-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Lx/R56y+CwL9xcgXDyJoEz7+yVgtm6SFVPwqH+dAVf9DD/JPN8U6wp81MeQsKSLS UDmkQbihL+GJnEdApMP9Mg== 0000950134-98-004388.txt : 19980518 0000950134-98-004388.hdr.sgml : 19980518 ACCESSION NUMBER: 0000950134-98-004388 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: URANIUM RESOURCES INC /DE/ CENTRAL INDEX KEY: 0000839470 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-METALS, MINERALS (NO PETROLEUM) [5050] IRS NUMBER: 752212772 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17171 FILM NUMBER: 98621772 BUSINESS ADDRESS: STREET 1: 12750 MERIT DRIVE STREET 2: SUITE 1210 CITY: DALLAS STATE: TX ZIP: 75251 BUSINESS PHONE: 2143877777 MAIL ADDRESS: STREET 1: 12750 MERIT DRIVE STREET 2: SUITE 1210 CITY: DALLAS STATE: TX ZIP: 75251 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 1998 1 - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X Quarterly report pursuant to Section 13 or 15(d) of the Securities --- Exchange Act of 1934 For the quarterly period ended March 31, 1998 or Transition report pursuant to Section 13 or 15(d) of the Securities --- Exchange Act of 1934 For the transition period from __________ to __________ Commission file number 0-17171 URANIUM RESOURCES, INC. (exact name of Registrant as specified in its Charter) DELAWARE 75-2212772 (State of Incorporation) (I.R.S. Employer Identification No.) 12750 MERIT DRIVE, SUITE 1020, DALLAS, TEXAS 75251 (Address of principal executive offices, including zip code) (972) 387-7777 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ -------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Title of Each Class of Common Stock Number of Shares Outstanding ----------------------------------- ---------------------------- Common Stock, $.001 par value 12,053,027 as of May 11, 1998
- ------------------------------------------------------------------------------- 2 URANIUM RESOURCES, INC. 1998 FIRST QUARTERLY REPORT ON FORM 10-Q TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - March 31, 1998 (Unaudited) and December 31, 1997 3 Consolidated Statements of Operations - Three Months Ended March 31, 1998 and 1997 (Unaudited) 5 Consolidated Statements of Cash Flows - Three Months Ended March 31, 1998 and 1997 (Unaudited) 6 Notes to Consolidated Financial Statements - March 31, 1998 (Unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 PART II -- OTHER INFORMATION 12 SIGNATURES 13 INDEX TO EXHIBITS E-1
2 3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS URANIUM RESOURCES, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 1998 AND DECEMBER 31, 1997 (NOTE 1) ASSETS
March 31, December 31, ---------------- ---------------- 1998 1997 ---------------- ---------------- (Unaudited) Current assets: Cash and cash equivalents $ 588,253 $ 2,325,158 Short-term investment: Certificate of deposit, restricted 3,386,821 3,304,195 Receivables, net 4,519,536 4,507,090 Uranium inventory 1,793,013 2,260,200 Materials and supplies inventory 96,450 91,047 Prepaid and other current assets 279,475 253,910 ------------ ------------ Total current assets 10,663,548 12,741,600 ------------ ------------ Property, plant and equipment, at cost: Uranium properties 99,415,460 97,100,015 Other property, plant and equipment 580,676 580,676 Less-accumulated depreciation and depletion (38,074,879) (36,235,274) ------------ ------------ Net property, plant and equipment 61,921,257 61,445,417 Other assets 693,539 676,952 ------------ ------------ $ 73,278,344 $ 74,863,969 ============ ============
The accompanying notes to financial statements are an integral part of these consolidated balance sheets. 3 4 URANIUM RESOURCES, INC. CONSOLIDATED BALANCE SHEETS MARCH 31, 1998 AND DECEMBER 31, 1997 (NOTE 1) LIABILITIES AND SHAREHOLDERS' EQUITY
March 31, December 31, ---------------- ---------------- 1998 1997 ---------------- ---------------- (Unaudited) Current liabilities: Accounts payable $ 880,037 $ 3,233,277 Notes payable 2,100,000 1,950,000 Accrued interest payable 3,350 5,035 Current portion of long-term debt 7,000 7,000 Royalties payable 683,223 630,284 Current portion of restoration reserve 511,000 511,000 Other accrued liabilities 571,686 405,814 ------------ ------------ Total current liabilities 4,756,296 6,742,410 ------------ ------------ Other long-term liabilities and deferred credits 5,006,912 4,787,427 Long-term debt, less current portion 6,054,874 6,462,343 Deferred federal income taxes 5,036,810 4,967,000 Shareholders' equity: Common stock, $.001 par value, shares authorized: 25,000,000 shares issued and outstanding (net of treasury shares): 1998 - 12,053,027 1997 - 12,053,027 12,205 12,205 Paid-in capital 40,629,923 40,222,359 Retained earnings 11,790,742 11,679,643 Less: Treasury stock (152,500 shares), at cost (9,418) (9,418) ------------ ------------ Total shareholders' equity 52,423,452 51,904,789 ------------ ------------ $ 73,278,344 $ 74,863,969 ============ ============
The accompanying notes to financial statements are an integral part of these consolidated balance sheets. 4 5 URANIUM RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (NOTE 1) (UNAUDITED)
March 31, ------------------------------------- 1998 1997 -------------- -------------- Revenues: Uranium sales - Produced uranium $ 4,935,166 $ 3,796,400 Purchased uranium 1,126,800 3,413 ------------ ------------ Uranium sales 6,061,966 3,799,813 Costs and expenses: Cost of uranium sales - Direct cost of purchased uranium 961,937 -- Royalties 224,270 219,543 Operating expenses 1,680,773 1,176,287 Provision for restoration and reclamation costs 262,841 248,058 Depreciation and depletion 2,203,668 1,842,249 ------------ ------------ Total cost of uranium sales 5,333,489 3,486,137 ------------ ------------ Earnings from operations before corporate expenses 728,477 313,676 Corporate expenses - General and administrative 594,528 844,074 Depreciation 4,923 5,709 ------------ ------------ Total corporate expenses 599,451 849,783 ------------ ------------ Earnings (loss) from operations 129,026 (536,107) Other income (expense): Interest expense, net of capitalized interest (36,820) (66,918) Interest and other income, net 46,893 167,284 ------------ ------------ Total other income 10,073 100,366 ------------ ------------ Earnings (loss) before federal income taxes 139,099 (435,741) Federal income tax expense (benefit): Current -- -- Deferred 28,000 (87,000) ------------ ------------ Net earnings (loss) $ 111,099 $ (348,741) ============ ============ Net earnings (loss) per common share and common equivalent share (Basic and diluted) $ 0.01 $ (0.03) ============ ============ Weighted average common shares and common equivalent shares per share data 12,056,233 10,917,694 ============ ============
The accompanying notes to financial statements are an integral part of these consolidated statements. 5 6 URANIUM RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (NOTE 1) (UNAUDITED)
March 31, ----------------------------------- 1998 1997 ---------------- --------------- Cash flows from operations: Net earnings (loss) $ 111,099 $ (348,741) Reconciliation of net income to cash provided by operations- Provision for restoration and reclamation costs 262,841 248,058 Depreciation and depletion 2,208,591 1,847,958 Provision (credit) for deferred income taxes 28,000 (87,000) Decrease in restoration and reclamation accrual (1,051) (81,894) Other non-cash items, net 159,409 (162,659) ------------ ------------ Cash flow provided by operations, before changes in operating working capital items 2,768,889 1,415,722 Effect of changes in operating working capital items- (Increase) decrease in receivables (12,446) (145,593) (Increase) decrease in inventories 25,083 (498,037) Increase in prepaid and other current assets (122,050) (145,455) Decrease in payables and accrued liabilities (2,136,114) (1,084,780) ------------ ------------ Net cash provided by (used in) operations 523,362 (458,143) ------------ ------------ Investing activities: Increase in investments (82,626) (37,014) Additions to property, plant and equipment - Kingsville Dome (1,200,641) (1,817,104) Rosita (130,651) (699,358) Vasquez (308,206) (29,620) Alta Mesa (11,125) (182,503) Churchrock (327,476) (261,965) Crownpoint (148,920) (229,410) Other property (189,291) (108,856) Decrease (increase) in other assets (9,712) 4,228 ------------ ------------ Net cash used in investing activities (2,408,648) (3,361,602) ------------ ------------ Financing activities: Payments and refinancings of principal 148,351 (6,170,074) Issuance of common stock and warrants, net -- 57,999 ------------ ------------ Net cash provided by (used in) financing activities 148,351 (6,112,075) ------------ ------------ Net decrease in cash and cash equivalents (1,736,905) (9,931,820) Cash and cash equivalents, beginning of period 2,325,158 16,934,276 ------------ ------------ Cash and cash equivalents, end of period $ 588,253 $ 7,002,456 ============ ============
The accompanying notes to financial statements are an integral part of these consolidated statements. 6 7 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements included in the Company's 1997 Annual Report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1998 are not necessarily indicative of the results that may be expected for the full calendar year ending December 31, 1998. 2. LONG-TERM DEBT EXTENSION OF NOTE TERMS In March 1998, the Company entered into an agreement to extend the maturity date from May 31, 1998 to May 31, 2000 on the $6,000,000 secured convertible note that was issued from mutual funds managed by Ryback Management Company. The note is convertible into shares of the Company's common stock. In exchange for the extension in the term of the note, the conversion price was adjusted from $4.00 per share to $3.00 per share. In the same transaction, the exercise price for warrants held by the lenders to purchase 1,000,000 shares of the Company's common stock has also been adjusted from $4.00 to $3.00 per share, and the expiration date of the warrants has been extended from May 31, 1998 to May 31, 2000. In connection with this transaction the Company allocated $408,000 for the value of the warrants resulting in an effective rate of 10% on the refinanced note. CAPITALIZED INTEREST Interest capitalized in the three months ended March 31, 1998 and 1997 was $118,000 and $69,000, respectively. Total interest costs in these periods were $155,000 and $136,000, respectively. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward Looking Statements This Item 2 contains "forward-looking statements" which are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements relating to liquidity, financing of operations, continued volatility of uranium prices, estimates of future capital expenditures, proved undeveloped reserves and other such matters. The words "believes," "expects," "projects," "targets," or "estimates" and similar expressions identify forward-looking statements. The Company does not undertake to update, revise or correct any of the forward-looking information. Readers are cautioned that such forward-looking statements should be read in conjunction with the Company's disclosures under the heading: "Cautionary Statement for the Purposes of the `Safe Harbor' Provisions of the Private Securities Litigation Reform Act of 1995" in the Company's 1997 Annual Report on Form 10-K. CAPITAL RESOURCES AND LIQUIDITY Operating Cash Flows For the quarter ended March 31, 1998, the Company's cash and cash equivalents were $588,000 a decrease of $1,737,000 as compared to a decrease of $9,932,000 for the first quarter of 1997. The Company's uranium operations generated cash flow from operations of $523,000 for the quarter ended March 31, 1998, in comparison to 7 8 negative cash flow from operations in the same period in 1997 of $458,000. The Company's net working capital at March 31, 1998 was $5,907,000. Investing Cash Flows South Texas Projects During the three months ending March 31, 1998, development expenditures totaling $1,201,000 and $131,000 were incurred at the Company's Kingsville Dome and Rosita sites, respectively. The expenditures at the Kingsville Dome project were primarily for activities on the wellfields in the recently obtained PAA #3 and on the acquisition and construction of the remote ion exchange plants to be used in production from PAA #3. Capital expenditures incurred on the Alta Mesa project for the three months ended March 31, 1998 were minimal and were related primarily to permitting and licensing activities. The Company expects to fund its 1998 operating and capital expenditures at its Kingsville Dome, Rosita, and Alta Mesa projects from cash on hand, sales proceeds under 1998 uranium deliveries and through existing financing arrangements. New Mexico Projects Capital expenditures at the Company's Churchrock and Crownpoint projects for permitting and land holding costs totaled approximately $476,000 for the three months ending March 31, 1998 compared to costs of $491,000 for the first quarter of 1997. Capital requirements for 1998 and beyond for these projects are expected to be met through future sales proceeds from current and additional uranium delivery contracts and through future sources of debt and/or equity financing. Financing Cash Flows In May 1996, the Company entered into a $3.0 million revolving credit facility. This facility was renewed and expanded for a two year term to a $5.0 million credit facility in July 1997. This facility is secured by the Company's uranium inventory and/or by receivables from its uranium sales contracts. Principal and interest payments under the loan are due monthly, with interest on the loan accruing at the prime rate plus 1%. Borrowings under this facility at March 31, 1998 totaled $2,100,000. In June 1996, the Company received $4.0 million in proceeds from the one-year note entered into with the Lindner Dividend Fund. The terms of the note provided for the payment of both the principal and accrued interest by June 1997 with interest on the note accruing at a rate of 6.5% per annum. The $4.0 million principal amount and accrued interest on this note was paid in January 1997. The Company was obligated to pay a production payment royalty of $1.00 per pound on the first three million pounds of uranium produced and sold from either Kingsville Dome or Rosita. The Company has cumulatively produced in excess of three million pounds of uranium from these properties and made the final payment of approximately $730,000 on this obligation in January 1997. In the first quarter of 1997 the Company generated $58,000 from the issuance of 14,500 shares of common stock associated with the exercise of certain stock warrants. Other Non-Cash Transactions In March 1997, the Company acquired from Santa Fe Pacific Gold Corporation ("Santa Fe") certain mineral interests covering approximately 500,000 acres in northwestern New Mexico in exchange for 1.2 million shares of the Company's common stock and a commitment for certain exploration expenditures. Approximately one-third of the acreage comprises uranium mineral rights and the remaining acreage comprises exploration rights with rights to purchase and develop any uranium mineral interests found. Included in the purchase is an existing royalty obligation from the Company to Santa Fe on certain properties currently under lease from Santa Fe. The Company estimates that there is approximately 14.7 million pounds of proven in-place uranium reserves on 37,000 acres of the property on which it acquired the entire mineral estate (excluding coal). Also included in the 500,000 acres is the fee interest in uranium on approximately 140,000 acres and the exclusive uranium rights, for 17 years, on approximately 346,000 acres. 8 9 ENVIRONMENTAL ASPECTS The Company utilizes ISL solution mining technology as its only mining method. Unlike conventional uranium mining companies, the Company's mining technology does not create "tailings". Nevertheless, the Company is highly regulated. Its primary environmental costs to date have been related to obtaining and complying with environmental mining permits and, once mining is completed, the reclamation and restoration of the surface areas and underground water quality to a condition consistent with applicable requirements. Accruals for the estimated future cost of such activities are made on a per-pound basis as part of production costs. See the Consolidated Statements of Operations for the applicable provisions for such future costs. See also Note 1 - "Restoration and Reclamation Costs" of Notes to Consolidated Financial Statements in the Company's Form 10-K as of December 31, 1997. RESULTS OF OPERATIONS Revenues, earnings from operations and net income for the Company can fluctuate significantly on a quarter to quarter basis during the year because of the timing of deliveries requested by its utility customers. The Company's customers have generally elected, where possible, to take delivery of the bulk of the annual deliveries under their long-term sales contracts later in each year. Accordingly, operating results for any quarter or year-to-date period are not necessarily comparable and may not be indicative of the results which may be expected for future quarters or for the entire year. Three Months Ended March 31, 1998 and 1997 The following is a summary of the key operational and financial statistics related to the Results of Operations:
Three Months Ended March 31, ----------------------------- 1998 1997 ----------- ------------ (In thousands, except per pound data) Uranium sales revenue $ 6,062 $ 3,800 Total pounds delivered 370 232 Average sales price/pound $ 16.37 $ 16.38 Pounds produced 227 247 Pounds purchased 100 -- Average production cost of produced pounds $ 15.87 $ 15.37 Average cost of purchased pounds $ 10.50 N/A Average cost of produced pounds sold $ 14.88 $ 13.96 Average cost of purchased pounds sold $ 10.50 N/A
Revenue from uranium sales in the first quarter of 1998 increased by $2,262,000 from 1997 amounts. The average sales price for total uranium deliveries in the first quarter ending March 31, 1998 and 1997 was $16.37 per pound and $16.38 per pound, respectively. Total uranium deliveries in the first quarter of 1998 of 370,000 pounds was 138,000 pounds higher than those made in the same period in 1997. 9 10 Details of the cost of uranium sales were as follows:
Three Months Ended March 31, ----------------------------- 1998 1997 ------------ ----------- (In thousands) Cost of purchased uranium $ 962 $ -- Royalties 224 220 Operating expenses 1,681 1,176 Provision for restoration and reclamation costs 263 248 Depreciation and depletion of uranium properties 2,204 1,842 ------- ------- Total cost of uranium sales $ 5,334 $ 3,486 ======== =======
The Company produced 227,000 pounds of uranium from the Rosita and Kingsville Dome facilities in the three months ending March 31, 1998, compared to 247,000 pounds in the same quarter of 1997. The average per pound production cost for the first quarter of 1998 of $15.87 was slightly higher than the corresponding period of 1997 ($15.37 per pound). In January 1998, the Company received the necessary regulatory permits at Kingsville Dome to expand its production into PAA #3, located northwest of the current production fields. This new production area is expected to contain approximately 2.0 million in-place pounds (70% of which are projected to be produced). Wellfield development is currently underway in this area and production is projected to begin in June 1998. Beginning with the first wellfield in PAA #3, the Company will implement new operating techniques which will utilize a remote ion exchange plant concept. This change in technique is expected to increase production efficiency and reduce overall production costs. There can be no assurance that such methods will enhance production or reduce overall production costs. Operating expenses attributable directly to the sale of Kingsville Dome and Rosita produced pounds totaled $1,681,000 ($6.03 per pound) in the first quarter ended March 31, 1998 compared to $1,176,000 ($5.07 per pound) for Kingsville Dome and Rosita produced pounds that were sold in the same period in 1997. The provision for restoration and reclamation in the first three months ended March 31, 1998 consists of $263,000 ($0.94 per pound) for production sold during 1998. The provision for restoration and reclamation in the first quarter ended March 31, 1997 consists of $219,000 ($0.95 per pound) for Rosita production sold and $29,000 for costs associated with reclamation at the Benavides project (a previous mining location). The depreciation and depletion provision in the quarter ended March 31, 1998 consisted of $2,204,000 ($7.91 per pound) for Rosita and Kingsville Dome production sold. The depreciation and depletion provision in the first quarter of 1997 consisted of $1,842,000 ($7.94 per pound) for Rosita and Kingsville Dome production sold. Royalty expenses in the first three months of 1998 totaled $213,000 compared to $220,000 in 1997. The average cost of uranium purchases made in the first quarter of 1998 was $10.50. No pounds were purchased in the same period in 1997. Total deliveries in the first three months of 1998 consisted of 279,000 produced pounds at an average cost per pound of $14.88 and 100,000 purchased pounds at a cost of $10.50 per pound. During the same period in 1997, the Company delivered 232,000 produced pounds, at an average cost per pound of $13.96. No purchased pounds were delivered during the first quarter of 1997. 10 11 Corporate expenses consisting of general and administrative ("G&A") expenses decreased to $595,000 in the first quarter of 1998 from $844,000 in the first quarter of 1997. This reduction resulted primarily from employee incentive awards paid in the first quarter of 1997 of $168,000 compared to no such awards in 1998. Total other income for the first quarter of 1998 decreased by $90,000 from the same period in 1997. This change resulted from lower interest income and was offset by a reduction in net interest of $120,000 and $30,000, respectively for the first three months of 1998. The lower interest income resulted from reductions in average available cash and investment balances which were generated from the Company's equity placement in December 1996. 11 12 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None ITEM 5. OTHER INFORMATION. None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Financial Data Schedule 12 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. URANIUM RESOURCES, INC. Dated: May 11, 1998 By: /S/ Paul K. Willmott ------------------------- Paul K. Willmott Director, President and Chief Executive Officer Dated: May 11, 1998 By: /S/ Thomas H. Ehrlich -------------------------- Thomas H. Ehrlich Vice President - Finance and Chief Financial Officer (Principal Financial and Accounting Officer) 13 14 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 FINANCIAL DATA SCHEDULE
E-1 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS DEC-31-1998 MAR-31-1998 588,253 3,386,821 4,519,536 0 96,450 10,663,548 99,415,460 (38,074,879) 73,278,344 4,756,296 6,462,438 0 0 12,205 52,003,683 73,278,344 6,061,966 6,061,966 5,333,489 5,932,940 0 0 36,820 139,099 28,000 111,099 0 0 0 111,099 .01 .01
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