Westwater Resources Inc (WWR) 2012 Q2 法說會逐字稿

Greetings and welcome to the Uranium Resources second quarter 2012 update. At this time all participants are in a listen-only mode. A 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. Thank you, Ms. Pawlowski, you may begin.

Thank you, Claudia, and good morning, everyone. We certainly appreciate your time today and your interest in Uranium Resources. On the call with me I have Don Ewigleben, President and CEO; Tom Ehrlich, Chief Financial Officer; Rick Van Horn, Senior Vice President of Operations and Development; and Mark Pelizza, Senior Vice President of Environment, Safety and Public Affairs.

Don will go over the results of the quarter and our focus what our focus and strategic initiatives are for the Company as we move forward and he will then follow with a Q&A opportunity.

If you don't have the release that went out after the market close yesterday, 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 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 precautionary factors.

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

Thank you, Debbie. And thanks to those of you who have joined us this morning. We do appreciate it.

I would like to start today with five major areas of our business that I am going to update and I will come back in detail on each of them.

First, the short-term uncertainty that remains in this marketplace we think in the long term will still come back. We will see strong market fundamentals in the uranium space.

Secondly, our recently announced agreement with the Navajo Nation is a significant step forward towards the development of our assets in New Mexico and I want to detail what that means to us.

Third, the Neutron acquisition which is about to close will position us as one of the top US uranium development companies and while it is always important to say how big you are, we could care less how many overall pounds in the ground. It is about getting to production with quality pounds and I am going to talk about that in detail.

Four, we are confident that the $50 million that we need to build Churchrock and Crownpoint will be met and I will give you some indications why we are so confident.

Fifth, we are progressing our Texas projects as planned. We want to return to production in Texas as well. So I will detail some of those thoughts.

Let me start with the macro side and look at what we now know to be a difficult soft market. The present market fundamentals with regarding uranium are not strong. The uranium spot price recently dipped below $50 and this week has been hovering around $49 and change. The soft market is sort of typical for this time of the year so it wasn't unexpected.

Part of the reason is still the Department of Energy. Their uranium sales of between 5 million and 6 million pounds per year or approximately 10% of the annual US reactor consumption was expected. A recent secretarial determination that could increase sales to about 15% of annual US reactor consumption wasn't as expected. We must temper those numbers with the belief that there is still not enough excess supply to balance what will happen in the coming years with regard to Russian HEU exploration and long-term demands international.

With regard to what has happened at the DOE, let me just say that the mining associations and the uranium associations are working with the Department of Energy to get back to a balanced approach.

The long-term fundamentals still remain very strong. There is an increasing demand. Let's just look what happened recently. Japan restarted the Ohi reactors 3 and 4 and we expect this will pave the way for more restarts in Japan.

China started a new reactor in the first quarter of this year and they have seven more planned in 2012 or into 2013. Reactors are expected to come online in other high-growth countries such as South Korea, Russia, Argentina and India. And of equal importance, there are four reactors under construction in Georgia and South Carolina. While all that is going on in increasing the long-term demand, there is a decreasing supply.

We have talked frequently about the Russian HEU agreement expiring in 2013. That could remove as much as 24 million pounds annually of the supply for US utilities. There are questions regarding many, many of the new development projects as some are being delayed, some are being canceled, so all the projections that previously were there regarding future production are now coming into question. That is why we still believe in the long-term fundamentals for a decreasing supply and an increasing demand.

We expect this supply and demand imbalance to drive uranium prices up. We are preparing to capitalize on this imbalance by being in production in New Mexico in 2014 and hopefully similarly in production in Texas about the same time. And I will talk a little bit more about that when I get to those particular projects.

Let me move to the access agreement that we have just reached with the Navajo Nation. On July 31 our subsidiary, HRI, and the Navajo Nation reached this agreement on temporary access for our Churchrock section 8 project via sections 9 and 17. I cannot stress the significance of this achievement enough. It is essentially the first time an agreement has been made with the Navajo Nation for uranium producer in a very long, long time. It settles an alleged trespass issue and provides access for regulatory requirements and permit activities on our section 8 utilizing their sections 9 and 17.

But it is just the first step towards a comprehensive agreement with the Navajo Nation that we intend to reach. We are working on costs and time lines for the remediation work that we have described as well as the overall subject matter of the agreements, a permanent right of way to support our rock Churchrock, Crownpoint development project.

Let me just pause and say why, why did we do this? You know that in years past we had a considerable amount of time spent management effort and certainly dollars in litigation and fortunately for us that provided a strong answer to the question of jurisdiction on section 8. We have it. And [while] permits therefore were valid.

But we need to be working in the state of New Mexico in concert with the Navajo Nation. Most of our employees will be Navajo and for all of the surrounding areas in that vicinity of our Churchrock section 8 property, we will have as our neighbor the Navajo Nation. Our ethics, policy, our public affairs strategy, our community affairs desire is to work in a transparent open way with that community. And that community is the Navajo Nation.

Unfortunately they have had years and years of problems that occurred back in the '50s and '60s with frankly the US government as one of the reasons but many small companies that didn't clean up after themselves. We intend to fix some of that. That is where we started at the section 17 cleanup and we knew that we would be doing it at some point in time; we have simply concluded that we can conduct that restoration activity to a point that allows us to stay on schedule for construction and operation of our project. And since we were going to be doing it at some point in time, we are going to do it upfront as a show of good faith to the Navajo Nation that we can operate our properties in an environmentally sound way and protect our employees, as I've said many of which will be Navajo, in a safe manner.

With regard to other parts of New Mexico, regarding the whole Churchrock, Crownpoint project on section 8, we will be building a facility that will process 6.5 million pounds of in-place non-reserved mineralized material. The necessary UIC permit and NRC license are both in timely renewal which means they are valid but we are in a process of having both renewed to ensure that we have derisked this project to the maximum extent possible, hence the discussions with the Navajo Nation.

The NRC license addresses 27.4 million pounds of what we expect to be an eventual mine life of up to 15 years. We have a third party prepared feasibility study and it has determined that section 8 is an economically viable project. The capital requirements are expected to be about $50 million. We have got great confidence in our ability to secure the necessary funds for this project by virtue of conversations that we have had with certain shareholders who are fully prepared to support our return to production.

We will start the first well field and transport material to our existing permitted data processing facilities in Texas and then we will expand to seven total well fields with staggered production in the section 8 area.

While our NRC license allows for production of a to one million pounds per year, the sooner we operate, close and restore that initial well field to the appropriate standard, the sooner we can move to a 3 million pound per year production rate under the NRC license. To do so, we will have to bring on more well fields than the seven that are planned for section 8 but this is a significant license parameter. It allows for us to produce 3 million pounds per year once we have proved commercial restoration of that first well field.

When you think about the fact that this entire country produced only slightly more than 4 million pounds last year, 3 million pound production rate is pretty significant.

Now peak production will have approximately 60 to 65 employees working on the ground in New Mexico and an additional 35 in Texas supporting the project processing along with some other independent contractors. Most importantly, we expect that many of our employees in Mexico will be members of the Navajo Nation.

We continue to refine the feasibility study for this project. While we are not on the TSX, we seek to have a 43-101 compliant feasibility study that we can use for multiple purposes. Although we had planned to release more details about the feasibility study by now, we have allowed the qualified person who is working on this study more time so that we can ensure that it is the best possible document it can be. This requires some additional confirmation drilling and other analyses but we want to ensure that we can use this 43-101 compliant feasibility study for multiple purposes.

Now we are prepared to begin construction upon the completion and approval by our Board of the feasibility study in the fourth quarter but it may be moved to the first quarter of 2013 for several reasons.

One, we are still in discussions with the royalty holders and we want to provide for increased rate of return. Yes, it is viable; in fact, it is a strongly viable project but we want to make it even more strong and the way to do that is to buy down or buy out those existing royalties. They know it and we know it. So we have been in discussions for some time on that topic.

We want to ensure that we have completed all of the discussions with the Navajo Nation on all matters so there is no questions left for the future about their concerns. We want to be able to address them.

And we expect market conditions to improve for financing in the coming months so we have slowed the progress of what we intended to do with regard to a third quarter financing activity. If any of these settings should cause us to move the start of the construction to the first quarter of 2013, it would mean that we might not have any production from section 8 in 2013 as we had planned. However, any production in 2013 would have been minimal at best since we would be ramping up to a full production rate in 2014 in either case.

So we are basically still talking about the same project, the same amount of production on a similar timeframe but because we want to make sure that we are doing it right and we want to make sure that we are financing this project appropriately in the right market conditions, it may be that we don't start construction until the first part of 2014 -- excuse me, 2013 and therefore production in 2014.

Now I'd like to turn to a pending transaction that we have previously announced about Neutron Energy. The Neutron acquisition is progressing quite well. As we have announced before, there will be special shareholders meetings this month. For the Neutron shareholders, it will be on August 23 and for the URI shareholders, it will be on August 29. We expect to close this transaction on or about August 31 of this month.

The total transaction costs have been in the range that we expected despite the fact that it has taken a bit longer to get to closing than we thought. The legal proxy S-4 accounting and other similar costs through July have totaled a little over $1 million. The funding of Neutron's administrative budget, the development costs that they have had, and final asset purchases have totaled about $3.4 million.

As we have worked through the many regulatory and legal activities to get to a closing, as I said, is going to be August 31, we have had more time to ensure that this was an appropriate acquisition for URI. What we found is that the synergistic aspects of the two companies' holdings along with the optionality that this acquisition provides for us will give us midterm and long-term uranium assets located in New Mexico to follow in our pipeline after the Churchrock project is in production. Over 52 million pounds of in-place non-reserved mineralized uranium material are being acquired.

The acquisition of the previous mill site provides true optionality since it can handle the conventional assets east of Mt. Taylor. The transaction also gives us 206,000 acres of uranium holdings in New Mexico for further exploration and upside potential.

The Ambrosia Lake project held by Neutron will be an excellent addition to the eventual Roca Honda complex that we envision. Of course that is west of Mt. Taylor. As a result, URI will rank as one of the largest uranium development companies in the world.

While we already had more uranium pounds in the ground in the US than any other company, this acquisition allows us to proceed on a faster pace to producing conventional assets when the uranium price recovers. And therein lies the main reason for the consolidation of that district knowing that mill sites are far more costly than processing sites at an ISR property, we need to have economy of scale and that will cause us to be able to have the appropriate economy of scale by moving more material and in case of NEI, their projects were further developed than our projects west of Mt. Taylor. So this provides our pipeline with short-term from Churchrock and those ISR amenable assets to the west with mid-term to long-term assets east of Mt. Taylor and that our of eventual long-term assets in the Roca Honda complex area west of Mt. Taylor.

Let me turn to Texas for just a moment. The Los Finados joint venture with Cameco is continuing. It is one of the most successful joint ventures I have participated in in over 30 years of mining and I am quite pleased with our partner in this particular project.

Phase 2 is scheduled to complete in November of this year and under Phase 2, we have already done 32 holes at an average depth of about 1170 feet and we plan an additional 15 holes. About $1.5 million has been committed to complete Phase 2, $1 million of that coming from Cameco and $0.5 million of that coming from URI.

We are about two-thirds of the way through the present budget and expect to stay on budget and on schedule for the Phase 2 activities.

Cameco has already earned about a 40% interest at this point but it will have 50% of the project at completion of Phase 2 and as we have previously announced, if Phase 3 goes forward and they complete their funding of Phase 3 they will ultimately have a 70% interest in the project and we will have a 30% interest in the project.

The decision on Phase 3 will be made by November 30 of this year.

We also have an activity going on that we mentioned before in Texas about a pond project. We have several ponds with our existing permitted processing facilities that needed refurbishment. After processing over 8 million pounds in that area, we need to be able to now be prepared for a return to production that will be coming from other areas and therefore, we needed those ponds improved. That objective then is to be in a position to return to production from any source that we can process in that facility -- actually facilities. There's two of them.

It has cost us $2.9 million and all that capital has been invested. There is about $300,000 in monthly operating costs to maintain this project and we believe it will generate 40,000 pounds to 50,000 pounds of uranium as we clean out these ponds and process that material.

We also have maintained our restoration schedule on our other Texas projects moving towards closure on all of our well fields.

Now I am going to stop for a second and I am going to turn it over to our Chief Financial Officer, Tom Ehrlich, who will discuss our liquidity position and then I will come back for discussions on question and answers. Tom?

Sure, Don. Thank you. In terms of our liquidity position, our cash at the end of the quarter ended June 30, 2012 was about $2.8 million. That is comparable to where we were at the end of 2011 which was again just under $3 million.

During the six months of activity we had -- we used $5.1 million of cash in operations and about $6.4 million of cash investing activities. That breaks down to Q1 and Q2 for operations of about $2.5 million for each of those quarters and for our investing activities, we spent about $2 million in the first quarter -- I'm sorry -- yes the first quarter of 2012 and about $4.5 million in the second quarter.

The increased spending related to our investing activities were primarily related to the increase in the funding of the administrative and development budgets for Neutron. It was $1.1 million in the first quarter and $2.2 million in the second quarter and our increase in additions to property, plant and equipment was just under $1 million in the first quarter and just over $2.2 million in the second quarter. So the largest of that being activities related to Churchrock section 8 projects in terms of engineering studies and areas related to permitting and land.

During the six months we raised about $11.4 million in investing activities. That was as a result of the cash infusion from RCF of $10 million in March and we had sales under our ATM program in January of about $1.4 million. We did not raise any capital during the second quarter of this year from either of those activities.

Following the end of the quarter, we did venture back into the ATM market and we raised just under $1.5 million of net proceeds related to ATM sales so with BTIG -- with sales of about 2.66 million shares during the quarter. We believe with the cash on hand, the availability of the $5 million that RCF has committed to us in connection with the closing of the Neutron transaction, and the available funding under the ATM sales which is about $11.4 million worth of share value that we will have sufficient funding to see us through at least for the next 12 months. Don?

Thanks, Tom. It is time now to turn to questions and supporting the questions will be the officers of the Company that have been mentioned before. But I will certainly field the questions and turn to the executives as we go forward. I will ask the moderator to assist us in the questioning.

(Operator Instructions). [Gerald Faye], private investor.

Yes, good morning. I have several questions actually. One relating to not so much this immediate agreement with the Navajo Nation as the long-term ability for URI to get access to section 8. I understand this is an important agreement with the Navajo nation and that one hasn't been made before.

But if the Navajo Nation were to just stand fast on the other sections that apparently are needed, is it 9 and 17 that are needed to get access to section 8, does you are I have any backup plans to gain access? Is there any other way to gain access to that site?

Gerald, this is Don Ewigleben, and the answer is yes. We could certainly do so by virtue of what we have been advised by counsel with regard to our actual legal position. What we are trying to avoid is any further litigation. We don't want to be in that mode going forward. And we are so pleased to have this initial arrangement that we are confident we can find a way to meet the Navajo Nation's needs which is mostly about cleanup and our needs to be able to function on section 8. But the short answer is there are alternatives, yes.

Okay, but if I am understanding you correctly, those alternatives would involve litigation with the Navajo Nation.

There would be potential for that litigation (multiple speakers) I won't say that that is the only means but yes there would be potential for litigation.

Okay. So there is no free access, there is no back road. There is no open highway. There is no other way to get to that short of coming to some sort of an arrangement be it through litigation or negotiation with the Navajo Nation?

That wouldn't be a total true statement but suffice it to say that is our strategy and our preference.

Okay. Regarding the feasibility study, this has been a tortured process. We have gone back to 2011 when it was supposed to be originally released. Then it was supposed to be under management review, then we were told we are dotting the i's, crossing the t's. Then we are using it in negotiations with royalty holders. Now we are doing more drilling to come up with more uses for the study. You can understand how an individual investor would start to wonder how square is URI being with us.

I understand your concern. But let me just be very blunt about it. There is nothing wrong with the feasibility study, nothing. It is simply a matter that we have determined that there are some additional purposes for this document and rather than try to go public with a specific document at a time when we could in fact for a small amount of investment and a short amount of time improve the document for all various audiences that will need to review this document. Why not do it now? And most importantly, if you look at the market conditions of today, we have always said whether we raise the money in the third quarter of this year or the fourth quarter of this year, it would be based on market conditions.

So we functionally have the time to be able to make this document something that will breathe life into that whole region for a long time. So frankly we have the time to do it. We have the capital to do it. We are going to take this document to a point that it is not only 43-101 compliant. And remember, Gerald, we are not on the TSX today but when you look at the consolidation activities going on in this district, there is a potential that we might be on the TSX sometime in the future. If that is the case we need to ensure that it meets all the qualifying requirements of the BCSC well as the OSC in Canada.

Right now we don't have those problems. We only have to meet SEC requirements. All we are doing here is belt and suspenders to ensure that this document is usable for every audience.

Understood. And I appreciate that. The frustration comes in the fact that this story has just changed so often regarding the feasibility study. But I take you at your word for what we are using it now, what it is being used for now and I guess we can move on from there.

There was some news today from Laramide, who I know is your main royalty holder there. Do you have any comments on that?

This did not come as a surprise. Laramide owns the La Jara Mesa project in the district and for many years there has been some ongoing discussions whenever we have talked about having some sort of a joint mill site, they have been an entity that would be willing to talk about a joint relationship for their La Jara Mesa project and that is simply because it isn't strong enough of a project to support a mill. So we have had numerous conversations with them.

As you know, we stated before that the royalty itself is not a limiting factor in the sense of whether the project is viable but it is a question of whether or not we can improve the rate of return for our shareholders and we do intend to reduce or totally remove that royalty if possible.

They hold the majority of it, Laramide does and their project emphasis is not in the United States at the moment. So they have been seeking cash from any and all sources to work on other projects. And that is their business strategy and we understand that. We have been in discussions with them and moreover, the entity that has bought an option to in essence provide them some initial cash right now is an entity that we have had discussions with. That entity does buy royalties and then frequently converts royalties into share positions. So it was not a surprise that they did what they did. It is not a surprise as the entity -- and we have a relationship with that entity -- and it could ultimately be beneficial to our negotiations.

Anything beyond that, Gerald, I have got to say is kind of a difficult discussion because we are under a confidentiality arrangement with Laramide on these topics.

David Snow, Energy Equities.

I was just trying to follow up on that. Their royalty is in the unit 1 at Crownpoint, isn't it?

Will first off, hi David. Secondly no, they do have a royalty on the Churchrock section 8 location as well.

Okay, the same one?

Yes, it is one that they inherited originally held by another entity, then they purchased it. They actually still owe some payments to that entity so it has been a topic of discussion for some time and our belief is before we start construction of this project, we can resolve this issue. Today's event doesn't change that at all.

Okay, I missed today's event. Could you synops it quickly?

Sure. A company by the name of Anglo Pacific has bought an option to get to that royalty or convert warrants into shares and I don't want to go into great detail, it is just a press release that is out today from Anglo Pacific and Laramide that states that they are going to provide some initial funding to Laramide in return for a 5% right to those royalties.

It doesn't come as a surprise as I mentioned because we have been in conversation with this entity. It is what they do for a living. They look to take royalties and convert it to shares so that they can get a position in a company or a district.

Okay, thank you. And so did I hear you that you are thinking about raising money to go forward in the third or fourth quarters or did I hear that out of context?

Well, David, as we talked about in the past, we had contemplated that the market would improve for the third quarter. It has not yet done so and we had always said it could be that we would be raising those funds in the fourth quarter. So it will now be our intention to do two things -- finalize this document, the feasibility study, to a point that we could look at all financing options. We are not presently burdened by any debt but anytime you have a 15-year mine life, if you are going to be fair to shareholders you need to look at all possible financial instruments.

One would be a debt facility and while that is probably not our preferred strategy, if the markets continue to be difficult on an equity basis, you want to ensure you have the optionality to look at a debt facility. And one of the things that is required to do so is to have greater depth of detail with regard to the feasibility study so that a banker can review it or a banker's third-party contractor can review it.

Our thoughts now are simply to make certain that we have every option available to us. But mostly our strategy will still be an equity-based setting and frankly it may not be an open market equity setting simply because we have interested shareholders now who want us to get to production. They have been faithful to us and stayed with us for many years as we moved this project forward and they want us to get there.

So what we are looking at is likely a fourth quarter as opposed to a third quarter financing arrangement and what we will want to be able to demonstrate to those potential finance partners will be completion of the feasibility study and derisking of the project by receiving our renewals of our UIC permit and our NRC license along with the agreement with the Navajo so that we can show that the entire district can be managed in such a way that meets the needs of the Navajo Nation as well as provides for us moving these assets forward.

So rather a big picture discussion to get to the ultimate point of being able to raise $50 million.

Is there any reason you are required to do this in the fourth quarter?

No, the only reason is simple timing. We wanted to start construction in the fourth quarter so that we would have limited production in 2013 but take advantage of the price expectation -- increasing expectation in 2014.

So as I have mentioned even if we had been in production in 2013 which is still a possibility but not as likely as we once thought, it would have been minimal production in 2013 as you ramp up for a full year's production in 2014.

So we are now just looking at it why go into a financing arrangement that may not be the most beneficial to our shareholders just to say we did it in the third quarter. So if we do it in the fourth quarter or for that matter if the market conditions are difficult and we do it in the first quarter, we will still have our normal construction schedule still be in production in 2014 at the latest.

So you are thinking about a private placement with existing shareholder base, is that what you are --?

That would be our primary focus. We have as you know some new shareholders that have significant positions who are very knowledgeable about resource projects and they have indicated a willingness to have the discussions necessary. On the one hand, $50 million seems to be a lot but when you think about some of the other projects that are $1 billion projects, there is certainly the capability in the marketplace right now to find the $50 million necessary and we are very confident that we can do so.

Okay. Thank you very much.

(Operator Instructions). George Walsh, Gilford Securities.

Don, just could you go into a bit -- you mentioned the idea of using debt and I know you obviously can't have too many specifics at this point but what would be the basis of the debt service if you took on debt at this point? I mean is it future cash flows from production obviously that have to support it but that may not be for some time? So just what would be the parameters in general of some type of debt?

George, hello to you again. We have looked at just that. As you might know, a couple of our competitors who were moving forward in production in Wyoming had to lock in a portion of their offtake so that they could deal with some financing activities. We would expect a similar scenario under which we would need to come forward and show that -- let's just talk about general numbers --maybe a third of our production over that 15-year period would be at a locked in long-term price arrangement to be able to support the debt facility.

The only reason we would ever look at a debt facility is if it was cheaper than an equity position and therefore somehow benefited the shareholders. And the reason that we could do it is simply because you have got a license allowing over 45 million pounds to be produced and the initial project would be just a first step in that. So you're really talking about a small position of the overall production that could occur under that license.

So there is at least a potential that it could still be financially more beneficial to our shareholder.

But as I said at the outset, George, we don't have any debt now. We don't want any debt but in order to be able to look any future shareholder in the eye and say we have looked at every option, I want to make certain that this document is capable of being a bankable feasibility study.

Okay, all right, thanks, Don.

David Snow, Energy Equity.

Yes, I guess that you were saying that the fourth quarter would be contingent on getting some sort of a resolution with the Navajos. Exactly how much would you have to get resolved to get the assurance needed to go forward with the fourth quarter financing?

Well, this is about a cleanup of old historic problems from the '60s, '50s, '60s maybe even into the '70s on section 17. The good news here is that we had actually been working with the Navajo on this project for many, many years. Mark Pelizza, who is our Senior VP of Environment Safety Public Affairs is on the call but suffice it to say that he had been working with the Navajo Nation EPA over the last several years to do a categorization of what kind of material is there. And it is primarily old waste material that can cause some airborne problems and Navajo Nation has sought to find ways to pay for the cleanup on these projects. So what is appropriate for them is to see that anybody who is going to be producing in the area helps on these legacy problems.

We had somewhat characterized if you will what the bracketed costs could be on the cleanup of this area. That is the reason we are comfortable saying publicly that we will do the cleanup of this particular area before our operations began as the agreement states. The basic functional work is actually to remove the material from the site and likely encapsulate it in a location until it can be processed in a mill at some time in the future.

So it doesn't necessarily include resolution of the entire access issue that (multiple speakers)

Oh, no, sir it does. What happens in the Navajo Nation is they have a process to create a right-of-way and while we have a temporary access agreement so that we don't continue to have a fight in the Navajo court system about whether or not we do or don't have our proper access, that is what the temporary access agreement is about so it allows us to continue our permitting activities and for regulators to be on site and use these various entrances to get to section 8.

What we are talking about is a permanent arrangement through a right-of-way and they actually have a process. It has been in place for many, many years. It is how they have gas pipelines going across the Navajo Nation or power lines or any other things and what we will be doing is negotiating the terms of that agreement.

So step one is ensure that we have a proper implementation plan for the cleanup of 17. We understand the cost, we understand the process, how long it is going to take -- is it a multistep process etc.? And we will negotiate the terms of that with the Navajo Nation EPA in accordance with both state and federal laws as well. And then we will be able to have had a parallel track going of the right-of-way.

All of this may sound like a lot of activity but remember we have been in discussions for some time and we are quite pleased with the interest level of the Navajo Nation, the participants that the Navajo Nation EPA and Navajo Nation Department of Justice all the way literally into the council members who are understanding that we have the right to mine section 8. And since that exists, what is the maximum benefit the Navajo Nation can get out of that activity?

And that is the reason they have been willing to sit with us and talk about this and in part because we have said we don't want to litigate anymore. We want to try to find a workable solution so that this district can be managed in a way that meets their needs and ours.

So you expect to resolve these two parallel paths in time for a fourth quarter financing?

In time for a fourth quarter financing if it is the appropriate time meaning in the marketplace or certainly shortly thereafter. But it is our intention yes to be negotiating these activities as we speak.

That is a pretty optimistic timeframe.

Well, that could be true, David, one can never look into the crystal ball and be absolutely certain of anything. I will say to you that I am very pleased with the way that the Navajo nation has addressed these issues and sat with us, met with us, worked our arrangement out on a temporary access agreement in a very short period of time.

Very good. Thank you very much, sir.

There are no further questions at this time. I will now turn the floor back over to management for closing remarks.

Thank you. There were a number of questions today and I think it gave a greater level of detail about the issues that face this Company. But in closing, let me just say that we continue to see positive signs for uranium market in the long term and we are standing ready to take advantage of that with our future production schedule. In essence, we are still bullish on what will happen in the future on uranium pricing. It will be a 2014 price increase but we are going to stand ready to be in production by then.

We are going to stay focused on our strategy to advance our assets in both New Mexico and in Texas to get to production. Our near-term priorities have just been stated but let me reiterate them just in closing here. We seek a comprehensive agreement with the Navajo Nation that will last for generations and we want it to allow for future development of projects throughout New Mexico in accordance with their needs and ours.

We will redefine the feasibility study to ensure that it meets all the purposes we intend for this document. And we will continue to complete the royalty holder discussions to make a greater rate of return available for our shareholders. We are going to finalize this financing component for our New Mexico construction activities at section 8 in the very near term and we will receive the UIC and NRC license renewals to further derisk this project so that we can start construction and a year later start production.

I really appreciate everybody listening in today particularly those of you on the East Coast that I must be eating into your lunchtime. So thanks for being here. We appreciate your support and interest in URI. Thanks to all.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time and we thank you for your participation.