owned subsidiary, Hydro Resources, received this notice of violation and an order to comply with the Navajo Nation Civil Trespass Act. It's part of the Navajo Nation Division of Natural Resource.

The order that was assessed or the penalty, if you will, was only $50, certainly not significant or material, but it's a question that is raised about the various opportunities for access that we have to Section 8. This order asserted that the Section 8 Churchrock property couldn't be reached without crossing either Section 9 or 17, both of which are trust lands for the nation.

So we immediately went to a discussion with the Navajo. There are certainly questions that we want to ask of them about their views on access, but we were already trying to develop that working relationship with the Navajo Nation. So this is not unexpected.

While we are certain that we have access, we look at this project and say for how many years, 10-plus years, this project was tied up in litigation. It was a favorable result for us at the end of 10 years, but the fact of the matter is, even though we have our permits and are prepared, we have to have a working relationship with the entire community. And that certainly involves the Navajo Nation, particularly considering the number of employees that we will have who will be Navajo. So we want to continue to have all discussions available.

We are using this notice of violation, if you will, rather than just to say here is the $50 or contest it in whatever manner, we want to have a working relationship. We have started down the path of those discussions to ensure that we can have a positive relationship going forward, because we intend to be in this area for a long, long time.

We are valuing all the options, as Rick said, about how we will have access. He talked about the construction of the highway turnout; that is a project that is underway with the New Mexico Department of Transportation. That is primarily to look at providing safe access to the project.

But we are going to make certain that we work with the nation and with the New Mexico Department of Transportation to have not just the safest route, but the best available access for the number of trucks that we have, for our employees to come in and out. Not just from a safety perspective, but something that protects the community on all levels.

That is why we are in the discussions with the Navajo. We look at the Navajo violation, if you will, as an important step in moving our discussions to something that will get us to that closure on this best aspect of how do we work in the community with the Navajo Nation.

Well, enough on that. Let me move to an important issue, the liquidity position for the Company.

Our cash at March 31, 2012, was $9.9 million compared with $2.9 million at December 31, 2011. The increase was primarily due to receiving $10 million in cash associated with the sale of stock to Resource Capital Fund in a financing transaction that occurred in March.

As of April 30, 2012, we have approximately $7 million in cash on hand. We have an option at the closing of the Neutron merger to receive an additional $5 million through the sale of additional stock to Resource Capital Fund.

The Neutron budget funding that we have talked about in this transaction includes $0.9 million in cash for their first-quarter budget. This is under a loan agreement with their company prior to closing. We want to ensure that their activities on their projects continue and that the strong staff that we will be inheriting are allowed to do the work. So we created this budget for them to continue their activities.

We expect an additional $2.2 million for the second quarter of 2012 and that is in our approved and planned budget.

I know there has been some questions about our usage of the at-the-market facility that we have available to us. In the first quarter of 2012, basically during January, 1,815,073 shares of common stock were sold for approximately $1.5 million. There is still $12.9 million available for future sales under the ATM.

I want to be clear about that. The ATM is simply a tool, another opportunity to maintain all that we must do in the course of our financing activities to ensure we stay on track on our projects. What I mean by that is we are not in a position as a result of the agreements that we have with Neutron to go forth today and raise the necessary capital, as Rick mentioned, somewhere between $30 million and $50 million total all-in to build at the Churchrock Section 8 property. That will be done once we close the deal.

We also have opportunities to seek other forms of financing. As you well know, the Section 8 feasibility study was done by a qualified person, meets 43-101 standard, and as a result is a bankable feasibility study that allows us to look at an opportunity for a debt facility. Not saying that we will, but we are certainly in the mode of looking at all available modes of financing that project. We believe that we have a path to gaining that $50 million top number, if that is what it requires, prior to our construction in 4Q of this year.

So we are very encouraged about our position in terms of cash on hand and the ability to meet our needs. At the time that we exercised the ATM option and raised that amount of money it was prior to the arrangement with Resource Capital Fund to bring in the $10 million and we wanted to stay on track for our Section 8 project activities, our Churchrock property.

There are some pre-activities that had to be continued, primarily specific engineering projects that had to be done and some other on-site activities that required some cash, and we did not want to take that out of our existing budget. It normally would come out of a project budget. So we have had to pay ahead of the game a few items with regard to the project budget that we will recover once we gain the financing necessary to build the project in the latter part of the year.

That is the sole reason that we used the ATM and in the future we would be equally judicious. It's not a tool that we need to use on a regular basis and that is not how we intend to finance the project itself.

I think it's probably appropriate to open up the phone lines and have some questions at this point. I will come back in and try to answer each of those questions.

(Operator Instructions) David Snow, Energy Equities.

Good morning. I am trying to figure out what is the fully diluted share count now, including the ATM and the more recent March $10 million transaction. And how many shares were issued in the March transaction?

David, I am going to ask Tom Ehrlich, who is our CFO, to answer that question but, first, good morning.

Good morning to you.

Thanks. Tom?

David, let me pull that number up. If you have additional questions, let me pipe in with that. I don't have that at the tip of my fingers, but I will come back to you in just a moment. How is that?

Okay, terrific, Tom. I am wondering the 6.5 million pounds of in place ore body; what is the recoverable amount in the feasibility study that you expect?

Rick, if you will respond to that one. Rick, did you hear that question?

Can you hear me?

Yes, go ahead.

Okay. Feasibility study estimated 4.35 million pounds out of that 6.5 million.

Okay. And is there a -- can you give us some idea as to how the profile would look on that?

What do you mean the profile?

By year how it would ramp up?

Yes. It would be pretty small the first year and then the second -- when I say the first year. The first year, we are still looking at the latter half of 2013, depends on when we get cranked up. But the next year after that we should be close to 1 million pounds, maybe 800,000 pounds, but then 1 million pounds in the next year after that.

And then I guess you would be holding at 1 million pounds for a year or so and then tapering down, or how does it go after 2015?

And then ramping down and the finally year of production will be 2019.

Okay. Does 2016 start to ramp down or does it hold for a couple of years or what is the -- after 2015 how does it look?

It still holds pretty close, David, at 800,000 but then it goes down to 400,000 in the next-to-last year and the last year. Again, this depends on the timing of when we get cranked up is only I think like 50,000 pounds.

David, if I might -- and, Rick, I apologize for interjecting; this is Don Ewigleben. Let's not forget that the theory here is, and the strategy going forward is that while we will begin a production in the Section 8 properties, our NRC license allows for a much larger production opportunity.

So while, yes, we will be ramping down off of those seven well fields, we expect to be in production in the other well fields that we have under our license. So the concept, of course, is we will get to our maximum 1 million pounds per year under the NRC license while we are in production at Section 8. But to get to the 3 million pounds per year production limit in our NRC license we have to take in those other properties to get that level of processing.

So while we are talking about ramping down Section 8, let's not forget, we will be bringing on the other properties online. That is why we built the Crownpoint facility to process all of the material in that area.

You mentioned in the press release that the first year kind of starts the clock for showing restoration. I am trying to recall how you phrased that, but it sounds like three years from the first year you might be able to get approval to expand to the 3 million pound level.

Rick, I will let you speak to that one directly.

We would anticipate that at three years, after three years we would have our commercial restoration demonstration complete. That is one of the criteria that allows us to expand into the other operations.

So it would be three years from the first production, is that how --?

Three years from the first production, David, yes.

Okay. And are the adjoining sections contiguous or how far away are they?

Well, the next place we go is Section 17 which is just directly to the south. Section 17 is Churchrock. And then our license also includes the Unit 1 property and the Crownpoint property, so we would proceed in that. And those are not contiguous; they are miles away.

I see, okay. I was just trying to remember. Then I am also trying to -- had a question about you mentioned in the press release, but I didn't hear any color on it, continued discussions for the royalty holders on Section 8. How is that going?

Well, as you might guess, in any business negotiation we are not at liberty to speak publicly about the specifics of those activities. Let's be clear about it, though, we have been very open about the fact that there is a royalty there and we have been very open about the fact that our strategy is to buy down or buy out that royalty and it comes from a number of different holders. That would improve the rate of return.

We have not been able to publicly release our feasibility study, in part because we are in the midst of those negotiations. So suffice it to say it's high on our radar screen to have that resolved before production begins.

Okay. So I guess we are not going to see the feasibility study published anytime in the next --?

We hope to get it out, David, as soon as we can, but you have nailed the reason why we cannot do it immediately.

All right. I just had one more question and that is have you had any further discussions about a mill other than on your property with some of the other players down there? Or on your property with some of the other players?

We have continued to have conversations with every small junior entity. We have not entertained a conversation with anyone with the Mt. Taylor property simply because we have not heard any announced plans about how they intend to deal with their mill issues. But you know there has always been a strategy for us that there was likely to be no more than two, maybe three mills in that district, simply because of the capital structure not being able to afford to do it.

We always believed that there would need to be a mill east of Mt. Taylor, and we think that through the Neutron transaction we have an opportunity to potentially move towards an east Mt. Taylor mill that was located in the old [Bokum] site. There is another site west of Mt. Taylor where there was a previous mill and it has infrastructure area. I think everyone looks at that as a possible location for the next large-scale mill west of Mt. Taylor.

We have not had a specific site yet located because we are looking at every opportunity. As to the idea of some form of a joint venture with the other juniors, everyone is still keeping an open mind to that concept. Even though you look in the permit applications for each of the juniors who are in that district and they say they are going to build a mill, I think we all have come to the same realization that there will need to be some setting under which there is either a joint venture mill or there is a mill with a toll milling relationship with the other smaller entities.

The one west of Mt. Taylor, to refresh my memory, was that one yours or who is was that? Is that the old Kerr-McGee mill or what?

There is a property that was known as the Rio Algom site and BHP has that property. It was in the midst of restoration and is still a viable location for a mill site. I think everyone would be pleased in that district if a mill could be built in that location. But, again, we have not cited a particular location for our potential west Mt. Taylor Mill.

I will just throw one more question. Have you any crystal ball on whether there will be some Japanese reactor restarts coming up this summer? And if so, what is your prognosis of how many?

David, as you know, I am not very good at looking into the crystal ball. I don't gamble because I typically assume the wrong numbers whenever I am doing anything like that, so I look at it from a hard number, factual basis.

I am pleased to see that new report that basically said what we all were surmising. The Japanese government, despite its comments about trying to close down the reactors, simply cannot do it. We don't have any specifics.

We don't have any corner on the market for knowledge base as to what those specifics are, but we are encouraged by the fact that these economic reports are now showing what we all assumed. That Japan would not be able to close down all of their nuclear fleet and meet all of their economic needs and power needs; therefore, that market is to want to remain open.

And I don't want to lose (multiple speakers)

Is that available on the Internet somewhere or do you have a --?

I will ensure that we get a copy of that report to you, David. We have got your nomenclature; we will get it to you.

Okay, just terrific. Thank you very much.

David, to follow up on your question on the capital structure, we have got 106.2 million shares that are currently outstanding, about another 3 million options, and then a warrant of about 1 million shares. So our total fully diluted common stock is just over 110 million.

In connection with the RCF financing, we issued just about 10.3 million shares. The price on that was $0.9747, so just under $1.

And so this includes the ATM and that last transaction?

Yes, sir, that is correct.

Okay. There is more to come, though, isn't there, if you complete the joint venture, the merger I mean?

That is correct. We would be issuing additional shares as part of the transaction. The remaining number -- Tom, do you have that handy?

It's 37 million.

Okay. Thank you very much.

Thank you, David.

(Operator Instructions) Anthony Young, Dahlman Rose.

Thanks for taking the question. I just wanted to focus on the capital costs a little bit more. You guys sort of -- I think you brush upon it on the last set of questions, but when you have that $50 million CapEx number that is out there, is that -- would you be building processing facilities in New Mexico as part of that? Or is that utilizing the Texas facilities?

Actually, Anthony, -- good morning to you -- it is a combination of both. We have the luxury of having processing facilities in Texas which allows us to start the well fields prior to the full and complete construction of the Crownpoint processing facility. Because we can have the material, the resin, trucked to Texas we can then get into production sooner from the time that we actually start the construction of Crownpoint.

But, ultimately, the material that is being mined in that 27 million pounds under that license will be processed at the Crownpoint facility.

Then just so that we can sort of think about timing a little bit. I mean you would probably spend about $30 million, $35 million or so to get in production and then you would have the rest come maybe in year -- in the later portion of 2014 or 2015 to build the processing facilities in New Mexico.

Rick, why don't you give out the limited amount of public information we can discuss about those expenditures.

Anthony, yes, we are going to start at Churchrock Section 8 with trucking resin to the Texas facility. That does not include the cost of construction of a Crownpoint facility. That facility would be constructed when it makes sense.

As it turns out, the resin haul is a little bit cheaper, but it obviously involves more work, but on a dollar-by-dollar basis they are about a wash. The facility at Crownpoint would probably be built, probably if we build it would be built in years three and four of the Churchrock Section 8 to allow us to process 17 and then to go on to the other Crownpoint uranium project properties as laid out in the NRC license.

Okay. Did you guys envision a scenario where you just wouldn't build that processing facility in Texas -- or, excuse me, in New Mexico?

Yes, there is a scenario that would say we never build. The idea is that if we -- if a conventional mill is built in the state, the tail end of the mill could be used to process resin also.

Okay. That was the extent of my questions; I think that the rest were already asked. Thanks, guys.

Thanks, Anthony.

I would like to turn the questions over to Debbie for e-mail questions at this time.

Thank you, Tanya. We did have a few e-mail questions that came in for us, guys. I will start with the one.

Tom, maybe you could clarify regarding the RCF funding and the number of shares and the 13b filing that was recently made. The question comes to -- given the recent stock price (inaudible) need clarification as to how many shares RCF actually ends up with.

The number of shares that RCF will end up with -- again, there is 37 million shares that will be issued in connection with the complete transaction. The number of shares that RCF will have -- Debbie, let me again do a quick calculation on that. I want to make sure we are giving the right numbers.

So if you could go to the next question, I will come back to that one. How is that?

Okay. And then, Rick, going back to the Section 8 -- I think we actually answered most. This one I will give to you Don, it's on ENDAUM or, Mark Pelizza, maybe you should answer this one. ENDAUM, the status of that, what our thoughts are regarding the situation, do we have reason for concern.

Mark? Mark, do you still have access to the line?

Say that again, Debbie, please.

Sure. The question is in regard to the ENDAUM situation with the underground injection control permits. How much reason for concern is there and what is the status?

Well, that whole decision has been deferred. The judge has chosen not to hear the matter right now. We think that along a separate course that it will probably become a moot issue, because we are also in the process of the renewal on our permit. And we think the renewal process will move along and make the whole issue of a decision on time and renewal moot.

We feel that our position is good on time and renewal but we think it may be a court case that just never happens because our renewal process will pass it by.

Okay, thank you. Rick, a couple of questions on Churchrock Section 8 and the pond project. At what price per pound is the U308 economically viable for the project? And on the pond after -- well, let's talk to that one first and then I will go the pond after it because I think the writer is confused.

I can't talk about cost, but the sales price that the feasibility study was run at was $64 a pound.

And then also the study went through various scenarios of varying prices per pound, right?

There was a sensitivity analysis, yes.

Exactly, okay. The next question is on just the pond. I am going to read the questions as they were written, but I think the writer was confused some on it.

The 40,000 to 50,000 pounds are just the amounts expected from the pond effort, which I will answer as yes, and if so, what are the additional expectations for full operating activity at what cost per pound? He might be moving toward just Texas production; what our capacity is there and at what price we would actually go back to the production.

That is part of the pre-feasibility study that Don talked about for Texas production. We have properties that are targeted. We obviously owned properties that would come into production to start with and then we have other properties that would be targeted. I really can't talk to those because again I can't show our hand on land acquisition and whatever. But we are in the range of $45 to $50 a pound, something like that.

And then what about Kingsville Dome and Rosita processing facilities, what are their capacities?

As they stand right now, Kingsville is capable of 800,000 pounds a year; Rosita with a little bit of work is an 800,000 pound a year facility. The plan is to install two dryers in each which will give us two operating plants that have about 1.5 million pounds a year capacity.

Okay, thank you. And then, Tom, on exchange listings, we had discussed before about the Toronto Stock Exchange listing. Curious as to where we are with that.

And then, secondarily, on the NASDAQ continued listing requirements for the $1 stock price, where are we with that?

With the Toronto Stock Exchange we are still evaluating and looking at what the best options are there. We do have an application that is up with them. They have done a preliminary review. They are looking at some of the other information we have submitted to them related to the Neutron acquisition. So we are again looking at the best timing and options and moving forward on potentially adding the Toronto Stock Exchange as one of our listing alternatives.

With respect to the NASDAQ notification that we received in January, obviously we are hoping with the information that we are putting out with Neutron, with some of the progress that we are making on some of our areas in Texas and New Mexico we are able to achieve the $1 stock price prior to the six-month deadline expiring. If not there is a number of different items that we would look to do, including an appeal to NASDAQ on that and presenting our case to demonstrate why we believe our shares should remain listed on the exchange.

Then did you have the answer on the RCF share count?

I do, yes. Again, in connection with the acquisition there will be 37 million shares that would be issued by URI. 24.6 million of those would be issued to RCF in addition to the 10.3 million that they were issued in March in connection with the $10 million financing. That would bring their ownership position up to just over 24%.

Of the 37 million, another 8.4 million would be issued to the existing debt holder, Rand Merchant Bank, and the balance would be issued to the Neutron shareholders and their financial advisors, ROTH Capital.

Now in addition to that we do have the option of availing ourselves of another $5 million in capital with RCF. If we do that at the prices that we issued the previous amount at, it would be just over 5 million shares. And so if you look at the $10 million that they invested in March, the $24.6 million that they would be receiving in connection with the acquisition, plus the $5.1 million, it would bring their ownership position to right at 27%.

Great. Okay, understand. Operator, Tanya, we have a couple more people in queue, one of whom was actually the one that e-mailed some of the other questions. So we can take the other gentleman first, the first one in line.

[Benjamin Allen], private investor.

I would like to ask I know, I know that you have a number of potential buyers in the US but how extensive can you sell your products out of the country?

Benjamin, first of all, hello, I don't think we have met before. This is Don Ewigleben; hope to meet you some time in the future.

The answer to the question is we can certainly supply our product on the world market. We have limitations as a US Nuclear Regulatory Commission licensed property as to certain countries that cannot buy uranium for obvious reasons. But, as you probably are aware, we, in the course of the 8 million-plus pounds that we produced in Texas, had contracts with both the Japanese and the Germans and would still probably have similar contracts in Texas going forward. So we look to the global market.

That said, I am always keeping my eye on the present status of the 104 nuclear reactors, plus the two or three that will be coming online in the US. The reason for that is they used about 50 million pounds last year and the country only produced about 4.8 million, I believe it was. I don't have the number in front of me, but less than 5 million pounds.

So we are going to be in production in the Churchrock location and in our Texas location just as that HEU agreement goes away, the 2013 prices go up, and we believe the short-term secondary supply will no longer be available to the US facilities. Therefore, the utilities will be looking for contracts just as we are getting developed and ready to be in production at a full scale in 2014.

So it's a very good timing setting for us. We will look at the global market setting, but right now we are not encumbered at Churchrock in any way, shape, or form as to who we can sell that to.

Okay, thank you. That was a question that I wanted to ask you. Thank you so much.

Thanks, Benjamin.

[Kurt Gordese], private investor.

Good morning, guys. I listened to the calls; I call in every once in a while. I am trying to understand -- I am just a small investor and I am trying to understand that we keep hearing that in 2013, 2014 that this happens, and that if the price goes here this is going to happen and yet you guys are making acquisitions with zero revenue. It feels like me as a stockholder is being the ATM on this.

Where does it end? I mean, as a small investor we tired of getting beat up. We are tired of hearing 30 to 1 leveraged. We are tired of hearing we are going to go back and we are going to dilute this and we are going to fight this. I mean if I ran my business that way I would be out of business. If I don't have revenue, I can't make acquisitions.

I am a little stern this morning, but it kind of is getting old. We are continuing to be we are positioning ourselves if this happened and if the market goes here and we have figured this. I mean, help me stay on board with you guys. I mean, at what point do we finally say enough is enough?

Kurt, again we have not met. I want to visit with you at some point in time so I can understand your concerns.

I understand your frustration. The shareholders or you or I have had similar frustrations for many years because of the great delays in getting to where we are today towards Churchrock Section 8 being in production and returning back to production in Texas. So I understand that frustration.

When we talk about the price what we are talking about here is something that is never a certainty. We can't say for certain the price will be anything going forward in the future. What we can say is we are going to be in production and we will start giving the return to the shareholders that they have been looking for that has been held up for so many years over the litigious nature of the process system.

Now we are at the cusp of being there. We should be able to reduce those frustrations that you have by doing exactly what we said we were going to do. We will, in fact, be producing.

As to the consolidation strategy, need to be very clear on this, we don't buy pounds just to say we want to get bigger. It has nothing to do with that. In fact, of the 101.4 million pounds we have in New Mexico, almost 60% of it is conventional and, unfortunately, it is in a checkerboard setting. It was given out in parts through the Santa Fe Railroad, etc.

So what you have is a setting where I might have a property or you or I might have a property, let's call it in our Roca Honda area, which is available on our website on the map, that has a terrific opportunity for development once that mill is built. But in and of itself wouldn't it be able to have a rate of return to pay back the necessary capital to build that facility.

So what do we do? We look at the nearby section and we look and see there is a section next to us that has similar grade but we have the shaft. Why don't we combine those two activities through consolidation or joint venture, whatever it takes, and then have the appropriate economy of scale to build the mill facility?

And let me be clear, not for the in situ recovery property. That is a different function, that is the 40-plus-percent of our material in New Mexico, but for the conventional that will only be viable at about a $75 price. So it is not that we can just sit back and say, great, we are going to be in production by the end of 2013 right as the prices are rising at Churchrock.

Our job and our fiduciary responsibility to shareholders, such as yourself, is to say we must have a pipeline for the rest of these assets. Otherwise we would be wasting the value of those assets. How do we bring value to the shareholders by ultimately getting to production on those conventional or underground assets? We have to combine some of them to have the economy of scale to build the appropriate mill site.

I realize the frustration, sir. But it's something that we are working very hard. Let me let you follow up.

And I understand and I appreciate it, and I understand you have got to run this business as an expert that you are with the people you have in your office. You can't go by stockholder sentiment or what the message boards say, and I appreciate that.

But when you start talking about $50 million for a processing plant -- we keep going up and up and up with zero revenue. I am all for planning for when things happen to be in the right position, but when you are doing it on dilution of us stockholders it just kind of gets old. And I realize you have already answered the question to me, but it's just a tough go right now.

We watched the stock price go from $1.50 down to $0.80 and then $0.90. And I realize that is not how you operate is by watching what your stock does, and that is great and fine and dandy, but in the conference call today you said you cannot comment on future acquisitions at land. And so here we go again.

It's like ATM stockholder money to buy more things. Even though they might be strategically important in the future, what if we don't get to that future? What if it doesn't get to $60? And what if -- it's almost that famous Wall Street scene with Gordon Gekko and he's is addressing stockholders and if this happens and this happens and this happens.

Anyway, I am pulling for you. I am still hanging in. I am getting to the end of my rope. I just think that some revenue needs to be generated before any more things go out, whether it's core samples, whatever it may be. There has got to be -- the sum of the parts have to be worth more than the whole thing.

Kurt, I do hear you. I do understand that core frustration with shareholders wanting to see us get to that production. I can only ask that you hold on, because after so many years of not being able to be in production we see the light at the end of the tunnel. We still expect to be in construction by the end of the year and in production by the end of 2013 to get to a full year's production in 2014 when we know those prices will be there.

As to the certainty, while I can't ever guarantee a thing, one of the things I do know is that we are so much differently situated than our brethren in the junior mining sector, junior uranium mining sector because we have already produced 8 million pounds in Texas. We already know how to close those properties. We already have the facilities and a trained group of people that know how to do it in Texas.

That is why we are trying to combine that element, if you will, with the projects activities in New Mexico so that we can have a reduced cost and bring increased value to the shareholders sooner than others will be able to.

What I mean by that is at a $52 price, which is what I think it was yesterday, we are looking at still having a small margin rate of return in Texas. But we are very close to a point where we could be back in production. I am simply asking you to do what you have been doing and that is monitor our activities, let us know your concerns, and we will try to react to them appropriately.

I do have a daily concern about our share price and I do have a daily concern about what our shareholders think, because they are us. And I don't mean that in a pejorative way. I am simply saying to you that our whole mission is to do what finally can be done now after many, many years for this company and that is bring value to shareholders through production and get out of the mode of being the development company and into the mode of what is our rate of return for the shareholders investment.

Our next question comes from --

(multiple speakers) Tanya, we are about running out of time but Jerry is on the line (inaudible) so maybe if, Jerry, you can get on and ask one question or so.

Thanks. I will keep it very brief; I know you are running out of time and Debbie has done a wonderful job of summarizing my e-mail questions.

So basically I want to congratulate you and I want to thank you for your honest communication. Don, I appreciate what you just said to the previous caller and I understand and I believe at this point that you are working in the best interest of the shareholders. I am an individual shareholder, I share some of the same concerns, but my experience with you has been consistently forthright. You have an honest with me and I appreciate your efforts.

I don't want to take up any more of your time. I will leave it there. Thanks again, guys.

Jerry, I appreciate those comments. And I just want to say to anybody listening or to any other URI shareholder, multiple means of getting to us with your questions so that we can respond. Jerry did a very nice job of preparing a set of e-mail questions in preparation for this call. That is great feedback for us. I need to have that feedback.

Obviously I get to see institutional investors from time to time, but I want to see the individual investor questions get answered just as well. So thanks for sending in the e-mail.

To those of you that are on the call that have similar concerns and interests, you will find that not just Debbie Pawlowski, who manages our Investor Relations, but any of the persons you have heard on this call today, or for that matter any other executive at URI, of which we are a relatively small group, will talk to you. We will be happy to visit with you and we just might be near where you live.

So let us know what your thoughts are, your concerns. When we make the next round of visits it will be talking about some specifics on the feasibility that we can't talk about today. We know there is some good news coming; we simply can't talk about it because of the negotiation on the royalty. So we will be back to visit with you.

In the meantime please send in the e-mails, talk to us through the website, or just pick up the phone because we will find a way to get back to you.

With that in mind, let me just do a quick recap because we are just about out of time. I know there is frustration in this marketplace, but we see the positive signs in both the short term and certainly in the long term for the uranium market. It is bound to return. It is a simple matter of available production at a time when demand will be significantly increasing.

We are going to stay on our strategy. We got to advance these assets to get to production, that is what our shareholders demand and we have to do it. We only grow our asset base if there is an economically viable preferable piece of property next to us that enhances an existing asset. So it's not just garner a property for something bigger; it's because economy of scale will dictate we should go after that piece of property.

Our near-term priorities are very clear. Get the financing component done for the New Mexico construction so we can get up and running in Churchrock Section 8. Visited with our Navajo Nation colleagues so that we ensure that we have got not just on access but the best possible assess that works for the entire community for Section 8.

And, lastly, we have got to have these discussions with our royalty holders, not because we can't make money on the project with the existing royalties, but because our job is to get as much value to shareholders as we can and that includes finding a way to bring down these royalties to a reasonable number to give us a significantly higher rate of return. That is what we are engaged in for now.

Again, I thank you for your time today. I appreciate the interesting in URI and mostly I appreciate the comments of everyone today. Please, feel free to give those same comments to us throughout the next quarter until we can do this call again.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.