-----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, A/Hl5YoPawkw2JkTsChJE3TNChlomM1qkOC8l2gMqK1DjHgfmWMpKISj2aHKKuHG 1dW8Uewcj/EYVBUP25mb2w== 0000950134-97-002518.txt : 19970401 0000950134-97-002518.hdr.sgml : 19970401 ACCESSION NUMBER: 0000950134-97-002518 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 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-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-17171 FILM NUMBER: 97570698 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-K405 1 FORM 10-K FOR YEAR ENDED DECEMBER 31, 1996 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee required] For the fiscal year ended December 31, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934 [No fee required] 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) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $.001 par value per share 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 by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the Common Stock of the Registrant held by nonaffiliates at March 19, 1997 was approximately $52,537,257. Number of shares of Common Stock outstanding as of March 19, 1997: 10,827,527 shares. Documents Incorporated by Reference: Document Location in 10-K -------- ---------------- Proxy Statement for 1997 Annual Meeting of Stockholders Part III ================================================================================ 2 URANIUM RESOURCES, INC. ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 TABLE OF CONTENTS PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ITEM 1. BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Business Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Marketing Strategy/Uranium Sales Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The ISL Mining Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Environmental Considerations and Permitting; Water Rights . . . . . . . . . . . . . . . . . . . . . 6 The Uranium Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Supply and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Uranium Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 ITEM 2. PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 South Texas Producing Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 South Texas Development Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 New Mexico Development Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Santa Fe Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Reclaimed Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Reclamation and Restoration Costs and Bonding Requirements . . . . . . . . . . . . . . . . . . . . 19 ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . . . . . . . . . . . . . . . . 20 PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. . . . . . . . . . . . . . 28 Market Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS . . . . . 31 Forward Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Capital Resources and Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Environmental Aspects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . 36 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . 36
i 3 PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . . . . 37 ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . 37 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . 37 PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . 38 SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Index to Consolidated Financial Statements, Auditors' Report, Financial Statements and Supplemental Data F-1 to F-23 Index to Exhibits E-1 to E-2
ii 4 URANIUM RESOURCES, INC. ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 PART I The "Company" or "Registrant" is used in this report to refer to Uranium Resources, Inc. and its consolidated subsidiaries. Items 1 and 2 contain "forward-looking statements" and 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 management's expectations regarding the Company's reserve base, timing of receipt of mining permits, production capacity of mining operations planned for properties in South Texas and New Mexico and planned dates for commencement of production at such properties, business strategies and other plans and objectives of the Company's management for future operations and activities and other such matters. The words "believes," "plans," "intends," "strategy," "projects," "targets," or "anticipates" 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" beginning on page 21. Certain terms used in this Form 10-K are defined in the "Glossary of Certain Terms" appearing at the end of Part I hereto. As used herein, "Western World" is a uranium industry term referring to the countries from which statistics are available for the purpose of compilation of data relating to the industry, and generally refers to those countries outside the Republics of the Commonwealth of Independent States (the "CIS"), Eastern Europe and the Peoples Republic of China. ITEM 1. BUSINESS. THE COMPANY GENERAL Uranium Resources, Inc., a Delaware corporation (the "Company"), was formed in 1977 to acquire, explore and develop properties for the mining of uranium in the United States using the in situ leach ("ISL") mining process. The Company is recognized as a leader in the field of ISL mining. In the ISL process, groundwater fortified with oxidizing agents is pumped into the ore body causing the uranium contained in the ore to dissolve. The resulting solution is pumped to the surface where it is further processed to a dried form of uranium which is shipped to conversion facilities for sale to the Company's customers. The ISL process is generally a more cost effective and environmentally benign mining method than conventional mining techniques. From March 1988 until September 1990 the Company produced a total of approximately 1.5 million pounds of uranium from its Kingsville Dome property in South Texas, and from October 1990 through March 1992 it produced a total of approximately 1.1 million pounds of uranium from its Rosita property also located in South Texas. The Kingsville Dome property was shut-in in September 1990 and the Rosita property in March 1992 due to the decline in the uranium spot market price to below the Company's production costs. Generally, the Company sells uranium to electric utilities under long-term contracts that provide for minimum prices which escalate with inflation. See "-Marketing Strategy/Uranium Sales Contracts." From 1988 through March 1992 the Company's production of uranium from the Kingsville Dome and Rosita facilities provided a portion of the uranium inventory required for such sales while these sites were producing. The Company has also purchased a significant amount of uranium through a combination of 1 5 long-term and spot contracts to satisfy its obligations under such contracts. From 1993 through June 1995 such uranium purchases comprised the major source for the Company's uranium deliveries. In anticipation of the firming and increase in the spot price of uranium, in mid 1994 the Company began plans for the resumption of production at its Rosita and Kingsville Dome properties. The spot price of uranium increased from $9.25 per pound as of July 31, 1994, to $11.80 per pound as of May 31, 1995. In June 1995 production was recommenced at the Rosita property and preproduction activities were begun at the Kingsville Dome property with production established in March 1996. Since the re-establishment of production and through December 1996 the Company has produced approximately 1.1 million pounds from Rosita and 860,000 pounds from Kingsville Dome at average production costs of $10.86 and $12.31 per pound, respectively. These production and cost levels establish the Company as the largest and one of the lowest cost producers of uranium concentrates in the United States. It is the only publicly-owned uranium production company in the United States whose activities exclusively involve the commercial ISL production of uranium. As of February 28, 1997, the Company had 156 employees, including its professional staff consisting of ten geologists, six engineers, one chemist, two landmen and two certified public accountants. To support its production, exploration and permitting activities, the Company maintains regional offices in Corpus Christi, Texas and in Albuquerque, New Mexico, and field offices at the Kingsville Dome site, the Rosita site and in Crownpoint, New Mexico. BUSINESS STRATEGY During 1995, the Company developed and began the implementation of a multi-phase strategy to exploit its existing production base and technical expertise and to identify, acquire, permit and develop additional ISL amenable uranium properties that will allow the Company to be a significant uranium producer in the Western World. The Company is implementing its strategy through (i) resuming production at its existing production sites; (ii) making capital expenditures for property exploration, acquisition and development; (iii) permitting additional development sites, which are targeted to commence production during 1998; and (iv) reviewing opportunities to sell uranium outside the United States. After ceasing uranium production in the early 1990s because of depressed market prices, the Company resumed production at Rosita and Kingsville Dome in June 1995 and March 1996, respectively. During the period the Company was not producing uranium, it was able to purchase uranium to fulfill its existing contracts at a price lower than its cost of production. For the year ended December 31, 1996, the Company produced approximately 1.4 million pounds of uranium at an average cost of $12.12 per pound. This production enabled the Company to take advantage of the significant imbalance between the annual level of uranium production and consumption in the Western World and the rise in the spot market price for uranium which at $13.65 per pound as of February 28, 1997 was up approximately 42% over the spot price of $9.65 per pound as of January 31, 1995. The Company estimates that for 1996, its uranium production was approximately 20% of the total U.S. production and approximately 2% of the total Western World production. In June 1996, the Company acquired for $4 million (of which $1 million is recoverable against one-half of future royalties) a mineral lease on the Alta Mesa properties located in South Texas which are estimated by the Company to contain 6.2 million pounds of in-place proven and probable uranium reserves (estimated 4.0 million pounds recoverable). In November 1996 the Company entered into a letter of intent with Santa Fe Pacific Gold Corporation ("Santa Fe") pursuant to which the Company would acquire for exploration and development potential certain uranium 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 to expend certain amounts on exploration. Approximately one-third of this acreage comprises uranium mineral rights 2 6 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. This transaction was completed in March 1997. The Company has two development projects in South Texas, Vasquez and Alta Mesa, both targeted to commence production in 1998. The Company also has three development projects in two districts in New Mexico, the Churchrock district and the Crownpoint district. Churchrock is targeted to commence production in 1998. Permitting is in process at all such projects. Commencement of production at these properties is subject to timely permitting and the availability of capital. When Alta Mesa, Vasquez and Churchrock reach full production, the Company expects that, based on planned production rates, its total annual production capacity from these operations plus Kingsville Dome will approximate 4.0 million pounds. MARKETING STRATEGY/URANIUM SALES CONTRACTS The Company is aggressively developing a portfolio of sales contracts in support of its production expansion goals. Long-term contracts are a primary focus of the Company. Spot sales will be utilized to manage inventories and optimize revenues. The Company intends to use matched sales in amounts equal to its available quotas through 2003 to maximize profitability. All contracts together will result in a portfolio that is targeted to provide upside market price participation while limiting down-side price risk. As of December 31, 1996, based on prices escalated in accordance with the contract terms through that date, the Company had long-term contracts for approximately $73,359,000 of future sales for deliveries through 2002, as compared with contracts for approximately $37,824,000 as of December 31, 1995, based on prices escalated in accordance with contract terms through that date, in each case excluding the revenue related to the sale of Russian uranium under the matched sale program. The Company has contracts that have a market-related price, with a price ceiling and price floor subject to escalation for between 80%-100% of future inflation. The Company also has contracts with fixed prices which are also subject to escalation for between 80%-100% of future inflation. One other contract is based upon 99% of market price without a floor or a ceiling. The following table provides information concerning the Company's long-term sales contracts from January 1, 1997 through 2002 (excluding the delivery of Russian uranium) with prices escalated through December 31, 1996 and using the December 31, 1996 spot price of uranium for the market price related contracts:
1997 1998 1999 2000 2001 2002 Total ---- ---- ---- ---- ---- ---- ----- Number of customers 7 7 4 3 2 1 N/A Total long-term contracted deliveries 1,423 1,395 704 584 484 150 4,740 (thousands of pounds) Total sales (thousands) $22,116 $22,198 $10,819 $ 8,783 $ 7,222 $2,221 $73,359 Average minimum sales price per pound $ 15.54 $ 15.92 $ 15.36 $ 15.03 $ 14.91 $14.81 $15.47
For deliveries in periods subsequent to 1997, certain buyers have the option to adjust deliveries between 10% to 20%. In general, except for the options of the buyers to decrease deliveries by a specified percentage, and except for force majeure events, the buyers either must take delivery and pay for the entire amount contracted for or, if delivery is refused on any portion of the contract, pay to the Company the difference between the minimum contract price and the amount received by the Company upon the sale of the uranium to a third party. Certain of the contracts also provide the buyer with options to renew beyond the periods reflected in the table. 3 7 Should any of the Company's customers be unable to perform its obligations to purchase and pay for the uranium because of force majeure or otherwise, this could have a material adverse effect on the Company's results of operations if the Company would not be able to sell such material under another long-term contract or in a spot market sale. A significant portion of the Company's contracted sales of uranium from January 1, 1997 through December 31, 2002 are represented by eight long-term contracts with seven different customers, five of which represented 20%, 16%, 15%, 12% and 11% of sales for the year ended December 31, 1996 and four of which represented 23%, 14%, 10% and 10% of sales for the year ended December 31, 1995. As of December 31, 1996, the Company had two outstanding long-term purchase contracts for Russian origin uranium totaling 270,000 pounds with deliveries from 1997 through 1998. These contracts have a price escalation factor related to future inflation. RESERVES The following table sets forth the Company's total in-place proven and probable uranium reserves as of December 31, 1996. The reserves are based on an estimated 65% recovery factor, certain cut-off grades and a price of $16 per pound.
In-Place Reserves as of Recoverable December 31, 1996 Reserves as of Producing (P)/ ---------------------- December 31, Properties Development (D)Proven Probable 1996 - ---------- --------------- ------ -------- -------------- (Amounts in thousands of pounds of U3O8) Texas Kingsville Dome P 709 3,001 2,412 Rosita P 1,761 -- 1,144 Vasquez D 2,248 1,439 2,397 Alta Mesa D 4,346 1,863 4,036 New Mexico Churchrock Section 8 D 6,529 -- 4,244 Section 17 D 3,451 4,992 5,488 Mancos D 4,164 -- 2,707 Crownpoint D 30,758 8,201 25,323 ---------- ---------- ---------- TOTALS 53,966 19,496 47,751 ========== ========== ==========
The foregoing table does not include approximately 14.7 million pounds of proved and probable in-place reserves (estimated 9.6 million pounds recoverable) related to the Santa Fe transaction and 27.0 million pounds of proved and probable in-place reserves (estimated 17.6 million pounds recoverable) contained on acreage adjoining the Crownpoint property for which the Company executed leases with the landowners in 1992. These leases are subject to approval by the U.S. Bureau of Indian Affairs (the "BIA"), with such approval expected in 1997 as a result of the Company's receipt of the Final Environmental Impact Statement (the "FEIS") in March 1997. See Item 2. Properties - New Mexico Development Properties - Crownpoint District. THE ISL MINING PROCESS The ISL mining process, a form of solution mining, differs dramatically from conventional mining techniques. The ISL technique avoids the movement and milling of significant quantities of rock and ore as well as mill tailings waste associated with more traditional mining methods and generally results in a more cost-effective and more environmentally-benign extraction operation in comparison to conventional uranium mining. Historically, the majority of U.S. uranium production resulted from either open pit surface mines or underground shaft operations. These conventional mining methods are, in many cases, 4 8 capital and labor intensive and are not cost competitive with the majority of non-U.S. conventional producers. To the Company's knowledge, there are no conventional U.S. producers today. The ISL process was first tested for the production of uranium in the mid-1960's and was first applied to a commercial-scale project in 1975 in South Texas. The ISL process had become well established in the South Texas uranium district by the late 1970's, where it was employed in connection with approximately twenty commercial projects, including two operated by the Company. In the ISL process, groundwater fortified with oxygen and other solubilizing agents is pumped into a permeable ore body causing the uranium contained in the ore to dissolve. The resulting solution is pumped to the surface where the uranium is removed from the solution and processed to a dried form of uranium which is shipped to conversion facilities for sale to the Company's customers. An ISL project involves several major components: ORE BODY EVALUATION Ore bodies which are currently being mined by the ISL process are associated with groundwater saturated permeable sandstone formations located between 100 and 2,000 feet below the surface. The uranium ore is deposited in a roll front configuration where the groundwater passing through the sandstone passes from a natural environment which is oxidizing to a naturally occurring reducing environment. This change causes the dissolved uranium in the groundwater to become insoluble, and it then attaches to the grains of the sandstone. Some important factors in evaluating an ore body for the ISL process are permeability, the thickness of the ore zone, depth, size, grade of ore, shape of the ore body, nature of uranium mineralization, host rock mineralogy, and the hydrology. These factors are important in determining the design of the wellfield, the type and flow of the leaching solution, and the nature of the surface ISL facilities. WELLFIELD DESIGN The wellfield is the mechanism by which the leaching solution, or lixiviant, is circulated through the ore body. The wellfield consists of a series of injection, production (extraction) and monitoring wells drilled in specified patterns. These patterns will vary primarily with the configuration of the ore and the hydrologic characteristics of each deposit. Determining the wellfield pattern is crucial to minimizing costs and maximizing efficiencies of production. Injection and production wells vary in diameter from four to six inches. Generally, these wells are drilled down to the bottom of the ore zone (through which the lixiviant must be circulated to achieve production). Injection and production wells are cased with polyvinyl chloride ("PVC") or fiberglass casings which are cemented in place from the bottom of the ore zone to the surface. The wells are then completed into the ore zone. LIXIVIANT CHEMISTRY The lixiviant, consisting of native groundwater fortified with an oxidant and an anionic complexing agent, is introduced via the injection wells to the ore bearing aquifer. The oxidant (gaseous oxygen) changes the uranium valence state making the uranium soluble in the lixiviant. The lixiviant (sodium bicarbonate) complexes the original uranium to a soluble ion, uranyl dicarbonate, which dissolves the uranium. The dissolved uranium then flows to the surface with the lixiviant fluid which is circulated through the ore body until economic recovery is achieved. URANIUM RECOVERY PROCESS The uranium recovery process consists of a lixiviant circuit, an elution/precipitation circuit and a drying and packaging process. The lixiviant circuit flows from the ore body, where the uranium is dissolved. The lixiviant stream is then circulated to an ion exchange column on the surface where uranium is extracted from the lixiviant by absorption onto the resin beads of the ion exchange columns. The lixiviant is then refortified and reinjected into the ore body. When the ion exchange column's resin beads are loaded with uranium, the column is removed and placed into the elution circuit where the uranium is 5 9 flushed with a salt water solution which precipitates the uranium from the beads. This leaves the uranium in a slurry, which is then dried and packaged for shipment as uranium powder. WELLFIELD RESTORATION At the conclusion of mining, the mine site is decommissioned and decontaminated and the wellfield is restored and reclaimed. Wellfield restoration involves returning the aquifer to a condition consistent with its pre-mining use and removing evidences of surface disturbance. The restoration of the wellfield can be accomplished by flushing the ore zone for a time with native ground water and/or using reverse osmosis to remove ions, minerals and salts to provide clean water for reinjection to flush the ore zone. Decommissioning and decontamination entail decontamination, dismantling and removal for disposal or reuse of the structures, equipment and materials used at the site during the mining and restoration activities. ENVIRONMENTAL CONSIDERATIONS AND PERMITTING; WATER RIGHTS The production of uranium is subject to extensive regulations, including federal and state (and potentially tribal) environmental regulations, that have a material effect on the economics of the Company's operations and the timing of project development. The Company's primary regulatory costs have been related to obtaining and complying with the regulatory licenses and permits that must be obtained from federal and state agencies prior to the commencement of uranium mining activities. Environmental considerations include the prevention of groundwater contamination (through proper design and operation of the wellfield and monitoring wells to prevent the vertical or horizontal escape of leaching solution from the mining area) and the treatment and disposal of liquid and/or solid discrete surface waste or by-product materials (so-called "11e. (2) by- product material" under federal law). The majority of by-product material that is generated is liquid and generally is disposed of through underground injection wells, by a combination of reverse osmosis, brine concentration and evaporation or, after treatment, by surface deposition or discharge. Any such disposal must be approved by the governing authority having jurisdiction over that aspect of the Company's activities. Once mining is completed, the Company is required to reclaim the surface areas and restore underground water quality to the level of quality mandated by applicable regulations or license requirements. A small amount of solid discrete surface waste materials generated by the ISL process is disposed of by delivery to a licensed by- product material disposal site or to a licensed conventional uranium mill tailings pile. While such sites may not be readily available in the future, the Company believes that any increase in the cost of such disposal will continue to be insignificant relative to total costs of production and will not be a material portion of restoration/reclamation costs. In both Texas and New Mexico there are two primary regulatory authorizations required prior to operations: a radioactive material license and underground injection control ("UIC") permits which relate both to the injection of water for production purposes and to the disposal of by-product material through underground injection wells. Uranium mining is subject to regulation by the U.S. Nuclear Regulatory Commission ("NRC") under the federal Atomic Energy Act ("AEA"); however, the AEA also allows for states with regulatory programs deemed satisfactory by the NRC to take primary responsibility for licensing and regulating certain activities, such as uranium recovery operations. When a state seeks this responsibility, it enters into an agreement with the NRC whereby the NRC agrees to recede from the exercise of most of its counterpart jurisdiction, leaving the matters to be administered by the state. Texas has entered into such an agreement; however, New Mexico is not a party to such an agreement. The federal Safe Drinking Water Act ("SDWA") creates a nationwide regulatory program protecting groundwater which is administered by the U.S. Environmental Protection Agency ("EPA"). To avoid the burden of dual federal and state (or Indian tribal) regulation, the SDWA allows for the permits issued by the UIC regulatory programs of states and Indian tribes determined eligible for treatment as states to suffice in place of a UIC permit required under the SDWA. A state whose UIC program has been determined sufficient for this purpose is said to have been granted "primary enforcement responsibility" or "primacy," and a UIC permit from a state with primacy suffices in lieu of an EPA-issued permit, provided 6 10 the EPA grants, upon request by the permitting state, an "aquifer exemption" or "temporary aquifer designation" modifying the permitting state's UIC program to recognize the temporary placement of mining fluids into the intended mining zone within the horizontal confines of the proposed mining area. Although the EPA's consent to aquifer exemptions or temporary aquifer designations for certain mineral deposits is often issued almost automatically, the EPA may delay or decline to process the state's application if the EPA questions the state's jurisdiction over the mine site. Both Texas and New Mexico have been granted "primacy" for their UIC programs, and the Navajo Nation has been determined eligible for treatment as a state but is not due to submit its program for EPA approval for several years. Until such time as the Navajo Nation has been granted "primacy," ISL uranium mining activities within Navajo Nation jurisdiction will require a UIC permit from the EPA. Despite some procedural differences, the substantive requirements of the Texas, New Mexico and EPA UIC programs are very similar. In addition to its radioactive materials licenses and UIC permit, the Company is also required to obtain from appropriate governmental authorities a number of other permits or exemptions, such as for waste water discharge, land application of treated waste water, or for air emissions. The current environmental regulatory program for the ISL industry is well established. Many ISL mines have gone full cycle through the permit- operating-restoration cycle without any significant environmental impact. However, the public anti-nuclear lobby can make environmental permitting difficult and permit timing less than predictable. In Texas, both the radioactive materials license and the UIC permits required for ISL uranium mining are granted by the Texas Natural Resource Conservation Commission ("TNRCC"), with the concurrence of the NRC required for the licensee's final release from further radioactive materials license obligations after mining and all required decommissioning, decontamination, restoration and reclamation have been completed at a site. The TNRCC also regulates air quality and surface deposition or discharge of treated waste water associated with the ISL mining process. In New Mexico, radioactive materials licensing is handled directly by the NRC, rather than by the State of New Mexico. Furthermore, depending upon whether a site located within New Mexico falls under state or Navajo Nation jurisdiction, the licensure of the UIC aspects of ISL mining may be conducted by either the New Mexico Environmental Department ("NMED") or the EPA or possibly both in case of jurisdictional conflict. The jurisdictional issue when raised as to any development property, could result in litigation between the state and the EPA, with the possibility of delays in the issuance of affected UIC permits. Water is essential to the ISL process. It is readily available in South Texas for the Company's operations and obtaining water rights is not required because water is subject to capture. In New Mexico the use of water rights is administered through the New Mexico State Engineer subject to Indian tribal jurisdictional claims as discussed below. Obtaining new water rights, and the transfer or change in use of existing water rights are carefully and strictly regulated by the State Engineer. The State Engineer may also grant an application for a "temporary water right" which will not establish a vested right but may provide sufficient acre feet per day to fulfill the applicant's water needs. The State Engineer exercises jurisdiction over underground water basins with "reasonably ascertainable boundaries." Accordingly, new appropriations or changes in purpose or place of use or points of diversion of existing water rights, such as those in the San Juan and Gallup Basins where the Company's properties are located, must be obtained by permit from the State Engineer. Applications are required to be published and are subject to hearing if protested. There are three criteria for decision, that the application: (1) not impair existing water rights, (2) not be contrary to the conservation of water within New Mexico, and (3) not be detrimental to the public welfare. Applications may be approved subject to conditions which govern exercise of the water rights. Appeals from decisions of the State Engineer are to the district court of the county in which the work or point of desired appropriation is situated and from there to the New Mexico Court of Appeals. Finally, jurisdiction over water rights may become an issue in New Mexico when an Indian nation, such as the Navajo Nation, objects to the State Engineer's authority to grant or transfer a water right or to award a temporary water right, claiming tribal jurisdiction over Indian country. This issue could result in litigation between the Indian nation and the state which may delay action on water right applications, and, depending on who prevails as to any particular property, could result in a requirement to make applications to the 7 11 appropriate Indian nation and continuing jurisdiction by the Indian nation over use of the water. All of the foregoing issues arise to a greater or lesser extent in connection with the Company's New Mexico properties, as further described below. There can be no assurance that the regulatory permits or licenses in Texas or New Mexico, or the applications for water rights in New Mexico, required for any project of the Company will be approved by the necessary governing authority in the form contemplated by management, or in any other form, or within the time periods necessary to commence timely production. Additionally, regulations and permit requirements are subject to revisions and changes which may materially affect the Company's operations. Any delay or failure in obtaining such permits or water rights could materially and adversely affect the business and operations of the Company. In addition to the costs and responsibilities associated with obtaining and maintaining permits, and the regulation of production activities, the Company is subject to those environmental laws and regulations applicable to the ownership and operation of real property in general, including but not limited to the potential responsibility for the activities of prior owners and operators. THE URANIUM INDUSTRY GENERAL The only significant commercial use for uranium is to fuel nuclear power plants for the generation of electricity. Nuclear plants generated approximately 17% of the world's electricity in 1995, up from less than 2% in 1970 and according to the Uranium Institute ("UI"), through the year 2000 nuclear generating capacity is expected to grow at 1% per annum, primarily as a result of new reactor construction outside the United States and increased efficiencies of existing reactors. As of December 31, 1995 there were 363 nuclear reactors operating in the Western World, 109 of which are in the United States, and another 32 under construction outside of the United States. Uranium consumption by Western World commercial reactors increased from about 60 million pounds in 1981 to approximately 129 million pounds in 1995. Western World consumption is estimated to reach approximately 135 to 150 million pounds by 2001. SUPPLY AND DEMAND 1995 and 1996 were transition years in the uranium market place, signaling the end of a ten year period of significantly depressed product prices. There is no single event that caused this long-anticipated correction. It is the result of numerous factors working in concert over a ten-year period that finally re-established the move toward market equilibrium. From the early 1970's through 1980, the Western World uranium industry was characterized by increasing uranium production fueled by overly optimistic projections of nuclear power growth. From 1970 to 1985, production exceeded consumption by approximately 500 million pounds. By the end of 1985 enough inventory had been amassed to fuel Western World reactor needs for over five years. In response, sales of excess inventory followed and prices plummeted from highs above $40 per pound in 1979 to below $8 per pound in 1992. As prices fell, Western World production declined dramatically from a high of 115 million pounds in 1980 to a low of 57 million pounds by 1994. Since 1985, consumption of uranium in the Western World has exceeded Western World production by over 400 million pounds. In 1995, consumption of uranium in the Western World was 129 million pounds, nearly double the production of 66 million pounds by Western World producers. Accordingly, by the end of 1995, excess inventory levels in the Western World (inventory in excess of preferred levels) had been reduced to less than two years of forward reactor requirements, and excess inventories in the U.S. had been reduced to less than one year of projected forward requirements. Countering the drawdown of Western World inventories and contributing directly to the downturn of market prices was the importation, starting in 1989, of uranium from the Commonwealth of Independent 8 12 States (the "CIS"), and to a lesser extent, from Eastern Europe and mainland China. As the result of an anti-dumping suit in 1991 by the U.S. ("CIS Anti- dumping Suit") against some republics of the CIS, suspension agreements were signed with six CIS republics (Russia, Ukraine, Kazakhstan, Uzbekistan, Kyrgzstan and Tajikistan) in October 1992, which applied price related volume quotas to CIS uranium permitted to be imported into the U.S. The Russian Suspension Agreement was amended in March 1994 allowing for up to 43 million pounds of Russian uranium to be imported into the U.S. over the 10 years beginning March 1994, but only if it is matched with an equal volume of new U.S. production. Based on U.S. consumption for the 1994-2003 period (as reported or projected by the Department of Energy), the matched volumes could account for up to 18% of the supply to the U.S. market during this period. In 1995 the Republics of Kazakhstan and Uzbekistan concluded negotiations to amend their respective suspension agreements. Both amendments lowered initial prices relating to their respective import quotas allowing imports to occur. Additionally, the amendments require that uranium mined in those Republics and enriched in another country for importation in the U.S. will count against their respective quotas. The Uzbekistan amendment replaces the price-tied quota system with one based upon U.S. production rates after October 1997. As U.S. rates increase, additional imports from Uzbekistan are allowed. Although these amendments to the suspension agreements may increase the supply of uranium to the U.S. market, they provide increased predictability concerning CIS imports into the U.S. Due to declining production levels in the CIS republics, uranium from these sources has recently been difficult to obtain. Consequently, the market impact of CIS primary production may be diminishing. In January 1994, the U.S. and Russia entered into an agreement (the "Russian HEU Agreement") to convert highly enriched uranium ("HEU"), derived from dismantling nuclear weapons, into low enriched uranium ("LEU") suitable for use in nuclear power plants. At a projected maximum conversion rate for HEU and LEU, approximately 24 million pounds of uranium will be available to Western World markets, meeting up to 18% of annual requirements by 2001. In 1996 the U.S. Congress passed legislation in compliance with the suspension agreements which allows the converted HEU material to be sold in the U.S. marketplace at an annual rate not to exceed 2 million pounds in 1998, increasing gradually to 20 million pounds in 2009. At this maximum rate, HEU material could supply approximately 40% of annual U.S. reactor requirements projected for 2009. In addition, an uncertain amount of HEU material is allowed to be used in the U.S. for the overfeeding of enrichment facilities and as a source of Russian uranium for matching sales. Industry analysts expect annual Western World consumption to increase to between 135 and 150 million pounds by 2001. The Company estimates that between 30 and 40 million pounds of this demand could be filled by a combination of government stockpiles (including converted Russian and U.S. HEU and inventory sold by the Department of Energy) and imports from CIS republics and former East Bloc countries. To achieve market equilibrium by 2001 primary production in the Western World will need to supply between 95 and 120 million pounds on an annual basis subject to some adjustment for any remaining inventory drawdown and limited uranium reprocessing. Production from existing facilities in the Western World, however, is projected to decline from current levels to approximately 57 million pounds by 2001 as reserves are depleted. New production therefore will have to be brought online to fill a potential annual gap of between 38 and 63 million pounds. While current price levels may sustain 1995 production levels, the Company believes that higher prices will be needed to support the required investment in new higher cost production as lower cost production reserves are depleted. 9 13 The following table shows U.S. production and Western World production and consumption for the years presented. PRODUCTION AND CONSUMPTION OF U(3)O(8)(1) (Western World Countries) (Amounts in millions of pounds of U(3)O(8))
Total Western Total U.S. Total U.S. Total Western World World Year Production Consumption Production Consumption ---- ---------- ----------- ---------- -------------- 1979 37.5 20.5 99.7 46.6 1980 43.7 18.8 115.0 41.0 1981 38.5 24.1 114.9 59.9 1982 26.9 24.3 107.8 69.8 1983 21.2 28.7 96.2 76.6 1984 14.9 27.0 101.0 78.4 1985 11.3 33.7 90.7 91.1 1986 13.5 34.9 96.7 97.9 1987 13.0 33.7 92.2 93.8 1988 13.1 39.9 95.5 108.2 1989 13.8 38.0 89.0 104.3 1990 8.9 44.2 73.8 114.0 1991 8.0 44.8 70.0 128.4 1992 5.6 45.2 60.9 123.3 1993 3.1 44.2 57.2 130.8 1994 3.4 40.4 57.8 135.7 1995 6.0 51.1 66.0 128.6 1996(est.) 7.2 45.3 72.9 134.9-143.1
- ------------------ (1) Source: Industry - various publications of Department of Energy/Energy Information Administration ("DOE/EIA"), Trade Tech, UxCo and the Uranium Institute. URANIUM PRICES Spot prices reflect the price at which uranium may be purchased for delivery within one year. Historically, spot prices have been more volatile than long-term contract prices, increasing from $6.00 per pound in 1973 to $43.00 per pound in 1978, then declining to a low of $7.25 per pound in October 1991. The spot price per pound as of February 28, 1997 was $13.65. 10 14 The following graph shows spot prices per pound from 1978 to December 31, 1996, as reported by Trade Tech. [GRAPH] - ---------------- All prices beginning in 1993 represent the nonrestricted origin U(3)O(8) deliveries available to U.S. utilities. Trade Tech began reporting a two-tier price structure soon after the United States and certain Republics of the CIS agreed to import restrictions on uranium produced. The foregoing prices reflect those prices available to U.S. utility consumers. COMPETITION The Company markets uranium to utilities in direct competition with supplies available from various sources worldwide. The Company competes primarily on the basis of price. The Company estimates that for 1996 its uranium production was approximately 20% of the total U.S. production and approximately 2% of the total Western World production. According to the UI, in 1995, six companies, Cameco Corporation, Compagnie Generales des Matieres Nucleaires, Energy Resources of Australia, Ltd., the RTZ Corporation PLC, Uranerzbergbau-GmbH and WMC Limited, produced almost 70% of total Western World output. Virtually all of Western World production was from only eight nations: Canada, Niger, Australia, Namibia, South Africa, United States, France and Gabon. In 1989 the CIS and mainland China began to supply significant quantities of uranium annually into Western World markets. 11 15 ITEM 2. PROPERTIES. SOUTH TEXAS PRODUCING PROPERTIES The Company currently has two producing properties which are located in South Texas, Rosita and Kingsville Dome. The following is a description of those properties. KINGSVILLE DOME The Property. The Kingsville Dome property consists of mineral leases from private landowners (and a small portion owned in fee) on 3,720 gross (3,573 net) acres located in central Kleberg County, Texas. The leases provide for royalties based upon uranium sales. The leases have expiration dates ranging from February 1998 to 2004. With a few minor exceptions, all the leases contain shut-in royalty clauses which permit the Company to extend the leases not held by production by payment of a royalty. 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 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. Reserves. As of December 31, 1996, the property contained approximately 3.7 million pounds of in-place proven and probable uranium reserves (estimated 2.4 million pounds recoverable). Production History. Initial production commenced in May 1988. In May 1989, due to the continuing decline in the spot price of uranium, the Company deferred development of the next wellfield, and the plant was shut-in in September 1990. Total production from May 1988 through September 1990 was approximately 1.5 million pounds. Wellfield development activities resumed in December 1995, and production commenced in March 1996. Annualized production levels at Kingsville Dome are approximately 1 million pounds; and production was approximately 860,000 pounds from recommencement of production in March 1996 through December 31, 1996. Further Development Potential. As part of the Company's ongoing production activities, it is engaged in significant development and exploration efforts at Kingsville Dome. Exploration is planned northwest of the current production area in 1997. The Company anticipates spending approximately $10.1 million in 1997 and $3.4 million in 1998 for plant capital, permitting, development and land holding costs. Permitting Status. Radioactive material licensing and UIC permit hearings for currently producing areas have been completed, and the necessary permits have been issued. Some minor amendments to the license and permit for further production within the permit area will be required as development proceeds. The term of the license and UIC permit is effectively open-ended. The UIC disposal permit will require renewal in mid-1998, and the Company is in the process of applying for that renewal. Restoration and Reclamation. Restoration of groundwater is planned to commence in early 1997. The Company anticipates spending approximately $750,000 in 1997 and $600,000 in 1998 on such restoration activities. ROSITA The Property. The Rosita property consists of mineral leases on 3,377 gross and net acres located in northeastern Duval County, Texas. All the leases, except minor leases, are held by production. The leases provide for royalties based upon uranium sales. The Company was obligated to pay a production 12 16 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 balance due of approximately $730,000 under this obligation was paid in January 1997. See the above discussion of Kingsville Dome. Reserves. As of December 31, 1996, the property contained approximately 1.8 million pounds of in-place proven and probable uranium reserves (estimated 1.1 million pounds recoverable). Production History. The Company began initial production at Rosita in October 1990. Total production from Rosita for the eighteen months through March 31, 1992 was approximately 1.1 million pounds. In March 1992, due to depressed uranium prices, the Company shut-in production. Wellfield development activities resumed at Rosita in March 1995, and production recommenced in June 1995. From that date through year-end 1995 approximately 610,000 pounds were produced and production in 1996 totaled 500,000 pounds. Further Development Potential. The Company estimates that there are approximately 300,000 pounds of uranium remaining to be produced from existing operating wellfields at Rosita. In addition, the Company believes that an additional 840,000 pounds of uranium may be recovered from future wellfields at Rosita. Preproduction activities for the new wellfields began in January 1997, with expected production beginning in the first quarter of 1997. The Company expects its existing reserves at Rosita to be fully depleted by mid-1998. The Company anticipates spending approximately $2.1 million for development activities, permitting and land holding costs in 1997 and $238,000 in 1998. Permitting Status. Radioactive materials licensing and UIC permit hearings for currently producing areas have been completed, and the necessary permits have been issued. Some minor amendments for further production within the permit area will be required as development proceeds. The term of the license and UIC permit is effectively open-ended. The UIC disposal permit will require renewal in mid-1997, and the Company has filed its application for such renewal. Restoration and Reclamation. The Company expects to commence initial groundwater restoration in January 1997 and expects to expend approximately $300,000 in 1997 and $345,000 in 1998 on such activities. SOUTH TEXAS DEVELOPMENT PROPERTIES VASQUEZ The Property. The property consists of two mineral leases on 842 gross and net acres located in southwestern Duval County, Texas. One lease expires in January 1998, subject to extension for permitting delays, and the other lease expires in February 2000. The leases provide for royalties based on uranium sales. A potential conflict with respect to the mineral rights has arisen on the Vasquez property. The Company's lease is with the owner of both the surface of the land and 50% of the minerals. The Company believes the minable reserves on this property are within 200 feet of the surface and are, therefore, under Texas law owned by the surface estate. As a result of the surface lease alone, the Company believes it has the right to mine 100% of the minerals under Texas law. Another party, however, owns 50% of the mineral estate and may challenge the Company's ownership of 50% of the minerals. The Company expects to file a quiet title action to resolve this matter. Reserves. As of December 31, 1996, the property contained approximately 3.7 million pounds of in-place proven and probable uranium reserves (estimated 2.4 million pounds recoverable). Development Plan. Production is targeted to commence in 1998. The Company anticipates spending approximately $1.1 million in 1997 and $5.3 million in 1998 for plant construction, permitting, 13 17 development and land holding costs. The Company anticipates having to demonstrate financial surety in connection with these activities of approximately $3.0 million which it expects to meet by posting a bond collaterized by cash in an amount equal to 50% of the bond. Permitting Status. All of the required permit applications have been completed and submitted to the TNRCC. The TNRCC is currently reviewing the applications. The Company expects the permits to be in place in 1997. ALTA MESA The Property. The Alta Mesa property consists of 4,575 gross and net acres located in Brooks County, Texas. The Company has a single mineral lease from the private mineral owner. The lease provides for a royalty based upon uranium sales and requires payment of minimum royalties if production does not begin by certain specified times. The Company paid $4 million for the lease of which $1 million is recoverable against one-half of future royalties. The lease term ends in December 1999 unless production from the property commences by that date (subject to extension for permitting delays). Reserves. As of December 31, 1996, the property contained approximately 6.2 million pounds of in-place proven and probable reserves (estimated 4.0 million pounds recoverable). Development Plan. Construction of the plant and wellfields is projected to take eight months and is scheduled to begin as the various licenses are issued by the TNRCC. Construction of the plant and wellfields is anticipated to begin in the third or fourth quarter of 1997 depending on the progress in licensing with the TNRCC. The Company anticipates spending approximately $6.0 million in 1997 and $4.8 million in 1998 for plant construction, permitting, development and land holding costs. The Company anticipates having to demonstrate financial surety in connection with these activities of approximately $3.0 million which it expects to meet by posting a bond collaterized by cash in an amount equal to 50% of the bond. Permitting Status. The Company filed license applications in the fourth quarter of 1996 and anticipates having the final permits in place in 1998. NEW MEXICO DEVELOPMENT PROPERTIES GENERAL The Company has various interests in properties located in the Churchrock and Crownpoint districts in New Mexico. As to these properties, the Company holds both patented and unpatented mining claims, mineral leases and some surface leases from private parties, the Navajo Nation and Navajo allottees. In addition, the Company signed a letter of intent in November 1996 to acquire from Santa Fe certain uranium mineral interests and exploration rights for uranium on significant acreage in New Mexico, a small portion of which falls within the Churchrock district. This agreement with Santa Fe was finalized in March 1997. In keeping with its overall corporate strategy, the Company's development plan for its New Mexico properties will proceed incrementally, subject to timely permitting, the availability of water rights and the availability of capital. The Company plans to develop the Churchrock district first, with production targeted for 1998, and the Crownpoint district next, with production targeted for 1999. REGULATORY FRAMEWORK NRC License. In New Mexico, uranium production requires a radioactive materials license issued by the NRC. The Company has applied for one NRC license covering all properties located in both the 14 18 Churchrock and Crownpoint districts (except the Mancos property) and has included the properties in both districts (except the Mancos leases) under one Final Environmental Impact Statement (FEIS) which is a prerequisite for the NRC license. The NRC has finalized and completed the publication of the FEIS in the first quarter of 1997. The FEIS is subject to review and comment by the EPA and any cooperating agencies and is available to the public. Upon publication, and in the absence of any litigation concerning the FEIS, the NRC may issue the NRC license. However, the NRC has published notice of an opportunity for a hearing on the license which is currently planned for early 1997. Although the NRC may defer a hearing on licensure until after a license is issued, it is unclear whether the NRC will do so. There can be no assurance that the license will be issued or, if issued, that it will allow for the Company's planned operations, or that, if issued, the license would be issued on a timely basis to permit the Company to meet its targeted production schedule for the Churchrock district. UIC Permit. NMED has jurisdiction under the New Mexico Water Quality Act to regulate UIC activities within the State of New Mexico, and the New Mexico UIC program has received "primary enforcement responsibility" from the EPA under the federal SDWA. However, by the terms of regulations issued by the EPA and the primacy determination made for the State of New Mexico, New Mexico's UIC primacy does not extend to New Mexico's exercise of UIC regulation or permitting over facilities located on "Indian lands," a term whose geographic reach the EPA has defined as coextensive with that of Indian country. Because even a permit issued by a state holding UIC primacy cannot suffice in lieu of a federal UIC permit issued under the SDWA unless the EPA issued a corresponding aquifer exemption or temporary aquifer designation, the EPA's opinion that a site lies within Indian country virtually compels a state UIC applicant to secure an EPA UIC permit for UIC activities to be conducted on such a site. The EPA has announced it may assert that all of the Company's New Mexico development properties lie within Indian country and thus require UIC permits issued by the EPA. In addition to the EPA's assertions, the Navajo Nation claims regulatory jurisdiction over all of the Company's New Mexico development properties. These claims subject the development of the property to further uncertainties, including a potential for delays in UIC permitting until and unless a Navajo regulatory program is promulgated and accepted by the EPA for a determination of primacy. Although a Navajo UIC program may adopt unique application, permitting, and enforcement procedures, it would, nonetheless, be required to impose virtually the same substantive requirements as the Company is prepared to satisfy under existing New Mexico and EPA UIC programs. This dispute over UIC jurisdiction is currently focused on a portion of the Churchrock and Crownpoint properties. Despite this current jurisdictional dispute among the EPA, the State of New Mexico, and the Navajo Nation, the Company maintains good relations with the state of New Mexico, the Navajo Nation, and the EPA. However, there can be no assurance that the jurisdictional dispute will not have a material adverse effect on the Company's development plans in New Mexico. Water Rights. For general information on water rights in New Mexico, see "Business-Environmental Considerations and Permitting; Water Rights." CHURCHROCK DISTRICT The Property. The Churchrock properties encompass 2,225 gross and net acres and include mineral leases, patented mining claims and unpatented mining claims. The properties are located in McKinley County, New Mexico, and consist of three parcels, known as Section 8, Section 17 and Mancos. None of these parcels lies within the area generally recognized as constituting the Navajo Reservation. The Company owns mineral leases for both Sections 17 and the Mancos properties. The surface estate on Section 17 is owned by the Navajo Nation. The Company owns patented and unpatented mining claims on Section 8. The Company is obligated to pay certain royalties based on uranium sales. The unpatented claims currently require an annual payment of $100 per claim payable to the Bureau of Land Management 15 19 to remain in full force and effect and are subject to certain overrides. The Mancos leases can be held indefinitely by paying certain annual royalties after the primary term, which expired in 1994. The Section 17 leases expire in 1998. Production at any time will hold the leases until production ceases. On March 25, 1997, the Company acquired from Santa Fe, the fee mineral interests in Section 17 and Mancos thereby extinguishing certain of the royalty obligations on those properties. Reserves. As of December 31, 1996, Section 8 contained approximately 6.5 million pounds of in-place proven and probable uranium reserves (estimated 4.2 million pounds recoverable), Section 17 contained approximately 8.4 million pounds of in-place proven and probable uranium reserves (estimated 5.5 million pounds recoverable), and the Mancos property contained approximately 4.2 million pounds of in-place proven and probable uranium reserves (estimated 2.7 million pounds recoverable). Development Plan. The New Mexico properties will be developed in accordance with the licenses issued by the NRC. It is anticipated that the first property to be licensed will be Churchrock. Costs related to permitting activities and land holding costs were $600,000 in 1996. The Company anticipates spending approximately $12.3 million in 1997 and $7.3 million in 1998 for plant construction, permitting, development and land holding costs. The Company anticipates having to demonstrate financial surety in connection with these activities of approximately $10.0 million which it expects to meet by posting a bond collaterized by cash in an amount equal to 50% of the bond. Exploration Potential. The measured in-place reserves in Sections 8 and 17 and Mancos encompass only a small portion of the properties owned by the Company. The Company believes that substantial additional mineralization exists on these properties. Because of greater depths, this mineralization is estimated to be recoverable at a higher cost and accordingly require higher uranium prices to make them economical to produce. Water Rights. The Company originally acquired mineral leases on Sections 8 and 17 from United Nuclear Corporation ("UNC") and, in connection therewith, acquired certain rights to use water from UNC. An application to use one of these rights has been the subject of extensive administrative proceedings and litigation with the New Mexico State Engineer and the Navajo Nation over the nature and extent of UNC's water rights. The State Engineer determined that the consumptive use and diversion amount UNC originally sought to transfer for use by the Company were in excess of the rights held by UNC and denied the application on the grounds that the UNC rights were insufficient to support the Company's mining operations. The Company has since revised its water budget to be consistent with the rights of UNC as determined by the State Engineer. The State Engineer has agreed to hear a revised application for the transfer of the water rights within 180 days after the application is submitted. The Company anticipates filing a revised application or applications for new temporary appropriation of water. A claim by the Navajo Nation to jurisdiction over these water rights was denied by the State Engineer and the state district court. These decisions do not preclude such a claim from being made in federal court. Permitting Status. On June 21, 1989 the EPA issued its aquifer exemption covering that portion of the Churchrock site known as Section 8, and on November 1, 1989, NMED issued its permit, covering UIC activities on Section 8. On October 7, 1994, NMED issued an amended permit covering UIC activities on both Section 8 and Section 17. The permit for Section 17 was contested by the Navajo Nation which claimed UIC regulatory jurisdiction over the site, based on the fact that the surface estate is owned by the Navajo Nation. The EPA, acting as an advocate for the Navajo Nation, has asserted the Navajo Nation's claim and has refused to amend its previously issued aquifer exemption covering Section 8 to add the portion of the Churchrock facility on Section 17. The EPA has subsequently announced it may reconsider its issuance of an aquifer exemption covering the Section 8 portion of the Churchrock site. The Company does not plan to pursue permits for Mancos until uranium prices rise. In June 1996 the Company filed with the NMED two applications to renew the permit in two distinct parts, one covering the Section 8 portion and the other the Section 17 portion of Churchrock. This was to assure that the Company maintained a "clear" UIC authorization on the Section 8 portion of the site. 16 20 The surface estate on Section 8 is not owned by the Navajo Nation or Navajo allottees. Because the renewal application was timely filed, the permit covering the Section 8 property has remained continuously in effect pending final determination on the renewal application by the NMED. The Navajo Nation has recently asserted jurisdiction over the UIC for Section 8, claiming that the land lies within a "dependent Indian community." The EPA has not yet taken a position on this issue. This situation could potentially delay or obstruct development of Section 8. The renewal application pertaining to the Section 17 property will be subject to a new administrative review which will ultimately require EPA to re-examine the jurisdictional status. If the EPA does not find the site within NMED jurisdiction, the Company believes the state will file suit for a declaration of UIC jurisdiction over the site. The outcome of this suit may ultimately affect UIC jurisdiction on all Indian lands. CROWNPOINT DISTRICT The Property. The Crownpoint properties are located in the San Juan Basin, 22 miles northeast of the Company's Churchrock deposits and 35 miles northeast of Gallup, New Mexico, adjacent to the town of Crownpoint. The Properties consist of 1,578 gross and net acres, as follows: (a) 162 gross and net acres on Section 24. The Company has 100% of the mineral estate on this acreage pursuant to a combination of a 40% fee interest, a mineral lease on the other 60% of the mineral estate (expiring in April 1997 unless the parties agree to an extension) and unpatented mining claims. This acreage is subject to an obligation of the Company to pay a production payment on the first 50,000 pounds of uranium produced and an override based on uranium sales; (b) 959 gross and net acres on Sections 19 and 29 pursuant to a lease from private mineral owners (expiring August 2007) which provides for royalties and an override based on uranium sales; and (c) 457 gross and net acres of unpatented mining claims in Sections 9, 24 and 25. In addition to the foregoing, the Company has 1,440 gross and net acres of mineral leases (hereinafter referred to as "Unit 1") from Navajo allottees who are the beneficial owners of the surface and mineral rights. The leases are subject to approval by the Bureau of Indian Affairs (the "BIA"). The BIA Area Director is expected to approve the leases after completion of the FEIS. Although not assured, this approval is expected in the second quarter of 1997. These leases expire 10 years after the approval by the BIA. Reserves. With respect to all the Crownpoint acreage except Unit 1, as of December 31, 1996, the property contained approximately 39.0 million pounds of in-place proven and probable reserves (estimated 25.3 million pounds recoverable). The Company estimates that Unit 1 contains approximately 27.0 million pounds of in-place proven and probable reserves (estimated 17.6 million pounds recoverable). The Unit 1 reserves are not included as part of the Company's reserve base. Development Plan. The New Mexico properties will be developed according to the licenses issued by the NRC. It is anticipated that the first property to be licensed will be Churchrock followed by Unit 1 and Crownpoint after 1998. Costs relating to permitting activities and land holding costs were $710,000 in 1996, and are expected to total $200,000 in 1997 and $200,000 in 1998. Water Rights. With respect to Crownpoint, the Company has acquired three applications for appropriations of water which give the Company the first three "positions in line" on the hearings list for the San Juan Basin. Certain aspects of all three applications were protested and are subject to hearings. Water rights relating to Unit 1 involve the issue of the jurisdiction of the Navajo Nation, and this jurisdictional issue might also be present for other parts of Crownpoint. The Company plans to proceed with water rights for Crownpoint at a future date. 17 21 Permitting Status. The application for the NRC license is part of the overall application for both the Churchrock and Crownpoint districts discussed above. The Company had previously submitted UIC permit applications for Sections 19 and 24; however, because of Section 19's proximity to the town of Crownpoint, the Company withdrew these previous applications. The Company has recently submitted a revised UIC permit application for Section 24. There can be no assurance that the UIC permit will be granted. The surface estate on Section 19 and 29 is owned by the Navajo Nation and may be subject to the same jurisdictional dispute as for Section 17 in Churchrock. SANTA FE PROPERTIES GENERAL The Company signed a letter of intent in November 1996 to acquire from Santa Fe certain uranium mineral interests and exploration rights for uranium in New Mexico. This transaction closed in March 1997 and the major components of the transaction include the following detail. The Properties. The properties consist of: (a) 37,000 acres as to which the Company has acquired a fee interest in the entire mineral estate, excluding coal ("Category I Properties"); (b) approximately 140,000 acres as to which the Company has acquired the fee interest in uranium (the "Category II Properties"); and (c) approximately 346,000 acres as to which the Company has acquired the exclusive right to explore for uranium (the "Category III Properties"). The Company is obligated to spend on exploration (or pay to Santa Fe) $200,000 per year for the ten year period starting in March 1997 and $400,000 per year for the seven year period starting in March 2007. This expenditure can be made on any of the Category II or Category III properties. The license is for 17 years, expiring in March 2014. In the event that the sale price of uranium shall exceed $25 per pound for any twelve-month period URI has committed to spend on exploration (or pay to Santa Fe) during the following 5 years an aggregate of $5 million; and in the event that the sale price of uranium shall exceed $30 per pound for any twelve-month period URI has committed to spend on exploration (or pay to Santa Fe) during the following 5 years an aggregate of $10 million. With respect to Category II and Category III properties, at such time as URI shall apply for a mining permit with respect to any such properties Santa Fe has the right to put the remaining mineral interests owned by it (excluding coal) to the Company at a price of $200 per acre for any acreage in any section which is covered by the mining application. The acreage price shall be increased by the same percentage as the percentage increase in the price of uranium on the date of such application over $15.80 per pound. URI has the option to purchase at any time the entire mineral estates (excluding coal) on such properties on the same terms. Reserves. The Company estimates that the Category I Properties contain 14.7 million pounds of proven in-place uranium reserves (estimated 9.6 million pounds recoverable). Development Plan. The planned development strategy is to dove-tail qualified properties from the Santa Fe lands into the production plans for Churchrock and Crownpoint. Exploration Potential. There is significant exploration potential for the Santa Fe properties. Numerous ore grade holes drilled on the properties demonstrates this potential; however, because the depths of the deposits are not delineated, development costs are uncertain. 18 22 RECLAIMED PROPERTIES The Company has completed production and groundwater restoration on its Benavides and Longoria projects in South Texas. The Company is currently completing the final stages of surface reclamation on these projects which the Company believes will not involve material expenditures. On August 28, 1995, Manuel T. Longoria, as owner of the ranch containing the site of the Company's Longoria mine, brought suit against the Company in state district court in Duval County, Texas, asserting claims said to have arisen at various times over the last eighteen years. See "Business- Legal Proceedings." The Company acquired the Section 17 leases in the New Mexico Churchrock district from United Nuclear Corporation ("UNC"). UNC had conducted underground mining for uranium on Section 17 and had reclaimed these properties. In connection with the acquisition, the Company assumed any liability of UNC for any remaining remediation work that might be required. NMED has not determined what, if any, additional remediation will be required under the New Mexico Mining Act. If more remediation work is required, the Company believes it will not involve material expenditures. RECLAMATION AND RESTORATION COSTS AND BONDING REQUIREMENTS Upon completion of production from a wellfield, the Company is obligated under state and federal law to restore the aquifer to a condition consistent with its pre-mining use. This involves restoration of the aquifer, plugging and abandoning the injection and production wells and reclaiming the surface. With respect to operations at Kingsville Dome and Rosita, as well as reclamation and restoration of the Benavides and Longoria projects, the TNRCC requires the Company to provide financial surety to cover the costs of such restoration and reclamation. The surety bond requirement at December 31, 1996 was approximately $5.6 million. The Company fulfills this requirement through the issuance of surety bonds from the United States Fidelity and Guaranty Company ("USF&G") and has deposited as collateral for such bonds cash of approximately $2.8 million. The Company is obligated to fund the cash collateral account with an additional $0.50 for each pound of uranium production until the account accumulates an additional $1.0 million. The Company estimates that its future reclamation liabilities with respect to current operations at December 31, 1996 approximates $4.0 million, which has been charged to earnings. These financial surety obligations are reviewed and revised annually by the TNRCC. The Company anticipates that it will be required to provide financial surety of approximately $3.0 million as a condition to receipt of the requisite permits for the mining of each of the Alta Mesa and Vasquez projects. The Company anticipates that USF&G or other bonding entities will provide the requisite bond under arrangements similar to those in place for Rosita and Kingsville Dome. In New Mexico surety bonding will be required prior to development of the properties. The Company anticipates that it will be required to provide financial surety of approximately $10.0 million as a condition to receipt of the requisite permits for the Churchrock project which it anticipates will be provided by USF&G, or other bonding entities under arrangements similar to those in place for Rosita and Kingsville Dome. The amount of the surety bond is subject to annual review and revision by the NRC and State of New Mexico. ITEM 3. LEGAL PROCEEDINGS On August 28, 1995, Manuel T. Longoria, as owner of the ranch containing the site of the Company's Longoria mine near Bruni in Duval County, Texas, brought suit against the Company in state district court in Duval County, Texas asserting claims said to have arisen at various times over the last 18 years. In the action styled Longoria v. Uranium Resources, Inc., et al., Longoria claims the Company has leased the site knowing that the proposed mining would contaminate the site; that the Company had 19 23 knowingly or negligently conducted mining operations in a manner which contaminated the Longoria property with toxic and hazardous material which present a serious health hazard. The suit asks for remediation of the Longoria property and for unspecified actual and punitive damages. With regard to the claim for remediation, the Company, upon the conclusion of mining at the Longoria site and the nearby sites, began reclamation in the manner required by its permits and by state and federal regulations. Such reclamation is nearing completion. The Company has made provisions for the costs of site reclamation and does not believe the settlement of this lawsuit will result in damages that are materially different than the costs already in the financial statements. On July 12, 1995, the Company filed a lawsuit in the federal district court in Colorado against Professional Bank, a Colorado chartered bank ("ProBank"). The Company believes that ProBank is owned or controlled by Oren L. Benton, the former Chairman of the Company's Board of Directors. In the action styled Uranium Resources, Inc. v. Professional Bank, the Company alleges that ProBank transferred $1,080,000, without the Company's authorization, from the Company's account at ProBank to the accounts maintained at ProBank of various entities and an individual affiliated with Mr. Benton. The Company has recovered $300,000 of the total and is seeking to recover the balance from ProBank. During 1994, the Company encountered liquidity problems that resulted in the Company entering into certain transactions with companies controlled by Mr. Benton (the "Benton Companies"). On February 23, 1995, Benton and various of the Benton Companies filed for protection under Chapter 11 of the Federal Bankruptcy Code (the "Benton Bankruptcy"). In connection with the Benton Bankruptcy, the bankrupt estates have advised the Company that they are reviewing certain transactions entered into by the Company with the Benton Companies. Such a review could potentially result in claims against the Company that could have a material adverse effect on the Company. The Company and the bankrupt estates have entered into a tolling agreement with respect to the possible assertion of such claims. The Company is unable to assess whether any such claim will be asserted, and if asserted, what adverse consequences, if any, might result from such assertion. No claims have been asserted to date. The Company has asserted claims against Benton and the Benton Companies in the bankruptcy proceedings. The Company is subject to periodic inspection by certain regulatory agencies for the purpose of determining compliance by the Company with the conditions of its licenses. In the ordinary course of business, minor violations may occur, however, these are not expected to cause material expenditures. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The 1996 Annual Meeting of Stockholders was held on May 29, 1996, in Corpus Christi, Texas. Shares representing 6,316,306 votes (72.1% of total outstanding) were present in person or by proxy. At the meeting, the Stockholders of the Company elected Leland O. Erdahl, Paul K. Willmott, George R. Ireland and James B. Tompkins to the Board of Directors for a one-year term. In addition, the Company's Stockholders approved the amendment to the Company's restated Certificate of Incorporation to increase the authorized shares of common stock from 12,500,000 shares to 25,000,000 shares and ratified Arthur Andersen LLP as independent accountants for the Company for 1996. The proposal to increase the authorized shares of the Company was approved by a vote of 6,221,019 shares in favor, 86,077 opposed and 9,300 abstaining. The ratification of Arthur Andersen LLP as independent accountants was approved by a vote of 6,310,161 shares in favor, 2,645 opposed and 3,500 abstaining. 20 24 --------------------- CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 The Company is including the following cautionary statement to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statement made by, or on behalf of, the Company. The factors identified in this cautionary statement are important factors (but not necessarily all of the important factors) that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company. Where any such forward- looking statement includes a statement of the assumptions or bases underlying such forward-looking statement, the Company cautions that, while it believes such assumptions or bases to be reasonable and makes them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to the future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result, or be achieved or accomplished. Taking into account the foregoing, the following are identified as important risk factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company: CONTINUING SIGNIFICANT CAPITAL REQUIREMENTS An ISL mining operation requires a substantial amount of capital prior to the commencement of, and in connection with, production of uranium, including costs related to acquiring the rights to mine uranium, securing regulatory permits and licenses, exploration and definitional drilling to determine the underground configuration of the ore body, designing and constructing the uranium processing plant, drilling and developing in order to establish the infrastructure for the production wells for each wellfield and complying with financial surety requirements established by various regulatory agencies regarding the future restoration and reclamation activities for each property. The Company expects to fund some of its 1997 capital requirements from cash flow from operations and the proceeds of the equity placement in December 1996. However, the majority of the capital requirements for new development projects in 1997 and 1998 will require additional sources of capital. There can be no assurance that the Company will raise sufficient capital to fund these capital requirements. POTENTIAL ADVERSE EFFECT OF FEDERAL AND STATE REGULATIONS The development and production of uranium is subject to extensive governmental regualtions that materially affect the economics of the Company's operations and the timing of project development. To produce uranium, the Company must secure and maintain multiple permits, obtain adequate water rights and comply with extensive federal, state and potential tribal regulations for environmental protection, including regulations relating to air and water quality, the prevention of groundwater contamination, the reclamation and restoration of wellfield aquifers and the treatment, transportation and disposal of liquid and/or byproduct material and solid wastes generated by the Company's uranium mining and processing activities. To date, the Company's operations have not been materialy and adversely affected by the inability to obtain or maintain required permits or water rights, or by any groundwater contamination or the disposal of waste or byproduct material. However, should the Company be unable to obtain or maintain permits or water rights for development of its properties or otherwise fail to adequately handle future environmental issues, the Company's operations could be materially and adversely affected by expenditures or delays in the Company's ability to initiate or continue production at its properties. 21 25 The Company must obtain all necessary permits from the appropriate governmental agency before it can commence production at any of its development properties. The Company's future production is highly dependent on its ability to bring these development properties into production. Applications for permitting of certain of these properties have been filed. There can be no assurances that all the necessary permits will be obtained or that such permits will be obtained in a timely manner. Any significant delays in obtaining the necessary permits could have a material adverse effect upon the Company and its developmental plans for these properties. The Company has expended significant resources, both financial and managerial, to comply with environmental protection laws, regulations and permitting requirements and anticipates that it will be required to continue to do so in the future. Although the Company believes its producing properties comply in all material respects will all relevant permits, licenses and regulations pertaining to worker health and safety as well as those pertaining to the environment, the historical trend toward stricter environmental regulation may continue. The uranium industry is subject to not only the worker health and safety and environmental risks associated with all mining businesses, but also to additional risks uniquely associated with uranium mining and processing. The possibility of more stringent regulations exists in the areas of worker health and safety, the disposal of wastes and byproduct material, the decommissioning, decontamination and reclamation of mining, milling, refining and conversion sites, and other environmental matters, each of which could have a material adverse effect on the costs or the viability of a particular project. The Company is required to provide financial surety to state environmental agencies for plugging wells, groundwater restoration and site decommissioning, decontamination and reclamation. The Company estimates that its current restoration, decommissioning, decontamination and reclamation costs are approximately $3.7 million, which amount the Company has accrued as a liability on its financial statements. The Company satisfied its financial surety requirements imposed by environmental regulators with surety bonds totalling approximately $5.6 million at December 31, 1996, one-half of which is collateralized by the Company with cash. The Company anticipates that its future financial surety requirements will increase significantly as production from the Company's producing sites continues and as future development and production occurs at additional sites in Texas and New Mexico. The amount of the financial surety for each producing property is subject to annual review and revision by regulators. There can be no assurance that the Company will have sufficient capital to meet these future finacial surety obligations. RESERVE ESTIMATES Reserve estimates are necessarily imprecise and depend to some extent on statistical inferences drawn from limited drilling, which may prove unreliable; and there can be no assurance that the indicated level of recoveries will be realized. Should the Company encounter mineralization or formations at any of its mines or projects different from those predicted by drilling, sampling and similar examinations, uranium reserve estimates may have to be adjusted and mining plans may have to be altered in a way that could adversely affect the Company's operations. Moreover, short-term operating factors relating to the uranium reserves, such as the need for sequential development of ore bodies and the processing of new or different uranium grades, may adversely affect the Company's profitability in any particular accounting period. NEED TO REPLACE RESERVES The Company's producing uranium mines are, in general, characterized by a series of individual wellfields that produce at differing declining production rates. Each wellfield's production decline rate depends on ore reserve characteristics, and, in the case of the Company, varies from a steep decline rate of six months, to a relatively slow production decine rate of eighteen months. The Company's future uranium reserves and production, and therefore cash flow and income, are highly dependent upon the Company's level of success in exploiting its current reserves and acquiring or developing additional reserves. Reserves 22 26 at the Company's currently producing sites are expected to be depleted in 1999, although there is the potential for developing additional wellfields at Kingsville Dome. There can be no assurance that the Company's development properties will be placed into production or that the Company will be able to continue to find and develop or acquire reserves. COMPETITION There is global competition in the uranium industry for mineral properties, capital, customers and the employment and retention or qualified personnel. In the production and marketing of uranium concentrates there are approximately 15 major uranium-producing entities, some of which are government controlled and some of which are significantly larger and better capitalized than the Company. The Company competes with larger producers in Canada, Australia and Africa, as well as with other U.S. ISL producers of uranium and other producers that recover uranium as a by-product of other mineral recovery processes. The Company also expects to compete with uranium recovered from the de-enrichment of highly enriched uranium obtained from the dismantlement of U.S. and Russian nuclear weapons and sold in the market by the United States Enrichment Corporation and/or the United States Department of Energy, as well as from imports to the United States of uranium from the CIS. The amount of uranium produced by competitors or imported into the United States may have a material impact on uranium prices. URANIUM PRICE VOLATILITY The Company's earnings are dependent on the price of uranium, which is determined primarily by global supply and demand and by the relationship of that price to the Company's costs of production. Historically, uranium prices have been subject to fluctuation, and the price of uranium has been and will continue to be affected by numerous factors beyond the Company's control, including the demand for nuclear power, political and economic conditions, and governmental legislation in uranium producinng and consuming countries and production levels and costs of production of other producing companies. Certain of the Company's current long and medium-term contracts have pricing mechanisms related to spot market prices. In recent year's, prior to 1996, imports of uranium, including imports of uranium from the CIS, have resulted in significant downward pressure on uranium prices. The spot market price for uranium has strengthened appreciably since January 1995. Prices have risen from $9.65 per pound as of January 31, 1995 to a high of $16.50 per pound as of May 31, 1996. The spot price as of February 28, 1997 was $13.65 per pound. While the current spot prices of uranium have increased to levels which exceed the Company's cost of uranium production, there is no assurance that such price level will remain at the current level. URANIUM CONTRACTS PROFITABILITY As of December 31, 1996, the Company had contracts for delivery of an estimated 4.7 million pounds of uranium (exclusive of 270,000 pounds of Russian uranium sales made pursuant to the matched sales program) to domestic utilities from January 1, 1997 through 2002. Profitability to the Company on these deliveries will depend on the cost of producing uranium at the Company's mining properties, the Company's ability to produce uranium to meet its sales commitments and the spot market price of uranium. LIMITED MARKET; DEPENDENCE ON A FEW CUSTOMERS The Company's primary source of revenue is derived from its sale of uranium to U.S. nuclear power plants. Uranium's only current commercial use is as fuel for nuclear power reactors. Accordingly, the Company's present and potential customers are electric utlities that operate nuclear power plants. The United States is the world's largest producer of nuclear-generated electricity. As of December 1996, there were 109 nuclear units in the U.S. which generated approximately 22.5% of the country's total electricity 23 27 in 1995. Currently, there are no new nuclear power plants under construction in the U.S. As of December 31, 1995, there were 363 nuclear power plants in the Western World, with 32 power plants being constructed in parts of the world other than the U.S. There can be no assurance that the Company can continue to compete successfully for such customers. A significant portion of the Company's contracted sales of uranium from January 1, 1997 through December 31, 2002 are represented by eight long-term contracts with seven different customers, five of which represent 20%, 16%, 15%, 12% and 11% of sales for the year ended December 31, 1996 and four of which represented 23%, 14%, 10% and 10% of sales for the year ended December 31, 1995. The loss of any of these customers or curtailment of purchases by such customers could have a material adverse effect on the Company's financial condition and results of operations. COMPETITION FROM ALTERNATIVE ENERGY SOURCES AND PUBLIC ACCEPTANCE OF NUCLEAR ENERGY Nuclear energy competes with other sources of energy, including oil and gas, coal and hydro-electricity. These alternative energy sources are to some extent interchangeable with nuclear energy, particularly over the longer term. Lower prices of oil, gas, coal and hydro-electricity for an extended period of time, as well as the possibility of developing in the future other low cost sources for energy, have made and could continue to make nuclear power a less attractive fuel source for the generation of electricity, thus resulting in lower demand for uranium. Furthermore, the growth of the uranium and nuclear power industry beyond or maintenance at its current will depend upon continued and increased acceptance of nuclear technology as a means of generating electricity. Because of unique political, technological and environmental factors that affect the nuclear industry, the industry is subject to public opinion risks which have and could continue to have an adverse impact on the demand for nuclear power and increase the regulation of the nuclear power industry. POTENTIAL ADVERSE IMPACT OF LOSS OF KEY PERSONNEL Certain of the Company's employees have significant experience in the uranium ISL mining industry. The number of individuals with ISL experience is small. The continued success of the Company is dependent upon the efforts of these key individuals, and the loss of any one or more of such persons' services could have a material adverse effect on the Company's business operations and prospects. The Company has not entered into employment contracts with or purchased key man life insurance for any of these individuals. MINING RISKS AND INSURANCE The business of uranium mining generally is subject to a number of risks and hazards, including environmental hazards, industrial accidents, flooding, interruptions due to weather conditions and other acts of nature. Such risks could result in damage to or destruction of the Company's wellfield infrastructure and production facilities, as well as to adjacent properties, personal injury, environmental damage and processing and production delays, causing the Company monetary losses and possible legal liability. While the Company maintains, and intends to continue to maintain, liability, property damage and other insurance consistent with industry practice, no assurance can be given that such insurance will continue to be available, be available at economically acceptable premiums or be adequate to cover any resulting liability. 24 28 GLOSSARY OF CERTAIN TERMS claim . . . . . . . . . . . . . A claim is a tract of land, the right to mine of which is held under the federal General Mining Law of 1872 and applicable local laws. concentrates . . . . . . . . . A product from a uranium mining and milling facility, which is commonly referred to as uranium concentrate or U(3) O(8). conversion . . . . . . . . . . A process whereby uranium concentrates are converted into forms suitable for use as fuel in commercial nuclear reactors. cut-off grade . . . . . . . . . Cut-off grade is determined by the following formula parameters: estimates over the relevant period of mining costs, ore treatment costs, general and administrative costs, refining costs, royalty expenses, process and refining recovery rates and uranium prices. gross acres . . . . . . . . . . Total acres under which the Company has mineral rights and can mine for uranium. Indian country . . . . . . . . A term derived from jurisdictional determinations in criminal law enforcement proceedings under 18 U.S.C. Section 1151 and understood to encompass territory situated within Indian reservations, land owned by Indian allottees and land within a dependent Indian community. lixiviant . . . . . . . . . . . When used in connection with uranium in situ leach mining, a solution that is pumped into a permeable uranium ore body to dissolve uranium in order that a uranium solution can be pumped from production wells. net acres . . . . . . . . . . . Actual acres under lease which may differ from gross acres when fractional mineral interests are not leased. ore . . . . . . . . . . . . . . Naturally occurring material from which a mineral or minerals of economic value can be extracted at a reasonable profit. over feeding . . . . . . . . . Operating enrichment plants in a manner that reduces plant operating costs but increases the amount of uranium required to produce a given quantity of enriched uranium. probable reserves . . . . . . . Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measured) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation. 25 29 proven reserves . . . . . . . . Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well- established. reclamation . . . . . . . . . . Reclamation involves the returning of the surface area of the mining and wellfield operating areas to a condition similar to pre-mining. recoverable reserves . . . . . Reserves that are either proven or probable, are physically minable, and can be profitably recovered under conditions specified at the time of the appraisal, based on a positive feasibility study. The calculation of minable reserves is adjusted for potential mining recovery and dilution. reserve . . . . . . . . . . . . That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. restoration . . . . . . . . . . Restoration involves returning an aquifer to a condition consistent with its pre-mining use and removing evidences of surface disturbance. The restoration of the wellfield can be accomplished by flushing the ore zone with native ground water and/or using reverse osmosis to remove ions to provide clean water for reinjection to flush the ore zone. resources . . . . . . . . . . . A resource is a concentration of naturally occurring minerals in such a form that economic extraction is currently or potentially feasible. roll front . . . . . . . . . . The configuration of sedimentary uranium ore bodies as they appear within the host sand. A term that depicts an elongate uranium ore mass that is "C" shaped. spot price . . . . . . . . . . The price at which uranium may be purchased for delivery within one year. surety obligations . . . . . . A bond, letter of credit, or financial guarantee posted by a party in favor of a beneficiary to ensure the performance of its or another party's obligations, e.g., reclamation bonds, workers' compensation bond, or guarantees of debt instruments. tailings . . . . . . . . . . . Waste material from a mineral processing mill after the metals and minerals of a commercial nature have been extracted; or that portion of the ore which remains after the valuable minerals have been extracted. Trade Tech . . . . . . . . . . A Denver-based publisher of information for the nuclear fuel industry; the successor to the information services business of Nuexco. 26 30 uranium or uranium concentrates . . . . . . . . . U(3)O(8), or triuranium octoxide. U(3)O(8) . . . . . . . . . . . Triuranium octoxide equivalent contained in uranium concentrates, referred to as uranium concentrate. waste . . . . . . . . . . . . . Barren rock in a mine, or mineralized material that is too low in grade to be mined and milled at a profit. 27 31 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. MARKET INFORMATION The Company's Common Stock trades on NASDAQ under the trading symbol URIX. The following table sets forth the high and low sales prices for the Common Stock as reported through NASDAQ for the periods indicated:
Common Stock ------------ Fiscal Quarter Ending High Low --------------------- ------ ----- December 31, 1996 13-5/8 7-1/8 September 30, 1996 14-25/32 9-35/64 June 30, 1996 17-5/8 12-1/8 March 31, 1996 15-1/2 5-5/8 December 31, 1995 7 5-1/8 September 30, 1995 8-5/8 4-1/2 June 30, 1995 4-3/4 2-3/4 March 31, 1995 7-1/8 3
The high and low sales prices for the common stock for the period January 1, 1997 through March 1, 1997, was $8.00 and $5.875, respectively. HOLDERS As of March 20, 1997, the Company had 10,827,527 shares of Common Stock outstanding held of record by 123 persons. DIVIDENDS The Company did not declare or pay any cash or other dividends on its Common Stock during the years ending December 31, 1994, 1995 or 1996. The Company does not anticipate paying dividends for the foreseeable future. 28 32 ITEM 6. SELECTED FINANCIAL DATA
Year Ended December 31, -------------------------------------------------------- 1996 1995 1994 1993 1992 -------------------------------------------------------- (In thousands, except per share and per pound amounts) CONSOLIDATED STATEMENTS OF OPERATIONS DATA Uranium sales: Produced uranium $ 17,827 $ 7,195 $ 959 $ 1,341 $ 4,881 Purchased uranium 6,437 14,634 16,375 11,881 12,943 Cost of uranium sales (20,122) (17,235) (13,466) (10,216) (12,334) Writedown of uranium properties -- (163) -- (1,945) -- -------- -------- -------- -------- -------- Earnings (loss) from operations before corporate expenses 4,142 4,431 3,868 1,061 5,490 Corporate expenses (3,055) (3,496) (2,177) (1,903) (2,285) -------- -------- -------- -------- -------- Earnings (loss) from operations 1,087 935 1,691 (842) 3,205 Interest and other, net (328) (324) 163 387 (394) Loss on acceleration of uranium contract -- -- (349) -- -- Loss on termination of joint venture and transfer to stockholders -- (1,781) -- -- -- -------- -------- -------- -------- -------- Earnings (loss) before income taxes 759 1,170 1,505 (455) 2,811 Federal income tax (benefit) -- (234) 300 (107) 408 -------- -------- -------- -------- -------- Net earnings (loss) $ 759 $ (936) $ 1,205 $ (348) $ 2,403 ======== ======== ======== ======== ======== Earnings (loss) per common share: Primary $ 0.08 $ (0.12) $ 0.17 $ (0.05) $ 0.36 ======== ======== ======== ======== ======== Fully diluted $ 0.08 $ (0.12) $ 0.17 $ (0.05) $ 0.36 ======== ======== ======== ======== ======== Weighted average common stock and equivalents outstanding: Primary 10,031 8,098 7,073 6,640 6,684 Fully diluted 10,031 8,098 7,193 6,640 6,756 CONSOLIDATED OPERATING AND OTHER DATA Cash provided by operations $ 9,294 $ 5,301 $ 5,080 $ 6,283 $ 9,186 Pounds of uranium produced 1,360 612 -- -- 80 Pounds of uranium purchased 488 660 1,329 510 750 Pounds of uranium delivered 1,656 1,633 1,081 753 1,070 Capital expenditures $ 14,607 $ 3,583 $ 3,183 $ 3,101 $ 2,885 Average sales price per pound(1) $ 16.35 $ 15.64 $ 16.03 $ 17.56 $ 16.66 Average cost of produced pounds sold (2) $ 11.34 $ 10.28 $ 13.60 $ 12.96 $ 12.62 Average cost of purchased pounds sold $ 10.21 $ 9.41 $ 10.68 $ 10.88 $ 8.80 Cash cost per produced pound(3) $ 8.51 $ 7.11 N/A N/A $ 10.80 Average cost per produced pound(2) $ 12.12 $ 10.09 N/A N/A $ 13.68 Average cost per purchased pound $ 10.21 $ 9.52 $ 10.07 $ 11.24 $ 9.35
(1) Excludes sales of the Russian component of deliveries made under the matched sales amendment. The economic benefit of such sales are treated as "pass-through" sales. (2) Average cost per produced pound consists of all operating costs, depletion, depreciation and accrued restoration and reclamation costs. (3) Cash cost per pound consists of all operating costs and wellfield development costs associated with producing wellfields. 29 33
Year Ended December 31, ------------------------------------------------------ 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- (In thousands) CONSOLIDATED BALANCE SHEET DATA Cash and cash equivalents $ 16,934 $ 4,716 $ 2,528 $ 2,530 $ 1,707 Working capital (deficit) 15,269 4,710 (2,545) (2,777) 2,482 Uranium properties (net) 42,444 37,200 37,230 34,420 33,076 Total assets 68,794 48,085 44,850 40,846 41,725 Total debt (1) 12,577 7,487 9,227 11,286 13,518 Total liabilities 23,497 18,214 16,632 20,563 21,094 Total shareholders' equity 45,297 29,872 28,218 20,283 20,631
(1) Includes current portion of long-term debt and notes payable. 30 34 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS This Item 7 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 and estimate of future net cash flows attributable to 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" beginning on page 21. CAPITAL RESOURCES AND LIQUIDITY Operating Cash Flows At December 31, 1996, the Company's cash and cash equivalents were $16,934,000 an increase of $12,218,000 from the Company's cash and equivalents at year end 1995. Cash and cash equivalents in 1995 increased by $2,188,000 from 1994 year end levels. The Company's uranium operations generated positive cash flow of $9,294,000 for the year ended December 31, 1996, in comparison to positive cash flow from operations in 1995 and 1994 of $5,301,000 and $5,080,000, respectively. The Company's net working capital at December 31, 1996, was $15,269,000 compared to $4,710,000 at December 31, 1995. During January 1995, when companies controlled by Oren L. Benton (the "Benton Companies") held effective control of the common stock of the Company, the Company transferred $1 million to the Benton Companies in connection with a planned joint venture to process uranium at a Benton Companies' mill. Shortly thereafter, an additional $1,080,000 was transferred to or for the benefit of Mr. Benton or certain Benton Companies without the authorization of the Company's Board of Directors. In February 1995, Mr. Benton and certain of the Benton Companies filed for bankruptcy. In June 1995 the Company received $300,000 related to the unauthorized transfer; however, the remaining $1.78 million has not been recovered and there can be no assurance that the Company's efforts to pursue remedies will be successful. A loss for these transactions was recorded in 1995 which resulted in a reduction of $1.78 million in the Company's shareholders equity. Investing Cash Flows The Company resumed development activities at its Rosita site during the second quarter of 1995 and uranium production began in June 1995. During 1996, $2,002,000 in capital expenditures were incurred at Rosita. Capital expenditures to be incurred for 1997 at Rosita, primarily for additional wellfield development, are expected to be approximately $2,100,000. Significant development activities at the Company's Kingsville Dome facility began in December 1995 and resulted in commencement of production at this site in March 1996. Capital expenditures at Kingsville Dome during 1996 totaled $6,695,000 and are expected to be $10,100,000 in 1997. The Company expects to fund its 1997 operations and capital expenditures at its Kingsville Dome and Rosita projects from cash on hand, sales proceeds under 1996 uranium deliveries and through existing financing arrangements. In June 1996, the Company acquired the rights to a significant uranium deposit in South Texas known as the Alta Mesa project. The Company spent $4,000,000 to acquire the uranium rights to the property which is estimated to contain approximately 6.2 million pounds of in-place proven and probable reserves. Capital expenditures related primarily to permitting and licensing activities have totaled approximately 31 35 $400,000 since the acquisition date. Extensive drilling and environmental work has been undertaken on this property by previous leaseholders which will be useful to the Company for licensing and pre-production evaluation of the project. The Company is targeting the production capacity for this site at 1.0 million pounds per year. The projected recovery factors on the Alta Mesa property are estimated at 65% to 75% of their in-place reserves and initial estimated production costs, including acquisition costs, plant and wellfield capital costs, operating costs and projected reclamation costs are projected to be in the $10-$11 per pound range. The initial capital costs to acquire the rights to the Alta Mesa property were obtained through a one-year note from the Lindner Dividend Fund. This $4.0 million note was repaid in January 1997 from the proceeds from the Company's equity placement completed in December 1996. Capital expenditures at the Company's Churchrock, Crownpoint and Vasquez projects for permitting and land holding costs totaled approximately $1,300,000 in 1996. Capital requirements for 1997 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. Cash used for other investing activities for 1996 comprised primarily of increases of $2,070,000 related to the purchase of certificates of deposit to fund certain bonding requirements at the Company's producing and development properties. These certificates of deposit are pledged under these bonding requirements and therefore are not readily available to the Company. See Note 1 - - "Restricted Cash" of the Notes to Consolidated Financial Statements. Financing Cash Flows During May 1996, the Company entered into a $3.0 million revolving credit facility. This facility is secured by the Company's 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%. Principal advances, net of repayments, under this facility amounted to $1,440,000 in 1996. In June 1996, the Company received $4.0 million in proceeds from the one-year note entered into with the Lindner Dividend Fund, noted previously. 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 principal and accrued interest on this note was paid in January 1997. In December 1996, the Company completed an equity placement in which 2,000,000 shares of the Company's common stock were sold in a public offering. Net proceeds to the Company totaled over $14,000,000 with $4,900,000 of the proceeds used in January 1997 to repay the $4.0 million note from the Lindner Dividend Fund and to pay certain other long-term obligations. The balance of the proceeds will be used for working capital purposes and to fund development activities at the Company's projects. In 1996, the Company also generated approximately $630,000 from the issuance of approximately 167,000 shares of common stock upon the exercise of certain stock options and stock warrants. Net cash generated from the Company's financing activities in 1995 totaled approximately $720,000. The Company received $2,000,000 in December 1995 from the exercise of 500,000 of the warrants issued in connection with the Lindner Notes and also received $460,000 during the year from the issuance of approximately 156,000 shares of common stock associated with the exercise of certain employee and directors stock options. The Company received $6,000,000 under the convertible loan made in May 1995 by Lindner Investments and Lindner Dividend Fund and had debt payments during the year under a note to a bank totaling $7,740,000. ENVIRONMENTAL ASPECTS The Company utilizes ISL solution mining technology as its only mining method. Unlike conventional uranium mining companies, the Company's mining technology does not create "tailings". Nevertheless, the Company is highly regulated. Its primary environmental costs to date have been related 32 36 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. 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. Years Ended December 31, 1996, 1995 and 1994 The following is a summary of the key operational and financial statistics related to the Results of Operations:
1996 1995 1994 -------- -------- -------- (In thousands, except per pound data) Uranium sales revenue(1) $ 24,264 $ 21,829 $ 17,334 Total pounds delivered 1,656 1,633 1,081 Average sales price/pound(2) $ 16.35 $ 15.64 $ 16.03 Pounds produced 1,360 612 0 Pounds purchased 488 660 1,329 Average production cost of produced pounds $ 12.12 $ 10.09 N/A Average cost of purchased pounds $ 10.21 $ 9.52 $ 10.07 Average cost of produced pounds sold $ 11.34 $ 10.28 $ 13.60 Average cost of purchased pounds sold $ 10.21 $ 9.41 $ 10.68
(1) 1996 and 1995 uranium sales revenues include approximately $4.5 million and $3.5 million, respectively, from the sale of Russian uranium which is sold under the matched sales Amendment. (2) Average sales price does not include the sales of Russian material sold as a "pass through" sale under the matched sales Amendment. Revenue from uranium sales in 1996 increased by $2,435,000 from 1995 amounts. This increase resulted primarily from higher average per pound sales prices achieved this year compared to 1995. The average sales price for total uranium deliveries (including Russian origin uranium) in 1996 and 1995 was $14.65 per pound and $13.37 per pound, respectively. Total deliveries in 1996 (1,656,000 pounds) increased slightly from the amounts delivered in 1995 (1,633,000 pounds) but were not a significant factor in the change in uranium revenues year over year. The deliveries in 1996 included both spot sales (350,000 pounds) and long-term contract sales (1,306,000 pounds). All of the spot sales made in 1996 33 37 were deliveries of produced pounds made pursuant to matched sales agreements. The average sales price for these deliveries was $17.86 per pound. Revenue from uranium sales in 1995 increased by $4,495,000 from 1994 levels. Total uranium deliveries in 1995 increased by 552,000 pounds from those made in 1994. This increase was primarily a result of sales made in 1995 under the Amendment to the Russian Suspension Agreement (the "Amendment") which totaled 780,000 pounds during the year. The 780,000 pounds delivered in 1995 included 320,000 of URI produced uranium and 460,000 pounds of Russian purchased uranium. Sales under the Company's long-term contracts not subject to the Amendment totaled 715,000 pounds in 1995 compared to deliveries in 1994 of 779,000 pounds. The average sales price per pound for these 1995 deliveries under URI's long-term contracts was $17.50 and the average sales price for the 1994 long-term contract deliveries was $18.13 per pound. The deliveries in 1995 also included 137,000 pounds sold in the spot market whereas, 1994 included approximately 302,000 pounds of spot market sales at an average price of $10.64. Details of the cost of uranium sales were as follows:
1996 1995 1994 ------- ------- ------- (In thousands) Cost of purchased uranium $ 4,979 $10,315 $10,861 Royalties 1,198 432 37 Operating expenses 4,866 2,738 1,743 Provision for restoration and reclamation costs 1,480 597 274 Depreciation and depletion of uranium properties 7,599 3,154 551 Writedown of uranium properties -- 163 -- ------- ------- ------- Total cost of uranium sales $20,122 $17,399 $13,466 ======= ======= =======
The Company produced 500,000 and 860,000 pounds from the Rosita and Kingsville Dome facilities respectively in 1996. Rosita was in production for all of 1996 whereas the Kingsville Dome production resumed in March 1996. The average per pound production cost for the year at Rosita and Kingsville Dome was $11.81 and $12.31, respectively. Production from Rosita in 1996 was below the one million pound annual rate the Company had projected previously. This decline in production resulted in an increase in average per pound production costs for this facility when compared to the 1995 production costs. The Company has continued production from Rosita and in January 1997 received the necessary regulatory permits to expand its production into a new production area northwest of the current production fields. This new production area is expected to contain the majority of the remaining uranium reserves at this site with projected production from this area continuing through mid-1998 which coincides with the planned shut-down of this production facility. The Company expects that as production options in new wellfields become limited, that the latter stages of production from Rosita may result in production costs that are higher than previously experienced. New operating techniques to increase productivity from these wellfields will be reviewed and may be implemented to determine how various recovery options may impact future projects. There can be no assurance that such methods will enhance production or improve cost efficiencies. Kingsville Dome production for 1996 of 860,000 pounds exceeded its original planned output for the year while maintaining the average production operating costs at $12.31 per pound. The Company 34 38 continues to develop and produce from this facility and expects to achieve higher production levels in 1997 at costs comparable to those achieved in 1996. Operating expenses attributable directly to the sale of the Company's produced pounds totaled $4,574,000 in 1996 compared to $1,975,000 for produced pounds that were sold in 1995. Total operating expenses and depreciation and depletion include standby costs for the Kingsville Dome and Rosita facilities. These costs have been recorded as direct charges to operations. Standby costs for 1996, 1995 and 1994 were $313,000, $875,000 and $1,458,000, respectively. The provision for restoration and reclamation in 1996 consists of $1,100,000 ($0.94 per pound) for production sold during 1996 and $380,000 for costs associated with reclamation activities related to the Benavides project (a previous mining location). The provision for restoration and reclamation in 1995 consists of $499,000 ($0.93 per pound) for Rosita production sold during 1995 and additional increases to the Benavides and Bruni reserves (previous mining locations) of $97,000. The 1994 provision for restoration and reclamation consists of $48,000 ($0.75 per pound) for Rosita production sold during 1994 and increases to the Benavides and Bruni reserves of $226,000. The depreciation and depletion provision in 1996 consisted of $7,578,000 (an average rate of $6.49 per pound) for Rosita and Kingsville Dome production sold and Kingsville Dome depreciation while on standby of $21,000. The depreciation and depletion provision in 1995 consisted of $3,042,000 (an average rate of $5.67 per pound) for Rosita production sold and Rosita and Kingsville Dome depreciation while on standby of $112,000. The 1994 provision for depreciation and depletion is comprised of a $5.16 rate per pound for Rosita production sold of $332,000 and Rosita and Kingsville Dome depreciation while on standby of $219,000. Royalties in 1996 totaled $1,198,000 compared to $432,000 in 1995 and $37,000 in 1994. The increase in 1996 is directly attributable to the combined increase in production at Rosita and Kingsville Dome and the corresponding increase in sales of produced uranium compared to 1995. Similarly, the increase in 1995 over 1994 amounts resulted from the startup of Rosita production in 1995 and the increased sales of produced uranium compared to 1994 deliveries. The average cost of uranium purchases made in 1996 was $10.21 per pound compared to $9.52 in 1995. Total deliveries in 1996 consisted of 487,500 purchased pounds, at an average cost per pound of $10.21, and 1,168,000 produced pounds at $11.34 per pound. During 1995, the Company delivered 1,096,000 purchased pounds at an average cost per pound of $9.41 and 537,000 pounds of produced uranium which carried an average cost of $10.28 per pound. Corporate expenses consisting of general and administrative ("G&A") expenses decreased to $3,055,000 in 1996 from $3,496,000 in 1995. This decrease resulted primarily from legal and accounting fees and other expenses relating to the Benton Companies transactions and the Lindner financing charges in 1995 that were not incurred in 1996. In 1996, G&A included costs associated with the opening of a corporate headquarters in Albuquerque, New Mexico for a subsidiary of the Company (Hydro Resources, Inc.), costs associated with the unsuccessful acquisition bid for a significant uranium production company and continuing legal costs associated with the unauthorized transfer of funds in 1995 to or for the benefit of certain Benton Companies. Corporate expenses increased to $3,496,000 in 1995 from $2,177,000 in 1994. This increase resulted from $1,020,000 of costs related to the Benton Companies transactions and the issuance of the Lindner Notes. Other expense for 1996 was significantly lower than in 1995. This change was primarily attributable to the losses from the termination of a joint venture ($1,001,000) and a loss on unauthorized transfers ($780,000) made in 1995 which were previously classified in the December 31, 1995 financial statements in earnings from operations that were not repeated in 1996. These same transactions in 1995 were the primary reason for the significant increase in other expense in 1995 compared to 1994. The 1994 35 39 other expense category included $349,000 from the loss on the acceleration of a uranium sales contract which did not occur in 1995. Total interest costs for 1996, net of capitalized amounts increased from 1995. This increase resulted from the additional $4.0 million borrowed in June 1996 to finance the purchase of the Alta Mesa property and advances received under the Company's credit facility with NationsBank which was entered into in May 1996. Total interest costs in 1995 including capitalized amounts decreased by $355,000 compared to 1994. This decrease to $536,000 from $891,000 in 1994 resulted from lower average outstanding debt balances related primarily to the complete payoff of the bank debt with Union Bank of Switzerland by October 1995. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information called for by Item 8 appears on pages F-1 through F-23 of this Annual Report on Form 10-K. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 36 40 PART III ITEMS 10, 11, 12 AND 13. In accordance with General Instruction G(3), Items 10, 11, 12, and 13 are hereby incorporated by reference from sections of the Company's definitive proxy statement entitled "Election of Directors", "Executive Compensation", "Security Ownership of Principal Stockholders and Management", and "Certain Transactions with Related Parties". Such definitive proxy statement will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 1996. 37 41 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) (1) Financial Statements. See the Index to Consolidated Financial Statements on page F-1 for a listing of those financial statements filed as part of this Annual Report. (a) (2) Financial Statement Schedules. See the Index to Consolidated Financial Statements on page F-1 for a listing of those financial statements filed as part of this Annual Report. (a) (3) Exhibits. See the Index to Exhibits on page E-1 for a listing of the exhibits that are filed as part of this Annual Report. (b) Reports on Form 8-K A report on Form 8-K was filed by the Company on December 13, 1996 which included a description of the Uranium Industry and Business of the Company. Such description included a discussion of the Company's proven and probable uranium reserves and such reserves were the subject of a report of Douglas International, Inc. who are experts in uranium mining, geology and ore reserve determination. 38 42 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Date: March 27, 1997 URANIUM RESOURCES, INC. By: /s/ Paul K. Willmott ----------------------------------- Paul K. Willmott, President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Date - --------- ---- /s/ Paul K. Willmott March 27, 1997 - ----------------------------------------------------- Paul K. Willmott, Director, President and Chief Executive Officer /s/ Thomas H. Ehrlich March 27, 1997 - ----------------------------------------------------- Thomas H. Ehrlich, Vice President - Finance and Chief Financial Officer (Principal Financial and Accounting Officer) /s/ Leland O. Erdahl March 27, 1997 - ----------------------------------------------------- Leland O. Erdahl, Director /s/ George R. Ireland March 27, 1997 - ----------------------------------------------------- George R. Ireland, Director /s/ James B. Tompkins March 27, 1997 - ----------------------------------------------------- James B. Tompkins, Director 39 43 URANIUM RESOURCES, INC. AND CONSOLIDATED SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Public Accountants . . . . . . . . . F-2 Consolidated Balance Sheets . . . . . . . . . . . . . . . . F-3 Consolidated Statements of Operations . . . . . . . . . . . F-5 Consolidated Statements of Common Shareholder's Equity. . . F-6 Consolidated Statements of Cash Flows . . . . . . . . . . . F-7 Notes to Consolidated Financial Statements . . . . . . . . F-8
The additional financial data referred to below should be read in conjunction with these financial statements. Schedules not included with this additional financial data have been omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto. The individual financial statements of the subsidiaries of the Company have been omitted because all such subsidiaries are included in the consolidated financial statements being filed. ADDITIONAL FINANCIAL DATA Financial statement schedules for the years ended December 31, 1996, 1995 and 1994 II - Valuation and qualifying accounts and reserves. . . . . . .F-23 The accounts of the Company are maintained in United States dollars. All dollar amounts in the financial statements are stated in United States dollars except where indicated. F-1 44 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholders and Board of Directors of Uranium Resources, Inc.: We have audited the accompanying consolidated balance sheets of Uranium Resources, Inc. (a Delaware Corporation) and subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. These consolidated financial statements and the schedule referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Uranium Resources, Inc. and subsidiaries as of December 31, 1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in the index of financial statements is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. The schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, fairly state in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. /s/ Arthur Andersen LLP ARTHUR ANDERSEN LLP Dallas, Texas February 14, 1997 (except with respect to the matter discussed in Note 13, as to which the date is March 27, 1997) F-2 45 URANIUM RESOURCES, INC. CONSOLIDATED BALANCE SHEETS ASSETS
December 31, ---------------------------- 1996 1995 ------------ ------------ Current assets: Cash and cash equivalents $ 16,934,276 $ 4,715,942 Short-term investment: Certificate of deposit, restricted 2,779,840 712,094 Receivables, net 1,829,539 4,005,191 Uranium inventory 3,575,285 663,487 Materials and supplies inventory 88,483 126,180 Prepaid and other current assets 239,435 127,519 ------------ ------------ Total current assets 25,446,858 10,350,413 ------------ ------------ Property, plant and equipment, at cost: Uranium properties 71,364,561 56,735,549 Other property, plant and equipment 546,985 493,879 Less-accumulated depreciation and depletion (29,335,818) (19,929,621) ------------ ------------ Net property, plant and equipment 42,575,728 37,299,807 Other assets 771,084 434,897 ------------ ------------ $ 68,793,670 $ 48,085,117 ============ ============
The accompanying notes to financial statements are an integral part of these consolidated balance sheets. F-3 46 URANIUM RESOURCES, INC. CONSOLIDATED BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, ---------------------------- 1996 1995 ------------ ------------ Current liabilities: Accounts payable $ 2,201,145 $ 2,464,512 Notes payable 5,440,000 -- Accrued interest payable 185,186 39,843 Current portion of long-term debt 730,074 350,000 Royalties payable 746,113 811,686 Unearned revenue -- 528,970 Current portion of restoration reserve 368,000 544,000 Other accrued liabilities 507,117 901,707 ------------ ------------ Total current liabilities 10,177,635 5,640,718 ------------ ------------ Other long-term liabilities and deferred credits 4,279,289 2,777,351 Long-term debt, less current portion 6,407,054 7,137,507 Deferred federal income taxes 2,633,000 2,658,000 Shareholders' equity: Common stock, $.001 par value, shares authorized: 1996 - 25,000,000; 1995 - 12,500,000; shares issued and outstanding (net of treasury shares): 1996 - 10,813,027; 1995 - 8,645,698 10,966 8,798 Paid-in capital 32,290,630 17,626,510 Retained earnings 13,004,514 12,245,651 Less: Treasury stock (152,500 shares), at cost (9,418) (9,418) ------------ ------------ Total shareholders' equity 45,296,692 29,871,541 ------------ ------------ $ 68,793,670 $ 48,085,117 ============ ============
The accompanying notes to financial statements are an integral part of these consolidated balance sheets. F-4 47 URANIUM RESOURCES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, -------------------------------------------- 1996 1995 1994 ------------ ------------ ------------ Revenues: Uranium sales - Produced uranium $ 17,827,204 $ 7,194,655 $ 958,569 Purchased uranium 6,437,105 14,634,591 16,375,328 ------------ ------------ ------------ Uranium sales 24,264,309 21,829,246 17,333,897 Costs and expenses: Cost of uranium sales - Direct cost of purchased uranium 4,979,407 10,314,611 10,860,546 Royalties 1,197,890 432,050 37,254 Operating expenses 4,866,436 2,738,420 1,742,669 Provision for restoration and reclamation costs 1,479,939 596,482 274,465 Depreciation and depletion 7,599,047 3,153,793 550,802 Writedown of uranium properties and other uranium assets -- 163,145 -- ------------ ------------ ------------ Total cost of uranium sales 20,122,719 17,398,501 13,465,736 ------------ ------------ ------------ Earnings from operations before corporate expenses 4,141,590 4,430,745 3,868,161 Corporate expenses - General and administrative 3,033,819 3,467,639 2,146,323 Depreciation 20,875 28,235 30,588 ------------ ------------ ------------ Total corporate expenses 3,054,694 3,495,874 2,176,911 ------------ ------------ ------------ Earnings from operations 1,086,896 934,871 1,691,250 Other income (expense): Interest expense, net of capitalized interest (610,403) (525,369) (41,564) Interest and other income, net 282,370 201,263 204,803 Loss on acceleration of uranium contract -- -- (349,265) Loss on termination of joint venture -- (1,000,953) -- Loss on transfer to stockholder -- (780,000) -- ------------ ------------ ------------ Earnings (loss) before federal income taxes 758,863 (1,170,188) 1,505,224 Federal income tax provision (benefit): Current 25,000 18,000 (72) Deferred (25,000) (252,000) 300,000 ------------ ------------ ------------ Net earnings (loss) $ 758,863 $ (936,188) $ 1,205,296 ============ ============ ============ Net earnings (loss) per common share: Primary $ 0.08 $ (0.12) $ 0.17 ============ ============ ============ Fully diluted $ 0.08 $ (0.12) $ 0.17 ============ ============ ============
The accompanying notes to finanacial statements are an integral part of these consolidated statements. F-5 48 URANIUM RESOURCES, INC. CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
Common Common Stock Stock ---------------------- Purchase Paid-In Retained Treasury Shares Amount Warrants Capital Earnings Stock ------------ ------- ------------ ------------ ------------ ---------- Balances, December 31, 1993 6,640,020 $ 6,828 $ 349,704 $ 7,961,217 $ 11,976,543 $ (11,580) Net income -- -- -- -- 1,205,296 -- Common stock issuance for employee stock option plans 81,781 81 -- 240,475 -- -- Conversion of long-term debt 496,040 496 -- 2,355,693 -- -- Conversion of uranium sales contract 736,842 737 -- 3,584,756 -- -- Expiration of common stock purchase warrants -- -- (349,704) 349,704 -- -- Waiver of loan fees from affiliate -- -- -- 548,219 -- -- ------------ ------- ------------ ------------ ------------ ---------- Balances, December 31, 1994 7,954,683 8,142 0 15,040,064 13,181,839 (11,580) Net loss -- -- -- -- (936,188) -- Common stock issuance for employee/director stock option plans 156,015 156 -- 458,908 -- -- Common stock issuance for stock warrants 500,000 500 -- 1,999,500 -- -- Treasury shares issued 35,000 -- -- 128,038 -- 2,162 ------------ ------- ------------ ------------ ------------ ---------- Balances, December 31, 1995 8,645,698 8,798 0 17,626,510 12,245,651 (9,418) Net income -- -- -- -- 758,863 -- Common stock issuance 2,000,000 2,000 -- 14,030,949 -- -- Common stock issuance for employee stock option plans 119,329 120 -- 441,219 -- -- Common stock issuance for stock warrants 48,000 48 -- 191,952 -- -- ------------ ------- ------------ ------------ ------------ ---------- Balances, December 31, 1996 10,813,027 $10,966 $ 0 $ 32,290,630 $ 13,004,514 $ (9,418) ============ ======= ============ ============ ============ ==========
The accompanying notes to financial statements are an integral part of these consolidated statements. F-6 49 URANIUM RESOURCES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, -------------------------------------------- 1996 1995 1994 ------------ ------------ ------------ Cash flows from operations: Net earnings (loss) $ 758,863 $ (936,188) $ 1,205,296 Reconciliation of net income to cash provided by operations- Provision for restoration and reclamation costs 1,479,939 596,482 274,465 Depreciation and depletion 7,619,922 3,182,028 581,390 Loss on acceleration of uranium contract -- -- 349,265 Writedown of uranium properties and other assets -- 163,145 -- Amortization of other assets -- -- 119,307 Provision (credit) for deferred income taxes (25,000) (252,000) 300,000 Decrease in restoration and reclamation accrual (513,975) (104,108) (157,374) Other non-cash items, net 274,243 401,711 426,950 ------------ ------------ ------------ Cash flow provided by operations, before changes in operating working capital items 9,593,992 3,051,070 3,099,299 Effect of changes in operating working capital items- (Increase) decrease in receivables 2,175,652 (3,952,451) (313,197) (Increase) decrease in inventories (1,000,793) 3,761,066 3,957,339 Increase in prepaid and other current assets (367,894) (238,201) (188,749) Increase (decrease) in payables and accrued liabilities (1,107,157) 2,679,313 (1,474,311) ------------ ------------ ------------ Net cash provided by operations 9,293,800 5,300,797 5,080,381 Investing activities: Increase in investments (2,067,746) (149,883) (522,843) Additions to property, plant and equipment - Kingsville Dome (6,695,472) (560,772) (125,219) Rosita (2,001,722) (2,108,508) (1,404,922) Alta Mesa (4,403,070) -- -- Churchrock (596,725) (477,686) (883,678) Crownpoint (709,590) (291,394) (682,785) Other property (200,457) (144,833) (86,098) Increase in other assets (156,593) (99,218) (1,221) ------------ ------------ ------------ Net cash used in investing activities (16,831,375) (3,832,294) (3,706,766) Financing activities: Proceeds from borrowings 10,869,000 6,135,000 2,250,000 Payments and refinancings of principal (5,779,379) (7,874,225) (8,017,047) Proceeds from sale of uranium sales contract -- -- 4,150,735 Issuance of common stock and warrants, net 14,666,288 2,459,064 240,556 ------------ ------------ ------------ Net cash provided by (used in) financing activities 19,755,909 719,839 (1,375,756) ------------ ------------ ------------ Net increase (decrease) in cash and cash equivalents 12,218,334 2,188,342 (2,141) Cash and cash equivalents, beginning of period 4,715,942 2,527,600 2,529,741 ------------ ------------ ------------ Cash and cash equivalents, end of period $ 16,934,276 $ 4,715,942 $ 2,527,600 ============ ============ ============
The accompanying notes to financial statements are an integral part of these consolidated statements. F-7 50 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION AND DESCRIPTION OF COMPANY The consolidated financial statements have been prepared in accordance with generally accepted accounting principles and include the accounts of Uranium Resources, Inc. ("URI") and its wholly owned subsidiaries (collectively "the Company"). All significant intercompany transactions have been eliminated in consolidation. URI was formed in 1977 and incorporated in Delaware in 1987. The Company is primarily engaged in the business of acquiring, exploring, developing and mining uranium properties, using the in situ leach ("ISL") or solution mining process. The primary customers of the Company are major utilities who utilize nuclear power to generate electricity. The Company continuously evaluates the creditworthiness of its customers. The Company has been, in the past, involved in a number of significant ISL uranium mining joint venture arrangements and has also provided consulting, plant design and construction expertise to other companies. At present the Company owns both producing and development properties in South Texas and development properties in New Mexico. The Company's Rosita and Kingsville Dome uranium production facilities in South Texas resumed operations in June 1995 and March 1996, respectively, and were both in operation at December 31, 1996. INVENTORIES Uranium inventory consists of uranium concentrates (U(3)O(8)) located at the Company's Rosita and Kingsville Dome sites and also at converters awaiting delivery to customers. All uranium inventories are valued at the lower of cost (first-in, first-out) or market. The cost of produced uranium includes all operating production costs, and provisions for depreciation, depletion and future restoration obligations. Materials and supplies inventory is valued at the lower of average cost or market. BORROWED URANIUM Uranium is occasionally borrowed from other parties to facilitate deliveries under sales contracts. Repayment of the loan is normally made from production or from purchased uranium. The liability for borrowed uranium is recorded at the latest spot market price (estimated replacement cost) and the cost is adjusted to the actual amount when the borrowed material is repaid. PROPERTY, PLANT AND EQUIPMENT Uranium Properties Capitalization of Development Costs - All acquisition, exploration and development costs (including financing, salary and related overhead costs) incurred in connection with the various uranium properties are capitalized. Gains or losses are recognized upon the sale of individual property interests. All costs incurred in connection with unsuccessful acquisition and exploration efforts and abandoned properties are charged to expense when known. All properties with significant acquisition or incurred costs are evaluated for their realizability on a property-by-property basis. Any impairment of such costs is recognized by providing a valuation allowance (see Note 2 - "Uranium Properties - Writedown of Abandoned Property"). Total exploration and evaluation costs capitalized in 1996, 1995 and 1994 were $116,000, $4,000 and $75,000, respectively. F-8 51 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 Depreciation and Depletion - In general, depletion of uranium mineral interests and related development costs is computed on a property-by-property basis using the units-of-production method based on the proved and probable recoverable uranium reserves as estimated periodically by the Company's geologists and engineers. Depreciation and depletion is provided on the investment costs, net of salvage value, of the various uranium properties' production plants and related equipment using the estimated production life of the uranium reserves. Other ancillary plant equipment and vehicles are depreciated using a straight line method based upon the estimated useful lives of the assets. Other Property Other property consists of corporate office equipment, furniture and fixtures and transportation equipment. Depreciation on other property is computed based upon the estimated useful lives of the assets. Repairs and maintenance costs are expensed as incurred. Gain or loss on disposal of such assets is recorded as other income or expense as such assets are disposed. Capitalization of Interest The Company capitalizes interest cost with respect to properties undergoing exploration or development activities that are not subject to depreciation or depletion. The average interest rate on outstanding borrowings during the period is used in calculating the amount of interest to be capitalized. Interest capitalized in the twelve months ended December 31, 1996, 1995 and 1994 amounted to $11,000, $11,000 and $850,000, respectively. Total interest costs in these periods were $621,000, $536,000 and $891,000, respectively. RESTORATION AND RECLAMATION COSTS Various federal and state mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality to the pre-existing mine area average quality. Accruals for the estimated future cost of restoration and reclamation are made on a per-pound basis as part of production costs, or when it is determined by an engineering study that an adjustment to the accrual is required. REVENUE RECOGNITION FOR CERTAIN URANIUM SALES The Company recognizes revenue from the sale of uranium under which substantially all of its obligations related to the delivery have been completed. Under certain uranium sales contracts which contain origin-specific delivery requirements, the revenue from the portion of a sale which requires the satisfaction of future obligations is recorded as unearned revenue until these commitments are satisfied. Commitments that are expected to be completed within one year are classified as current; all others are recorded as long-term deferred credits. EARNINGS PER SHARE Earnings per share are based on the weighted average number of common shares and dilutive common stock equivalents outstanding during the period. The weighted average number of shares used in the earnings per share calculations were 10,031,000, 8,098,000 and 7,073,000 in 1996, 1995, and 1994, respectively. F-9 52 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 UNAMORTIZED DEBT ISSUANCE COSTS Debt discount and related expenses arising from the issuance of debt securities are amortized by the effective interest method. CONSOLIDATED STATEMENTS OF CASH FLOWS The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Additional disclosures of cash flow information follow:
Twelve Months Ended December 31, 1996 1995 1994 -------- -------- --------- Cash paid during the period for: Interest $501,000 $524,000 $756,000
The change in inventories in the Consolidated Statements of Cash Flows during 1996, 1995 and 1994 excludes the changes in uranium inventories for non-cash capitalized restoration and depreciation and depletion provisions. Such increases (decreases) totaled $1,923,000, $391,000 and ($389,000), respectively. Certain additional non-cash transactions occurred in 1995 and 1994, and such major transactions are summarized as follows: In May 1995, 35,000 treasury shares were issued to financial advisors in connection with the Lindner Note (Note 5). $130,200 In November 1994, the Company acquired from Energy Fuels the Scottish Nuclear Contract in exchange for 736,842 shares of common stock and the remaining 1994 balance owed to the Company from Energy Fuels for uranium purchased (Note 3). $4,500,000 In August 1994, the long-term debt and related interest expense owed to Mr. Oren L. Benton was converted into 496,040 shares of common stock (Note 5). $2,356,189 In August 1994, Nuexco Exchange, A.G. acquired the Company's Note due Citibank, N.A. (Note 5). $6,500,000 In August 1994, the accrued fee obligations and related unamortized debt discount remaining on the Note with Citibank, N.A. were waived by Nuexco Exchange, A.G. and have been recorded as an increase to paid-in capital (Note 5). $548,219 In August 1994, Nuexco Exchange, A.G. made an additional loan to the Company to finance the purchase of uranium inventory (Note 5). $6,000,000
F-10 53 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 RESTRICTED CASH At December 31, 1996 and 1995, the Company had pledged a certificate of deposit of $2,779,840 and $712,840, respectively, in order to collateralize surety bonds required for future restoration and reclamation obligations related to the Company's South Texas production and development properties. These funds are not readily available to the Company and are not included in cash equivalents. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain estimates and assumptions. Such estimates and assumptions may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. URANIUM PROPERTIES KINGSVILLE DOME PROPERTY In 1981, the Company acquired an exploration property in South Texas, known as Kingsville Dome, from Exxon Corporation. After significant production in 1988-1990, the property was put on a standby basis because of low uranium spot prices and production ceased in September 1990. Wellfield development activities began in December 1995 at Kingsville Dome which lead to the resumption of production at the property in March 1996. Total uranium production for the period March 1996 through December 31, 1996 was approximately 860,000 pounds at a cost of approximately $12.31 per pound. Cost of uranium sales in 1996, 1995 and 1994 in the Consolidated Statements of Operations includes $293,000, $512,000 and $700,000, respectively of costs incurred to maintain the facility while Kingsville Dome was on standby and not in production. At December 31, 1996 the property contained approximately 2,412,000 pounds of estimated recoverable proved and probable reserves and the net carrying value of the property was approximately $15,200,000. ROSITA PROPERTY In late 1985, the Company acquired several lease holdings in a uranium prospect ("Rosita") in South Texas. Construction and development activities began in the first quarter of 1990 and were completed in September 1990 with production commencing immediately thereafter. The property was originally put on a standby basis and production ceased in March 1992. Wellfield development activity began in early 1995 at Rosita which lead to the resumption of production at the property in June 1995. Total production for the year ended December 31, 1996 was approximately 500,000 pounds at a cost of approximately $11.80 per pound. Cost of uranium sales at December 31, 1995 and 1994 in the Consolidated Statements of Operations includes $246,000 and $759,000, respectively, of Rosita standby costs. At December 31, 1996, the property contained approximately 1,144,000 pounds of estimated recoverable proved and probable uranium reserves and the net carrying value of the property at December 31, 1996 was approximately $6,800,000. F-11 54 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 ALTA MESA PROPERTY In June 1996, the Company acquired the Alta Mesa property consisting of 4,575 acres of leases in South Texas for a cash payment of $4 million of which $1 million is recoverable against one-half of future royalties. The lease term ends in December 1999 unless production from the property commences by that date (subject to extension for permitting delays). As of December 31, 1996 the Alta Mesa property contained approximately 4,036,000 pounds of estimated recoverable proved and probable reserves. The Company filed license applications in the fourth quarter of 1996 and anticipates having the final permits in place in 1998. The net carrying value of this property at December 31, 1996 was approximately $4,403,000. CHURCHROCK PROPERTIES In December 1986, the Company acquired properties in the Churchrock region of New Mexico containing approximately 6,951,000 pounds of estimated recoverable proved and probable uranium reserves. In September 1991, an additional 200 acres of leases were obtained in exchange for a future production royalty payment which, based upon the expected selling price of the uranium production, may vary between 5% and 10%. Preliminary analysis of the drilling data of these 200 acres indicates approximately 5,488,000 pounds of estimated recoverable proved and probable reserves. Permitting activities are currently ongoing on both of these properties. The net carrying value of these properties at December 31, 1996 was approximately $6,920,000. CROWNPOINT PROPERTY In August 1988, the Company acquired the Crownpoint property, consisting of 163 acres of leases and related equipment and buildings for cash payments of $550,000, amounts payable in future years of $950,000 and a sliding scale overriding royalty on future production. The present value of the future payable amount, $407,054 at December 31, 1996, is recorded as a purchase money obligation. Additionally, also in 1988, the Company staked 321 acres of claims in the same area. In August 1993, the Company acquired approximately 959 acres of leases adjoining the Crownpoint properties. Initial interpretation of the drilling data for all the properties acquired in 1988 and 1993 indicate total estimated recoverable proved and probable uranium reserves of approximately 25,323,000 pounds. The net carrying value of these properties at December 31, 1996 was approximately $7,519,000. WRITEDOWN OF ABANDONED PROPERTY In the fourth quarter of 1995, the Company determined that certain evaluation projects in South Texas would not be pursued toward acquisition. The costs related to these projects were expensed in 1995 resulting in a pre-tax charge of approximately $163,000. 3. CONTRACT COMMITMENTS SALES CONTRACTS The Company has entered into several long-term contract commitments to sell uranium. Included in URI's long-term contracts are sales to be made under the Amendment to the Russian Suspension Agreements (the "Amendment"). Such sales involve the sale of Russian origin uranium providing it is F-12 55 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 matched with U.S. uranium mined after March 11, 1994. Under these arrangements, the Russian uranium is essentially sold at its approximate purchase price. As a result, these "pass-through" sales of specifically the Russian origin uranium is not expected to have a significant impact on the future profitability of the Company's operations. Total future sales of uranium concentrates (excluding the Russian component of sales made under the Amendment) of approximately 4,741,000 pounds represent future revenues of approximately $73,359,000 over the various contract periods from January 1, 1997 through 2002. The average current price of such future contracted deliveries, with escalation calculated through December 31, 1996, is $15.47. The Company has contracts which include various pricing provisions including contracts with market related prices and price ceilings and price floors which escalate for between 80%-100% of future inflation, contracts with fixed prices which escalate for between 80%-100% of future inflation and another contract whose pricing is based upon 99% of market prices without a price ceiling or floor. All revenues for the twelve months ended December 31, 1996 were from sales to nine customers, five of which represented more than 10% of total revenues. Sales to these five customers totaled $4,860,000, $3,861,000, $3,565,000, $2,790,000 and $2,663,000 during 1996. All revenues for the twelve months ended December 31, 1995 were from sales to ten customers, three of which represented more than 10% of total revenues. Sales to these three customers totaled $5,040,000, $3,011,000 and $2,600,000 during 1995. Revenues for the twelve months ended December 31, 1994 were from sales to six customers, five of which represented more than 10% of total revenues. Sales to these five customers totaled $3,847,000, $3,670,000, $3,286,000, $3,214,000 and $2,094,000 during 1994. PURCHASE CONTRACT COMMITMENTS In 1990, the Company entered into a long-term purchase contract to purchase 250,000 pounds per year from 1992 through 1995, at an original base price of $10.50 per pound as of January 1, 1990, escalated at the rate of 50% of the prime rate and 50% of inflation. In 1995, the Company took deliveries of 200,000 pounds under this contract. On November 29, 1995, the Company and the supplier both agreed to terminate the contract and forego the delivery of the remaining 50,000 pounds. In July 1992, the Company entered into a long-term purchase contract to purchase 200,000 pounds annually from 1993 through 1995. The contract contained spot market pricing considerations and carries a minimum price of $8.00 per pound escalated at a 6% rate and a maximum price of $8.00 per pound escalated at an 18% rate. Deliveries under this contract were completed in 1995. On August 28, 1995, the Company entered into two long-term Russian origin uranium purchase contracts to purchase between 40,000 and 60,000 pounds annually from 1995 through 1998 and to purchase a total of 480,000 pounds to be purchased from 1995 to 1998, respectively. The original base price of these two purchase commitments is significantly below current market prices for similar transactions. These contracts are subject to future price escalations based upon inflation indices. As of December 31, 1996, 270,000 pounds remain to be purchased with deliveries in 1997 and 1998. In addition, the Company entered into an agreement on August 19, 1994 with Energy Fuels Nuclear, Inc. ("EFN"), an affiliated company of Mr. Benton pursuant to which the Company assigned to EFN its rights under certain uranium purchase agreements (see Note 5). Through December 31, 1994, the Company purchased 150,000 pounds of uranium for $1,791,500 under the two agreements and resold the uranium to EFN for the same price. In a separate transaction, the Company purchased 100,000 pounds of uranium from a third-party supplier and resold the same to another company affiliated with Mr. Benton for $940,000. At December 31, 1994, it was determined that EFN was unable to fulfill its obligations for the remaining 450,000 pounds under the two agreements and the Company fulfilled these remaining obligations. F-13 56 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 On November 18, 1994, the Company was assigned a long-term sales contract ("the Scottish Nuclear Contract") from Energy Fuels, Ltd. ("EFL"), an affiliated company of Mr. Benton, in exchange for 736,842 shares of common stock and the remaining balance due to the Company in the amount of $881,500 plus accrued interest of $33,006 for 1994 purchases of uranium made by EFN and another company affiliated with Mr. Benton. The Scottish Nuclear Contract was valued by the Company and EFL at $4,500,000. The deliveries under the Scottish Nuclear Contract were accelerated to December 1994 with the Company realizing proceeds of $4,151,735 in order to fund the current cash requirements of the Company. The difference from the agreed-upon value of the Scottish Nuclear Contract and the proceeds received upon accelerating delivery was recorded as a loss of $349,265 in the December 31, 1994, Consolidated Statements of Operations. 4. SHORT-TERM DEBT NATIONSBANK CREDIT AGREEMENT In May 1996 the Company entered into a $3.0 million revolving-credit facility with NationsBank, N.A. ("Nations"). This facility is secured by the Company's receivables from its uranium sales contracts with interest on the loan accruing at the prime rate plus 1%. Principal and interest payments under the facility are due monthly. As of December 31, 1996, $1,440,000 was outstanding under this facility. LINDNER SHORT-TERM NOTE In June 1996 the Company entered into an agreement with Lindner Dividend Fund for a $4.0 million note to acquire the Alta Mesa property. The terms of the note provide for the payment of both the principal and accrued interest by June 1997. Interest on the note accrues at a rate of 6.5% per annum. The entire principal amount plus accrued interest was repaid in January 1997. 5. LONG-TERM DEBT CITIBANK CREDIT AGREEMENT On May 24, 1990, the Company entered into a Credit Agreement with Citibank, N.A. ("Citibank"). On August 19, 1994, the Citibank debt agreements were restructured as discussed below. The balance at the time of restructuring was $6,500,000. In connection with the restructuring the Company received a waiver of accrued fee obligations of $700,000, which was arranged by one of the Benton Companies. The waiver of these fees was recorded in 1994, net of the unamortized debt discount remaining on the Citibank debt (approximately $152,000) as an increase to paid-in capital. CITIBANK DEBT RESTRUCTURING AND EQUITY CONVERSION On August 19, 1994 Nuexco Exchange, A.G., ("NEAG"), a company then owned by Mr. Benton, acquired the note (the "Note") outstanding to Citibank under the Credit Agreement for $6,500,000. To fund this acquisition of the Note due Citibank and for the additional loan to the Company, NEAG borrowed $12,500,000 from Union Bank of Switzerland ("UBS") and made a new loan to the Company of $6,000,000. The $6,000,000 loaned to the Company was used to purchase 648,648 pounds of uranium at $9.25 per pound from EFN. The notes due NEAG ("NEAG Notes") were secured by 599,423 pounds of uranium purchased from EFN and by the contracts between the Company and certain utilities for delivery of uranium. NEAG assigned their notes due from the Company and the related security to UBS. NEAG and UBS released all other collateral that had secured the original Citibank Note. The balance of the notes was paid in full by October 1995. F-14 57 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 To enable the Company to meet its short-term liquidity requirements while negotiations with Citibank were in progress, Mr. Benton advanced $1,125,000 to the Company in January 1994 and $1,125,000 in April 1994. The advances made to the Company by Mr. Benton accrued interest at Citibank's prime rate plus 3%. Mr. Benton also guaranteed the Company's payment obligations through December 31, 1994 on the Citibank Note. On August 19, 1994 the $2,250,000 in advances together with accrued but unpaid interest of $106,189 were converted into equity by the Company's issuance to Mr. Benton of 496,040 shares of common stock at a valuation of $4.75 per share. In August 1994, the Company entered into an agreement with an affiliated company of Mr. Benton ("Benton affiliate") which gave the Company the right, prior to August 18, 1997 to require the Benton affiliate to purchase up to $6,996,750 of common stock at a per share price of $4.75 (1,473,000 shares). The Benton affiliate was granted demand and piggy-back registration rights for such shares. Mr. Benton guaranteed the Benton affiliate's performance of its obligations under this agreement. The issuance of the 736,842 shares to the Benton affiliate in connection with the assignment of the long-term sales contract from EFL (Note 3) was credited against this commitment. The Company does not intend nor does it anticipate that the balance of the shares will be put to the Benton Companies because of the Benton bankruptcy. LINDNER NOTE On May 25, 1995 the Company entered into an agreement with Lindner Investments and Lindner Dividend Fund, (the "Lender") two mutual funds managed by Ryback & Associates, for a $6 million secured convertible note with the Company (the "Lindner Note"). The Lindner Note is for a term of three years and bears interest at an annual rate of 6.5% and is convertible at any time during the three-year term into 1.5 million shares of the Company's common stock at an initial conversion price of $4.00 per share. The Lender also received a three-year warrant to purchase 1.5 million shares of the Company's common stock at an initial price of $4.00 per share. As of December 31, 1996, the Lender had exercised 500,000 shares of warrants under the agreement for an infusion of $2.0 million to the Company. Certain other financial advisors associated with the transaction were granted warrants and options to purchase up to 150,000 shares at an initial exercise price of $4.00 per share. The loan is secured by a mortgage on the Company's Rosita and Kingsville Dome uranium properties in Texas. Part of the proceeds form the Lindner Note were used to pay down existing payables and provide funding to complete the production start-up of the Company's Rosita property. The balance of the proceeds were used to fund pre-production activities a the Company's Kingsville Dome facility to permit commencement of production in 1996. As of December 31, 1996, certain other financial advisors have exercised 48,000 shares of warrants under the agreement. PURCHASE MONEY OBLIGATION In 1987, the Company acquired certain long-term sales contract delivery rights in exchange for cash plus an assignment of a $3,000,000 future production payment, at $1.00 per pound of production sold from the Kingsville Dome and Rosita projects, starting in 1988. The production payment was recorded as a purchase money obligation at an original calculated present value of $2,379,839 and the remaining balance owed at December 31, 1996 is $730,074. The remaining balance under the production payment was repaid in January 1997. F-15 58 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 SUMMARY OF LONG-TERM DEBT
At December 31, ----------------------- 1996 1995 ---------- ---------- Long-term debt of the Company consists of: Lindner Note $6,000,000 $6,000,000 Purchase money obligation - Sales contract acquisitions 730,074 1,080,453 Crownpoint property (Note 2) 407,054 407,054 ---------- ---------- 7,137,128 7,487,507 Less - Current portion 730,074 350,000 ---------- ---------- Total long-term debt $6,407,054 $7,137,507 ========== ==========
Maturities of long-term debt are as follows:
For the Twelve Months Ended: For the Twelve Months Ended: - ---------------------------- ---------------------------- December 31, 1997 $ 730,074 December 31, 2000 -- December 31, 1998 6,000,000 December 31, 2001 and beyond $ 407,000 December 31, 1999 --
6. RELATED-PARTY TRANSACTIONS/LIQUIDITY ISSUES During 1994, the Company encountered liquidity problems that resulted in the Company entering into certain transactions with companies controlled by Oren L. Benton (the "Benton Companies") whereby the Benton Companies (a) assisted in the restructuring of the Citibank, N.A. debt (see Note 4), (b) arranged for an additional $6.0 million loan to the Company to purchase uranium inventory to secure the restructured debt, (c) advanced the Company $2,250,000 to make debt payments prior to the restructuring, which advances were subsequently converted to common stock and (d) committed to provide the Company with an additional $7.0 million of capital (see Note 4). As a consequence of the debt restructuring, the Company assigned most of the 1995 proceeds from its contracts with utilities for the delivery of uranium, to the lender. The debt payments were equal to the Company's expected revenue from these contracts which resulted in almost no proceeds being received by the Company until the fourth quarter of 1995, when the restructured debt was paid in full. Further, during January 1995, when the Benton Companies held effective control of the common stock of the Company, the Company transferred $1.0 million to the Benton Companies in connection with a planned joint venture to process uranium at a Benton Companies' mill. The specific Benton Companies which were to be part of the planned joint venture did not receive the transferred funds. Because of the Benton Bankruptcy, the realizability of the Company's $1.0 million investment is doubtful. Shortly thereafter, the then Chairman and CFO of the Company, who were also officers of the Benton Companies, transferred $1.08 million out of the Company without the authorization of the Company's Board of Directors. In February 1995, the Benton Companies filed for bankruptcy. The Company received $300,000 in June 1995 from the $1.08 million transfer, but $1.78 million of the initial $2.08 has not been recovered and there can be no assurance that the Company's efforts to pursue remedies will be successful. The Company recorded losses totaling $1.78 million for these transactions in 1995. F-16 59 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 In connection with the Benton Bankruptcy, the bankrupt estates have advised the Company that they are reviewing various transactions entered into by the Company with the Benton Companies. Such a review could potentially result in claims that could have a material adverse effect on the Company. The bankrupt estates have entered into a tolling agreement with respect to possible assertions of certain claims. The Company is unable to assess whether any such claim will be asserted, and if asserted, what adverse consequences, if any, might result from such assertion. No such claims have been asserted. The Company can also assert claims against Benton and the Benton Companies in such proceedings. The Company pursued various options to solve its liquidity problems and discussions regarding alternative financing arrangements. Such efforts resulted in the Company entering into a $6.0 million convertible debt agreement in May 1995 (see Note 5 - "Long-Term Debt - Lindner Note"). 7. SHAREHOLDERS' EQUITY COMMON STOCK Common Stock Issued in 1996 In December 1996, the Company completed a public sale of 2,000,000 shares of the Company's common stock at a price of $7.875 per share. The offering raised $15,750,000 before commissions and expenses of approximately $1,700,000. Issuance of Treasury Shares On May 25, 1995, the Company issued 35,000 shares of the Company's common stock which were held as treasury shares to financial advisors in connection with the Lindner Note as discussed in Note 5. Conversion of Notes to Oren L. Benton On August 19, 1994, the long-term debt of $2,250,000 and related interest owed to Oren L. Benton was converted into 496,040 shares of common stock at a price of $4.75 per share as discussed in Note 5. Conversion of Uranium Sales Contract On November 22, 1994, the Company acquired from EFL a long-term sales contract (Note 3) in exchange for an amount due from EFN and another company affiliated with Mr. Benton, and 736,842 shares of common stock. WARRANTS Lindner Warrants In connection with the May 1995 Lindner Note as discussed in Note 5, the Company issued a three-year warrant to purchase 1,500,000 shares of the Company's common stock at an initial conversion price of $4.00 per share. The warrants are convertible at any time through May 1998. As of December 31, 1996, 500,000 warrants have been exercised. In addition, the Lindner Note is convertible at any time during the three year term into 1,500,000 shares of the Company's common stock at an initial conversion price of $4.00 per share, none of which have been converted at December 31, 1996. F-17 60 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 Financial Advisors' Warrants/Options On May 25, 1995, the Company issued a three-year warrant to purchase 100,000 shares of the Company's common stock at an initial conversion price of $4.00 per share to certain financial advisors associated with the Lindner Note transaction. The warrants are convertible at any time through May 1998. In addition, the Company granted options to purchase 50,000 shares at an initial conversion price of $4.00 per share. The options are immediately exercisable and expire on March 6, 2000. As of December 31, 1996, 48,000 warrants have been exercised. Common Stock Purchase Warrants In conjunction with the March 1990 public offering, 301,875 common stock purchase warrants were issued. Each warrant was exercisable through February 26, 1994 to purchase one share of common stock at a price of $5.20 per share. A total of 82,500 common stock purchase warrants had been exercised as of December 31, 1993. The remaining warrants expired in accordance with their terms on February 26, 1994. Underwriter Warrants In connection with the March 1990 public offering, the Company issued to the underwriter, for an aggregate sum of $1,315, Underwriter's Common Stock Purchase Warrants ("Underwriter Warrants"). The Underwriter Warrants were exercisable through March 5, 1994 to purchase 32,886 shares of common stock at a price of $6.60 per share. None of the Underwriter Warrants had been exercised as of December 31, 1993 and they all expired in accordance with their terms on March 5, 1994. STOCK OPTIONS Directors Stock Options On May 25, 1995, the Company granted options to certain directors of URI, to purchase 200,000 shares of the Company's common stock at an exercise price of $4.50 per share. All such options are immediately exercisable and expire May 24, 1998, 30 days after the holder ceases to be a director of the Company or one year after such holder's death, whichever occurs first. None of these options have been exercised as of December 31, 1996. On August 16, 1995, the Company granted options to a director of URI, to purchase 100,000 shares of the Company's common stock at an exercise price of $8.38 per share which was the fair market value of a share of common stock on August 16, 1995. Such options are immediately exercisable and expire May 24, 1998, 30 days after the holder ceases to be a director of the Company or one year after his death, whichever occurs first. None of these options have been exercised as of December 31, 1996. Other Stock Options On July 31, 1995, the Company granted options to a former officer of the Company to purchase 50,000 shares of the Company's common stock at an exercise price of $4.75 per share which was the fair market value of a share of common stock on that date. Such options are immediately exercisable and expire May 31, 1998. All of these options have been exercised as of December 31, 1996. F-18 61 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 8. STOCK-BASED COMPENSATION PLANS The Company has three stock option plans, the Employees' Stock Option Plan, the Stock Incentive Plan and the Directors' Stock Option Plan. The Company accounts for these plans under APB Opinion No. 25, under which no compensation cost has been recognized. Had compensation cost for these plans been determined consistent with FASB Statement No. 123 ("FAS 123"), the Company's net earnings (loss) and earnings (loss) per share ("EPS") for the year ended December 31, 1996 and 1995 would have been reduced to the following pro forma amounts:
1996 1995 -------------- -------------- Net Earnings: As reported $ 758,863 $ (936,188) Pro forma $ (519,164) $ (1,414,842) Primary EPS: As reported $ 0.08 $ (0.12) Pro forma $ (0.06) $ (0.16) Fully diluted EPS: As reported $ 0.08 $ (0.12) Pro forma $ (0.06) $ (0.16)
The fair value of each option is estimated on the date of grant using the Black-Sholes option-pricing model with the following weighted average assumptions used for grants in 1996 and 1995, respectively: expected volatility of 65% and 71% and risk-free interest rates of 6.0% and 6.1%. An expected life of 4.6 and 5.0 years was used for options granted to the employees and directors, respectively. The FAS 123 method of accounting has not been applied to options granted prior to January 1, 1995, and accordingly the resulting pro forma compensation cost may not be representative of that to be expected in future years. The Directors' Stock Option Plan provides for the grant of 20,000 stock options to each of the non-employee directors along with additional annual grants of stock options upon re-election as directors at the Company's annual meeting. Currently there are 84,000 stock options outstanding under the Directors' Stock Option Plan. Also, on January 15, 1992, the Board of Directors approved the grant of 577,248 stock options under the Employees' Stock Option Plan. All of the previously outstanding options were canceled upon the effectiveness of the new options. On August 10, 1994, the Board of Directors increased the available options under the Employees' Stock Option Plan and the Directors' Stock Option Plan to 850,000 options and 150,000 options, respectively. On October 11, 1995, the Board of Directors elected to discontinue grants under the Employees' Stock Option Plan with the adoption of a stock incentive plan covering key employees. The Stock Incentive Plan provides for the grant of a maximum of 750,000 stock options. These options may be qualified or nonqualified. As of December 31, 1996, there are 338,810 options outstanding under the Stock Incentive Plan. Additional details about the options granted under the stock option plans are as follows:
--------------------------------------------------- At December 31, 1996 --------------------------------------------------- Options Exercise Options Available Options Options Options Date of Grant Price Granted for Exercise Exercised Canceled Outstanding - -------------------------------------------------------------------------------------------------------------------- January 15, 1992 $ 2.94 617,248 130,123 302,125 185,000 130,123 May 22, 1992 $ 3.00 2,000 -- 1,000 1,000 -- ==================================================================================================================== Balances at December 31, 1992 619,248 130,123 303,125 186,000 130,123 ==================================================================================================================== February 26, 1993 $ 2.50 10,000 -- 2,500 7,500 -- May 27, 1993 $ 3.50 2,000 -- 500 1,500 -- ==================================================================================================================== Balances at December 31, 1993 631,248 130,123 306,125 195,000 130,123 ====================================================================================================================
F-19 62 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 July 11, 1994 $ 4.38 20,000 10,000 -- -- 20,000 August 10, 1994 $ 4.25 140,000 9,000 1,000 120,000 19,000 December 15, 1994 $ 5.88 3,000 1,000 -- 1,000 2,000 ==================================================================================================================== Balances at December 31, 1994 794,248 150,123 307,125 316,000 171,123 ==================================================================================================================== February 24, 1995 $ 4.13 210,000 25,000 -- 110,000 100,000 April 12, 1995 $ 3.88 10,000 2,500 -- -- 10,000 May 26, 1995 $ 3.75 40,000 10,000 -- -- 40,000 August 16, 1995 $ 8.38 100,000 25,000 -- -- 100,000 August 31, 1995 $ 6.88 127,508 31,877 -- -- 127,508 October 11, 1995 $ 6.94 35,000 8,750 -- -- 35,000 December 19, 1995 $ 5.50 3,000 750 -- -- 3,000 ==================================================================================================================== Balances at December 31, 1995 1,319,756 254,000 307,125 426,000 586,631 ==================================================================================================================== February 22, 1996 $ 9.75 178,810 -- -- -- 178,810 May 29, 1996 $ 17.00 3,000 -- -- -- 3,000 May 30, 1996 $ 16.13 75,000 -- -- -- 75,000 July 22, 1996 $ 11.13 50,000 -- -- -- 50,000 ==================================================================================================================== Balances at December 31, 1996 1,626,566 254,000 307,125 426,000 893,441 ==================================================================================================================== ====================================================================================================================
The exercise price for the options granted under the stock option plans has been the approximate market price of the common stock on the date granted. The terms of the options provide that no options may be exercised for one year after grant, and then for ratable exercise over the subsequent four-year period, with a total exercisable period of ten years. The exercise price for the options granted under the Stock Incentive Plan has been the approximate market price of the common stock on the date granted. The terms of the options are determined by the Board of Directors upon grant; however, no options may be exercised after a period of ten years. 9. FEDERAL INCOME TAXES The deferred federal income tax liability consists of the following:
December 31, -------------------------- 1996 1995 ----------- ----------- Property development costs - net of amortization $ 6,745,000 $ 7,933,000 Accelerated depreciation 180,000 125,000 Restoration reserves (1,362,000) (1,034,000) Net operating loss and percentage depletion carryforwards (5,296,000) (5,971,000) Valuation allowance and other - net 2,366,000 1,605,000 =========== =========== Total deferred income tax liability $ 2,633,000 $ 2,658,000 =========== ===========
Major items causing the Company's tax provision to differ from the federal statutory rate of 34% were:
For the Twelve Months Ended December 31, ---------------------------------------------------------------------------------------- 1996 1995 1994 -------------------------- -------------------------- -------------------------- % OF % OF % OF PRETAX PRETAX PRETAX AMOUNT INCOME AMOUNT INCOME AMOUNT INCOME ----------- ----------- ----------- ----------- ----------- ----------- Pretax income (loss) $ 758,863 $(1,170,188) $ 1,505,224 ----------- ----------- ----------- ----------- ----------- ----------- Pretax income (loss) times statutory tax 258,000 34.0% (398,000) (34.0%) 512,000 34.0% rate Increases (reductions) in taxes resulting from: Percentage depletion (258,000) (34.0%) 398,000 34.0% (512,000) (34.0%) Alternative minimum tax -- 0.0% (234,000) (20.0%) 299,928 19.9% ----------- ----------- ----------- ----------- ----------- ----------- Income tax expense (benefit) $ -- 0.0% $ (234,000) (20.0%) $ 299,928 19.9% =========== =========== =========== =========== =========== ===========
F-20 63 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 The Company's book income for regular federal income tax purposes at December 31, 1996 is entirely sheltered by cumulative percentage depletion and investment tax credit carryforwards. However, under the Alternative Minimum Tax ("AMT") system imposed by the 1986 Tax Reform Act ("the 86 ACT"), these carryforward items may only be utilized on a limited basis resulting in the above tax provisions, which consists entirely of deferred AMT. At December 31, 1996, approximately $5,460,000 of percentage depletion (available for regular tax purposes) had not been utilized to shelter book income and is available to carry forward to future accounting periods. No tax payments were required in 1996, 1995 and 1994. The Company also has available for regular federal income tax purposes at December 31, 1996 estimated net operating loss carryforwards of approximately $10,100,000 which expire primarily in 1999 through 2011, if not previously utilized. At December 31, 1996, the Company had investment tax credit carryforwards of approximately $21,000, after adjusting for the reductions required by the 86 ACT, which expire for regular tax purposes in 1997 through 2000. 10. OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS Other long-term liabilities and deferred credits on the balance sheet consisted of:
December 31, ----------------------- 1996 1995 ---------- ---------- Reserve for future restoration and reclamation costs, net of current portion of $368,000 and $544,000 in 1996 and 1995 (Note 1) $3,768,495 $2,446,151 Unearned revenue from Russian matched sales (Note 1) 510,794 331,200 ---------- ---------- $4,279,289 $2,777,351 ========== ==========
11. COMMITMENTS AND CONTINGENCIES The Company's mining operations are subject to federal and state regulations for the protection of the environment, including water quality. These laws are constantly changing and generally becoming more restrictive. The ongoing costs of complying with such regulations has not been significant to the Company's annual operating costs. Future mine closure and reclamation costs are provided for as each pound of uranium is produced on a unit-of-production basis. The Company reviews its reclamation obligations each year and determines the appropriate unit charge. The Company also evaluates the status of current environmental laws and their potential impact on their accrual for costs. The Company believes its operations are in compliance with current environmental regulations. The Company is from time to time involved in various legal proceedings of a character normally incident to its business. Management does not believe that adverse decisions in any pending or threatened proceedings will have a material adverse effect on the Company's financial condition or results of operations. F-21 64 URANIUM RESOURCES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED) DECEMBER 31, 1996 12. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments," requires disclosure about the fair value of financial instruments. Carrying amounts for all financial instruments approximate fair value as of December 31, 1996. The fair value of debt is estimated based on the discounted value of the future cash flows using borrowing rates currently available to the Company for loans with similar terms and average maturities. 13. SUBSEQUENT EVENT On March 25, 1997, the Company completed the acquisition of certain uranium mineral interests in New Mexico from Santa Fe Pacific Gold Corporation in exchange for 1.2 million shares of the Company's common stock and a commitment to expend certain amounts on exploration. F-22 65 SCHEDULE II URANIUM RESOURCES, INC. VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
Additions --------------------------- Balance at Charged to Charged to Beginning Costs and Other Balance at End Description of Period Expenses Accounts Deductions (a) of Period - --------------------------------------------------------------------------------------------------------------------- Year ended December 31, 1996: Accrued restoration costs ........... $2,990,151 $1,479,939 $ 180,380(b) $ 513,975 $4,136,495(d) Year ended December 31, 1995: Accrued restoration costs ........... $2,427,624 $ 596,482 $ 70,153(b) $ 104,108 $2,990,151(d) Year ended December 31, 1994: Accrued restoration costs ........... $2,361,297 $ 274,465 $ (50,764)(c) $ 157,374 $2,427,624(d)
- -------------------- (a) Deductions represent costs incurred in the restoration process. (b) Increase resulted primarily from the change in the amounts of restoration provision included in ending uranium inventory. (c) Decrease resulted primarily from restoration provision amounts in beginning inventory which were expensed in the current year. (d) Amounts recorded as current liabilities at December 31, 1996, 1995 and 1994 are $368,000, $544,000 and $90,000, respectively. F-23 66 EXHIBIT INDEX
Exhibit Number Description - ------ ----------- 3.1 Restated Certificate of Incorporation of the Company, as amended. 3.2* Restated Bylaws of the Company (filed with the Company's Form S-3 Registration No. 333-17875 on December 16, 1996). 4.1 Registration Rights Agreement dated March 25, 1997 between the Company and Santa Fe Pacific Gold Corporation. 10.1* Amended and Restated Directors Stock Option Plan (filed with the Company's Form S-8 Registration No. 333-00349 on January 22, 1996). 10.2* Amended and Restated Employee's Stock Option Plan (filed with the Company's Form S-8 Registration No. 333-00403 on January 22, 1996). 10.3* 1995 Stock Incentive Plan (filed with the Company's Form S-8 Registration No. 333-00405 on January 22, 1996). 10.4* Non-Qualified Stock Option Agreement dated August 16, 1995, between the Company and Leland O. Erdahl (filed with the Company's Annual Report on Form 10-K dated March 27, 1996). 10.5* Non-Qualified Stock Option Agreement dated May 25, 1995, between the Company and George R. Ireland (filed with the Company's Annual Report on Form 10-K dated March 27, 1996). 10.6* Non-Qualified Stock Option Agreement dated May 25, 1995, between the Company and James B. Tompkins (filed with the Company's Annual Report on Form 10-K dated March 27, 1996). 10.7* Stock Option Agreement dated March 6, 1995 between the Company and James P. Congleton, as amended on May 25, 1995 (filed with the Company's Annual Report on Form 10-K dated March 27, 1996). 10.8* Warrant to Purchase Common Stock dated May 25, 1995, between the Company and Grant Bettingen, Inc. (filed with the Company's Annual Report on Form 10-K dated March 27, 1996). 10.9* Non-Qualified Stock Option Agreement dated July 31, 1995, between the Company and Wallace M. Mays (filed with the Company's Form S-8 Registration Statement No. 33-64481 on November 21, 1995). 10.10* Contract dated as of November 17, 1987 and amended as of May 29, 1992 by Hydro Resources, Inc., a wholly-owned subsidiary of Uranium Resources, Inc., and Public Service of New Mexico (filed with the Company's Form 8 - Amendment to Application or Report as filed with the Securities and Exchange Commission on December 9, 1988).(1) 10.11* Contract for the Purchase of Natural Uranium Concentrates (U3O8) dated April 5, 1994 between Uranium Resources, Inc., URI, Inc. and Pacific Gas & Electric Company (filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1994).(1)
E-1 67
Exhibit Number Description - ------ ----------- 10.11* Contract for the Purchase of Natural Uranium Concentrates (U3O2) dated April 5, 1994 between Uranium Resources, Inc., URI, Inc. and Pacific Gas & Electric Company (filed with the Company's Annual Report on Form 10-K for the year ended December 31, 1994). (1) 10.12* Agreement for the Sale of Uranium Concentrates dated as of August 23, 1990 between OES Fuel, Incorporated, Uranium Resources, Inc. and URI, Inc. (filed with Post-Effective Amendment No. 3 to the Company's Form S-1 Registration Statement as filed with the Securities and Exchange Commission on December 7, 1990).(1) 10.13* U3O8 Sales Agreement dated September 30, 1988 between GPU Nuclear Corporation and URI, Inc. guaranteed by Uranium Resources, Inc. (filed with the Company's Form 8 - Amendment to Application or Report as filed with the Securities and Exchange Commission on December 9, 1988).(1) 10.14* Summary of Supplemental Health Care Plan (filed with Amendment No. 1 to the Company's Form S-1 Registration Statement (File No. 33-32754) as filed with the Securities and Exchange Commission on February 20, 1990). 10.15* Note and Warrant Purchase Agreement entered into May 25, 1995 by and among Lindner Investments, Lindner Dividend Fund and the Company (filed with the Company's Current Report on Form 8-K dated May 25, 1995). 10.16 Loan Agreement entered into June 18, 1996 by and between Lindner Dividend Fund and the Company. 10.17* Uranium Concentrates Sales Agreement dated August 28, 1996 by and between the Company and Georgia Power Company (filed with the Company's Quarterly Report on Form 10-Q/A-2 for the quarter ended September 30, 1996).(1) 10.18* Uranium Concentrates Sales Agreement dated August 21, 1996 by and between the Company and Commonwealth Edison Company (filed with the Company's Quarterly Report on Form 10-Q/A-2 for the quarter ended September 30, 1996).(1) 10.19 Agreement of Santa Fe Pacific Gold Corporation as Uranco, Inc. Shareholder with the Company and Guarantee of the Company dated as of March 25, 1997.(1) 10.20 Stock Exchange Agreement and Plan of Reorganization dated as of March 25, 1997. 10.21 License to Explore and Option to Purchase dated March 21, 1997 between Sante Fe Pacific Gold Corporation and Uranco, Inc.(1) 21.1 Subsidiaries of the Company. 23.1 Consent of Arthur Andersen LLP. 27 Financial Data Schedule.
*Incorporated by reference pursuant to Rule 12b-32 under the Securities and Exchange Act of 1934, as amended. (1)Certain provisions have been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment. E-2 EX-3.1 2 RESTATED CERTIFICATE OF INCORPORATION 1 EXHIBIT 3.1 RESTATED CERTIFICATE OF INCORPORATION OF URANIUM RESOURCES, INC. (AS AMENDED ON JUNE 19, 1996) ARTICLE 1 The name of the corporation is Uranium Resources, Inc. ARTICLE 2 The address of its registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, 19801. The name of its registered agent at such address is The Corporation Trust Company. ARTICLE 3 The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. ARTICLE 4 The aggregate number of shares which the corporation has authority to issue is Twenty-Five Million (25,000,000) shares, $.001 par value per share. The shares are designated as common stock and have identical rights and privileges in every respect. The holders of the stock of the corporation shall have no preemptive rights to subscribe for any securities of the corporation. ARTICLE 5 The Board of Directors is authorized to make, alter or repeal the bylaws of the corporation. ARTICLE 6 No contract or transaction between the corporation and one or more of its directors, officers or stockholders, or between the corporation and any other corporation or firm in which 2 one or more of them is directly or indirectly interested, shall be void or voidable solely for this reason, or solely because any such director or officer is present at or participates in the meeting of the board or committee which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) the material facts as to such director's, officers, or stockholder's relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors even though the disinterested directors be less than a quorum; or (2) the material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee, or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. This provision shall not be construed to invalidate any contract or transaction which would be valid in the absence of this provision. ARTICLE 7 Section 1. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director or officer or employee of the corporation, or is or was serving at the request of the corporation as a director or officer or employee of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with -2- 3 respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer or employee of the corporation, or is or was serving at the request of the corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, except as otherwise limited by applicable law. Section 3. To the extent that a director, officer or employee of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of this Article 7, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 4. Any indemnification under Sections 1 and 2 of this Article 7 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer or employee is proper in the circumstances because he has met the applicable standard of conduct set forth in Sections 1 and 2 of this Article 7. Such determination shall be made (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (c) by the stockholders. Section 5. Expenses incurred by an officer or director in defending a civil or criminal action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized in this Article 7. Such expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the board of directors deems appropriate. Section 6. The indemnification and advancement of expenses provided by or granted pursuant to the other sections of this Article 7 shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Section 7. The corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer or employee of the corporation, or is or was -3- 4 serving at the request of the corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article 7. Section 8. For purposes of this Article 7, references to "the corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees, so that any person who is or was a director, officer or employee of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article 7 with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued. Section 9. For purposes of this Article 7, reference to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the corporation" shall include any service as a director, officer or employee of the corporation which imposes duties on, or involves services by, such director, officer or employee with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the corporation" as referred to in this Article 7. Section 10. The indemnification and advancement of expenses provided by or granted pursuant to this Article 7 shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, or employee and shall inure to the benefit of the heirs, executors and administrators of such a person. ARTICLE 8 No director of the corporation shall have any personal liability to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided, however, this provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. -4- EX-4.1 3 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 4.1 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is made and entered into as of March 25, 1997 by and between Uranium Resources, Inc., a Delaware corporation ("URI"), and Santa Fe Pacific Gold Corporation, a Delaware corporation ("Santa Fe"). This Agreement is made pursuant to the Stock Exchange Agreement and Plan of Reorganization, dated as of March 25, 1997 (the "Plan of Reorganization") by and between URI and Uranco Inc. ("Uranco"). URI has agreed to acquire all the issued and outstanding shares of Uranco from Santa Fe which is the sole beneficial owner of all the issued and outstanding shares of such company. As consideration for such acquisition, URI has issued to Santa Fe 1,200,000 shares of its Common Stock, par value $.001 per share (the "Common Shares"). In order to induce Santa Fe to consent to the Plan of Reorganization, URI has agreed, inter alia, to provide the registration rights set forth in this Agreement, and the execution and delivery of this Agreement is a condition precedent to consummation of the transactions contemplated by the Plan of Reorganization. The parties hereby agree as follows: 1. Definitions. Capitalized terms used herein without definition shall have the meaning set forth in the Plan of Reorganization. "Commission" means the United States Securities and Exchange Commission. "Holder" means Santa Fe, so long as Santa Fe holds any Registrable Securities, and any other holder of Registrable Securities to whom the registration rights set forth in Sections 2 and 3 hereof have been transferred pursuant to Section 11 (d) hereof. "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a trust or any other entity or organization. "Registrable Securities" means (i) the Common Shares issued to Santa Fe pursuant to the Plan of Reorganization and (ii) any other securities that may be issued or distributed in respect of or in exchange for or in replacement of such Common Shares by way of dividend, split, exchange or other distribution, recapitalization or reclassification. For the purposes of this Agreement, Registrable Securities will cease to be Registrable Securities when (a) a registration statement covering such Registrable Securities has been declared effective and they have been disposed of pursuant to such effective registration statement, (b) they are distributed pursuant to Rule 144 (or any similar provision then in force) under the Securities Act or (c) they have been otherwise transferred and URI has delivered new certificates or other evidence of ownership for them not subject to any stop transfer order or other restriction on transfer and not bearing a legend restricting transfer. 2 "Rule 144" shall mean Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission. "Securities Act" means the United States Securities Act of 1933, as amended. 2. Demand Registration. (a) Demand. Subject to the terms hereof, URI agrees that it will (i) file a registration statement with respect to all or part of the Registrable Securities held by a Holder within thirty days after the Holders of not less than a majority in number of shares of Registrable Securities make a written request to URI requesting such registration and specifying the intended method of disposition of the Registrable Securities to be so registered under the Securities Act (any such request being referred to as a "Registration Request") and (ii) use its best efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) as will permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request; provided that such Registration Request is made at any time on or after the expiration of twelve (12) months from the date of this Agreement and on or prior to the third anniversary hereof (subject to any increase in time pursuant to Section 2(b) below), provided further that URI shall not be obligated to effect such registration unless such registration may be made pursuant to a registration statement on Form S-3 (or any substitute form the SEC may adopt) under the Securities Act; and provided further that URI shall not be obligated to effect such registration if all of the Registrable Securities to be included in such registration can, within thirty days of such Registration Request, be sold pursuant to Rule 144. The Company will use its best efforts to qualify for registration on Form S-3. Within ten days after receipt of such Registration Request, URI will give written notice of such Registration Request to all Holders of Registrable Securities, which notice shall offer such Holders the opportunity to include in such registration statement such amount of Registrable Securities as each such Holder may request, and URI will include in each such registration statement all Registrable Securities with respect to which it has received written requests for inclusion therein within ten business days following the date on which such notice is given. Subject to Section 3(e) and the last sentence of Section 5 hereof, URI shall not be required to file more than three registration statements and effect more than three registrations pursuant to this section (for purposes of determining whether a registration statement has been filed, a Take-Down pursuant to Section 3(c) shall count as a registration statement). For purposes of the foregoing sentence, a registration shall not be deemed to have been effected or a Take-Down made (i) unless and until such registration statement has been declared effective under the Securities Act and either (A) all Registrable Securities covered by such registration statement or Take-Down have actually been sold or distributed pursuant thereto or (B) the period -2- 3 during which URI must keep such registration statement (including a Shelf Registration during distribution of Registrable Securities after a Take-Down) effective pursuant to paragraph (b) below shall have expired or (ii) if, after such registration statement has become effective, such registration is interfered with by any stop order, injunction, order or other requirement of law or requirement of any governmental agency or court and, as a result thereof, no Registrable Securities are actually sold or distributed pursuant to such registration statement or Take-Down. (b) Effectiveness, Etc. URI agrees to use its best efforts to have such registration statement requested pursuant to Section 2(a) declared effective under the Securities Act as soon as practicable after filing and to keep such registration statement (as well as any Shelf Registrations during distributions of Registrable Securities after a TakeDown pursuant to Section 3(c) hereof) continuously effective until ninety days after the effective date (or the Take-Down Date, as applicable) or such earlier date at which the distribution is completed. Notwithstanding the foregoing, if (i) the Board of Directors of URI determines, in good faith, that such registration would be materially detrimental to URI and the Board of Directors of URI concludes, as a result, that it is essential to delay the filing of such registration statement, and (ii) the Company shall furnish to the Holders a certificate signed by the president of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be materially detrimental to the Company for such registration statement to be filed without delay and that it is, therefore, essential to delay the filing of such registration statement, then URI shall have the right to delay such filing but may not delay the filing for a period of more than 90 days after receipt of the initial request. In the event any filing is delayed, the two-year period during which demands pursuant to Section 2(a) hereof may be made shall be extended by one day for every day of delay. URI further agrees, if necessary, to supplement or amend such registration statement requested pursuant to Section 2(a) (as well as any Take-Down pursuant to Section 3(c)), if required by (x) the registration form utilized by URI for such registration statement or by the instructions applicable to such registration form, (y) the Securities Act or the rules and regulations thereunder or (z) the Holders of (or any underwriter(s) for) any shares of the Registrable Securities covered by such registration statement with respect to information concerning such Holders or underwriter(s). URI agrees to furnish to the Holders of the Registrable Securities copies of any such supplement or amendment prior to its being used or filed with the Commission. URI will pay all Registration Expenses (as hereinafter defined) in connection with such registration statements requested pursuant to Section 2(a), whether or not it becomes effective, and such Take-Downs pursuant to Section 3(c). (c) Right of Company or Security Holders to Piggyback. URI and any of its security holders that have a contractual right to require URI to register the sale or other disposition of Common Shares shall, subject to the terms hereof, have the right to include common shares in any registration statement under Section 2(a) or any Take-Down pursuant to Section 3(c), but only if (i) the Holders of a majority of the Registrable Shares being registered in such registration consent to such inclusion in writing and (ii) if such registration is an underwritten -3- 4 offering, URI or such security holders, as applicable, agree in writing to sell their securities on the same terms and conditions as apply to the Registrable Securities being sold. (d) Selection of Underwriters. If a requested registration pursuant to this Section 2 or a Take-Down pursuant to Section 3(c) involves an underwritten offering, the managing underwriters) thereof shall be selected by the Holders of not less than a majority of the number of shares of the Registrable Securities so to be registered. (e) Priority in Requested Registrations. If a requested registration pursuant to this Section 2 or a Take- Down pursuant to Section 3(c) involves an underwritten offering and the managing underwriter(s) shall advise URI in writing (with a copy to each Holder of Registrable Securities requesting registration) that, in the opinion of such managing underwriter(s), the number of securities requested to be included by Holders in such registration exceeds the number which can be sold in such offering within a price range acceptable to the Holders of not less than a majority of the number of shares of Registrable Securities requested to be included in such registration, only that number of Registrable Securities which URI is so advised can be sold in such offering at such acceptable price shall be included, such Registrable Securities so included being allocated pro rata among the Holders requesting such registration on the basis of the number of such securities requested to be included by such Holders, and neither URI nor any holder of Common Shares other than the Holders hereunder shall participate in such requested registration, unless all Registrable Securities requested by the Holders to be registered are included in the registration. (f) Requested Underwritten Offerings. If requested by the managing underwriter(s) for any underwritten offering by Holders of Registrable Securities pursuant to a registration requested under this Section 2 or a Take-Down pursuant to Section 3(c) (including for such purpose a "qualified independent underwriter" required in connection with such offering by the rules of the National Association of Securities Dealers, Inc.), URI will enter into an underwriting agreement with respect to such offering, such agreement to be reasonably satisfactory in substance and form to each, such Holder, URI and the managing underwriter(s) and to contain such representations and warranties by URI and such other terms as are generally prevailing in agreements of that type, including, without limitation, indemnities to the effect and to the extent provided in Section 7. The Holders of the Registrable Securities will cooperate with URI in the negotiation of the underwriting agreement and will give consideration to the requests of the managing underwriter(s) and the reasonable suggestions of URI regarding the form thereof, provided that nothing herein contained shall diminish the foregoing obligations of URI. The Holders of Registrable Securities to be distributed by such underwriters shall be parties to such underwriting agreement and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, URI to and for the benefit of such underwriters shall also be made to and for the benefit of such Holders of Registrable Securities and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such Holders of Registrable Securities. No such Holder of Registrable Securities shall be required to make any representations or warranties to or agreements with URI or the -4- 5 underwriters other than representations, warranties or agreements regarding such Holder, such Holder's Registrable Securities and such Holder's intended method of distribution and other representations required by law. Without limiting the foregoing, in no event shall any Holder be required to make any representation or warranty with respect to URI or its businesses or operations. 3. Piggyback Registration. (a) Registration of Similar Securities. If at any time after the first anniversary of the date of this Agreement and prior to the third anniversary of the date of this Agreement URI proposes to file a registration statement on Form S-3 or any other form under the Securities Act with respect to an offering of Similar Securities (other than in connection with an exchange offer or an offering of securities solely to existing shareholders of URI or a delayed or continuous offering covered by Section 3(b) or (c) below) then URI will promptly give to each Holder written notice thereof, which notice shall state whether such registration will be in connection with an underwritten offering (and, if not, shall identify the alternative plan of distribution) and offer each such Holder the opportunity to include in such registration statement and such underwritten offering such amount of Registrable Securities as each such Holder may request prior to the anticipated filing date. The Company shall use its best efforts to include in such registration (and any related qualification under blue sky laws or other compliance), except as set forth in Section 3(d) below, and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests made by any Holder within ten (10) days after the written notice from the Company described above is mailed or delivered by the Company. Such written request may specify all or a part of a Holder's Registrable Securities. If such registration is in connection with an underwritten offering or in connection with a transaction pursuant to which securities are being sold to a purchaser or purchasers with a view to the redistribution thereof, such Registrable Securities may only be sold as part of such underwriting or transaction. If the anticipated filing date is deferred by more than fifteen business days, URI shall promptly give written notice of such new filing date to each Holder of Registrable Securities, which notice shall offer each such Holder the opportunity to include in such registration statement such amount of Registrable Securities as each such Holder may request, provided such Holder makes such new request not later than forty-eight hours prior to the new filing date. For purposes of this Section 3(a), "Similar Securities' shall mean (i) URI's Common Stock, par value $.001 per share, and (ii) any other class of URI's common equity hereinafter authorized, but shall not include debt securities convertible into any of the foregoing. (b) Shelf Registrations. If URI proposes to file a registration statement under the Securities Act with respect to an offering by URI of any Similar Securities on a delayed or continuous basis (a 'Shelf Registration"), then URI shall give written notice of such proposed filing to each Holder of Registrable Securities at least twenty-five days before the anticipated filing date, which notice shall offer each such Holder the opportunity to include in such Shelf Registration such amount of Registrable Securities as each such Holder may request at least five business days prior to the anticipated filing date. In lieu of including the Registrable Securities in the same registration statement in which URI's securities are included, the Registrable -5- 6 Securities may be included in a separate registration statement on the same registration form filed no later than the date on which the registration statement relating to the securities to be offered by URI is filed; provided, however, that for purposes of this Agreement such separate registration statement shall be deemed to be the same registration statement as that which relates to the securities being offered by URI; and provided further that such separate registration statement shall not be deemed a registration statement for purposes of the penultimate sentence of Section 2(a). If the anticipated filing date is deferred by more than fifteen business days, URI shall promptly give written notice of such new filing date to each Holder of Registrable Securities, which notice shall offer each such Holder the opportunity to include such amount of Registrable Securities as each such Holder may request if such Holder makes such new request at least five business days prior to the new filing date. (c) Shelf Registration Take-Downs. As soon as practicable and in any event within forty-eight hours after receiving written notice (a "Take-Down Notice") from the Holders of not less than a majority of the number of shares of Registrable Securities covered by a Shelf Registration specifying the amount and intended method of disposition of such Holders' Registrable Securities under the Securities Act, URI shall notify the Holders whether any filing under the Securities Act is required in connection with such disposition (a "Take-Down") and shall make all required filings within (3) days after such notification. The date such filings are made or the date of notification from URI that no filing is required is referred to as a "TakeDown Date". Any filings made by URI pursuant to this Section 3(c) in connection with a TakeDown of Registrable Securities (or any notification that no such filing is required) shall be deemed to be a filing of a registration statement for purposes of the penultimate sentence of Section 2(a). No sales shall be made pursuant to a Shelf Registration pursuant to Sections 3(b) and 3(C) except during the ninety-day period (the "Take-Down Period") commencing on a TakeDown Date, subject to Section 5(d) and the last paragraph of section 5. (d) Underwritten Offering. URI shall use its best efforts to cause the managing underwriter(s) of a proposed underwritten offering pursuant to Section 3(a) to permit the Holders of Registrable Securities requested to be included in the registration for such offering to include such Registrable Securities in such offering on the same terms and conditions as any Similar Securities of URI included therein. Upon request by URI or the managing underwriter(s) made to the Holders of Registrable Securities requested to be included in the registration for such proposed underwritten offering prior to the effective date thereof, such Holders shall enter into underwriting agreements with such underwriter or underwriters in customary form providing for the inclusion of such Registrable Securities in such offering, on such terms and conditions or, if any such Holders shall refuse to enter into any such agreements, URI shall have the right to exclude from such registration all (but not less than all) Registrable Securities of the Holders who shall have refused to enter into such agreement. Notwithstanding the foregoing, if the managing underwriter(s) of such offering inform the Holders of Registrable Securities that the total amount of securities which such Holders, URI and any other persons or entities intend to include in such offering is sufficiently large to materially and adversely affect the success of such offering, then the respective amounts of securities to be offered for the account of each Holder of Registrable Securities and for the accounts of all other holders of securities requesting -6- 7 registration shall be reduced pro rata, based on the number of such securities requested to be included by each Holder of Registrable Securities and each other holder, to the extent necessary to reduce the total amount of securities to be included in such offering to the amount recommended by such managing underwriter(s); provided that URI shall not be subject to such pro rata reduction. (e) Effectiveness, Etc., URI agrees to use its best efforts to effect the registration and the sale of the Registrable Securities requested to be registered pursuant to this Section 3 in accordance with the intended method of disposition thereof as quickly as practical; except that URI may terminate such registration (i) in its sole discretion and for any reason in the case of a registration pursuant to Section 3(a); or (ii) upon not less than five days notice to the Holders of Registrable Securities in the case of a registration pursuant to Sections 3(b) and 3(c), if the Board of Directors of URI determines, in good faith, that such registration would be seriously detrimental to URI and the Board of Directors of URI concludes, as a result, that such registration should not proceed. If URI terminates any registration pursuant to the foregoing sentence during any Take-Down of Registrable Securities pursuant to Section 3(c), no registration statement will be deemed to have been filed or Take-Down deemed to have been made in connection therewith for purposes of the penultimate sentence of Section 2(a). (f) Availability of Rule 144. Notwithstanding this Section 3, URI shall not be obligated to effect registration of any Registrable Securities if all of such Registrable Securities to be included in such registration can, within thirty days of such Registration Request, be sold pursuant to Rule 144 under the Securities Act. 4. Holdback Agreements. (a) To the extent not inconsistent with applicable law, each Holder of Registrable Securities constituting ten percent (10%) or more of the outstanding Common Stock of URI agrees not to offer publicly or effect any public sale or distribution of the issue being registered or of any similar security of URI, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, during the seven days prior to, and during the one hundred and eighty-day period beginning on the effective date (or the commencement of a takedown in the case of a shelf registered offering) of any registration statements relating to URI's securities (except as part of such registration or take-down), if and to the extent requested by URI in the case of a non-underwritten public offering in which Registrable Securities of such Holder are included or if and to the extent requested by the managing underwriter(s) in the case of an underwritten public offering in which Registrable Securities of such Holder are included; provided, however, that all officers and directors of the Company and holders of at least one percent (1%) of the Company's voting securities are bound by and have entered into similar agreements. Anything herein to the contrary notwithstanding, under no circumstances shall any Holder of Registrable Securities be precluded by the provisions of this Section 4 from offering publicly or effecting any public sale or distribution of Registrable Securities for more than one -7- 8 hundred and eighty-seven days out of any consecutive period of three hundred and sixty-five days. (b) URI agrees (i) not to effect any public sale or distribution of its equity securities or securities convertible into or exchangeable or exercisable for such equity securities during the seven days prior to the effective date of any registration pursuant to Section 2 or Section 3 hereof (except as part of such registration or pursuant to registrations on Form S-8 or any successor form to Form S-8) and during the period subsequent to such effective date and prior to the completion of the sale by the Holders of all Registrable Securities offered pursuant to such registration and (ii) to cause each holder of its privately placed equity securities convertible into or exchangeable or exercisable for such equity securities purchased from URI on or after the date of this Agreement to agree not to effect any public sale or distribution of any such securities during such period, including a sale pursuant to Rule 144 (except as part of such registration, if permitted). The obligations described in this Section 4 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. 5. Registration Procedures. Subject to the provisions of Section 2 and 3 hereof, in connection with the registration of Registrable Securities hereunder, URI will as expeditiously as possible: (a) furnish to each seller of Registrable Securities, prior to filing a registration statement, copies of such registration statement as proposed to be filed, and thereafter such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto), the prospectus included in such registration statement (including each preliminary prospectus) and such other documents in such quantities as such seller may reasonably request from time to time in order to facilitate the disposition of the Registrable Securities owned by such seller; (b) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement; (c) use its best efforts to keep such registration effective for a period of ninety (90) days or until the Holder or Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that (i) such 90-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities -8- 9 on Form S-3 which are intended to be offered on a continuous or delayed basis, such 90-day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that Rule 145, or any successor rule under the Securities Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment that (1) includes any prospectus required by Section 10(a)(3) of the Securities Act or (II) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (1) and (111) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in the registration statement; (d) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any seller of Registrable Securities reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; except that URI will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (b), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction; (e) use its best efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operation of URI to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities; (f) notify each seller of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and URI will promptly prepare and furnish to each seller a reasonable number of copies of a supplement or amendment to such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; provided, however, that URI shall have no obligations pursuant to this Section 5(d) in the cases of a registration pursuant to Sections 3(b) and 3(c) except during the period beginning on the date of the company's receipt of a Take-Down Notice and ending on the earlier of (i) the sale of all Registrable Securities being sold pursuant to such Take-Down, and (H) the end of the TakeDown Period (as it may be extended pursuant to the last paragraph of Section 5); -9- 10 (g) use its best efforts to cause all such Registrable Securities to be listed (i) on each securities exchange on which similar securities issued by URI are then listed, or (H) if no such similar securities are then listed, on the Nasdaq National Market System; (h) enter into customary agreements (including an underwriting agreement in customary form) in form reasonably necessary to effect the offer and sale of Common Stock and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities; (i) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such seller or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of URI and its Subsidiaries (collectively, the "Records") as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the officers, directors and employees of URI to supply all information reasonably requested by any such Inspector in connection with such registration statement. Records which URI determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in the registration statement and either (A) such registration has not been terminated or delayed pursuant to the provisions of Section 2 or 3 hereof, as the case may be, or (B) sales have been consummated pursuant to such registration statement by any seller of Registrable Securities or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction. Each seller of Registrable Securities shall use reasonable efforts, prior to any such disclosure by such seller's Inspector, to inform URI that such disclosure is necessary to avoid or correct a misstatement or omission in the registration statement. Each seller of Registrable Securities further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to URI and allow URI, at the expense of URI, to undertake appropriate action to prevent disclosure of the Records deemed confidential; (j) in the event such sale is pursuant to an underwritten public offering, use its best efforts to obtain a letter of the kind contemplated by the Statement of Auditing Standards No. 72, "Letters For Underwriters and Certain Other Requesting Parties," promulgated by the American Institute of Certified Public Accountants (an "AICPA Letter") from the independent public accountants for URI in customary form and covering such matters of the type customarily covered by such letters as the Holders of a majority of the number of shares of the Registrable Securities being sold reasonably request; (k) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and to make available to its security holders, as soon as reasonably practicable, an earning statement covering a period of at least twelve months, beginning with the first month after the effective date of the registration statement, which earning statement shall satisfy the provisions of Section II (a) of the Securities Act and Rule 158 thereunder; and -10- 11 (l) provide a transfer agent and registrar for all Registrable Securities registered pursuant to such registration statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration. URI may require each seller of Registrable Securities as to which any registration is being effected to furnish to URI such information regarding such seller or the distribution of such securities as URI may from time to time reasonably request in writing, in each case only as required by the Securities Act. Each Holder of Registrable Securities agrees that, upon receipt of any notice from URI of the happening of any event of the kind described in Section 5(d) hereof, such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder's receipt of the copies of the supplemented or amended prospectus contemplated by Section 5(d) hereof (the "Blackout Period"), and, if so directed by URI, such Holder will deliver to URI (at the expense of URI) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice. In the event URI shall give any such notice in connection with a registration statement, URI shall keep such registration statement effective (or shall extend the Take-Down Period, as applicable) for the period commencing on the date when each such seller of Registrable Securities covered by such registration statement shall have received the copies of the supplemented or amended prospectus contemplated by Section 5(d) hereof and continuing thereafter for a number of days equal to the number of days which were remaining in the period during which URI was otherwise required to keep such registration statement effective pursuant to Section 2(b) (or for a number of days equal to the number of days which were remaining in the Take-Down Period, as applicable) on the date when URI gave such notice pursuant to Section 5(d) hereof. In the event any Blackout Period substantially prejudices the successful completion of the distribution of Registrable Securities, or in any event extends for a period in excess of rive days, then there shall not be deemed to have been a filing of a registration statement or the use of a Take-Down in connection with such distribution for the purposes of the penultimate sentence of Section 2(a). 6. Registration Expenses. All expenses (other than underwriting discounts and commissions attributable to the Registrable Securities and other than fees and disbursements of more than one counsel for the selling Holders) incident to the performance of or compliance with this Agreement by URI, including, without limitation, all registration and filing fees (including, without limitation, fees of the Commission and the National Association of Securities Dealers, Inc.), fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), rating agency fees, printing expenses, messenger and delivery expenses, internal expenses (including, without limitation, all expenses of its officers and employees performing legal or accounting duties), the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange on which similar securities issued by URI are then listed, fees and -11- 12 disbursements of counsel for the underwriters and of one counsel for the selling Holders, fees and disbursements of counsel for URI and its independent certified public accountants (including the expenses of any special audit or AICPA Letter required by or incident to such performance), the cost of securities acts liability insurance (if the underwriters so require or URI elects to obtain such insurance), the fees and expenses of any special experts retained by URI in connection with such registration and the fees and expenses of other persons retained by URI (all such expenses being herein called "Registration Expenses"), will be borne by URI. AU underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities shall be borne by the Holders of such securities pro rata on the basis of the number of shares of securities so registered on their behalf, as shall any other expenses in connection with the registration required to be borne by the Holders of such securities. Any Holder who retains counsel other than or in addition to the one counsel for the Holders whose fees and disbursements are included within Registration Expenses shall pay the fees and disbursements of such other or additional counsel. 7. Indemnification: Contribution. (a) Indemnification by URI. URI agrees to indemnify, to the full extent permitted by law, each Holder of Registrable Securities included in any registration statement pursuant to Section 2 or 3 hereof, its officers, directors legal counsel and accountants and each person who controls, is controlled by or under common control with (within the meaning of the Securities Act) each such Holder, officer, director, legal counsel and accountants, and each underwriter and each person who controls, is controlled by or under common control with any underwriter, against all losses, claims, damages, liabilities and expenses (including attorneys' fees and other expenses incurred in connection with investigating or defending any such claims) arising out of or based on any untrue or alleged untrue statement of material fact contained in any registration statement, or any prospectus, preliminary prospectus contained therein, or any amendment or supplement thereto, or in any other document incident to any such registration, or based on any omission or alleged omission to state in any such document a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and will reimburse each such Holder, each of its officers, directors, legal counsel and accountants and each person controlling, controlled by or under common control with such Holder, each such underwriter, and each person controlling, controlled by or under common control with any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to URI by or on behalf of a Holder or underwriter expressly for use therein or (ii) the fact that a Holder or underwriter sold Registerable Securities to a Person to whom there was not sent or given a copy of the prospectus as amended or supplemented to the date of such sale at or prior to the confirmation of such sale. -12- 13 Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. (b) Indemnification by Holders of Registrable Securities. In connection with any registration statement in which a Holder of Registrable Securities is participating, each such Holder will furnish to URI in writing such information with respect to such Holder as URI reasonably requests for use in connection with any such registration statement, or any prospectus or preliminary prospectus contained therein, or any amendment or supplement thereto, and agrees to indemnify, to the extent permitted by law, URI, its directors and officers and each person who controls URI (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses caused by any untrue or alleged untrue statement of a material fact contained in any such registration statement, or any prospectus or preliminary prospectus contained therein, or any amendment or supplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information with respect to such Holder provided by such Holder for use in the preparation of such registration statement. Notwithstanding anything to the contrary in this Agreement, in no event shall any indemnification provided hereunder by the Holder(s) of Registrable Securities in connection with any registration thereof exceed the amount of proceeds received by such Holder(s) in connection with such registration. (c) Conduct of Indemnification Proceedings. Any person entitled to indemnification hereunder shall give prompt written notice to the indemnifying party after the receipt by such person of actual knowledge of any claim as to which such person may claim indemnification or contribution pursuant to this Agreement and, unless in the reasonable judgment of such indemnified party a conflict of interest may exist between such indemnified party and the indemnifying party with respect to such claim, permit the indemnifying party to assume, and the indemnifying party shall assume, the defense of such claim with counsel reasonably satisfactory to such indemnified party, and the indemnified party may participate in such defense at its own expense. Failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section 7, to the extent such failure is not prejudicial. If the indemnifying party is not entitled to assume the defense of a claim, it will not be obligated to pay the fees and expenses of more than one counsel for the indemnified parties with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim, in which event the indemnifying party shall be obligated to pay the fees and expenses of such additional counsel or counsels. The indemnifying party will not be subject to any liability for any settlement made without its consent. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to the entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. -13- 14 (d) Contribution. If the indemnification provided for in this Section 7 from the indemnifying party is held by a court of competent jurisdiction to be unavailable to an indemnified party hereunder in respect of any losses, claims, damages, liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or the omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in Section 7(c) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in the immediately preceding paragraph. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. If indemnification is available under this Section 7, the indemnifying parties shall indemnify each indemnified party to the full extent provided in Section 7(a) and (b) hereof without regard to the relative fault of said indemnifying party or indemnified party or any other equitable consideration provided for in this Section 7(d). Notwithstanding anything to the contrary in this Agreement, in no event shall the amount contributed hereunder by the Holder(s:) of Registrable Securities in connection with any registration thereof exceed the amount of proceeds received by such Holder(s) in connection with such registration. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with an underwritten public offering conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. (f) The obligations of the parties under this Section 7 shall survive the termination of this Agreement. -14- 15 8. Participation in Underwritten Registrations. No person may participate in any underwritten registration thereunder unless such person (a) agrees to sell such person's securities on the basis provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements. 9. Rule 144; Current Reports. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the Commission that may at any time permit a Holder to sell securities of URI to the public without registration, URI agrees to use its best efforts to: (a) timely file all reports and other documents required to be filed by it under the Securities Act and the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations adopted by the Commission thereunder (or, if it is not required to file such reports, it will make publicly available at all times such information as will enable the Holders of Registrable Securities to sell any Registrable Securities held by them without registration under the Securities Act as described in this section 9); (b) take such further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the Commission; and (c) furnish to any Holder so long as such Holder owns any of the Registrable Securities forthwith upon request a written statement by URI that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act (at any time during which it is subject to such reporting requirements), a copy of the most recent annual or quarterly report of URI, and such other reports and documents so filed by URI as may be reasonably requested in availing any Holder of any rule or regulation of the Commission permitting the selling of any such securities without registration. 10. Termination of URI's Obligations. URI's obligations pursuant to Sections 2 and 3 hereof shall terminate on the date on which all Registrable Securities (other than Registrable Securities acquired by URI or any affiliate of URI) can be freely sold by the Holder thereof without registration under the Securities Act to a transferee, who (unless an affiliate of URI) would be able to sell freely such Common Share without further registration under the Securities Act. -15- 16 11. Miscellaneous. (a) No Inconsistent Agreements. URI will not hereafter enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or which provides to any other person more favorable registration rights than those provided herein to the Holders of Registrable Securities. URI is not a party to any existing agreement with respect to any of its securities which is inconsistent with the rights granted to the holders of Registrable Securities in this Agreement or which provides to any other person more favorable registration rights than those provided herein to the Holders of Registrable Securities. Anything in this Agreement to the contrary notwithstanding, (i) URI shall not be prohibited from entering into other agreements providing for registration rights with respect to its securities, which agreements may contain restrictions no less favorable to URI than those contained in Section 4(b) hereof, (ii) URI shall not be prohibited from entering into underwriting agreements, which underwriting agreements may contain usual and customary restrictions prohibiting URI from filing registration statements for stated periods of time not to exceed 180 days and (iii) URI's obligation to file a registration statement pursuant to Section 2 or effect a Take-Down pursuant to Section 3(c) shall be suspended during any period of time in which any such agreement or underwriting agreement prohibits URI from doing so. (b) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless URI has obtained the written consent of Holders of at least a majority in number of shares of the Registrable Securities then outstanding affected by such amendment, modification, waiver or departure, but in no event shall the obligation of any Holder hereunder be materially increased, except with the written consent of such Holder. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made by hand delivery, facsimile, nationally recognized courier or first-class mail postage prepaid: (i) if to a Holder of Registrable Securities, as indicated below or at such other address as such Holder or assignee shall have furnished to the Company in writing: Santa Fe Pacific Gold Corporation 6200 Uptown Boulevard NE Albuquerque, New Mexico 871 10 Attention: Wayne Jarke Telephone: 505-880-5395 Facsimile: 505-880-5435 -16- 17 (ii) if to URI at its address set forth below or at such other address as the Company shall have furnished the Holders in writing: Uranium Resources, Inc. 12750 Merit Drive Suite 1020, Box 12 Dallas, Texas 75251 Attention: President Telephone: 214-387-7777 Facsimile: 214-387-7779 All such notices and communications shall be deemed to have been duly given: when delivered, if by hand, overnight courier or mail; and when transmitted, if by telecopy. (d) Successors and Assigns; Transfer of Registration Rights. The registration rights set forth in this Agreement may be transferred by a Holder only to a transferee or assignee of not less than 100,000 shares of Registrable Securities (as presently constituted and subject to subsequent adjustments for stock splits, stock dividends, reverse stock splits, and the like), provided, however, that URI is given written notice of such transfer at or within a reasonable time after said transfer or assignment, stating the name and address of each transferee or assignee and identifying the securities with respect to which the rights are being transferred or assigned, and, provided further, that the transferee or assignee of such rights assumes in writing the obligations of such Holder under this Agreement. (e) Delay of Registration. No Holder shall have any right to take any action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of the Agreement. (f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (g) Headings. The headings to this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (h) Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of New Mexico applicable to contracts to be performed wholly within New Mexico, without regard to conflicts of law principles. Any Holder of Registrable Securities may bring any action or proceeding to enforce or arising out of this Agreement in any court of competent jurisdiction. If such Holder commences such an action in a court located in the County of Bernalillo, State of New Mexico, or the United States District Court for the District of New Mexico, URI hereby agrees that it will submit to the personal jurisdiction of such courts and will not attempt to have such action dismissed, abated or transferred on the -17- 18 ground of forum non convenience; provided, however, that nothing contained herein shall prohibit URI from seeking, by appropriate motion, to remove an action brought in a New Mexico state court to the United States District Court for the District of New Mexico. If such action is so removed, however, URI shall not seek to transfer such action to any other district, nor shall URI seek to transfer to any other district any action which such Holder originally commenced in such federal court. Any action or proceeding brought by URI to enforce or arising out of this Agreement shall be brought solely in a court of competent jurisdiction located in the County of Bernalillo, State of New Mexico, or in the United States District Court for the District of New Mexico. URI agrees that a summons and complaint or equivalent documents commencing an action or proceeding in any court shall be validly and properly served and shall confer personal jurisdiction over URI if served to the President of URI, whom URI hereby designates and appoints as URI's authorized agent to accept and acknowledge on its behalf service of any and all process which may be served in such action or proceeding in any such court. URI shall be sent, by certified mail, a copy of such summons and complaint at the time of service upon such agent; provided, however, that any such copy shall be sent solely as a courtesy to URI and its failure to receive such copy shall in no way affect the validity and propriety of the service made on URI through such agent, as above provided. URI waives any objection which it may now or hereafter have to venue of any such action or proceeding, and waive any right to seek removal of any action or proceeding commenced in accordance herewith. (i) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be in any way impaired thereby, it being intended that any of the rights and privileges of Santa Fe shall be enforceable to the fullest extent permitted by law. (j) Entire Agreement. This agreement is entered into by the parties in connection with a transaction involving the transfer of common stock of Uranco owned by Santa Fe to URI in exchange for common stock of the Company, the grant by URI to Santa Fe of registration rights with respect to the stock of URI to be issued to Santa Fe, the grant by Santa Fe to Uranco of a license to explore and an option to purchase in exchange for certain commitments by Uranco, and the guarantee by URI of certain obligations of Uranco to Santa Fe. In order to effect this transaction, certain of the parties have contemporaneously entered into certain agreements, specifically, the Stock Exchange Agreement and Plan of Reorganization (URI and Uranco), the Agreement of Santa Fe as Uranco Shareholder and Guarantee of URI (Santa Fe and URI); the License to Explore and Option to Purchase (Santa Fe and Uranco); and the Registration Rights Agreement (Santa Fe and URI). All of such agreements, together with all exhibits or schedules thereto and documents delivered pursuant thereto, contain the entire agreement among the parties with respect to the contemplated transaction, and shall supersede all previous writings and all previous or contemporaneous oral negotiations, commitments, and understandings. -18- 19 (k) Attorneys' Fees. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. URANIUM RESOURCES, INC. By: /s/ Paul K. Willmott ----------------------------------- Name: Paul K. Willmott --------------------------------- Title: President -------------------------------- SANTA FE PACIFIC GOLD CORPORATION By: /s/ D.A. Smith ----------------------------------- Name: D.A. Smith --------------------------------- Title: Vice President and Chief Financial Officer -------------------------------- -19- EX-10.16 4 LOAN AGREEMENT DATED JUNE 18, 1996 1 EXHIBIT 10.16 LOAN AGREEMENT This Loan Agreement (the "Agreement") is made and entered into this 18th day of June, 1996 by and between Uranium Resources, Inc. (the "Company" or "Uranium Resources"), and Lindner Dividend Fund, a series of Lindner Investments, a Massachusetts business trust ("Creditor"), whose address is 7711 Carondelet Avenue, Suite 700, St. Louis, Missouri 63105. RECITALS A. On May 25, 1995, the Company, Lindner Dividend Fund, Inc., a Missouri Corporation and Lindner Investments, a Massachusetts business trust entered into a certain Note and Warrant Purchase Agreement (the "Note and Warrant Purchase Agreement") pursuant to which the Purchaser, as defined therein, purchased certain secured promissory notes to raise funds for the Company. B. The Company now seeks to borrow $4,000,000.00 from Creditor to allow the Company to enter into a certain Uranium Solution Mining Lease with Mestena Unproven, Ltd., et. al. as lessor, which lease has an effective date of December 16, 1995 (the "Lease"). C. The Company has agreed to execute a promissory note in the principal amount of $4,000,000.00 in favor of Creditor (the "Note"), and a certain Deed of Trust of even date herewith granting Creditor a first lien as to the Company's rights pursuant to the Lease (the "Second Deed of Trust"). D. The Company has agreed that in connection with this transaction, it will be bound by certain of the representations, warranties and covenants contained in the Note and Warrant Purchase Agreement. E. The parties now memorialize in this Agreement the additional agreements and covenants negotiated in connection with the Note and Second Deed of Trust. NOW, THEREFORE, in consideration of the covenants and agreements contained in this Agreement, it is agreed by the parties as follows: 1. Defined Terms. Capitalized terms which are not defined herein shall have the meanings assigned to such terms in the Note and Warrant Purchase Agreement, except as otherwise specified herein. 2. The Loan. Subject to the terms and conditions hereof and in reliance upon the representation and warranties 2 set forth in this Agreement, the Creditor hereby agrees to loan to the Company four million dollars ($4,000,000.00) to permit the Company to enter into the Lease (the "Loan"). As security for the Loan, the Company shall grant to Creditor a first Lien on the collateral which is the subject of the Second Deed of Trust. 3. Representations and Warranties. The Company represents and warrants that: 3.1 Note and Warrant Purchase Agreement. The following representations and warranties of the Company contained in Section 5 of the Note and Warrant Purchase are true and correct in all respects on the date hereof: 5.1, 5.2, 5.4, 5.9, 5.11, 5.13, 5.15, 5.17, 5.18, 5.19, 5.20, 5.21 and 5.22. For purposes of the foregoing representations and warranties, capitalized terms contained therein shall have the meaning assigned to them in the Note and Warrant Purchase Agreement, except that (i) "Purchase Documents" shall include the Note, the Second Deed of Trust, and this Agreement; and (ii) The "Texas Real Property" shall include all of the Company's real property and leasehold interests in the collateral more particularly described in the Second Deed of Trust. 3.2 Corporate Organization and Authority. Each of the Company and the Subsidiaries (a) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware (except for Beltline Resources, Inc., a Subsidiary of the Company which is a corporation duly organized and validly existing, and in good standing under the laws of the State of Texas), (b) has full corporate power and authority to carry on its business as now conducted, (c) has full corporate power and authority to enter into the Note, Deed of Trust and this Agreement and to execute and deliver such documents as contemplated therein and (d) is duly qualified or licensed and in good standing in each state or jurisdiction in which the ownership or its properties or the conduct of its, business requires said qualification or licensing, except where failure to be so qualified, licensed and in good standing could not reasonably be expected to have a Material Adverse Effect. 3.3 Authorization and Approvals. The execution, delivery and performance of the Note, the Second Deed of Trust and this Agreement do not (a) require any approval or consent on the part of, or filing, registration or qualification with, any governmental body, federal, state or local that has not been obtained or performed, except the recording of the Deed of Trust in the applicable office, or (b) contravene (i) the charter or by-laws of the Company or any Subsidiary, or (ii) any applicable law or contractual restriction binding on or affecting the Company or any Subsidiary, and (c) do not result 2 3 in or require the creation of any Lien (other than Liens created pursuant to the Second Deed of Trust. 3.4 Company Collateral. The Company is the owner of the leasehold interest covered by the Second Deed of Trust, including without limitation, all of the Company's rights pursuant to the Lease. The collateral is not subject to any Liens other than those in favor of Creditor, except as set forth in the Mortgage Title Opinion referenced in section 10.6 hereof. 3.5 Actions, Suits or Proceedings. Except as set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 1995, there are no actions, suits or proceedings, at law or in equity, and no proceedings before any arbitrator or by or before any governmental commission, board, bureau or other administrative agency, pending, or to the best knowledge of the Company threatened, against or affecting the Company, any Subsidiary, or any properties or rights of the Company or any Subsidiary which, if adversely determined, could materially impair the right of the Company or any Subsidiary to carry on business substantially as now conducted or could have a Material Adverse Effect upon the Company and the Subsidiaries individually, or taken as a whole. 3.6 Financial Statements. Except as set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 1995, the Financial Statements, as hereinafter defined, have been prepared in accordance with generally accepted accounting principles consistently applied, except as otherwise indicated in such Financial Statements, or in an auditor's report with respect thereto, and present fairly the financial condition of the Company and its Subsidiaries as of the dates indicated therein, and the results of their operations and changes in their cash flows for the periods then ended. To the best of the Company's knowledge, except as set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 1995, neither the Company nor any Subsidiary has any material contingent obligations, liabilities for taxes, long-term leases or unusual forward or long-term commitments not disclosed by, or reserved against, in the Financial Statements. "Financial Statements" shall mean the audited financial statements of the Company and its Subsidiaries contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1995 and the unaudited consolidated financial Statements of the Company and its Subsidiaries contained in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996. 3.7 Taxes. The Company has and each of its Subsidiaries has filed all federal, state and foreign income tax returns which are required to be filed at or prior to the 3 4 date of this Agreement, and each has paid or caused to be paid all taxes as shown on such returns or on any assessment received by it to the extent that such taxes or assessments have become due at or prior to the date of this Agreement. Federal income tax returns of the Company and its Subsidiaries have been examined and reported on by the taxing authorities or closed by applicable statutes and satisfied for all fiscal years prior to and including the fiscal year ended on July 31, 1992. 3.8 Valid Liens. The Liens granted by the Company to Purchaser in or on the collateral which is the subject of the Second Deed of Trust, including, without limitation, the Company's rights pursuant to the Lease, are valid and perfected Liens, securing the obligations of the Company to Creditor under the Note, the Second Deed of Trust and this Agreement, and such collateral is subject to no Liens that are prior to, on a parity with or junior to the Liens in favor of the Creditor, except as set forth in the Mortgage Title Opinion referenced in section 10.6 hereof. 3.9 Compliance with Agreement; No Default. The Company is in compliance with all of the covenants contained in the Note, the Second Deed of Trust and this Agreement, and no Event of Default has occurred and is continuing. The Company has performed and complied in all material respects with all agreements and conditions contained in the Note, the Second Deed of Trust or this Agreement which are required to be performed or complied with by the Company on or before the closing date. 4. Affirmative Covenants. So long as the indebtedness under the Note is outstanding and unless the Creditor shall otherwise consent in writing, the Company shall comply with the following affirmative covenants outlined in Section 6 of the Note and Warrant Purchase Agreement: 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10. For purposes of the foregoing affirmative covenants, capitalized terms contained in such affirmative covenant, or in the definition of any capitalized term within such affirmative covenant, shall have the meanings assigned to them in the Note and Warrant Purchase Agreement, except that "Notes" shall include the Note; "Purchaser" shall mean the Creditor; an "Event of Default" shall include an Event of Default pursuant to this Loan Agreement; the "Collateral" and the "Texas Real Property" shall include all of the Company's real property and leasehold interests in the collateral more particularly described in the Second Deed of Trust; "Closing Date" shall mean the date which is simultaneous with the execution and delivery of this Agreement, or such later date as mutually agreeable to the parties; and "Purchase Documents" shall include the Note, the Second Deed of Trust, and this Agreement. 4 5 5. Negative Covenants. So long as the indebtedness under the Note is outstanding and unless the Creditor shall otherwise consent in writing, the Company shall be bound by each of the following negative covenants outlined in section 7 of the Note and Warrant Purchase Agreement: 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7 and 7.8. For purposes of the foregoing negative covenants, capitalized terms contained in such negative covenant, or in the definition of any capitalized term within such negative covenant, shall have the meanings assigned to them in the Note and Warrant Purchase Agreement, except that "Purchaser" shall mean the Creditor; an "Event of Default" shall include an Event of Default pursuant to this Loan Agreement; the "Collateral" and the "Texas Real Property" shall include all of the Company's real property and leasehold interests in the collateral more particularly described in the Second Deed of Trust; and "Purchase Documents" shall include the Note, the Second Deed of Trust, and this Agreement. 6. Use of Loan Proceeds. The Company further agrees that it shall not use the monies loaned by Creditor to the Company for any purpose other than to acquire its interests pursuant to the Lease. 7. Events of Default. It shall be a default under this Agreement, the Note and the Second Deed of Trust if any of the following events occurs: 7.1 The Company defaults in the payment of principal or interest on the Note when the same becomes due and payable and the default continues for a period of five (5) days; 7.2. The Company fails to comply with any term or covenant in this Agreement, the Note or the Second Deed of Trust (other than payment terms of the Note), and the failure continues for a period of thirty (30) days; 7.3. An event of default occurs under the Deed of Trust or the Note and Warrant Purchase Agreement. 8. Acceleration. If an Event of Default (other than an Event of Default specified in clauses (g) and (h) of Section 8.1 of the Note and Warrant Purchase Agreement) occurs and is continuing, the Creditor, by written notice to the Company may declare the unpaid principal of and accrued interest on the Note to be due and payable. Upon such declaration the principal and interest shall be due and payable immediately. If an Event of Default specified in clause (g) or (h) of Section 8.1 of the Note and Warrant Purchase Agreement occurs, the unpaid principal of and accrued interest on the Note shall ipso fact become and be immediately due and payable without any declaration or other act on the part of Creditor. The Creditor 5 6 may by notice to the Company rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default under this Agreement have been cured or waived, except for the nonpayment of principal or interest that has become due solely because of the acceleration. 9. Other Remedies. If an Event of Default occurs and is continuing, the Creditor may pursue any available remedy to collect the payment of principal or interest on the Note or to enforce the performance of any provision of the Note or this Agreement. Any failure of the Creditor to take any steps to enforce, foreclose upon, or realize on any of the collateral which is the subject of the Second Deed of Trust or to exercise any other right under the Note, the Second Deed of Trust or this Agreement, shall not operate as a waiver of any other right or remedy of the Creditor or as a defense to the enforcement of the Note, the Second Deed of Trust or this Agreement. Moreover, the Creditor's manner of disposing of any of its collateral or marshalling is not a defense to the enforcement of the Creditor's rights under the Note, the Second Deed of Trust or this Agreement. 10. Conditions of Loan. The obligation of Creditor to loan monies under this Agreement is subject to receipt by Creditor of the following documents, in form and substance satisfactory to the Creditor, on or prior to the date of this Agreement, which the Company agrees to provide: 10.1 Certificates of recent date of the appropriate authority or official of the Company's state of incorporation, listing all incorporation documents of the Company on file in that office and certifying as to the good standing and corporate existence of the Company, together with copies of such incorporation documents of the Company, certified as of a recent date by such authority or official and certified as true and correct as of the Closing Date by a duly authorized officer of the Company. 10.2 A copy of the Bylaws of the Company, together with all authorizing resolutions and evidence of other corporate action taken by the Company to authorize the execution, delivery and performance by the Company of the Note, the Second Deed of Trust and this Agreement, and the consummation by the Company of the transactions contemplated by such documents, certified as true and correct as of the date of this Agreement by a duly authorized officer of the Company. 10.3 Certificates of incumbency of the Company containing and attesting to the genuineness of the signatures of those officers authorized to act on behalf of the Company in connection with the loan, and the consummation by the Company 6 7 of the transactions contemplated by the Note, the Second Deed of Trust and this Agreement, certified as true and correct as of the date hereof by a duly authorized officer of the Company. 10.4 The Note duly executed by the Company; 10.5 The Second Deed of Trust duly executed by the Company; 10.6 Mortgage Title Opinion for the collateral outlined in the Second Deed of Trust reflecting a first lien in favor of the Creditor and otherwise satisfactory to the Creditor; 10.7 An opinion of counsel to the Company addressed to Creditor and its counsel, dated as of the date hereof, substantially in a form acceptable to Creditor; 10.9 Any and all such other documents as the Creditor may reasonably request; 10.10 Payment of all administration expenses as required by this Agreement, incurred by the Company up to the date of this Agreement; and 10.11 A written consent by Lindner Investments and Lindner Dividend Fund to the Loan. 11. Miscellaneous Provisions. 11.1 Notices. All communications provided for hereunder shall be in writing and delivered or mailed by registered or certified mail, at the address appearing below, or such other address of which the parties hereto have been given notice. If to Company: Uranium Resources, Inc. 123750 Merit Drive, Suite 1020 Dallas, Texas 75251 Attention: President With a copy to: Baker & Hostetler 303 East 17th Street Suite 1100 Denver, Colorado 80203 Attention: Alfred C. Chidester If to Creditor: c/o Ryback Management Corporation 7711 Carondelet Avenue, Suite 700 St. Louis, Missouri 63105 Attention: Eric E. Ryback 7 8 With a Copy to: Dykema Gossett PLLC 400 Renaissance Center Detroit, Michigan 48243 Attention: Paul R. Rentenbach 11.2 Successor and Assigns. This Agreement shall be binding upon and inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns. 11.3 Severability. Should any part of this Agreement for any reason be declared invalid, such decisions shall not affect the validity of any remaining portion, which remaining portion shall remain in force and effect as if this Agreement had been executed with the invalid portion thereof eliminated and it is hereby declared the intention of the parties hereto that they would have executed the remaining portion of the Agreement without including therein any such part, parts, or portion which may, for any reason, by hereafter declared invalid. 11.4 Captions. The descriptive headings of the various section or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof. 11.5 Payments Due on Saturdays, Sundays and Holidays. In any case where the interest payment date on the Note or the date fixed for any other payment of the Note shall be on a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law to close in St. Louis, Missouri, then such payment or exchange need not be made on such date but may be made on the next succeeding business day not a Saturday, Sunday or a legal holiday or a day upon which banking institutions are authorized by law to close in St. Louis, Missouri, with the same force and effect as if made on the due date. 11.6 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. The execution and delivery of this Agreement shall be deemed effective upon receipt by each party hereto of a facsimile copy of this Agreement executed by the other party hereto. 11.7 Governing Law. This Agreement and the Note shall be construed in accordance with Missouri law. 8 9 IN WITNESS WHEREOF, the parties have executed this agreement. URANIUM RESOURCES, INC. By: /s/ PAUL K. WILLMOTT ---------------------------- Paul K. Willmont Its: President LINDNER DIVIDEND FUND, a series of LINDNER INVESTMENTS By: /s/ ERIC E. RYBACK --------------------------- Eric E. Ryback Its: President 9 EX-10.19 5 AGREEMENT OF SANTA FE PACIFIC GOLD CORP. 1 EXHIBIT 10.19 AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION AS URANCO INC. SHAREHOLDER WITH URANIUM RESOURCES, INC. AND GUARANTEE OF URANIUM RESOURCES, INC. This Agreement is made and entered into effective as of March 25, 1997 between Santa Fe Pacific Gold Corporation, a Delaware corporation ("SFPG"), and Uranium Resources, Inc., a Delaware corporation ("URI"). RECITALS: 1. SFPG owns all of the issued and outstanding shares of capital stock (the "Uranco Stock") of Uranco Inc., a Delaware corporation ("Uranco"). 2. SFPG has heretofore conveyed by deed to Uranco certain mineral interests as specifically set forth herein. This Agreement is the Agreement referred to in those deeds as setting forth the exclusive remedies of the grantee, its successors and assigns, related to the property covered by the deeds. 3. SFPG has heretofore granted an exploration license to Uranco Inc. which imposes certain obligations upon Uranco Inc. 4. Simultaneously herewith, Uranco has entered into a Stock Exchange Agreement and Plan of Reorganization (the "Stock Exchange Agreement") with URI pursuant to which SFPG is to exchange the Uranco Stock for 1,200,000 shares of the common stock, $.001 par value per share, of URI (hereinafter the "URI Shares") (the "Exchange"). 5. As a condition to the Exchange, URI is willing to guarantee the obligations of Uranco under the exploration license provided SFPG agrees to compensate it in the event that the title of Uranco to uranium in place in certain properties, the uranium or mineral interests of which were obtained by Uranco from SFPG, should fail. 6. The parties desire to enter into this Agreement to consummate the Exchange and provide the guarantee by URI of Uranco's obligations under the exploration license. AGREEMENT: NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein, the parties hereto agree as follows: SECTION 1. SFPG TRANSFER OF URANCO STOCK AND INVESTMENT REPRESENTATION. SFPG hereby conveys, transfers and assigns all its right, title and interest in and to the Uranco Stock to URI in consideration of the issuance by URI of the URI Shares, receipt of which is hereby acknowledged by SFPG, in accordance with the terms and conditions set forth in the Stock Exchange Agreement and Plan of Reorganization dated contemporaneously herewith 2 by and between Uranco and URI. SFPG has the knowledge and experience in business and financial matters to meaningfully evaluate the merits and risks of the purchase and acquisition of the URI Shares in exchange and consideration for the Uranco Stock as contemplated hereby. SFPG acknowledges that the URI Shares have been issued by URI without registration or qualification or other filings being made under the Federal Securities Act of 1933, as amended, or the securities or "Blue Sky" laws of any state, in reliance upon specific exemptions therefrom, and in furtherance thereof SFPG represents that the URI Shares received by it have been taken for its own account for investment, with no present intention of a distribution or disposition thereof to others. SFPG agrees that the certificates representing the URI Shares issued to it shall be subject to a stop-transfer order and shall bear a restrictive legend, in substantially the following form: THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), ARE "RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, IS NOT REQUIRED TO BE REGISTERED UNDER THE ACT. SECTION 2. URI GUARANTEE OF EXPLORATION LICENSE OBLIGATIONS. URI guarantees the performance by Uranco of its obligations under the License to Explore and Option to Purchase granted as of March 21, 1997 from SFPG (the "License"). -2- 3 SECTION 3. [ ] -3- 4 SECTION 4. SFPG REPRESENTATIONS AND WARRANTIES. SFPG represents and warrants to URI that: (a) SFPG has heretofore conveyed to Uranco (i) all of the interest reserved by Santa Fe Pacific Railroad Company in the instruments set forth in the Deeds attached hereto at Schedule 3 but excluding coal in place, including development or mineral rights related thereto (the "Mineral Interests") and further excluding the interests described as excluded in the Deeds but subject to the grants and interests stated in the Deeds; and (ii) title to all geological, geophysical and geochemical data and interpretive data, (except data relating to coal, including the development or mining of coal) (the "Technical Data") relating to the Mineral Interests being conveyed by the Deeds; and has delivered to Uranco all Technical Data presently known by Senior Management of SFPG to be in its possession and will deliver copies of all geological, geophysical and geochemical data and interpretive data for the property included in the License within a reasonable time after a written request from Uranco and/or URI. (b) The Board of Directors of SFPG has approved the transactions set forth in this Agreement and SFPG has the requisite power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery by SFPG of this Agreement, the performance by SFPG of its obligations hereunder and the consummation by SFPG of the transactions contemplated hereby have, to the extent necessary, been duly authorized by the appropriate corporate action, and no other proceeding on the part of SFPG is necessary for the execution and delivery thereof and the performance of its obligations hereunder. This Agreement is a legal, valid and binding obligation of SFPG, enforceable in accordance with its terms except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). (c) All consents and approvals required for SFPG to enter into this agreement and to carry out the transaction as set forth herein have been obtained. Neither the execution, delivery or performance of this Agreement by SFPG nor the consummation by SFPG of the transactions contemplated hereby will (i) conflict with or result in any breach of any provisions of the Articles of Incorporation or By-laws of SFPG or any of its Subsidiaries, (ii) require any filing with, or permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission; (iii) require the consent or approval of any person; (iv) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) -4- 5 under, or result in the creation of any lien or other encumbrance on any of the Mineral Interests pursuant to, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which SFPG is a party or by which SFPG or its properties or assets may be bound; or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to SFPG or by which any of its property or assets is bound. (d) Except as set forth in Schedule 4(d), there is no Proceeding (as defined below) which has been served on SFPG or, to the Actual Knowledge of Senior Management of SFPG, threatened against or involving SFPG involving the Mineral Interests before any court, arbitrator or administrative or governmental body. There are no Proceedings pending or, to the Actual Knowledge of Senior Management of SFPG, threatened against SFPG arising out of or in any way related to this Agreement or any of the transactions contemplated hereby. As used in this Agreement, "Proceeding" means any action, suit, hearing, arbitration or governmental investigation (whether public or private). (e) Senior Management of SFPG has no Actual Knowledge of any failure on the part of Uranco Inc. or its predecessors in title to the mineral interests owned by Uranco Inc. to comply in all material respects with the laws and regulations of federal, state or local governments applicable to such mineral interests, including environmental laws. As used in this section, "Senior Management" includes Chairman, President and Chief Executive Officer Patrick M. James, Executive Vice President and Chief Operating Officer Leroy E. Wilkes, Senior Vice President - Corporate Development Bruce D. Hansen, Vice President - Environmental Quality Tim J. Leftwich, and General Counsel and Secretary Wayne Jarke. As used in this section, "Actual Knowledge" means any personal knowledge, as of the date hereof, without making inquiry of any other person and without review of any records of SFPG or otherwise; and (f) The revenues generated by the Mineral Interests conveyed by SFPG to Uranco on or before the date of this Agreement did not exceed $5,000,000 over the three-year period preceding the date of this Agreement. SECTION 5. URI REPRESENTATIONS AND WARRANTIES. URI represents and warrants to SFPG that: (a) The Board of Directors of URI has approved the transactions set forth in this Agreement and URI has the requisite power and authority to enter into this Agreement and to carry out its obligations hereunder; (b) All consents and approvals required for URI to enter into this agreement and to carry out the transaction as set forth herein have been obtained; -5- 6 (c) Its representations and warranties contained in Article 2, Sections, 2. 1 through 2.9 of the Stock Exchange Agreement and Plan of Reorganization dated effective as of March 25, 1997, by and between Uranco Inc. and URI are true and correct; (d) The URI Shares are fully paid and non-assessable and not subject to preemptive rights; SECTION 6. INDEMNIFICATION BY SFPG AND URI. (a) SFPG agrees to indemnify and hold URI and Uranco harmless against and in respect of (1) any and all damages resulting from any misrepresentation, breach of any representation or warranty or nonfulfillment of any agreement on the part of SFPG under this Agreement or from any misrepresentations in or omission from any certificate furnished by SFPG hereunder; and (2) any and all actions, suits, proceedings, demands, assessments, judgments, costs and other expenses (including reasonable legal fees) incident to the foregoing. (b) URI agrees to indemnify and hold SFPG harmless against and in respect of (1) any and all damages resulting from any misrepresentation, breach of any representation or warranty or nonfulfillment of any agreement on the part of URI under this Agreement or from any misrepresentations in or omission from any certificate furnished by URI hereunder; and (2) any and all actions, suits, proceedings, demands, assessments, judgments, costs and other expenses (including reasonable legal fees) incident to the foregoing. (c) Notice of any claims desired to be asserted by a party seeking indemnification ("Indemnitee") against the other party ("Indemnitor") with respect to any matter for which Indemnitee claims indemnification pursuant to this Section 6 shall be served by Indemnitee upon the Indemnitor promptly. Any such notice shall set forth in reasonable detail the basis for the claim asserted. Within 20 days following its receipt of such notice, the Indemnitor shall send written notice to the Indemnitee stating: (1) Whether in its view the claim is one for which the Indemnitee is entitled to indemnification (a "Covered Claim"), and (2) If it acknowledges that the claim is a Covered Claim whether they choose to dispute its validity by participating in any defense of any action brought by a third party with respect to such claim. If the Indemnitor fails to furnish such notice within such 20-day period, such failure shall constitute its agreement that the claim is a "Covered Claim" and its election not to participate in the defense of any action on the Claim. If Indemnitor fails to furnish such notice or states in such notification that the claim is not a Covered Claim or that it declines to dispute the validity of said Claim, the Indemnitee may defend or settle the claim without the participation of Indemnitor, reserving any rights it might have with respect to indemnification. If Indemnitor acknowledges that the claim -6- 7 is a Covered Claim, then Indemnitor may participate, at its own cost and expense, in any discussions and proceedings relating thereto, provided that it has so notified the Indemnitee of its intention to do so in such notice. If Indemnitor does participate in any discussions and proceedings, Indemnitor shall pay its own costs and expenses in connection therewith. Any settlement or compromise made by the Indemnitee in accordance with this Section 5 without the participation of the Indemnitor or any final judgment or decree entered in any claim, suit or action defended only by the Indemnitee alone shall be deemed to have been consented to by, and shall be obligatory and binding upon, the Indemnitor as fully as if the Indemnitor alone had assumed the defense thereof and a final judgment or decree had been entered in such suit or action, or with regard to such claim by a court of competent jurisdiction for the amount of such settlement or compromise, satisfaction, judgment or decree, subject only to the right of the Indemnitor to dispute that any such claim is a Covered Claim if, but only if, the Indemnitor has served the proper notice within the proper time asserting that the claim is not a Covered Claim. (d) To the extent, if at all, that a court of competent jurisdiction determines that NMSA 1978, Section 56-7-2 (Repl. Pamp. 1996) applies to any provision of this Agreement, then any and all provisions of indemnification shall not indemnify any indemnitee against loss or damages, for: (1) death of bodily injury to persons; or (2) injury to property; or (3) any other loss, damage or expense arising under (i) or (ii) or both; or (4) any combination of these, arising from the sole or concurrent negligence of the indemnitee or the agents or employees of the indemnitee or any independent contractor who is directly responsible to the indemnitee, or from any accident which occurs in operations carried on at the direction or under the supervision of the indemnitee or an employee or representative of the indemnitee or in accordance with methods and means specified by the indemnitee or employees or representations of the indemnitee. (e) To the extent, if at all, that a court of competent jurisdiction determines that NMSA 1978, Section 56-7-1 applies to the indemnification set forth in this Agreement, the indemnification does not apply to liability, claims, damages, losses or expenses, including attorney fees arising out of: (1) the preparation or approval of maps, drawings, opinions, reports, surveys, change orders, designs or specifications by the indemnitee, or the agents or employees of the indemnitee; or -7- 8 (2) the giving of or failure to give directions or instructions by the indemnitee, or the agents or employees of the indemnitee, where such giving or failure to give directions or instructions is the primary cause of bodily injury to persons or damage to property. SECTION 7. COVENANTS OF URI. URI for the two year period commencing on the date of the Exchange or until SFPG disposes of all of the URI Shares acquired in the Exchange, whichever is earlier, will cause Uranco to actively engage in the conduct of the trade or business being conducted by Uranco on the date hereof and will not cause or allow Uranco to take any action, or to fail to take any action, which would, or could with the passage of time, adversely affect the qualification of the Exchange under Section 368(a)(1)(B) of the Internal Revenue Code, including but not limited to the following: (a) Merge or consolidate Uranco with or into any other corporation; (b) Liquidate or partially liquidate Uranco; (c) Cause Uranco to sell or transfer substantially all its assets in a single transaction or series of related transactions; (d) Cause Uranco to redeem or otherwise repurchase any of its capital stock; (e) Cause Uranco to issue additional shares of its stock (except in connection with an issuance pursuant to employee benefit or compensation plans of Uranco; or (f) Cease to engage in the active conduct of the trade or business engaged in by Uranco on the date hereof; unless URI first obtains, and permits to SFPG to review, an opinion of Baker & Hostetler LLP or other law firm of similar repute, or a ruling from the Internal Revenue Service that such transaction will not adversely affect the qualification of the Exchange under Section 368(a)(1)(B) of the Internal Revenue Code. The foregoing shall apply regardless of whether or not the Exchange actually qualifies under Section 368(a)(1)(B) of the Internal Revenue Code. SECTION 8. LEGAL OPINIONS. The following legal opinions have been exchanged by the parties: (a) URI has received the opinion of Modrall, Sperling, Roehl, Harris & Sisk, P.A., counsel to SFPG, dated the Closing Date, substantially to the effect that: -8- 9 (i) SFPG is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) SFPG has full corporate power and authority to execute, deliver and perform this Agreement and this Agreement has been duly authorized, executed and delivered by SFPG and (assuming due and valid authorization, execution and delivery by URI) constitutes the legal, valid and binding agreement of SFPG, enforceable in accordance with its terms except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). (iii) The execution and performance by SFPG of this Agreement will not violate the Certificate of Incorporation or By-Laws of SFPG, respectively, and, to the knowledge of such counsel, will not violate, result in a breach of or constitute a default under any material lease, mortgage, contract, agreement, instrument, law, rule, regulation, judgment, order or decree to which SFPG is a party or by which they or any of their properties or assets may be bound. (iv) After inquiry of the officers of SFPG, such counsel has no knowledge of any consent, approval, authorization or order of any court or governmental agency or body which has not been obtained but which is required on behalf of SFPG for the consummation of the transactions contemplated by this Agreement. (v) After inquiry of the officers of SFPG, such counsel has no knowledge of any actions, suits or proceedings, pending or threatened against or affecting SFPG by any governmental entity which seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement. (b) SFPG has received the opinion of Baker & Hostetler LLP, counsel to URI, dated the Closing Date, substantially to the effect that: (i) The incorporation, existence and good standing of URI are as stated in this Agreement. (ii) URI has full corporate power and authority to execute, deliver and perform this Agreement and the Stock Exchange Agreement and this Agreement and the Stock Exchange Agreement have been duly authorized, executed and delivered by URI and (assuming due and valid authorization, execution and delivery by Uranco) constitute the legal, valid and binding agreements of URI, enforceable in accordance with their terms except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent -9- 10 transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). (iii) The execution and performance by URI of this Agreement and the Stock Exchange Agreement will not violate the Certificate of Incorporation or ByLaws of URI, respectively, and, to the knowledge of such counsel, will not violate, result in a breach of or constitute a default under any material lease, mortgage, contract, agreement, instrument, law, rule, regulation, judgment, order or decree to which URI is a party or by which it or any of its properties or assets may be bound. (iv) To the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental agency or body which has not been obtained is required on behalf of URI for the consummation of the transactions contemplated by this Agreement or the Stock Exchange Agreement. (v) To the knowledge of such counsel, there are no actions, suits or proceedings, pending or threatened against or affecting URI by any governmental entity which seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement or the Stock Exchange Agreement. (vi) The Shares have been duly authorized and are validly issued and outstanding and are fully paid and nonassessable. (vii) The shares of URI Common Stock issued in the Exchange have been listed on the Nasdaq National Market subject to official notice of issuance. SECTION 9. PUBLIC ANNOUNCEMENTS. URI and SFPG will consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or the transactions contemplated hereby and will not issue any such press release or make any such public statement prior to such consultation. Notwithstanding the foregoing, SFPG and URI shall not be prohibited from issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby as may be required under applicable law, but in any such event, SFPG or URI, as the case may be, shall notify the other party prior to taking such action. SECTION 10. NASDAQ NATIONAL MARKET. URI shall use its reasonable best efforts to list on the Nasdaq National Market, upon official notice of issuance, the shares of URI Common Stock to be issued to SFPG in connection with the Exchange. -10- 11 SECTION 11. FEES AND EXPENSES. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, except as otherwise specifically set forth in this Agreement or in the Registration Rights Agreement. SECTION 12. REASONABLE EFFORTS. Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use all reasonable efforts after the Closing, to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Exchange and the other transactions contemplated by this Agreement and the prompt satisfaction of the conditions hereto, including (a) the obtaining of all necessary actions or non-actions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, (b) the obtaining of all necessary consents, approvals or waivers from third parties, and (c) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by this Agreement. SECTION 13. NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given on the date of delivery, if delivered personally or faxed during normal business hours of the recipient, or three days after deposit in the U.S. Mail, postage prepaid, if mailed by registered or certified mail (return receipt requested) as follows: (a) if to SFPG, to: Santa Fe Pacific Gold Corporation 6200 Uptown Blvd. NE Albuquerque, New Mexico 87110 Attention: Wayne Jarke, General Counsel Fax No.: (505) 880-5437 with a copy to: Modrall Law Firm 500 Fourth Street NW, Suite 1000 Albuquerque, New Mexico 87102 Attention: John R. Cooney Fax No.: (505) 848-1889 -11- 12 (b) If to URI, to: Uranium Resources, Inc. 12750 Merit Drive, Suite 1020 Box 12 Dallas, Texas 75251 Attention: President Fax No.: (214) 387-7779 with a copy to: Baker & Hostetler LLP 303 East 17th Avenue, Suite 1100 Denver, Colorado 80203 Attention: Alfred C. Chidester Fax No.: (303) 861-7805 SFPG and URI may hereafter notify the other of changes in the information set forth in this section, which changes shall be effective if given in compliance with this section. SECTION 14. ASSIGNABILITY AND PARTIES IN INTEREST. This Agreement shall inure to the benefit of and be binding upon URI and SFPG and their respective successors and assigns. The assigning party shall give notice of such assignment within 20 days after the effective date of assignment. Any assignment shall be of the entire Agreement. SECTION 15. CHOICE OF LAW, CHOICE OF FORUM AND ATTORNEYS' FEES. This Agreement shall be governed by and construed in accordance with the internal law of the State of New Mexico without giving effect to conflicts of law principles thereof. SFPG and URI agree that all litigation arising out of or related to this Agreement for the performance or non-performance of actions contemplated by this Agreement shall be brought in a federal or state court of competent jurisdiction within the state of New Mexico. SFPG and URI consent to jurisdiction of such a court. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the prevailing party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. SECTION 16. COUNTERPARTS. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute but one and the same instrument. -12- 13 SECTION 17. COMPLETE AGREEMENT. This agreement is entered into by the parties in connection with a transaction involving the transfer of common stock of Uranco owned by SFPG to URI in exchange for common stock of URI, the grant by URI to SFPG of registration rights with respect to the stock of URI issued to SFPG, the grant by SFPG to Uranco of a license to explore and an option to purchase in exchange for certain commitments by Uranco, and the guarantee by URI of certain obligations of Uranco to SFPG. In order to effect this transaction, certain of the parties have contemporaneously entered into certain agreements, specifically, the Stock Exchange Agreement and Plan of Reorganization (URI and Uranco); this Agreement; the License to Explore and Option to Purchase (SFPG and Uranco); and the Registration Rights Agreement (SFPG and URI). All of such agreements, together with all exhibits or schedules thereto and documents delivered pursuant thereto, contain the entire agreement among the parties with respect to the contemplated transaction, and shall supersede all previous writings and all previous or contemporaneous oral negotiations, commitments, and understandings. SECTION 18. CONFIDENTIALITY AGREEMENT. The Parties have heretofore entered into a Confidentiality Agreement dated August 26, 1996, which is incorporated herein by reference and which shall continue to govern the conduct of the Parties. SECTION 19. INTERPRETATION. The headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 20. SEVERABILITY. Any provision of this Agreement which is invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction be ineffective as to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction. -13- 14 SANTA FE PACIFIC GOLD CORPORATION Date: March 25, 1997 By: /s/ Bruce D. Hansen ---------------------------------- Name: Bruce D. Hansen Title: Senior Vice-President- Corporate Development URANIUM RESOURCES, INC. Date: March 25, 1997 By: /s/ Paul K. Willmott ---------------------------------- Name: Paul K. Willmott Title: President -14- 15 Schedule 3 3.1 Category I, McKinley County 3.2 Category I Claims, McKinley County 3.3 Category I, Sandoval County 3.4 Category II, McKinley County 3.5 Category II, Cibola County 3.6 Category II Royalty, Cibola County 3.7 Category II, Sandoval County 3.8 Category II, Bernalillo County -15- 16 EXHIBIT 10.19 Schedule 4(d) Navajo Nation land and jurisdictional claims: Since 1982, the Navajo Nation has asserted title and jurisdictional claims over lands in the checkerboard area in northwestern New Mexico outside the boundaries of the recognized Navajo Reservation, including portions of McKinley County, where some of the mineral interests subject to this Agreement are located. While the federal courts have rejected claims to title to lands, see Navajo Tribe v. New Mexico, 809 F.2d 1455 (10th Cir. 1987), the courts have acknowledged the potential for the exercise of off-reservation civil jurisdiction over non-Indians by the Navajo Nation. See Pittsburg & Midway Coal Mining Co. v. Watchman, 52 F.3d 1531 (10th Cir. 1995); Texaco, Inc. v. Zah, 5 F.3d 1374 (10th Cir. 1993). In view of these assertions, there is the potential that the Navajo Nation will assert title to, or jurisdiction over, the mineral interests subject to this Agreement located in McKinley County, New Mexico. While title claims were rejected, the decision was not on the merits, but was founded on the fact that the United States was immune from suit, that the suit should have been brought under the Indian Claims Commission Act of 1946, and the suit could not proceed against the remaining defendants, including Santa Fe Mining, Inc. , because the United States was an indispensable party. Accordingly, the decision could be read to have barred the claim or remedy, but not the underlying rights to title to the lands. As reflected in Pittsburg & Midway, the Navajo Nation aggressively asserts civil jurisdiction, including taxation and regulatory authority, to off-reservation areas within the territorial confines of the "Navajo Nation" as the Nation defines that term in 7 N.N.C. Section 254. While Santa Fe Pacific Gold Corporation and Uranco Inc. have not attempted to determine whether the mineral interests subject to this agreement would fall within the area over which the Navajo Nation would assert title or jurisdiction, neither company are presently aware of any Navajo Nation claim that would include the mineral interests subject to this Agreement that are located in Bernalillo, Cibola, or Sandoval Counties. 17 EXHIBIT 10.19 AFTER RECORDING RETURN TO: Margaret Lewis Meister Modrall, Sperling, Roehl, Harris & Sisk, P.A. P. O. Box 2168 Albuquerque, New Mexico 87103 DEED Category I McKinley STATE OF NEW MEXICO ) COUNTY OF McKINLEY ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals Corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the interest reserved by Santa Fe Pacific Railroad Company in the instruments described in Exhibit A hereto but only so far as such reservations and exceptions pertain to and cover the real estate in McKinley County, New Mexico more particularly described in Exhibit B hereto, less and except the interests described in Exhibit C hereto and subject to the grants and interests set forth in the instruments set forth in Exhibit D hereto, all of which exhibits are incorporated herein by reference. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997, (a copy of which is maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreement must be brought within the time period set forth in such agreement. 18 CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. WITNESS its hand and seal this 21 day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By:/s/ BRUCE D. HANSEN ------------------------------------ (Seal) Bruce D. Hansen Senior Vice President-Corporate Development STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March 21, 1997, by Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific Gold Corporation. (Seal) /s/ JACQUELINE WALSTON ---------------------------------- Jacqueline Walston Notary Public My commission expires: January 28, 1998 ----------------- 19 EXHIBIT A CATEGORY I DEED, MCKINLEY COUNTY Deeds Reserving Mineral Interests Warranty Deed dated October 15, 1945 from Santa Fe Pacific Railroad Company to Fernandez Company, recorded in Book 12 DR, Page 536, in the official records of McKinley County, New Mexico. Warranty Deed dated March 4, 1952 from Santa Fe Pacific Railroad Company to Hazel W. Prewitt, recorded in Book 11 Misc., Page 370, in the official records of McKinley County, New Mexico. Warranty Deed dated May 15, 1945 from Santa Fe Pacific Railroad Company to Harold F. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds, Page 482, in the official records of McKinley County, New Mexico. Warranty Deed dated April 16, 1951 from Santa Fe Pacific Railroad Company to Nabor Marquez. Warranty Deed dated February 6, 1947, from Santa Fe Pacific Railroad Company to Nabor Marquez, recorded in Book 13 of Deeds, Page 165, in the official records of McKinley County, New Mexico. Warranty Deed dated January 16, 1948, from Santa Fe Pacific Railroad Company to W. A. Berryhill, recorded in Book 13 of Deeds, Page 298, in the official records of McKinley County, New Mexico. Warranty Deed dated August 16, 1950, from Santa Fe Pacific Railroad Company to Rose C. Eaves, recorded in Book 10 of W. D., Page 423, in the official records of McKinley County, New Mexico. Warranty Deed dated March 15, 1947, from Santa Fe Pacific Railroad Company to Hazel W. Prewitt, an individual, and Hazel W. Prewitt, Guardian Estate of Joan M. Prewitt, a minor, recorded in Book 13 of Deeds, Page 240, in the official records of McKinley County, New Mexico. Warranty Deed dated May 14, 1929, from Santa Fe Pacific Railroad Company to the United States of America, In Trust for the Navajo Tribe, recorded in Book 7 of Deeds, Page 243, in the official records of McKinley County, New Mexico. Warranty Deed dated November 1, 1948, from Santa Fe Pacific Railroad Company to W. F. Pitt and Susie Bell Pitt, husband and wife, recorded in Book 9 of W. D., Page 53, in the official records of McKinley County, New Mexico. Warranty Deed dated December 1, 1944, from Santa Fe Pacific Railroad to Harold P. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds, Page 440, in the official records of McKinley County, New Mexico. 20 EXHIBIT B CATEGORY I DEED, MCKINLEY COUNTY CONVEYANCE OF ALL MINERALS EXCEPT COAL TO URANCO (Revised 03/10/97) MERIDIAN: NMPM ACRES Township 13 North, Range 8 West ------------------------------- Section 13 Lots 1-4, W/2 NE/4, W/2 SE4, W/2 645.36 Section 15 All 640.00 Section 17 All 640.00 Township 13 North, Range 9 West ------------------------------- Section 1 Lots 1-4, S/2 N/2, S/2 640.80 Section 3 Lots 1-4, S/2 N/2, S/2 640.24 Section 5 Lots 1-4, S/2 N/2, S/2 640.00 Section 7 Lots 1-4, E/2 W/2, E/2 648.08 Section 9 All, except that portion of E/2 and 379.92 East 360 ft. of E/2 W/2 described in Quitclaim Deed to USA dated 3/3/87 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Township 13 North, Range 10 West -------------------------------- Section 1 Lots 1-4, S/2 N/2, S/2 638.80 Section 3 Lots 1-4, S/2 N/2, S/2 638.16 Section 11 All 640.00 Section 13 All 640.00
B-1 21 Township 14 North, Range 10 West -------------------------------- Section 1 All, except 29.98 ac. in Baca Rail Spur 610.66 Section 3 All 640.88 Section 5 All 640.40 Section 7 All 651.04 Section 9 All 640.00 Section 13 All 640.00 Section 15 All, except 4.484 ac. for gas pipeline 607.54 R/W and 27.973 ac. for Baca Rail Spur Section 17 All 640.00 Section 21 All, except 33.09 ac. in Baca Rail Spur 606.91 Section 23 All 640.00 Section 25 All 640.00 Section 27 All 640.00 Section 29 All, except 32.24 ac. in Baca Rail Spur 607.76 Section 33 All 640.00 Section 35 All 640.00 Township 15 North, Range 10 West -------------------------------- Section 5 All 641.92 Section 7 All 667.36 Section 9 All 640.00 Section 11 All, except 30.73 ac. in Baca Rail Spur 609.27 Section 15 All, except 27.85 ac. in Baca Rail Spur 612.15 Section 17 All 640.00 Section 19 All 665.04 Section 21 All 640.00
B-2 22 Section 27 All 640.00 Section 29 All 640.00 Township 16 North, Range 10 West -------------------------------- Section 7 All 672.48 Section 19 All 669.80 Township 19 North, Range 11 West -------------------------------- Section 10 All 640.00 Section 11 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 18 All 637.60 Section 19 All 638.44 Section 20 All 640.00 Section 29 N/2, SW/4, N/2 SE/4, SE/4 SE/4 600.00 Section 30 All 639.20 Section 31 All 638.36 Township 17 North, Range 14 West -------------------------------- Section 13 Lots 1-4 7.32 Section 25 Lots 1-4 11.58 Township 16 North, Range 16 West -------------------------------- Section 7 Lot 4, S/2 and NE/4 of Lot 3, NE/4, 481.14 SE/4, E/2 SW/4, NE/4 SE/4 NW/4, S/2 SE/4 NW/4 Section 7 Lots 1, 2, NW/4 of Lot 3, NE/4 NW/4, 114.78 NW/4 SE/4 NW/4
B-3 23 Section 9 N/2 NW/4, N/2 S/2 NW/4, S/2 SW/4 NW/4, 220.00 SW/4 SE/4 NW/4, N/2 NW/4 SW/4, SW/4 NW/4 SW/4, NW/4 NE/4 SW/4, N/2 NW/4 NE/4, SW/4 NW/4 NE/4 Section 9 SE/4, S/2 NE/4, NE/4 NE/4, SE/4 NW/4 420.00 NE/4, S/2 SW/4, E/2 NE/4 SW/4, SW/4 NE/4 SW/4, SE/4 NW/4 SW/4, SE/4 SE/4 NW/4 Section 17 S/2, N/2 NW,/4, SW/4 NW/4 440.00 Section 17 NE/4, SE/4 NW/4 200.00 Township 16 North, Range 17 West -------------------------------- Section 13 All 640.00 --------- County Total 36,102.99
B-4 24 COMPANY: GOLD STATE: NM COUNTY: SANDOVAL Township 12 North, Range 3 West ------------------------------- Section 19 NW/4, SE/4 320.00 ------ County Total 320.00 ------ GRAND TOTAL: 36,422.99 =========
B-5 25 EXHIBIT C CATEGORY I DEED, MCKINLEY COUNTY Items Not Included in Grant Any interest in or under the property in Section 1 and 15, T.14N., R.10W., as described in the Special Warranty Deed dated November 23, 1983, between Betty Lou Wilcoxson Harris and Phil Harris to SF Coal Corporation, recorded in Book 35 of Deeds, Page 590, in the official records of McKinley County, New Mexico. Any interest in or under the property in Sections 21 and 29, T.14N., R.10W., as described in the Special Warranty Deed dated November 9, 1983, between Leroy Navarre and Billie Ione Navarre and SF Coal Corporation recorded in Book 35 of Deeds, Page 585, in the official records of McKinley County, New Mexico. Any interest in or under the property in Sections 11 and 15, T.15N., R.10W., as described in the Quitclaim Deed dated November 23, 1983, between R. M. Albers and Imogene Albers and SF Coal Corporation, recorded in Book 35, Page 598, in the official records of McKinley County, New Mexico. Any and all right, title and interest retained by Grantor in that certain Surface Use Agreement by and between Santa Fe Pacific Railroad Company and R.M. Albers, et al., dated June 3, 1980, a memorandum of which was recorded at Book 78, Page 252-253 of the official records of McKinley, County, New Mexico. Any and all right, title and interest retained by Grantor in that certain Agreement by and between Santa Fe Pacific Railroad Company and Fernandez Company, Ltd., dated July 31, 1979, a memorandum of which was recorded at Book 76, Page 938 of the official records of McKinley County, New Mexico, which agreement was partially released on April 2, 1982, which release is recorded at Book 52, Pages 961 -962 of the official records of McKinley County New Mexico, and which Agreement was amended on March 2, 1987, a memorandum of which was recorded in Book 90 Misc., Pages 639-642 of the official records of McKinley County, New Mexico. 26 EXHIBIT D CATEGORY I, MCKINLEY COUNTY Items to which Deed is Subject Stipulation in the District Court of McKinley County, New Mexico, case entitled Santa Fe Pacific Railroad Company, a corporation, Plaintiff v. Duane Berryhill and Nelda Berryhill, his wife, et. al., No. 8287, filed for record on July 25, 1953 at 9:30 a.m., recorded in Vol. 93, Folio 225, Valencia County records. Lease Option Agreement dated October 8, 1987, between Cerrillos Land Company and Santa Fe Energy Company, as amended on July 1, 1988, and as amended on December 1, 1989, a memorandum of which is recorded in Book 2, Page 1630, in the official records of McKinley County, New Mexico. Uranium Mining Lease and Agreement dated March 21, 1957, between Santa Fe Pacific Railroad Company and Quinta Corporation, as it affects the NE/4 and SE/4 NW/4 of Section 17, T.16N., R.16W., McKinley County, New Mexico. Surface Owners Agreement dated February 17, 1959 between Santa Fe Pacific Railroad Company and the Navajo Tribe of Indians recorded in Book 36, pages 25-29, in the official records of McKinley County, New Mexico. Waiver of Mineral Development Rights for Taylor Substation Site and Access Roadway dated November 13, 1973, from Santa Fe Pacific Railroad Company to Plains Electric Company, recorded in Book 44, Page 932, in the official records of McKinley County, New Mexico, covering two parcels of land in Lots 3 and 4, Section 1, T.13N., R.10W. Uranium Mining Lease dated December 4, 1980 from Santa Fe Pacific Railroad Company to Teton Exploration Drilling Company covering NE/4 NW/4, Lots 1 and 2, NW/4 SE/4 NW/4 and NW/4 of Lot 3 in Section 7,T.16N., R.16W. and all of Section 13, T.16N., R.17W., McKinley County, New Mexico. Surface Owners Agreement by and between Santa Fe Pacific Railroad Company and Fernandez Company, Ltd., dated July 31, 1979, a memorandum of which was recorded at Book 76, Page 938 of the official records of McKinley County, New Mexico, which agreement was partially released on April 2, 1982, which release is recorded at Book 52, Pages 961-962 of the official records of McKinley County New Mexico, and which Agreement was amended on March 2, 1987, a memorandum of which was recorded in Book 90 Misc., Pages 639-642 of the official records of McKinley County, New Mexico. Surface Use Agreement by and between Santa Fe Pacific Railroad Company and R.M. Albers, et al., dated June 3, 1980, a memorandum of which was recorded at Book 78, Page 252-253 of the official records of McKinley County, New Mexico. 27 Minerals Lease dated May 1, 1993, between Santa Fe Pacific Minerals Corporation and Quivira Mining Company, a memorandum of which is recorded in Book 7 of Comp., Page 439, in the official records of McKinley County, New Mexico, as it covers All of Sections 13, 23, and 25, and a portion of Section 15, T.14N., R.10W. Special Warranty Deed dated June 25, 1993, (effective 6-26-93) from Hospah Coal Company, Santa Fe Pacific Minerals Corporation, Santa Fe Pacific Mining, Inc., The Atchison, Topeka and Santa Fe Railway Company, and the Star Lake Railroad Company to San Juan Basin Coal Holding Company, recorded in Book 6 Comp., Page 8560, of the official records of McKinley County, New Mexico, covering coal and coal development rights or mining rights. Special Warranty Deed dated effective June 25, 1993, from Santa Fe Pacific Minerals Corporation to Hanson Natural Resources Company covering coal and related mining rights in Section 19, T.16N., R. 10W., McKinley County, New Mexico, recorded in Book 6 Comp., Page 8457 in the official records of McKinley County, New Mexico. (SFPG-47567) Special Warranty Deed dated effective June 25, 1993, from Santa Fe Pacific Minerals Corporation to Hanson Natural Resources Company covering coal and related mining rights in Section 7, T.16N. R.10W., recorded in Book 6 Comp., Page 8480, in the official records of McKinley County. (SFPG-47573) Amended and Restated San Juan Basin Agreement dated June 25, 1993, by and between Hospah Coal Company, Hanson Natural Resources Company and Chaco Energy Company. Road Use and Overpass Construction Agreement dated February 16, 1984 between Ranch Road, Inc. and SF Coal Corporation, as it covers Section 21, T.14N. , R.10W., McKinley County, New Mexico. (SFPG-32-001-SR-19) Real Estate Taxes for the years 1997 and subsequent years. 28 AFTER RECORDING RETURN TO: Margaret Lewis Meister Modrall, Sperling, Roehl, Harris & Sisk, P.A. P. O. Box 2168 Albuquerque, New Mexico 87103 DEED Category I Claims McKinley STATE OF NEW MEXICO ) COUNTY OF McKINLEY ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals Corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the interest of Grantor in the instruments described in Exhibit A hereto. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997, (a copy of which is maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreement must be brought within the time period set forth in such agreement. 29 CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. WITNESS its hand and seal this 21 day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By: /s/ BRUCE D. HANSEN ----------------------------------- (Seal) Bruce D. Hansen Senior Vice President-Corporate Development STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March 21, 1997, by Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific Gold Corporation. (Seal) /s/ JACQUELINE WALSTON ----------------------------------- Jacqueline Walston Notary Public My commission expires: 01/28/98 --------------- 30 EXHIBIT A MCKINLEY COUNTY, NEW MEXICO WEST LARGO PROJECT 32-010-002 / 32-010-0003
RECORDING DATA BLM SERIAL CLAIM NAMES BOOK PAGE NUMBERS - ----------- -------------- ---------- ID 21 53 1 NMMC 50374 123 620 * amended 123 655 * amended ID 22 53 2 NMMC 50375 123 616 * amended 123 657 * amended ID 23 53 3 NMMC 50376 123 602 * amended 123 659 * amended ID 24 53 4 NMMC 50377 123 618 * amended 123 661 * amended ID 25 53 5 NMMC 50378 123 600 * amended 123 663 * amended ID 26 53 6 NMMC 50379 123 604 * amended 123 665 * amended ID 27 53 7 NMMC 50380 123 606 * amended 123 667 * amended ID 28 53 8 NMMC 50381 123 624 * amended 123 669 * amended ID 29 53 9 NMMC 50382 123 608 * amended 123 671 * amended
31
RECORDING DATA BLM SERIAL CLAIM NAMES BOOK PAGE NUMBERS - ----------- -------------- ---------- ID 30 53 10 NMMC 50383 123 626 * amended 123 673 * amended ID 31 53 11 NMMC 5172 109 775 * amended 122 725 * amended ID 32 53 12 NMMC 5173 109 776 * amended 118 382 * amended ID 33 53 13 NMMC 5174 109 777 * amended ID 34 53 14 NMMC 5175 109 778 * amended ID 35 53 15 NMMC 5176 109 779 * amended ID 36 53 16 NMMC 5177 109 780 * amended ID 37 53 17 NMMC 5178 109 781 * amended ID 38 53 18 NMMC 5179 109 782 * amended 122 723 * amended ID 39 53 19 NMMC 50384 123 594 * amended 123 675 * amended ID 40 53 20 NMMC 50385 123 592 * amended 123 677 * amended ID 41 53 21 NMMC 50386 123 622 * amended 123 679 * amended ID 42 53 22 NMMC 50387 123 598 * amended 123 681 * amended
2 32
RECORDING DATA BLM SERIAL CLAIM NAMES BOOK PAGE NUMBERS - ----------- -------------- ---------- ID 43 53 23 NMMC 50388 123 628 * amended 123 683 * amended ID 44 53 24 NMMC 50389 123 614 * amended 123 685 * amended ID 45 53 25 NMMC 5180 109 783 * amended ID 46 53 26 NMMC 50390 123 635 * amended ID 47 53 27 NMMC 50391 123 637 * amended ID 48 53 28 NMMC 50392 123 639 * amended ID 49 53 29 NMMC 50393 123 641 * amended ID 50 53 30 NMMC 50394 123 643 * amended ID 51 53 31 NMMC 50395 123 590 * amended 123 687 ID 87 79 702 NMMC 50396 123 596 * amended 123 689 * amended ID 88 79 703 NMMC 50397 123 612 * amended 123 691 * amended ID 89 79 704 NMMC 50398 123 610 * amended 123 693 * amended ID 90 79 705 NMMC 50399 123 645 amended
3 33
RECORDING DATA BLM SERIAL CLAIM NAMES BOOK PAGE NUMBERS - ----------- -------------- ---------- ID 91 79 706 NMMC 50400 123 647 * amended ID 95 79 710 NMMC 50403 123 651 * amended ID 96 79 711 NMMC 50401 123 649 * amended ID 97 79 712 NMMC 50402 123 653 * amended ID 52 53 32 NMMC 9098 112 629 * amended 123 697 * amended ID 53 53 33 NMMC 9099 112 630 * amended 123 699 * amended ID 54 53 34 NMMC 9100 112 631 * amended 123 701 * amended ID 55 53 35 NMMC 9101 112 632 * amended 123 703 * amended ID 56 53 36 NMMC 9102 112 633 * amended 123 705 * amended ID 57 53 37 NMMC 9103 112 634 * amended 123 707 * amended ID 58 53 38 NMMC 9104 112 635 * amended 123 709 * amended ID 59 53 39 NMMC 9105 112 636 * amended 123 711 * amended
4 34
RECORDING DATA BLM SERIAL CLAIM NAMES BOOK PAGE NUMBERS - ----------- -------------- ---------- ID 60 53 40 NMMC 9106 112 637 * amended 123 713 * amended ID 61 53 41 NMMC 9107 112 638 * amended 123 715 * amended ID 62 53 42 NMMC 9108 112 639 * amended 123 717 * amended ID 63 53 43 NMMC 9109 112 640 * amended 123 719 * amended ID 64 53 44 NMMC 9110 112 641 * amended 123 721 * amended ID 65 53 45 NMMC 9111 112 642 * amended 123 723 * amended ID 66 53 46 NMMC 9112 112 643 * amended 123 725 * amended ID 67 53 47 NMMC 9113 112 644 * amended 123 727 * amended ID 68 53 48 NMMC 9114 112 645 * amended 123 729 * amended ID 69 53 49 NMMC 9115 112 646 * amended 123 731 * amended ID 70 53 50 NMMC 9116 112 647 * amended 123 733 * amended ID 71 53 51 NMMC 9117 112 648 * amended 123 735 * amended
5 35
RECORDING DATA BLM SERIAL CLAIM NAMES BOOK PAGE NUMBERS - ----------- -------------- ---------- ID 72 53 52 NMMC 9118 112 649 * amended 123 737 * amended ID 73 53 53 NMMC 9119 112 650 * amended 123 739 * amended ID 74 53 54 NMMC 9120 112 651 * amended 123 741 * amended ID 75 53 55 NMMC 9121 112 652 * amended 123 743 * amended ID 76 53 56 NMMC 9122 112 653 * amended 123 745 * amended ID 77 53 57 NMMC 9123 112 654 * amended 123 747 * amended ID 78 53 58 NMMC 9124 112 655 * amended 123 749 * amended ID 79 53 59 NMMC 9125 112 656 * amended 123 751 * amended ID 80 53 60 NMMC 9126 112 657 * amended 123 753 * amended ID 81 53 61 NMMC 9127 112 658 * amended 123 755 * amended ID 82 53 62 NMMC 9128 112 659 * amended 123 757 * amended ID 83 53 63 NMMC 9129 112 660 * amended 123 759 * amended
6 36
RECORDING DATA BLM SERIAL CLAIM NAMES BOOK PAGE NUMBERS - ----------- -------------- ---------- ID 84 53 64 NMMC 9130 112 661 * amended 123 761 * amended ID 85 53 65 NMMC 9131 112 662 * amended 123 763 * amended ID 86 53 66 NMMC 9132 112 663 * amended 123 765 * amended ID 98 112 799 NMMC 9133 123 767 * amended
Located in Sec. 20, 21, 22, 27, 28, 29, 32, 33, 34 15N-10W 7 37 EXHIBIT 10.19 AFTER RECORDING RETURN TO: Margaret Lewis Meister Modrall, Sperling, Roehl, Harris & Sisk, P.A. P. O. Box 2168 Albuquerque, New Mexico 87103 DEED Category I Sandoval STATE OF NEW MEXICO ) COUNTY OF SANDOVAL ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals Corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the interest reserved by Santa Fe Pacific Railroad Company in the instruments described in Exhibit A hereto but only so far as such reservations and exceptions pertain to and cover the real estate in Sandoval County, New Mexico more particularly described in Exhibit B hereto, less and except the interests described in Exhibit C hereto and subject to the grants and interests set forth in the instruments set forth in Exhibit D hereto, all of which exhibits are incorporated herein by reference. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997, (a copy of which is maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreement must be brought within the time period set forth in that agreement. 38 CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. WITNESS its hand and seal this 21 day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By: /s/ BRUCE D. HANSEN ----------------------------------- (Seal) Bruce D. Hansen Senior Vice President-Corporate Development STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March 21, 1997, by Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific Gold Corporation. /s/ JACQUELINE WALSTON --------------------------------------- Jacqueline Walston (Seal) Notary Public My commission expires: 01/28/98 --------------- 39 EXHIBIT A CATEGORY I DEED, SANDOVAL COUNTY Deeds Reserving Mineral Interests Warranty Deed dated September 8, 1949, from Santa Fe Pacific Railroad Company to Lou C. Evans. 40 EXHIBIT B CATEGORY I DEED, SANDOVAL COUNTY CONVEYANCE OF ALL MINERALS EXCEPT COAL TO URANCO (Revised 03/10/97) COMPANY: GOLD STATE: NM COUNTY: SANDOVAL
MERIDIAN: NMPM ACRES ----- Township 12 North, Range 3 West ------------------------------- Section 19 NW/4, SE/4 320.00 ------ County Total 320.00 ------
41 EXHIBIT C CATEGORY I DEED, SANDOVAL COUNTY Items Not Included in Grant None 42 EXHIBIT D CATEGORY I DEED, SANDOVAL COUNTY Items to which Deed is Subject Lease Option Agreement dated October 8, 1987, between Cerrillos Land Company and Santa Fe Energy Company, as amended on July 1, 1988, and as amended on December 1, 1989. 43 EXHIBIT 10.19 AFTER RECORDING RETURN TO: Margaret Lewis Meister Modrall, Sperling, Roehl, Harris & Sisk, P.A. P.O. Box 2168 Albuquerque, New Mexico 87103 DEED Category II McKinley STATE OF NEW MEXICO ) COUNTY OF McKINLEY ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals Corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the interest in uranium reserved by Santa Fe Pacific Railroad Company in the instruments described in Exhibit A hereto but only so far as such reservations and exceptions pertain to and cover the real estate in McKinley County, New Mexico more particularly described in Exhibit B hereto (the "Property"), less and except the interests described in Exhibit C hereto and subject to the grants and interests set forth in the instruments set forth in Exhibit D hereto, all of which exhibits are incorporated herein by reference. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and Grantee, dated effective as of March 21, 1997 (copies of which are maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreements must be brought within the time period set forth in such agreements. CONVEYANCE SUBJECT TO THE OBLIGATION TO PURCHASE ENTIRE MINERAL ESTATE. The grant of this deed is subject to the following right of Grantor. At such time as Grantee or its successors or assigns applies for a mining permit with respect to the Property or performs any activities on the Property which would require a mining permit, Grantor shall have the right to require Grantee or its successors or assigns to purchase all of the mineral estate (except coal in place including development or mining rights related to coal) owned by Grantor on the portion of the Property which is the subject of the mining permit or activities which would require a mining permit for a purchase price of $200 per acre (the "Purchase 44 Price"), which Purchase Price shall be paid within 30 days after Grantor declares its right to require the purchase. The Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Grantor's exercise of such right over $15.80 per pound. Grantee shall purchase such portions of property as entire sections or as much of each section as was originally conveyed by Grantor to Grantee. Additionally, Grantor grants to Grantee or its successor and assigns for a period of 99 years from the date of this Deed the option to purchase all of the remaining mineral estate (except coal in place, including development or mining rights related to coal) owned by Grantor in all or any portion of the Property for a total purchase price of $200 per acre (the "Purchase Price"), which Purchase Price will be payable within 30 days after Grantee or its successors or assigns elects to exercise the option to purchase. The Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Grantor's exercise of such right over $15.80 per pound. Grantee shall purchase such portions of property as entire sections or as much of each section as was originally conveyed by Grantor to Grantee. The Spot Price shall mean that price at which uranium may be purchased for delivery within one year, as reported by TradeTech or its successors in interest, or, in the absence of TradeTech or a successor in interest, another accepted industry publication. CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. WITNESS its hand and seal this 21st day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By: /s/ BRUCE D. HANSEN ----------------------------------- (Seal) Bruce D. Hansen Senior Vice President-Corporate Development 45 STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March 21, 1997, by Bruce D. Hansen as Senior Vice President Corporate Development of Santa Fe Pacific Gold Corporation. /s/ JACQUELINE WALSTON --------------------------------------- Jacqueline Walston (Seal) Notary Public My commission expires: 01/28/98 ---------------- 46 EXHIBIT A CATEGORY II DEED, MCKINLEY COUNTY Deeds Reserving Mineral Interests Warranty Deed dated January 2, 1946, from Santa Fe Pacific Railroad Company to Tom L. Elkins, recorded in Book 9 of Warranty Deeds, Page 93, in the official records of McKinley County, New Mexico. Warranty Deed dated February 23, 1937, from Santa Fe Pacific Railroad Company to Margaret A. Prewitt, recorded in Book 10 of Deeds, Page 485, in the official records of McKinley County, New Mexico. Warranty Deed dated January 2, 1946, from Santa Fe Pacific Railroad Company to Tom L. Elkins, recorded in Book 12 of Deeds, Page 585, in the official records of McKinley County, New Mexico. Warranty Deed dated January, 20, 1947, from Santa Fe Pacific Railroad Company to Frank Bond & Son, Inc., recorded in Book 13 of Deeds, Page 219, in the official records of McKinley County, New Mexico. Warranty Deed dated July 1, 1948, from Santa Fe Pacific Railroad Company to Hazel W. Prewitt, recorded in Book 9 of Warranty Deeds, Page 30, in the official records of McKinley County, New Mexico. Warranty Deed dated March 29, 1929, from Santa Fe Pacific Railroad Company to Antonio Lucero, recorded in Book 12 of Deeds, Page 516, in the official records of McKinley County, New Mexico. Warranty Deed dated January 2, 1925, from Santa Fe Pacific Railroad Company to H. F. Prewitt. Warranty Deed dated August 11, 1927, from Santa Fe Pacific Railroad Company to Frank Gantar, recorded in Book 7 of Deeds, Page 161, in the official records of McKinley County, New Mexico. Warranty Deed dated January 2, 1946, from Santa Fe Pacific Railroad Company to Gib Graham, recorded in Book 13 of Deeds, Page 13, in the official records of McKinley County, New Mexico. Warranty Deed dated January 26, 1931, from Santa Fe Pacific Railroad Company to The Gallup Country Club, recorded in Book 8 of Deeds, Page 62, in the official records of McKinley County, New Mexico. Warranty Deed dated May 1, 1950, from Santa Fe Pacific Railroad Company to Bert P. Cresto and Emma Cresto, recorded in Book 13 of Deeds, Page 384, in the official records of McKinley County, New Mexico. A-1 47 Warranty deed dated May 1, 1950, from Santa Fe Pacific Railroad Company to C. E. Gurley and Irene J. Gurley, recorded in Book 10 of Warranty Deeds, Page 395, in the official records of McKinley County, New Mexico. Warranty Deed dated May 1, 1950, from Santa Fe Pacific Railroad Company to George Bubany, recorded in Book 13 of Deeds, Page 382, in the official records of McKinley County, New Mexico. Quitclaim Deed dated April 15, 1959, from Santa Fe Pacific Railroad Company to Owners of record, recorded in Book 9, Page 480, in the official records of McKinley County, New Mexico. Warranty Deed dated May 1, 1950, from Santa Fe Pacific Railroad Company to John D. Guest, recorded in Book 13 of Deeds, Page 381, in the official records of McKinley County, New Mexico. Warranty Deed dated March 27, 1950, from Santa Fe Pacific Railroad Company to C. H. Harrell, recorded in Book 10 of Warranty Deeds, Page 366, in the official records of McKinley County, New Mexico. Warranty Deed dated October 20, 1930, from Santa Fe Pacific Railroad Company to John Grenko, recorded in Book 12 of Deeds, Page 428, in the official records of McKinley County, New Mexico. Warranty Deed dated October 5, 1949, from Santa Fe Pacific Railroad Company to Asa Glascock and Howard Wilson, recorded in Book 13 of Deeds, Page 404, in the official records of McKinley County, New Mexico. Warranty Deed dated June 19, 1925, from Santa Fe Pacific Railroad Company to County of McKinley, State of New Mexico. Warranty Deed dated May 16, 1938, from Santa Fe Pacific Railroad Company to Howard Wilson, recorded in Book 11 of Deed Records, Page 489, in the official records of McKinley County, New Mexico. Warranty Deed dated April 5, 1938, from Santa Fe Pacific Railroad Company to L. L. Sabin, recorded in Book 11 of Deeds, Page 636, in the official records of McKinley County, New Mexico. Warranty Deed dated August 19, 1930, from Santa Fe Pacific Railroad Company to Christian Reformed Board of Mission, recorded in Book 7 of Deeds, Page 283, in the official records of McKinley County, New Mexico. Warranty Deed dated August 1, 1946, from Santa Fe Pacific Railroad Company to C. G. Wallace, recorded in Book 9 of Warranty Deeds, Page 7, in the official records of McKinley County, New Mexico. Warranty Deed dated July 12, 1922, from Santa Fe Pacific Railroad Company to County Board of Education of McKinley County, New A-2 48 Mexico, recorded in Book 6 of Deed Records, Page 267, in the official records of McKinley County, New Mexico. Warranty Deed dated July 29, 1952, from Santa Fe Pacific Railroad Company to Thos. M. Kilpatrick and C. F. Knowles, recorded in Book 11 of Warranty Deeds, Page 302, in the official records of McKinley County, New Mexico. Warranty Deed dated May 26, 1926, from Santa Fe Pacific Railroad Company to W.0. Turner. Quitclaim Deed dated January 20, 1975, by and between Santa Fe Pacific Railroad Company and W. O. Turner, covering N/2, SW/4 of Section 35, T.15N., R.19W., McKinley County, New Mexico, recorded in Book 23, Page 68 in the official records thereof. Warranty Deed dated September 1, 1944, from Santa Fe Pacific Railroad Company to Claude Neafus and S. R. Bellmaine, recorded in Book 12 of Deeds, Page 402, in the official records of McKinley County, New Mexico. Warranty Deed dated April 27, 1950, from Santa Fe Pacific Railroad Company to Gib Graham, recorded in Book 10 of Warranty Deeds, Page 378, in the official records of McKinley County, New Mexico. Warranty Deed dated November 7, 1934, from Santa Fe Pacific Railroad Company to L. L. Sabin, recorded in Book 8 of Deeds, Page 274, in the official records of McKinley County, New Mexico. Warranty Deed dated October 15, 1945, from Santa Fe Pacific Railroad Company to Fernandez Company, recorded in Book 12 DR, Page 536, in the official records of McKinley County, New Mexico. Warranty Deed dated March 4, 1952, from Santa Fe Pacific Railroad Company to Hazel W. Prewitt, recorded in Book 11 Misc., Page 370, in the official records of McKinley County, New Mexico. Warranty Deed dated May 15, 1945, from Santa Fe Pacific Railroad Company to Harold F. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds, Page 482, in the official records of McKinley County, New Mexico. Warranty Deed dated January 16, 1948, from Santa Fe Pacific Railroad Company to W. A. Berryhill, recorded in Book 13 of Deeds, Page 298, in the official records of McKinley County, New Mexico. Warranty Deed dated May 14, 1929, from Santa Fe Pacific Railroad Company to the United States of America, In Trust for the Navajo Tribe, recorded in Book 7 of Deeds, Page 243, in the official records of McKinley County, New Mexico. A-3 49 Warranty Deed dated December 1, 1944, from Santa Fe Pacific Railroad to Harold P. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds, Page 440, in the official records of McKinley County, New Mexico. A-4 50 EXHIBIT B CATEGORY II DEED, MCKINLEY COUNTY CONVEYANCE OF URANIUM RIGHTS TO URANCO (Revised 03/10/97) COMPANY: GOLD STATE: NM COUNTY: McKINLEY
MERIDIAN: NMPM ACRES ----- Township 14 North, Range 8 West ------------------------------- Section 10 All 640.00 Township 13 North, Range 10 West -------------------------------- Section 5 Lots 1-4, S/2 N/2, S/2 639.36 Section 7 Lots 1-4, E/2, E/2 W/2 650.24 Section 9 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 21 W/2 SW/4 SE/4 NE/4, N/2 NE/4, SW/4 595.00 NE/4, N/2 SE/4 NE/4, NW/4, S/2 SE/4, NW/4 SE/4 Section 27 All 640.00 Section 29 All 640.00 Section 31 Lots 1-4, E/2 W/2, E/2 640.56 Section 33 All 640.00 Section 35 All 640.00 Township 15 North, Range 10 West -------------------------------- Section 1 All, except 31.07 acres in Baca 608.93 Rail Spur Section 3 All 641.00 Section 13 All 640.00
B-1 51 Section 23 All, except 29.81 ac. in Baca Rail 610.19 Spur Section 25 All, except 25.79 ac. in Baca Rail 614.21 Spur Section 31 All 663.60 Section 33 All 640.00 Section 35 All 640.00 Township 16 North, Range 10 West -------------------------------- Section 5 All 639.76 Section 9 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 21 All 640.00 Section 23 All 640.00 Section 25 All 640.00 Section 27 All 640.00 Section 29 All 640.00 Section 31 All 667.68 Section 33 All 640.00 Section 35 All 640.00 Township 17 North, Range 10 West -------------------------------- Section 31 Lots 1-4, E/2 W/2, E/2 640.32 Township 13 North, Range 11 West -------------------------------- Section 3 Lots 3, 4, S/2 NW/4 160.98 Section 5 All, except 24.71 ac. in Baca Rail 610.17 Spur Section 7 All that portion lying North and 495.00 East f the AT&SF Railway Co. R/W
B-2 52 Section 9 NE/4, N/2 NW/4, N/2 SE/4, SE/4 SE/4 360.00 Section 9 S/2 NW/4, SW/4, SW/4 SE/4 280.00 Section 15 All 640.00 Section 17 All that portion lying North and 96.71 East of the AT&SF Railway Co. R/W, except 39.63 ac. in Baca Rail Spur Section 17 Lots 5-8, SW/4 SE/4, SW/4 275.53 Section 19 All 640.06 Section 21 All that part lying North and East 199.59 of the AT&SF Railway Co. R/W Section 21 Lots 5-10, NW/4 SW/4 155.74 Section 22 All 640.00 Section 23 All 640.00 Section 24 SE/4, W/2 480.00 Section 25 All 640.00 Section 26 All 640.00 Section 27 All that part lying North and East 549.31 of the AT&SF Railway Co. R/W Section 29 All 640.00 Section 31 All 640.96 Section 33 All 640.00 Section 34 That portion of the E/2 lying South 23.70 and West of the AT&SF Railway Co. R/W Section 34 That portion of the E/2 lying North 283.09 and East of the AT&SF Railway Co. R/W Section 35 All 640.00 Township 15 North, Range 11 West -------------------------------- Section 27 E/2 E/2 160.00
B-3 53 Section 35 NW/4 NW/4 40.00 Township 14 North, Range 13 West -------------------------------- Section 31 All, except 200 ft. R/W of AT&SF 619.15 Ry. Co. Section 35 All that portion lying North and 531.25 East of R/W of AT&SF Ry. Co. Township 14 North, Range 14 West -------------------------------- Section 7 Lots 3, 4, that portion of E/2 SW/4 139.78 lying South & West of AT&SF RR R/W Section 21 All that portion lying North & East 114.06 of AT&SF RR R/W Section 25 All that portion lying North & East 494.75 of AT&SF RR R/W Township 17 North, Range 14 West --------------------------------- Section 1 Lots 1-4 2.02 Section 31 Lots 1-4, S/2 S/2 321.60 Section 33 Lots 1-4, S/2 S/2 317.76 Section 35 Lots 1-4, S/2 S/2 318.20 Township 14 North, Range 15 West -------------------------------- Section 1 Part Northeast of Northeast line of 96.34 AT&SF station grounds at S. Guam, said line parallel to & 1320 ft. northeasterly from centerline of original AT&SF main track, except portion Conveyed by SFPR to AT&SF 8-29-17, recorded in Bk. 5, Pg. 152, and portion of SE SE northeasterly of AT&SF R/W and southeasterly of southeast end of station grounds at S. Guam Township 15 North, Range 15 West -------------------------------- Section 25 All, except 26.55 ac. in R/W 613.45 Section 27 All that portion lying North & East 515.85 of AT&SF RR R/W
B-4 54 Section 35 All that portion lying North & East 197.84 of AT&SF RR R/W Township 17 North, Range 15 West -------------------------------- Section 31 All 315.20 Section 33 All 317.98 Section 35 All 315.20 Township 15 North, Range 16 West -------------------------------- Section 1 All 639.52 Section 3 All 641.90 Section 5 All 638.82 Section 7 All 616.18 Section 9 All 640.00 Section 11 All 640.00 Section 13 Lots 1-4 195.60 Section 15 Lots 1-4 185.28 Section 17 Lots 1-4 174.16 Township 16 North, Range 16 West -------------------------------- Section 1 All 595.20 Section 5 All 606.88 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 19 All 602.52 Section 21 All 640.00 Section 23 All 640.00 Section 25 All 640.00
B-5 55 Section 27 All 640.00 Section 29 All 640.00 Section 33 All 640.00 Section 35 All 640.00 Township 17 North, Range 16 West -------------------------------- Section 31 Lots 1-4, S/2 S/2 305.28 Section 33 Lots 1-4, S/2 S/2 308.21 Township 14 North, Range 17 West -------------------------------- Section 3 Lots 1-5, SW/4 NW/4, W/2 SW/4 235.56 Section 5 Lots 1-4, S/2 N/2, E/2 SE/4, NW/4 598.88 SE/4, N/2 SW/4 SE/4, W/2 SW/4, NE/4 SW/4, N/2 SE/4 SW/4 Section 7 All 638.12 Section 9 W/2, E/2 SE/4, SW/4 SE/4, N/2 NE/4 480.00 NE/4, E/2 NW/4 NE/4 Section 9 SW/4 NE/4, NW/4 SE/4 80.00 Section 9 S/2 NE/4 NE/4 20.00 Section 9 NW/4 NW/4 NE/4 10.00 Section 9 SW/4 NW/4 NE/4 10.00 Section 15 Lots 1-4, W/2 W/2 236.88 Section 17 All 640.00 Section 19 All 640.88 Section 21 All 640.00 Section 27 Lots 1-4, W/2 W/2 239.82 Section 29 N/2, SW/4 480.00 Section 33 S/2 320.00 Township 15 North, Range 17 West -------------------------------- Section 1 All 689.84
B-6 56 Section 3 All 640.62 Section 7 All 639.94 Section 9 NE/4, S/2 480.00 Section 13 Lots 1-4 164.48 Section 15 Lots 1-6, W/2 W/2, less 24.24 ac. 300.37 in AT&SF RR R/W for East bound main track Section 19 Lots 1, 2, E/2, E/2 NW/4 481.09 Section 21 E/2, W/2 NW/4, S/2 SW/4 480.00 Section 27 W/2 SW/4 80.00 Section 29 All 640.00 Section 31 All 638.84 Township 16 North, Range 17 West -------------------------------- Section 1 All 614.40 Section 3 All 622.04 Section 5 All 624.52 Section 7 All 632.52 Section 9 All 640.00 Section 11 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 19 All 636.44 Section 21 All 640.00 Section 25 All 640.00 Section 27 All 640.00 Section 29 All 640.00 Section 31 All 637.44
B-7 57 Section 33 All 640.00 Section 35 All 640.00 Township 17 North, Range 17 West -------------------------------- Section 31 Lots 1-4, S/2 S/2 297.38 Section 33 Lots 1-4, S/2 S/2 307.78 Section 35 Lots 1-4, S/2 S/2 306.02 Township 14 North, Range 18 West -------------------------------- Section 5 All 639.48 Township 15 North, Range 18 West -------------------------------- Section 1 All 638.56 Section 11 NE/4, E/2 NW/4 240.00 Section 23 All 640.00 Section 27 SE/4, NE/4 SW/4 200.00 Section 27 S/2 NE/4, NE/4 NE/4 120.00 Section 27 SE/4 NW/4, S/2 NW/4 NE/4, NW/4 NW/4 70.00 NE/4 Section 27 S/2 NE/4 NW/4 20.00 Section 27 N/2 NE/4 NW/4 20.00 Section 31 NE/4 NE/4 40.00 Section 31 Lots 1-4, SE/4 NE/4, NE/4 NW/4, 436.40 SE/4, SE/4 SW/4 Section 35 E/2, E/2 NW/4 400.00 Township 16 North, Range 18 West -------------------------------- Section 1 All 622.84 Section 3 All 622.72 Section 5 All, except 10.30 acres 614.26
B-8 58 Section 5 That portion lying within 40 ft. & 10.30 on both sides of survey line of Road 32, Section 2 as relocated for construction and known as F.A.P. #146-A Section 7 All, except 10.00 ac. quitclaimed 620.16 to County of McKinley by deed dated 6-19-25 Section 7 That portion lying within 40 ft. & 10.00 on both sides of survey line of Road 32, Section 2 as relocated for construction and known as F.A.P. #146 Section 9 All 640.00 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 19 All 634.08 Section 21 N/2 320.00 Section 23 All 640.00 Section 25 All 640.00 Township 17 North, Range 18 West -------------------------------- Section 31 Lots 1-4, S/2 S/2 290.40 Section 33 Lots 1-4, SW/4 SE/4, S/2 SW/4 255.58 Section 33 N/2 SE/4 SE/4, SE/4 SE/4 SE/4 30.00 Section 35 Lots 1-4, S/2 S/2 298.78 Township 15 North, Range 19 West -------------------------------- Section 7 Lots 3, 4, E/2 SW/4 156.27 Section 17 NE/4, E/2 NW/4, S/2 560.00 Section 19 All 633.40
B-9 59 Section 21 NW/4, SE/4, SW/4 NE/4, W/2 SE/4 389.00 NE/4, W/2 E/2 SE/4 NE/4, except 1 ac. in W/2 E/2 SE/4 NE/4 Section 21 1 ac. tract in W/2 E/2 SE/4 NE/4 1.00 Section 29 All, except AT&SF RR R/W and 512.25 station grounds Section 31 SE/4, NW/4, except AT&SF RR R/W 288.91 Section 33 All 640.00 Section 35 N/2, SW/4 480.00 Township 16 North, Range 19 West -------------------------------- Section 1 All 630.12 Section 3 All 636.30 Section 5 All 637.60 Section 7 All 629.24 Section 9 All 640.00 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 19 All 630.48 Section 23 All 640.00 Section 25 All 640.00 Section 31 All 629.80 Township 17 North, Range 19 West -------------------------------- Section 31 Lots 1-4, S/2 S/2 288.60 Section 33 Lots 1-4, S/2 S/2 290.40 Section 35 Lots 1-4, S/2 S/2 295.58
B-10 60 Township 16 North, Range 20 West -------------------------------- Section 1 All 638.12 Section 13 All 640.00 Section 17 SW/4 160.00 Section 19 All 640.92 Section 21 W/2 W/2 160.00 Section 25 All 640.00 Section 27 S/2 SW/4, NW/4 SW/4, S/2 SE/4, 240.00 NE/4 SE/4 Section 29 All 640.00 Section 31 All 638.00 Section 33 All 640.00 Section 35 All 640.00 Township 16 North, Range 21 West -------------------------------- Section 1 W/2 322.00 Section 3 All 123.86 Section 11 N/2, N/2 SW/4, SW/4 SW/4 440.00 Section 15 Lots 1-4 128.06 Section 23 All 640.00 Section 25 All 640.00 Section 27 Lots 1-4 128.80 Section 35 All 640.00 ------ County Total 105,447.60 ==========
B-11 61 EXHIBIT C CATEGORY II DEED, MCKINLEY COUNTY Items Not Included in Grant Less and Except any interest in or under the property in Sections 1, 23, and 25, T.15N., R.10W., as described in the Quitclaim Deed dated November 23, 1983, between R. M. Albers and Imogene Albers and SF Coal Corporation, recorded in book 35, Page 598, in the official records of McKinley County, New Mexico. Less and Except any interest in or under the property in Sections 5 and 17, T.13N., R.11W. , as described in the Special Warranty Deed dated November 8, 1983, between Donald J. Elkins and Gwen Elkins and SF Coal Corporation, recorded in Book 35, Page 567, in the official records of McKinley County, New Mexico. 62 EXHIBIT D CATEGORY II DEED, MCKINLEY COUNTY Items to which Deed is Subject Stipulation in the District Court of McKinley County, New Mexico, case entitled Santa Fe Pacific Railroad Company, a corporation, plaintiff v. Duane Berryhill and Nelda Berryhill, his wife, el al., filed for record on July 25, 1952 at 9:30 a.m., recorded in Vol. 93, Folio 225, Valencia County records. Agreement dated May 1, 1964, by and between Santa Fe Pacific Railroad Company and The Gallup Country Club, covering certain land in Section 23, T.15N., R.18W., McKinley County, New Mexico. (SFP-42117) Agreement dated November 26, 1957, by and between Santa Fe Pacific Railroad Company and C. E. Gurley and Irene J. Gurley, covering property in Section 27, T.15N., R.18W., McKinley County, New Mexico. (SFP-42215-A) Agreement dated April 16, 1959 by and between Santa Fe Pacific Railroad Company and George Bubany, covering certain lands in Section 27, T.15N., R.18W., McKinley County, New Mexico. SFP-42216-B) Agreement dated May 1, 1959, by and between Santa Fe Pacific Railroad Company and John D. Guest, covering property in the NW/4 of Section 27, T.15N., R.18W., McKinley County, New Mexico. (SFP-42217-A) Agreement dated October 14, 1965, by and between Santa Fe Pacific Railroad Company and Howard Wilson covering a parcel of land in Section 7, T.16N., R.18W., McKinley County, New Mexico. (SFP-39456-A) [Section not being conveyed] Amended and Restated San Juan Basin Agreement dated June 25, 1993, by and between Hospah Coal Company and Chaco Energy Company. Lease Option Agreement dated October 8, 1987, between Cerrillos Land Company and Santa Fe Energy Company, as amended on July 1, 1988, and as amended on December 1, 1989, a memorandum of which is recorded in book 2, Page 1630, in the official records of McKinley County, New Mexico. Special Warranty Deed dated June 25, 1993, from Hospah Coal Company, Santa Fe Pacific Minerals Corporation, Santa Fe Pacific Mining, Inc., The Atchison, Topeka and Santa Fe Railway Company, and the Star Lake Railroad Company to San Juan Basin Coal Holding D-1 63 Company, recorded in Book 6 Comp., Page 8560, of the official records of McKinley County, New Mexico, covering coal and coal development rights or mining rights. Special Warranty Deed dated June 24, 1993, from Santa Fe Pacific Minerals Corporation to Hanson Natural Resources Company covering coal and related mining rights in Sections 17, 25, 33 and 35, T.16N., R.10W., and Section 3, T.15N., R.10W., McKinley County, New Mexico. Special Warranty Deed dated June 24, 1993, from Santa Fe Pacific Minerals Corporation to Hanson Natural Resources Company covering coal and relating mining rights in Section 1, T.15N., R.10W., and Sections 9, 21, 23, 27 and 29, T.16N., R.10W., recorded in Book 6 Comp., Page 8480, in the official records of McKinley County, New Mexico. Oil and Gas Lease dated May 1, 1975, from Santa Fe Pacific Railroad Company to Tenneco Oil Company, covering Section 25, T.16N., R.10W, McKinley County, New Mexico. (SFP-9951) Real Estate Taxes for the years 1997 and subsequent years. D-2 64 EXHIBIT 10.19 AFTER RECORDING RETURN TO: Margaret Lewis Meister Modrall, Sperling, Roehl, Harris & Sisk, P.A. P. O. Box 2168 Albuquerque, New Mexico 87103 DEED Category II Cibola STATE OF NEW MEXICO ) COUNTY OF CIBOLA ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals Corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the interest in uranium reserved by Santa Fe Pacific Railroad Company in the instruments described in Exhibit A hereto but only so far as such reservations and exceptions pertain to and cover the real estate in Cibola County, New Mexico more particularly described in Exhibit B hereto (the "Property"), less and except the interests described in Exhibit C hereto and subject to the grants and interests set forth in the instruments set forth in Exhibit D hereto, all of which exhibits are incorporated herein by reference. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and Grantee, dated effective as of March 21, 1997, (copies of which are maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreements must be brought within the time period set forth in such agreements. CONVEYANCE SUBJECT TO THE OBLIGATION TO PURCHASE ENTIRE MINERAL ESTATE. The grant of this deed is subject to the following right of Grantor. At such time as Grantee or its successors or assigns applies for a mining permit with respect to the Property or performs any activities on the Property which would require a mining permit, Grantor shall have the right to require Grantee or its successors or assigns to purchase all of the mineral estate (except coal in place, including development or mining rights related to coal) owned by Grantor on the portion of the Property which is the subject of the mining permit or activities which would require a mining permit for a purchase price of $200 per acre (the "Purchase 65 Price"), which Purchase Price shall be paid within 30 days after Grantor declares its right to require the purchase. The Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Grantor's exercise of such right over $15.80 per pound. Grantee shall purchase such portions of property as entire sections or as much of each section as was originally conveyed by Grantor to Grantee. Additionally, Grantor grants to Grantee or its successor and assigns for a period of 99 years from the date of this Deed the option to purchase all of the remaining mineral estate (except coal in place, including development or mining rights related to coal) owned by Grantor in all or any portion of the Property for a total purchase price of $200 per acre (the "Purchase Price"), which Purchase Price will be payable within 30 days after Grantee or its successors or assigns elects to exercise the option to purchase. The Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Grantor's exercise of such right over $15.80 per pound. Grantee shall purchase such portions of property as entire sections or as much of each section as was originally conveyed by Grantor to Grantee. The Spot Price shall mean that price at which uranium may be purchased for delivery within one year, as reported by TradeTech or its successors in interest, or, in the absence of TradeTech or a successor in interest, another accepted industry publication. CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This Conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. WITNESS its hand and seal this 21st day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By:/s/ BRUCE D. HANSEN ------------------------------------ (Seal) Bruce D. Hansen Senior Vice President-Corporate Development 66 STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March 21, 1997, by Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific Gold Corporation. /s/ JACQUELINE WALSTON --------------------------------------- Jacqueline Walston (Seal) Notary Public My commission expires: 01/28/98 ---------------- 67 EXHIBIT A CATEGORY II DEED, CIBOLA COUNTY Deeds Reserving Mineral Rights Warranty Deed dated June 15, 1943, from Santa Fe Pacific Railroad Company to C.P. Duran and Jose M. Chavez. Warranty Deed dated May 1, 1946, from Santa Fe Pacific Railroad Company to C. P. Duran and Jose M. Chavez. 68 EXHIBIT B CATEGORY II DEED, CIBOLA COUNTY CONVEYANCE OF URANIUM RIGHTS TO URANCO (Revised 03/10/97) COMPANY: GOLD STATE: NM COUNTY: CIBOLA
MERIDIAN: NMPM ACRES ----- Township 11 North, Range 7 West ------------------------------- Section 31 Lots 1-4, E/2 NW/4, E/2 SW/4, NE/4, 634.52 SE/4 Township 11 North, Range 8 West ------------------------------- Section 25 All 640.00 ------ County Total 1,274.52
69 EXHIBIT C CATEGORY II DEED, CIBOLA COUNTY Items Not Included in Grant NONE 70 EXHIBIT D CATEGORY II DEED, CIBOLA COUNTY Items to which Deed is Subject Lease Option Agreement dated October 8, 1987 between Cerrillos Land Co. and Santa Fe Energy Co., as amended on July 1, 1988, and as amended on December 1, 1989, a memorandum in the official records of McKinley County, New Mexico. Real Estate Taxes for the years 1997 and subsequent years. 71 EXHIBIT 10.19 AFTER RECORDING RETURN TO: Margaret Lewis Meister Modrall, Sperling, Roehl, Harris & Sisk, P.A. P. O. Box 2168 Albuquerque, New Mexico 87103 ROYALTY DEED Category II Royalty Cibola STATE OF NEW MEXICO ) COUNTY OF CIBOLA ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals Corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the royalty interest received by Santa Fe Pacific Railroad Company in the instrument described in Exhibit A hereto but only so far as such grant pertains to and covers the real estate in Cibola County, New Mexico more particularly described in Exhibit B hereto (the "Property"), less and except the interests described in Exhibit C hereto and subject to the grants and interests set forth in the instruments set forth in Exhibit D hereto, all of which exhibits are incorporated herein by reference. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and Grantee, dated effective as of March 21, 1997 (copies of which are maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreements must be brought within the time period set forth in such agreements. CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. 72 WITNESS its hand and seal this 21st day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By: /s/ BRUCE D. HANSEN ----------------------------------- (Seal) Bruce D. Hansen Senior Vice President-Corporate Development STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March 21 1997, by Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific Gold Corporation. /s/ JACQUELINE WALSTON --------------------------------------- Jacqueline Walston (Seal) Notary Public My commission expires: 01/28/98 ---------------- 73 EXHIBIT A CATEGORY II DEED, CIBOLA COUNTY Deeds Reserving Mineral Rights Grant of Royalty dated February 10, 1983 from Gulf Oil Corporation to Santa Fe Pacific Railroad recorded in Book 1 of Misc., Page 3534 in the official records of Cibola County, New Mexico. 74 EXHIBIT B CATEGORY II ROYALTY DEED, CIBOLA COUNTY CONVEYANCE OF URANIUM RIGHTS TO URANCO (Revised 03/10/97) Township 13 North, Range 8 West ------------------------------- Section 25 Lots 5, 6, 8, 9, 10, E/2 NE/4 234.52 **Royalty Interest Only**
75 EXHIBIT C CATEGORY II DEED, CIBOLA COUNTY Items Not Included in Grant NONE 76 EXHIBIT D CATEGORY II DEED, CIBOLA COUNTY Items to which Deed is Subject Real Estate Taxes for the years 1997 and subsequent years. 77 EXHIBIT 10.19 AFTER RECORDING RETURN TO: Margaret Lewis Meister Modrall, Sperling, Roehl, Harris & Sisk, P.A. P. O. Box 2168 Albuquerque, New Mexico 87103 DEED Category II Sandoval STATE OF NEW MEXICO ) COUNTY OF SANDOVAL ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals Corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N. E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the interest in uranium reserved by Santa Fe Pacific Railroad Company in the instruments described in Exhibit A hereto but only so far as such reservations and exceptions pertain to and cover the real estate in Sandoval County, New Mexico more particularly described in Exhibit B hereto (the "Property"), less and except the interests described in Exhibit C hereto and subject to the grants and interests set forth in the instruments set forth in Exhibit D hereto, all of which exhibits are incorporated herein by reference. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and Grantee, dated effective as of March 21, 1997 (copies of which are maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreements must be brought within the time period set forth in such agreements. CONVEYANCE SUBJECT TO THE OBLIGATION TO PURCHASE ENTIRE MINERAL ESTATE. The grant of this deed is subject to the following right of Grantor. At such time as Grantee or its successors or assigns applies for a mining permit with respect to the Property or performs any activities on the Property which would require a mining permit, Grantor shall have the right to require Grantee or its successors or assigns to purchase all of the mineral estate (except coal in place, including development or mining rights related to coal) owned by Grantor on the portion of the Property which is the subject of the mining permit or activities which would require a mining permit for a purchase price of $200 per acre (the "Purchase 78 Price"), which Purchase Price shall be paid within 30 days after Grantor declares its right to require the purchase. The Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Grantor's exercise of such right over $15.80 per pound. Grantee shall purchase such portions of property as entire sections or as much of each section as was originally conveyed by Grantor to Grantee. Additionally, Grantor grants to Grantee or its successor and assigns for a period of 99 years from the date of this Deed the option to purchase all of the remaining mineral estate (except coal in place, including development or mining rights related to coal) owned by Grantor in all or any portion of the Property for a total purchase price of $200 per acre (the "Purchase Price"), which Purchase Price will be payable within 30 days after Grantee or its successors or assigns elects to exercise the option to purchase. The Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Grantor's exercise of such right over $15.80 per pound. Grantee shall purchase such portions of property as entire sections or as much of each section as was originally conveyed by Grantor to Grantee. The Spot Price shall mean that price at which uranium may be purchased for delivery within one year, as reported by TradeTech or its successors in interest, or, in the absence of TradeTech or a successor in interest, another accepted industry publication. CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. WITNESS its hand and seal this 21st day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By: /s/ BRUCE D. HANSEN ----------------------------------- (Seal) Bruce D. Hansen Senior Vice President-Corporate Development 79 STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March 21, 1997, by Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific Gold Corporation. /s/ JACQUELINE WALSTON ---------------------------- Jacqueline Walston (Seal) Notary Public My commission expires: 01/28/98 --------------- 80 EXHIBIT A CATEGORY II DEED, SANDOVAL COUNTY Deeds Reserving Mineral Interests Warranty Deed dated August 2, 1948, from Santa Fe Pacific Railroad Company to Frank Bond & Son, Inc., recorded in Volume 6 of Deed Records, Page 120. Warranty Deed dated April 1, 1949, from Santa Fe Pacific Railroad Company to Benjamin Benavidez, Abel Benavidez and Moises Benavidez, recorded in Volume 9 of Deed Records, Page 903, in the official records of Sandoval County, New Mexico. Warranty Deed dated December 6, 1938, from Santa Fe Pacific Railroad Company to Frank Bond and Son, recorded in Volume 5 of Deed Records, Page 42, in the official records of Sandoval County, New Mexico. Warranty Deed dated May 15, 1943, from Santa Fe Pacific Railroad Company to Frank Bond & Son, Ltd. Warranty Deed dated April 1, 1949, from Santa Fe Pacific Railroad Company to Faustino Benavidez, recorded in Volume 6 of Deed Records, Page 169, in the official records of Sandoval County, New Mexico. Warranty Deed dated December 15, 1943, from Santa Fe Pacific Railroad Company to Benajamin Benavidez, recorded in Volume 5 of Deed Records, Page 494, in the official records of Sandoval County, New Mexico. Warranty Deed dated November 1, 1949, from Santa Fe Pacific Railroad Company to O. F. Sandoval and Porfirio Sandoval. 81 EXHIBIT B CATEGORY II DEED, SANDOVAL COUNTY CONVEYANCE OF URANIUM RIGHTS TO URANCO (Revised 11/7/96) COMPANY: GOLD STATE: NM COUNTY: SANDOVAL
MERIDIAN: NMPM ACRES ----- Township 12 North, Range 1 East ------------------------------- Section 5 Lots 7, 8 SE/4, S/2 NW/4, Lot 6 451.11 NE/4, Lot 3 NW/4, Lot 5 NE/4, Lot 4 NW/4, SW/4 Section 6 All 614.74 Section 7 All 615.68 Section 8 Lots 1-4, NW/4, W/2 SW/4 354.06 Section 17 Lots 1-4 171.63 Section 18 All 614.56 Section 19 All 611.44 Section 20 Lots 1-4 178.14 Section 29 Lots 1-4, W/2 SW/4, SE/4 SW/4 253.05 Section 30 All 613.28 Section 31 All 616.80 Township 13 North, Range 1 East ------------------------------- Section 4 All 647.16 Section 5 All 650.80 Section 6 All 615.05 Section 7 All 599.88 Section 8 All 640.00 Section 9 All 640.00
B-1 82 Section 17 All 640.00 Section 18 All 600.68 Section 19 All 602.52 Section 20 All 640.00 Section 21 All 640.00 Section 28 All 640.00 Section 29 All 640.00 Section 30 All 606.27 Section 31 All, except North 300 ft. of 555.09 Section Section 33 All 534.92 Township 14 North, Range 1 East ------------------------------- Section 5 Lots 1-4, S/2 N/2, SE/4, NE/4 SW/4 531.88 Section 5 NW/4 SW/4, S/2 SW/4 120.00 Township 12 North, Range 1 West ------------------------------- Section 1 Lots 1-4, S/2 N/2, S/2 641.98 Section 3 Lots 1-4, S/2 N/2, S/2 647.18 Section 4 Lots 1-8 343.57 Section 9 Lots 1-8 341.56 Section 10 NE/4, NE/4 SE/4, W/2 SE/4, W/2 600.00 Section 11 All 640.00 Section 12 All 640.00 Section 13 All 640.00 Section 14 NE/4, S/2 480.00 Section 15 All 640.00 Section 21 Lots 1-8 341.64 Section 22 All 640.00
B-2 83 Section 23 All 640.00 Section 24 All 640.00 Section 25 All 640.00 Section 26 All 640.00 Section 27 E/2, E/2 SW/4 400.00 Section 27 NW/4, W/2 SW/4 240.00 Section 28 Lots 1-8 345.84 Section 33 Lots 1-8 344.52 Section 34 All 640.00 Section 35 W/2 320.00 Section 35 E/2 320.00 Township 13 North, Range 1 West ------------------------------- Section 12 All 640.00 Section 14 All 640.00 Section 22 N/2 320.00 Section 22 E/2 SE/4, N/2 SW/4 160.00 Section 24 All 640.00 Section 26 N/2, W/2 SE/4, SW/4 560.00 Section 28 Lots 1-4, E/2 338.88 Section 34 All, except North 300 ft. of 603.64 Section --------- County Total 31,307.55
B-3 84 EXHIBIT C CATEGORY II DEED, SANDOVAL COUNTY Items Not Included in Grant NONE 85 EXHIBIT D CATEGORY II DEED, SANDOVAL COUNTY Items to which Deed is Subject Lease Option Agreement dated October 8, 1987 between Cerrillos Land Co. and Santa Fe Energy Co., as amended on July 1, 1988, and as amended on December 1, 1989, a memorandum of which is recorded in Book 2, page 1630, in the official records of McKinley County, New Mexico. Surface and mineral limitation contained in Warranty Deed dated October 29, 1979 from Santa Fe Pacific Railroad to Paragon Resources, Incorporated covering certain lands in Section 28 and 29-13N-1E, Sandoval Co., NM. Real Estate taxes for years 1997 and subsequent years. 86 EXHIBIT 10.19 AFTER RECORDING RETURN TO: Margaret Lewis Meister Modrall, Sperling, Roehl, Harris & Sisk, P.A. P. O. Box 2168 Albuquerque, New Mexico 87103 DEED Category II Bernalillo STATE OF NEW MEXICO ) COUNTY OF BERNALILLO ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals Corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N. E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the interest in uranium reserved by Santa Fe Pacific Railroad Company in the instruments described in Exhibit A hereto but only so far as such reservations and exceptions pertain to and cover the real estate in Bernalillo County, New Mexico more particularly described in Exhibit B hereto (the "Property"), less and except the interests described in Exhibit C hereto and subject to the grants and interests set forth in the instruments set forth in Exhibit D hereto, all of which exhibits are incorporated herein by reference. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and Grantee, dated effective as of March 21, 1997 (copies of which are maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreements must be brought within the time period set forth in such agreements. CONVEYANCE SUBJECT TO THE OBLIGATION TO PURCHASE ENTIRE MINERAL ESTATE. The grant of this deed is subject to the following right of Grantor. At such time as Grantee or its successors or assigns applies for a mining permit with respect to the Property or performs any activities on the Property which would require a mining permit, Grantor shall have the right to require Grantee or its successors or assigns to purchase all of the mineral estate (except coal in place, including development or mining rights related to coal) owned by Grantor on the portion of the Property which is the subject of the mining permit or activities which would require a mining permit for a purchase price of $200 per acre (the "Purchase 87 Price"), which Purchase Price shall be paid within 30 days after Grantor declares its right to require the purchase. The Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Grantor's exercise of such right over $15.80 per pound. Grantee shall purchase such portions of property as entire sections or as much of each section as was originally conveyed by Grantor to Grantee. Additionally, Grantor grants to Grantee or its successor and assigns for a period of 99 years from the date of this Deed the option to purchase all of the remaining mineral estate (except coal in place, including development or mining rights related to coal) owned by Grantor in all or any portion of the Property for a total purchase price of $200 per acre (the "Purchase Price"), which Purchase Price will be payable within 30 days after Grantee or its successors or assigns elects to exercise the option to purchase. The Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Grantor's exercise of such right over $15.80 per pound. Grantee shall purchase such portions of property as entire sections or as much of each section as was originally conveyed by Grantor to Grantee. The Spot Price shall mean that price at which uranium may be purchased for delivery within one year, as reported by TradeTech or its successors in interest, or, in the absence of Trade Tech or a successor in interest, another accepted industry publication. CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. WITNESS its hand and seal this 21st day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By: /s/ BRUCE D. HANSEN ----------------------------------- (Seal) Bruce D. Hansen Senior Vice President-Corporate Development 88 STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March 21, 1997, by Bruce D. Hansen as Senior Vice President- Corporate Development of Santa Fe Pacific Gold Corporation. (Seal) /s/ JACQUELINE WALSTON --------------------------------------- Notary Public My commission expires: 01/28/98 ---------------- 89 EXHIBIT A CATEGORY II DEED, BERNALILLO COUNTY Deeds Reserving Mineral Interests Warranty Deed dated January 27, 1949, from Santa Fe Pacific Railroad Company to Sam R. Angell, Sr. 90 EXHIBIT B CATEGORY II DEED, BERNALILLO COUNTY CONVEYANCE OF URANIUM RIGHTS TO URANCO (Revised 11/7/96) COMPANY: GOLD STATE: NM COUNTY: BERNALILLO
MERIDIAN: NMPM ACRES ----- Township 11 North, Range 1 East ------------------------------- Section 5 Lots 3-7, SW/4 NW/4, NW/4 SW/4 257.09 Section 7 All 623.58 Section 19 All 622.72 Township 11 North, Range 1 West ------------------------------- Section 1 Lots 1-4, S/2 NE/4, S/2 NW/4, SE/4, 634.78 SW/4 Section 3 Lots 1-4, S/2 NE/4, S/2 NW/4, SE/4, 626.78 SW/4 Section 9 Lots 1-4, E/2 NE/4, E/2 SE/4 332.78 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 21 Lots 1-4, E/2 NE/4, E/2 SE/4 319.66 Section 23 All 640.00 Section 25 Lots 1-4, N/2 NE/4, N/2 NW/4 181.60 Section 27 Lots 1-4, N/2 NE/4, N/2 NW/4 180.40 -------- County Total 6,339.39
91 EXHIBIT C CATEGORY II DEED, BERNALILLO COUNTY Items Not Included in Grant NONE 92 EXHIBIT D CATEGORY II DEED, BERNALILLO COUNTY Items to which Deed is Subject Lease Option Agreement dated 10-08-97 between Cerrillos Land Co. and Santa Fe Energy Co., as amended on July 1, 1988, and as amended on December 1, 1989, a memorandum of which is recorded in Book 2, page 1630, in the official records of McKinley County, New Mexico. Real Estate Taxes for the years 1997 and subsequent years. EX-10.20 6 STOCK EXCHANGE AGREEMENT & PLAN OF REORGANIZATION 1 EXHIBIT 10.20 STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION By and Between URANIUM RESOURCES, INC. And URANCO, INC. Dated as of MARCH 25, 1997 2 TABLE OF CONTENTS
PAGE ---- ARTICLE 1 - REPRESENTATIONS AND WARRANTIES OF URANCO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.1. Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1.4. Consents and Approvals, No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 1.6. No Fees Owing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 1.7. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 1.8. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 1.9. No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ARTICLE 2 - REPRESENTATIONS AND WARRANTIES OF URI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 2.1. Organization, Standing and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 2.2. Capital Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 2.3. Authority; Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Section 2.4. SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 2.5. Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Section 2.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 2.7. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 2.8. No Fees Owing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 2.9. Investment Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 2.10. No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE 3 - CERTAIN OTHER UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 3.1. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 3.2. Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE 4 - CLOSING; ISSUANCE OF SHARES; EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 4.1. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 4.2. The Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 4.3. Closing Documents Delivered to URI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 4.4. Closing Documents Delivered by URI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE 5 - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 5.1. Assignability and Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 5.2. Choice of Law and Choice of Forum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 5.3. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 5.4. Complete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 5.5. Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 5.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 5.7. Knowledge, Due Diligence Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . 12
-i- 3 STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION This STOCK EXCHANGE AGREEMENT (this "Agreement") is made and entered into effective as of March 25, 1997 by and between Uranium Resources, Inc., a Delaware corporation ("URI"), and Uranco Inc., a Delaware corporation ("Uranco"). RECITALS: 1. Uranco is the holder of certain uranium and mineral interests in New Mexico which it is desirous of exploring and possibly developing, but lacks the capital to do so. 2. URI is in the uranium business, holds uranium interests in New Mexico and has the expertise to explore and consider development of the uranium interests held by Uranco. 3. Uranco and URI desire to exchange all of the outstanding stock of Uranco for 1,200,000 shares (the "Shares") of URI's common stock, $.001 par value per share ("Common Stock"), upon and subject to the terms and conditions set forth in this Agreement. 4. Uranco and URI intend and desire to qualify this transaction as a "reorganization" within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code. AGREEMENT: NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein, the parties hereto adopt this plan of reorganization and agree as follows: -1- 4 ARTICLE I REPRESENTATIONS AND WARRANTIES OF URANCO Uranco represents and warrants to URI that: SECTION 1.1. CORPORATE ORGANIZATION. Uranco is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite corporate power and authority to own, operate and lease its properties and to carry on its business as now being conducted, and is duly qualified or licensed to do business and is in good standing in each jurisdiction in which its ownership or leasing of property or conduct of business requires such licensing or qualification, except where the failure to be so qualified would not have a Material Adverse Effect on Uranco. For purposes of this Agreement (a) "Material Adverse Change" or "Material Adverse Effect" means, when used with respect to Uranco or URI, as the case may be, any change or effect that is or, so far as can reasonably be determined, is likely to be materially adverse to the assets, properties, condition (financial or otherwise), business or results of operations of Uranco or URI, in each case together with its Subsidiaries taken as a whole, and (b) "Subsidiary" means any corporation, partnership, joint venture or other legal entity of which Uranco or URI, as the case may be (either alone or through or together with any other Subsidiary), owns, directly or indirectly, 50% or more of the stock or other equity interests the holders of which are generally entitled to vote for the election of the other governing body of such corporation or other legal entity. Uranco has delivered to URI complete and correct copies of its Articles of Incorporation and By-Laws as in effect on the date hereof. SECTION 1.2. AUTHORIZATION. The execution and delivery by Uranco of this Agreement, the performance by Uranco of its obligations hereunder and the consummation by Uranco of the transactions contemplated hereby have been duly authorized by the appropriate corporate action, and no other proceeding on the part of Uranco is necessary for the execution and delivery thereof and the performance of its obligations hereunder. This Agreement is a legal, valid and binding obligation of Uranco, enforceable in accordance with its terms except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). -2- 5 SECTION 1.3. CAPITALIZATION. All of the issued and outstanding shares of the common stock of Uranco (the "Uranco Common Stock") are owned by Santa Fe Pacific Gold Corporation ("Santa Fe"). All of such outstanding shares have been duly and validly issued, were not issued in violation of any preemptive rights and are fully paid and non-assessable. There are no options, warrants, subscriptions, conversion or other rights, agreements, commitments, arrangements or understandings with respect to the issuance of shares of capital stock of Uranco or any other securities convertible into, exchangeable for or evidencing the right to subscribe for any such shares. SECTION 1.4. CONSENTS AND APPROVALS; NO VIOLATIONS. Neither the execution, delivery or performance of this Agreement by Uranco nor the consummation by Uranco of the transactions contemplated hereby will (i) conflict with or result in any breach of any provisions of the Articles of Incorporation or By-laws of Uranco, (ii) require any filing with, or permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission; (iii) require the consent or approval of any person other than Santa Fe; (iv) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, amendment, cancellation or acceleration) under, or result in the creation of any lien or other encumbrance on any of the Mineral Interests pursuant to, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which Uranco is a party or by which it or its properties or assets may be bound; or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Uranco or by which any property or asset of Uranco is bound. SECTION 1.5. LITIGATION. Except as set forth in Schedule 1.5, there is no Proceeding (as defined below) pending or, to the knowledge of Uranco, threatened against or involving Uranco involving the Mineral Interests before any court, arbitrator or administrative or governmental body, nor is there any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or arbitrator outstanding against Uranco relating to the Mineral Interests, nor, to the knowledge of Uranco, is there any basis for any such Proceeding. There are no Proceedings pending or, to the knowledge of Uranco, threatened against Uranco arising out of or in any way related to this Agreement or any of the transactions contemplated hereby. As used in this Agreement, "Proceeding" means any action, suit, hearing, arbitration or governmental investigation (whether public or private). -3- 6 SECTION 1.6. NO FEES OWING. Neither Uranco nor any of its directors, officers or shareholders has employed any broker or finder or incurred any liability for any financial advisory, brokerage or finders' fees or similar fees or commissions in connection with the transactions contemplated by this Agreement. SECTION 1.7. COMPLIANCE WITH LAWS. Uranco has complied in all material respects with the laws and regulations of federal, state and local governments and all agencies thereof which are applicable to its business. SECTION 1.8. DISCLOSURE. To Uranco's knowledge, no representation or warranty by Uranco in this Agreement contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. SECTION 1.9. NO OTHER REPRESENTATIONS. Uranco is not making any representation or warranty, express or implied, of any nature whatsoever, except as specifically set forth in Article 1 of this Agreement. ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF URI URI represents and warrants to Uranco that: SECTION 2.1. ORGANIZATION, STANDING AND POWER. URI is a corporation duly domesticated, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted. URI is duly qualified to do business, and is in good standing, in each jurisdiction where the character of its properties or the nature of its activities makes such qualification necessary, including without limitation the State of New Mexico, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect on URI. -4- 7 SECTION 2.2. CAPITAL STRUCTURE. The authorized capital stock of URI consists of 25,000,000 shares of URI Common Stock. At the close of business on March 5, 1997, (i) 10,827,527 shares of URI Common Stock were issued and outstanding, (ii) 1,463,346 shares of URI Common Stock were reserved for issuance upon the exercise of then outstanding URI stock options, (iii) 291,785 shares of URI Common Stock were reserved for issuance upon exercise of URI stock options which may be granted in the future under currently existing stock option plans, (iv) 152,500 shares of URI Common Stock were held by URI in its treasury, and (v) 2,500,000 shares of URI Common Stock were reserved for issuance upon the conversion of certain debt and the exercise of certain warrants. All outstanding shares of capital stock of URI are validly issued, fully paid and nonassessable and not subject to preemptive rights. Except as set forth above as of the date of this Agreement, there are no options, warrants, rights, commitments, agreements, arrangements or undertakings of any kind to which URI is a party or by which it is bound obligating URI to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of URI. SECTION 2.3. AUTHORITY; NON-CONTRAVENTION. The Board of Directors of URI has declared the Exchange fair to and advisable and in the best interest of the stockholders of URI. URI has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by URI and the consummation by URI of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of URI. This Agreement has been duly executed and delivered by URI and (assuming the valid authorization, execution and delivery of this Agreement by Uranco) constitutes a valid and binding obligation of URI enforceable against URI in accordance with its terms, except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a night of termination, cancellation or acceleration of any obligation or to the loss of a material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties or assets of URI under, any provision of (i) the Certificate of Incorporation or Bylaws of URI (true and complete copies of which as of the date hereof have been delivered to Uranco), (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to URI or (iii) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to URI or any of its respective properties or assets. -5- 8 No filing or registration with, or authorization, consent or approval of, any governmental entity is required by or with respect to URI in connection with the execution and delivery of this Agreement by URI or is necessary for the consummation by URI of the Exchange and the other transactions contemplated by this Agreement, except for (i) in connection, or in compliance, with the provisions of the Securities Exchange Act of 1934 (the "Exchange Act"), (ii) such filings and consents as may be required under any environmental, health or safety law or regulation pertaining to any notification, disclosure or required approval triggered by the Exchange or the transactions contemplated by this Agreement, (iii) such filings as may be required in connection with applicable taxes, (iv) filings under the HSR Act, and (v) such other consents, approvals, orders, authorizations, registrations, declarations and filings the failure of which to be obtained or made would not, individually or in the aggregate, have a Material Adverse Effect on URI, materially impair the ability of URI to perform its obligations hereunder or prevent the consummation of any of the transactions contemplated hereby. SECTION 2.4. SEC DOCUMENTS. URI has timely filed all required documents with the SEC since January 1, 1995 (the "URI SEC Documents"). As of their respective dates, URI SEC Documents complied in all material respects with the requirements of the Securities Act of 1933, as amended (the "Securities Act") or the Exchange Act, as the case may be, and none of URI SEC Documents, contained, as of their respective dates, any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of URI included in URI SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto) and fairly present the financial position of URI as at the dates thereof and the results of their operations and changes in financial position for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein). SECTION 2.5. ABSENCE OF MATERIAL ADVERSE CHANGE. Except as disclosed in URI SEC Documents filed with the SEC prior to the date hereof, there has not been any Material Adverse Change with respect to URI (other than changes in generally accepted accounting principles or interpretations thereof that affect the uranium industry generally or changes in general economic conditions that affect such industry on a nationwide basis). -6- 9 SECTION 2.6. LITIGATION. Except as disclosed prior to the date hereof in URI SEC Documents, copies of all of which have been provided to Uranco, there is no suit, action, investigation or proceeding pending or, to the knowledge of the executive officers of URI, threatened against URI at law or in equity before or by any federal, state, municipal or other court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or before any arbitrator of any kind, that would have a Material Adverse Effect on URI or, with respect to such matters that are pending or threatened as of the date hereof, materially impair the ability of URI to perform its obligations hereunder or to consummate the transactions contemplated hereby, and there is no judgment, decree, injunction, rule or order of any court, governmental department, commission, board, bureau, agency, instrumentality or arbitrator to which URI or any of its Subsidiaries is subject that would have a Material Adverse Effect on URI or, with respect to such items that are outstanding and applicable as of the date hereof, materially impair the ability of URI to perform its obligations hereunder or to consummate the transactions contemplated hereby. SECTION 2.7. OPINION OF FINANCIAL ADVISOR. On the date hereof URI has received the written opinion of EVEREN Securities, Inc. to the effect that the terms of the Exchange are fair to the holders of URI Common Stock from a financial point of view. SECTION 2.8. NO FEES OWING. No broker, investment banker or other person, other than EVEREN Securities, Inc. the fees and expenses of which will be paid by URI, is entitled to any broker's, finder's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of URI. SECTION 2.9. INVESTMENT REPRESENTATION. URI has the knowledge and experience in business and financial matters to meaningfully evaluate the merits and risks of the issuance of URI's Common Stock in exchange and consideration for the Uranco Stock as contemplated hereby. URI understands and acknowledges that the Uranco Stock was originally issued to Santa Fe, and will be sold and transferred to URI, without registration or qualification under the Securities Act of 1933, as amended, or any applicable state securities or "Blue Sky" law, in reliance upon specific exemptions therefrom, and in furtherance thereof URI represents that the Uranco Stock will be taken and received by URI for its own account for investment, with no present intention of a distribution or disposition thereof to others. URI further acknowledges and agrees that the certificate(s) representing the Uranco Stock transferred to URI shall bear a restrictive legend, in substantially the following form: -7- 10 THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), ARE "RESTRICTED SECURITIES," AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR IN A TRANSACTION WHICH, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, IS NOT REQUIRED TO BE REGISTERED UNDER THE ACT. SECTION 2.10. NO OTHER REPRESENTATIONS. URI is not making any representation or warranty, express or implied, of any nature whatsoever, except as specifically set forth in Article 2 of this Agreement. ARTICLE 3 CERTAIN OTHER UNDERSTANDINGS AND AGREEMENTS OF THE PARTIES SECTION 3.1. FEES AND EXPENSES. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, except as otherwise specifically set forth in this Agreement or in the Registration Rights Agreement. SECTION 3.2. REASONABLE EFFORTS. Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use all reasonable efforts after the Closing, to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Exchange and the other transactions contemplated by this Agreement and the prompt satisfaction of the conditions hereto, including (a) the obtaining of all necessary actions or non-actions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations and filings and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, (b) the obtaining of all necessary consents, approvals or waivers from third parties, and (c) the execution and delivery of any additional instruments necessary to consummate the transactions contemplated by this Agreement. -8- 11 ARTICLE 4 CLOSING; ISSUANCE OF SHARES; EXCHANGE SECTION 4.1. THE CLOSING. The consummation of the Exchange (hereinafter the "Closing") occurred at the offices of Modrall, Sperling, Roehl, Harris & Sisk, P.A., Albuquerque, New Mexico, at 10:00 a.m. Mountain Standard time, on March 25, 1997 (the "Closing Date"). SECTION 4.2. THE EXCHANGE. At the Closing, URI issued and delivered to Uranco's shareholder, Santa Fe, the Shares. In consideration for the issuance and sale of the Shares to Santa Fe, and as payment in full of the Shares, at the Closing Santa Fe transferred to URI the certificates evidencing all of the issued and outstanding shares of capital stock of Uranco. All of the Shares are fully paid and nonassessable. SECTION 4.3. CLOSING DOCUMENTS DELIVERED TO URI. The following documents were delivered to URI at closing: (a) The opinion of Modrall, Sperling, Roehl, Harris & Sisk, P.A., counsel to Uranco, dated the Closing Date, substantially to the effect that: (i) The incorporation, existence and good standing of Uranco is as stated in this Agreement; the authorized and issued and outstanding shares of Uranco are as stated in this Agreement; all outstanding shares of Uranco Common Stock are duly and validly authorized and issued, fully paid and nonassessable and have not been issued in violation of any preemptive right of any stockholders. (ii) Uranco has full corporate power and authority to execute, deliver and perform this Agreement and this Agreement has been duly authorized, executed and delivered by Uranco and (assuming due and valid authorization, execution and delivery by URI) constitutes the legal, valid and binding agreement of Uranco, enforceable in accordance with its terms except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). (iii) The execution and performance by Uranco of this Agreement will not violate the Certificate of Incorporation or By-Laws of Uranco, respectively, and, to the knowledge of such counsel, will not violate, result in a breach of or constitute a default -9- 12 under any material lease, mortgage, contract, agreement, instrument, law, rule, regulation, judgment, order or decree to which Uranco is a party or by which they or any of their properties or assets may be bound. (iv) After inquiry of the directors and officers of Uranco, such counsel has no knowledge of any consent, approval, authorization or order of any court or governmental agency or body which has not been obtained but which is required on behalf of Uranco for the consummation of the transactions contemplated by this Agreement. (v) After inquiry of the directors and officers of Uranco, such counsel has no knowledge of any actions, suits or proceedings, pending or threatened against or affecting Uranco by any governmental entity which seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement. (b) Certificate representing all of the issued and outstanding Uranco Common Stock duly endorsed for transfer to URI by Santa Fe. SECTION 4.4. CLOSING DOCUMENTS DELIVERED BY URI. At the Closing URI delivered the following: (a) The opinion of Baker & Hostetler LLP, counsel to URI, dated the Closing Date, substantially to the effect that: (i) The incorporation, existence and good standing of URI are as stated in this Agreement. (ii) URI has full corporate power and authority to execute, deliver and perform this Agreement and this Agreement has been duly authorized, executed and delivered by URI and (assuming due and valid authorization, execution and delivery by Uranco) constitutes the legal, valid and binding agreement of URI, enforceable in accordance with its terms except to the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law). (iii) The execution and performance by URI of this Agreement will not violate the Certificates of Incorporation or By-Laws of URI, respectively, and, to the knowledge of such counsel, will not violate, result in a breach of or constitute a default under any material lease, mortgage, contract, agreement, instrument, law, rule, regulation, judgment, order or decree to which URI is a party or by which they or any of their properties or assets may be bound. -10- 13 (iv) To the knowledge of such counsel, no consent, approval, authorization or order of any court or governmental agency or body which has not been obtained is required on behalf of URI for the consummation of the transactions contemplated by this Agreement. (v) To the knowledge of such counsel, there are no actions, suits or proceedings, pending or threatened against or affecting URI by any governmental entity which seek to restrain, prohibit or invalidate the transactions contemplated by this Agreement. (vi) The Shares have been duly authorized and are validly issued and outstanding and are fully paid and nonassessable. (vii) The shares of URI Common Stock issued in the Exchange have been listed on the Nasdaq National Market subject to official notice of issuance. (b) A Certificate representing the Shares registered in the name of Santa Fe. ARTICLE 5 GENERAL PROVISIONS SECTION 5.1. ASSIGNABILITY AND PARTIES IN INTEREST. This Agreement shall inure to the benefit of and be binding upon URI and Uranco and their respective successors and assigns. SECTION 5.2. CHOICE OF LAW AND CHOICE OF FORUM. This Agreement shall be governed by and construed in accordance with the internal law of the State of New Mexico without giving effect to conflicts of law principles thereof. Uranco and URI agree that all litigation arising out of or related to this Agreement for the performance or non-performance of actions contemplated by this Agreement shall be brought in a federal or state court of competent jurisdiction within the state of New Mexico. Uranco and URI consent to jurisdiction by such a court. SECTION 5.3. COUNTERPARTS. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute but one and the same instrument. -11- 14 SECTION 5.4. COMPLETE AGREEMENT. This agreement is entered into by the parties in connection with a transaction involving the transfer of common stock of Uranco owned by Santa Fe to URI in exchange for common stock of URI, the grant by URI to Santa Fe of registration rights with respect to the stock of URI to be issued to Santa Fe, the grant by Santa Fe to Uranco of a license to explore and an option to purchase in exchange for certain commitments by Uranco, and the guarantee by URI of certain obligations of Uranco to Santa Fe. In order to effect this transaction, certain of the parties have contemporaneously entered into certain agreements, specifically, the Stock Exchange Agreement and Plan of Reorganization (URI and Uranco), the Agreement of Santa Fe as Uranco Shareholder and Guarantee of URI (Santa Fe and URI); the License to Explore and Option to Purchase (Santa Fe and Uranco); and the Registration Rights Agreement (Santa Fe and URI). All of such agreements, together with all exhibits or schedules thereto and documents delivered pursuant thereto, contain the entire agreement among the parties with respect to the contemplated transaction, and shall supersede all previous writings and all previous or contemporaneous oral negotiations, commitments, and understandings. SECTION 5.5. INTERPRETATION. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 5.6. SEVERABILITY. Any provision of this Agreement which is invalid, illegal, or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity, illegality, or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. SECTION 5.7. KNOWLEDGE, DUE DILIGENCE INVESTIGATION. All representations and warranties contained herein which are made to the "knowledge" of Uranco or URI shall mean to the actual present knowledge of Uranco's or URI'S, as the case may be, executive officers after due inquiry with respect to such matters. -12- 15 IN WITNESS WHEREOF, the undersigned duly execute this Agreement as of the date first written above. URANCO INC. Date: March 25, 1997 By: /s/ Bruce D. Hansen --------------------------------- Name: Bruce D. Hansen --------------------------------- Title: President --------------------------------- URANIUM RESOURCES, INC. Date: March 25, 1997 By: /s/ Paul K. Willmott --------------------------------- Name: Paul K. Willmott --------------------------------- Title: President --------------------------------- -13- 16 Schedule 1.5: Litigation Navajo Nation land and jurisdictional claims: Since 1982, the Navajo Nation has asserted title and jurisdictional claims over lands in the checkerboard area in northwestern New Mexico outside the boundaries of the recognized Navajo Reservation, including portions of McKinley County, where some of the mineral interests subject to this Agreement are located. While the federal courts have rejected claims to title to lands, see Navajo Tribe v. New Mexico, 809 F.2d 1455 (10th Cir. 1987), the courts have acknowledged the potential for the exercise of off-reservation civil jurisdiction over non-Indians by the Navajo Nation. See Pittsburg & Midway Coal Mining Co. v. Watchman, 52 F.3d 1531 (10th Cir. 1995); Texaco, Inc. v. Zah, 5 F.3d 1374 (10th Cir. 1993). In view of these assertions, there is the potential that the Navajo Nation will assert title to, or jurisdiction over, the mineral interests subject to this Agreement located in McKinley County, New Mexico. While title claims were rejected, the decision was not on the merits, but was founded on the fact that the United States was immune from suit, that the suit should have been brought under the Indian Claims Commission Act of 1946, and the suit could not proceed against the remaining defendants, including Santa Fe Mining, Inc. , because the United States was an indispensable party.. Accordingly, the decision could be read to have barred the claim or remedy, but not the underlying rights to title to the lands. As reflected in Pittsburg & Midway, the Navajo Nation aggressively asserts civil jurisdiction, including taxation and regulatory authority, to off -reservation areas within the territorial confines of the "Navajo Nation" as the Nation defines that term in 7 N.N.C. Section 254. While Santa Fe Pacific Gold Corporation and Uranco Inc. have not attempted to determine whether the mineral interests subject to this agreement would fall within the area over which the Navajo Nation would assert title or jurisdiction, neither company are presently aware of any Navajo Nation claim that would include the mineral interests subject to this Agreement that are located in Bernalillo, Cibola, or Sandoval Counties. -14- EX-10.21 7 LICENSE TO EXPLORE EXHIBITS B-E 1 EXHIBIT 10.21 LICENSE TO EXPLORE AND OPTION TO PURCHASE THIS LICENSE TO EXPLORE AND OPTION TO PURCHASE ("LICENSE") is dated and effective March 21, 1997 by and between Santa Fe Pacific Gold Corporation, a Delaware corporation ("Licensor") and Uranco, Inc., a Delaware corporation ("Licensee"). RECITALS A. The property interest which is the subject of this License is described in Exhibit A to this License and shall be referred to as "Licensed Premises" for purposes of this License unless otherwise specified. B. Licensor wishes to allow Licensee to explore for uranium on the Licensed Premises, all on the terms and conditions hereinafter set forth. C. In consideration for the grant of the License and other valuable consideration, Licensor shall require exploration by Licensee on the Licensed Premises and other designated lands set forth in Exhibit B as to which Licensor has conveyed the uranium estate to Licensee (the "Category II Property"), all on the terms and conditions hereinafter set forth. The Licensed Premises and the Category II Property shall be collectively referred to herein as the "Exploration Property." D. Licensor wishes to grant Licensee the option to purchase the mineral estate owned by Licensor, (except coal in place, including development or mining rights related to coal) in the Licensed Premises and to impose on Licensee the obligation to purchase the mineral estate owned by Licensor, (except coal in place, including development or mining rights related to coal) before Licensee obtains any mining permit or performs any activities which would require a mining permit on any portion of the Licensed Premises. NOW, THEREFORE, for adequate consideration, the receipt and sufficiency of which is hereby acknowledged, and in consideration for the mutual promises of Licensor and Licensee stated in this License, Licensor and Licensee agree as follows: 1. GRANT OF LICENSE. a. Licensor hereby grants to Licensee, for a term of seventeen (17) years, commencing on the date of the execution hereof, the exclusive right to explore, sample and test the Licensed Premises for uranium and to use geological, geophysical and geochemical data and interpretive data (except data relating to coal, including the development or mining of coal), which has been provided from Licensor to Licensee. b. Licensor does not warrant the title to or quiet possession by Licensee of the Licensed Premises or the uranium or any other minerals on or in the Licensed Premises. Except 2 as provided in that certain Agreement of Santa Fe Pacific Gold Corporation, as Uranco, Inc. Shareholder and Uranium Resources, Inc. dated effective as of March 25, 1997 (the "Shareholder Agreement") and under this License, Licensor shall in no event become liable for damages arising from any lack or failure of title in the Licensor to the Licensed Premises, the inability of Licensee to explore for uranium or eviction of the Licensee from the Licensed Premises for any reason. c. The rights of Licensee under this License shall be subject to the right of Licensor to use the Licensed Premises for any and all purposes not detrimental to Licensee's use of the Licensed Premises for the purposes permitted in Paragraph 1 of this License. Licensor may lease to third parties the mineral estate other than uranium on the Exploration Property; provided, however, that except for coal in place, including development or mining rights related to coal, Licensor shall not sell any of the mineral estate on the Exploration Property to any party except Licensee, its successors and assigns until such time as Licensee's right and obligation to purchase the remaining mineral estate is relinquished or terminated pursuant to the terms of this License. d. Licensee accepts this License subject to the aforesaid terms and provisions and also subject to the terms and provisions of the deed or deeds by which Licensor reserved the minerals in the Licensed Property and all other grants and encumbrances set forth in Exhibit C to this License. 2. LICENSEE'S OBLIGATIONS. As a part of the consideration for the grant of this License, Licensee agrees: a. Assumption of Licensor's Obligations to Others: By commencing operations on any part of the Licensed Premises, Licensee assumes all obligations of Licensor related to or arising out of Licensee's operations, if any, to the surface owner or third party minerals owners of that portion of the Licensed Premises to be affected by such operation(s), and agrees to pay any such third party surface and mineral owners for any and all damages for which it or Licensor would be liable as a result of Licensee's operations. Any amounts which Licensor shall be required to pay to any surface or mineral owners by reason of the action or inaction of Licensee, its agents, employees, subcontractors and representatives, related to or arising out of Licensee's activities, shall be reimbursed to Licensor within thirty (30) days after written demand for reimbursement is made by Licensor upon Licensee. b. Approval of Agreements Affecting Licensor: To obtain Licensor's approval of any proposed agreement prior to Licensee entering into any permanent arrangement with any owner of the surface overlying any of the Licensed Premises, which approval will not be unreasonably withheld. c. Insurance: To carry and maintain at all times the following insurance coverage which shall name Licensor as an additional named insured: -2- 3 (i) Worker's Compensation including Occupational Disease with a minimum limit liability of $100,000 for Employers Liability or an amount required by the State of New Mexico, whichever is higher; (ii) Comprehensive General Liability with limits not less than $1,000,000 combined single limit, including: (a) Blanket Contractual Liability (b) Personal Injury (c) Independent Contractors (d) Removal of the "XCU" Exclusions; (iii) Automobile Liability with limits not less than $1,000,000 combined single limit including all owned, non-owned and hired automobiles; (iv) "All Risk" physical damage insurance on all surface facilities, (v) Excess Umbrella Liability coverage with limits of not less than $5 million covering its operations under this License. Prior to January 1 of each year during the term, Licensee shall provide to Licensor evidence that the required insurance is in effect. d. OPERATIONS IN ACCORDANCE WITH LAW: To comply with all applicable statutes, regulations, rules and orders of all governmental bodies with jurisdiction over the Licensed Premises related to Licensee's operations on the Licensed Premises, regardless of when they become or became effective, including, without limitation, those relating to health, safety, noise, environmental protection, waste disposal, and water and air quality. Licensee shall furnish Licensor with satisfactory evidence of such compliance upon request of Licensor. Should any discharge, leakage, spillage, emission or pollution of any type occur upon or from the Licensed Premises due to Licensee's use and occupance, Licensee, at its expense, shall clean and restore the Licensed Premises to standards equal to or exceeding standards imposed by any governmental body having jurisdiction over the Licensed Premises. e. MINING PERMIT: Licensee shall not perform any activities which require a mining permit on any portion of the Licensed Premises until the Purchase Price has been paid and a deed as set forth in Paragraph 4 of this License has been recorded. f. DISCHARGE OF LIENS: To discharge, remove, satisfy and take all other action to eliminate and prevent any and all liens and encumbrances, except those existing prior to the date of this License or resulting from taxes not yet due and payable, which attach to or are imposed against any interest owned by Licensor in any portion of the Licensed Premises, that arise out of Licensee's acts or omissions. If any person threatens any action which might result in the imposition or attachment of any such lien or encumbrance, Licensee shall, at its sole expense, -3- 4 take all reasonable action necessary to prevent the imposition or attachment of any such lien or encumbrance. Licensee shall have the right to contest in good faith the imposition of any such lien or encumbrance. g. Upon purchase by Licensee pursuant to Section 4 of this License of the remaining mineral estate (except coal in place, including development or mining rights related to coal) in all or a portion of the Licensed Premises, such property purchased shall no longer be subject to the terms of this License, except for the provisions of Section 6 of this License. 3. MULTIPLE USE. a. Licensee shall carry out all activities and operations on the Exploration Property in a manner compatible with the multiple use of the Exploration Property and shall avoid interference with the operations of any third parties who began or begin operations on the Exploration Property before Licensee. If Licensee knowingly encounters any minerals that are owned by a party other than Licensor, Licensee shall report such substances in its semi-annual report to Licensor pursuant to Paragraph 6 of this License and shall take all reasonable steps necessary to prevent any waste of such minerals. If any portion of the Exploration Property is determined to contain any substance owned by a third party, and that third party desires to explore for, develop, mine, remove or process such substance, Licensee shall in good faith attempt to adjust the timing, planning, location and construction of its operations to permit the exploration, development, mining, removing or processing of the substance. b. Licensor shall include a provision substantially similar to 3(a) herein in any grant of rights to any third party affecting any part of the Exploration Property to the end that the obligations placed upon Licensee under the terms hereof shall be mutually binding upon Licensee and any party hereafter acquiring an interest in the lands within the Exploration Property. 4. GRANT OF OPTION TO PURCHASE AND OBLIGATION TO PURCHASE. a. The "Spot Price" of uranium as used in this License shall mean that price at which uranium may be purchased for delivery within one year, as reported by TradeTech or its successor in interest or, in the absence of TradeTech or a successor in interest, another accepted industry publication. b. At such time as Licensee applies for a mining permit with respect to any of the Licensed Premises or performs any activities which would require a mining permit, Licensor shall have the right to require the Licensee to purchase all of the mineral estate (except coal in place, including development or mining rights related to coal) owned by Licensor in the Licensed Premises which is the subject of a mining permit or activities which would require a mining permit. The purchase price shall be $200 per acre (the "Purchase Price"). Licensee shall purchase such portions of property as entire sections of land, or as much of the section as is licensed pursuant to this License. The Purchase Price shall be paid within 30 days after Licensor gives notice to Licensee that it elects to exercise the option to require purchase. The -4- 5 Purchase Price shall be increased by the same percentage as the percentage increase in the Spot Price of uranium on the date of Licensor's exercise of such option over $15.80 per pound. Upon payment of the full Purchase Price, Licensor shall (i) execute and deliver to Licensee a deed in the form of Exhibit D attached to this License which shall be made subject to all matters of which Licensor has notice at the time of the conveyance, including but not limited to the instruments set forth in Exhibit C attached to this License, and (ii) convey title to all geological, geophysical and geochemical data and interpretive data (except data relating to coal, including the development or mining of coal) related to the mineral interests being conveyed. c. Licensor grants to Licensee during the term of this License the sole and exclusive option to purchase all of the remaining mineral estate (except coal in place, including development or mining rights related to coal) owned by Licensor in the Licensed Premises, or any part thereof, under the same terms and conditions set forth in Section 4(b) of this Agreement, except that Licensee shall not be obligated to apply for a mining permit before exercising this option. d. The exercise of this option as to a part of the Licensed Premises shall not extinguish Licensee's option to thereafter acquire, from time to time, all or any part of the remainder of the Licensed Premises. 5. EXPLORATION COMMITMENT. a. Licensee shall expend not less than $200,000 per year in exploration on the Exploration Property for License Years 1 through 10. Licensee shall expend not less than $400,000 per year on the Exploration Property for License Years 11 through 17. A License Year shall run from the date this License is signed and each anniversary of that date through the day preceding the anniversary date of the signing of this License. A breach of Licensee's obligation to perform the exploration requirements set forth in this Paragraph 5 shall only give rise to a right by Santa Fe to terminate this License and shall not give rise to any other remedies in law or in equity. b. Additionally, if the Spot Price for uranium shall exceed $25 per pound for any consecutive twelve-month period, Licensee shall spend on exploration (or pay to Licensor) during the 5 years following an aggregate of $5 million on the Licensed Premises. In the event that the Spot Price for uranium shall exceed $30 per pound for any twelve-month period, Licensee shall commit to spend on exploration (or shall pay Licensor) during the following 5 years an aggregate of $10 million on the Licensed Premises, (All expenditures on exploration required pursuant to this Paragraph 5 shall be referred to herein as the "Exploration Expenditures"). c. Licensee shall have the right to credit any Exploration Expenditures in one year in excess of required amounts to future years. The requirements for Exploration Expenditures shall be separate from any amounts paid for the purchase of the uranium or mineral estate from Licensor, and any such purchase price shall not be credited toward the Exploration Expenditures. -5- 6 The obligations in this Section 5 regarding Exploration Expenditures shall terminate upon the termination of this License. d. Licensee shall determine the manner, places and means by which Licensee makes Exploration Expenditures. Such Exploration Expenditures shall be made and conducted reasonably in accordance with mining industry standards. 6. [ ] 7. INSPECTION OF LICENSED PREMISES, BOOKS AND RECORDS OF LICENSEE. Licensor or its authorized representatives may enter, during ordinary business hours, into or upon all parts of the Licensed Premises for the purposes of making inspections or visual surveys or taking samples. Licensee shall, at Licensee's cost, assist Licensor or its representatives in the conduct of any inspections, visual surveys or samplings. Licensee shall furnish summary reports to Licensor, including maps, drill hole logs and reports showing all factual data concerning exploration activities on the Exploration Property, including, but not limited to, amounts spent on exploration. Licensee shall furnish such reports at semiannual intervals on January I and July 1 of each year of the License. Each report shall be complete as of the preceding calendar half. Licensee shall maintain complete and accurate books and records of Licensee's activities on or related to the Exploration Property and the exploration or discovery of uranium or other minerals and amounts expended in exploration. Licensor shall have the right to inspect, review and copy, at Licensor's expense, during ordinary business hours, all books and records related to Licensee's activities on the Exploration Property. While Licensee shall faithfully and truthfully report to Licensor the information required by this paragraph, no liability will be incurred by Licensee because of the inaccuracy of any analysis or interpretation of any such information or the inadvertent omission of any information, the omission of which will not make the information furnished substantially misleading. The requirements of this section are not applicable to any portion of the Licensed Premises purchased by Uranco pursuant to this License after the date it is purchased. -6- 7 8. LICENSEE'S INDEMNIFICATION OF LICENSOR. a. Licensee shall indemnify, hold harmless and defend Licensor against all liability, cost and expense (including without limitation any fines, penalties, judgments, third party claims, litigation cost and attorney fees) incurred by Licensor as a result of: (i) the use of the Exploration Property by Licensee, its agents, employees or invitees; or any discharge, leakage, spillage, emission or pollution, caused by Licensee's operation on the Licensed Premises, regardless of whether such liability, cost or expense arises during or after the term of this License. (ii) Licensee's breach of any provision of this License. b. Licensee shall pay all amounts due Licensor under this Paragraph within 30 days after any such amounts become due and, upon failure to make such payment within such time, all amounts due shall become a lien upon all property of the Licensee upon the Licensed Premises. c. Licensor may post notices of non-liability on the Licensed Premises to the extent that such posting is permitted by applicable law, and Licensee shall not disturb or damage any of Licensor's postings. 9. LIMITATION ON INDEMNIFICATION. a. To the extent, if at all, that a court of competent jurisdiction determines that NMSA 1978, Section 56-7-2 (Repl. Pamp. 1996) applies to any provision of this Agreement, then any and all provisions of indemnification shall not indemnify any indemnitee against loss or damages, for: (i) death of bodily injury to persons; or (ii) injury to property; or (iii) any other loss, damage or expense arising under (i) or (ii) or both; or (iv) any combination of these, arising from the sole or concurrent negligence of the indemnitee or the agents or employees of the indemnitee or any -7- 8 independent contractor who is directly responsible to the indemnitee, or from any accident which occurs in operations carried on at the direction or under the supervision of the indemnitee or an employee or representative of the indemnitee or in accordance with methods and means specified by the indemnitee or employees or representations of the indemnitee. b. To the extent, if at all, that a court of competent Jurisdiction determines that NMSA 1978, Section 56-7-1 applies to the indemnification set forth in this License, the indemnification does not apply to liability, claims, damages, losses or expenses, including attorney fees arising out of: (i) the preparation or approval of maps, drawings, opinions, reports, surveys, change orders, designs or specifications by the indemnitee, or the agents or employees of the indemnitee; or (ii) the giving of or failure to give directions or instructions by the indemnitee, or the agents or employees of the indemnitee, where such giving or failure to give directions or instructions is the primary cause of bodily injury to persons or damage to property. 10. LICENSEE'S OBLIGATIONS UPON SURRENDER. Upon expiration, termination or cancellation of this License, Licensee shall surrender the Licensed Premises in good order and condition and with respect to Licensee's operations conducted thereon, in compliance with all governmental laws, ordinances, rules, regulations, requirements and orders affecting conditions or the activities of Licensee on the Licensed Premises, including, but not limited to, those relating to conservation of lands and waters and air and water quality, which are in effect and become effective during the term hereof. Licensee shall have 3 months from the date of expiration, termination or cancellation to remove all its machinery, tools, facilities and improvements from the Licensed Premises; provided, however, that no tools, machinery, facilities or improvements shall be removed while Licensee may be in any manner indebted to Licensor under any obligation imposed by this License. Licensee shall also post appropriate warning signs at or near all surface openings created by it and provide such other safeguards to persons and property. 11. NOTICES. a. Any notice to be given by Licensor to Licensee shall be property served when addressed to Uranco, Inc., c/o Uranium Resources, Inc. at 12750 Merit Drive, Suite 1020, Dallas, Texas 75251, Attn: President or any other address Licensee provides in writing to Licensor. -8- 9 With a copy to Alfred C. Chidester, Baker and Hostetler LLP, 303 East 17th Avenue, Suite 1100, Denver, Colorado 80203-1264. With a copy to J.W. Cooper, Cooper and Cooper, Suite 1550, Frost Bank Plaza, Corpus Christi, Texas 78470. b. Any notice to be given by Licensee to Licensor shall be properly served when addressed to Santa Fe Pacific Gold Corporation, 6200 Uptown Boulevard, NE, Suite 400, Albuquerque, New Mexico 87110, Attn: Wayne Jarke or any other address Licensor provides in writing to Licensee. With a copy to Modrall, Sperling, Roehl, Harris & Sisk, P.A., P. 0. Box 2168, Albuquerque, New Mexico 87103, Attn: John R. Cooney. c. Notices shall be effective upon personal delivery or other receipt by either party. 12. LICENSEE NOT RELEASED BY TERMINATION. No termination, expiration or cancellation of this License shall release Licensee from any liability or obligation under this License, whether of indemnity or otherwise, resulting from or relating to any acts, omissions or events happening prior to the date of termination, expiration or cancellation, except that the requirements to pay Exploration Expenditures terminate upon termination of the License. 13. EVENTS OF DEFAULT. a. If Licensee (i) performs any actions which give rise to the need for a mining permit pursuant to any applicable law without obtaining a mining permit, (ii) releases hazardous substance or waste, as those terms are defined in any applicable federal, state or local law or ordinance, on the Licensed Premises, (iii) contaminates ground or surface water so that it does not meet drinking water standards of applicable law, (iv) causes harm to an endangered species as defined in applicable law, or (v) fails to comply with any term or condition of this License or fulfill any obligation under this License, including without limitation Section 2(d) and Section 3(a) of this License (other than failure to make a payment of money when due), Licensee is in default under the terms of this License. If Licensee fails to cure such default within 30 days after the completion of the conference set forth in Section 18 herein and the receipt of notice from Licensor specifying the nature of the default, Licensor may cancel this License by written notice to Licensee. If the default cannot be completely corrected within the 30 day period, this License shall not be cancelled, provided Licensee commences correction or mitigation of the default fall within the 30 day period and thereafter proceeds with reasonable diligence and in good faith and effects the remedy as soon as practicable. -9- 10 b. In the event correction is not reasonably possible, adequate mitigation satisfactory to Licensor which is commenced and completed pursuant to Section 13a of this License shall be accepted as a cure for default. c. If Licensee fails to make any payment of money to Licensor when due, Licensor may cancel this License upon written notice to Licensee and Licensee's failure to pay the full amount due within 30 days after Licensee's receipt of Licensor's notice. In no event shall cancellation be the exclusive remedy of Licensor. d. Commercial frustration, commercial impracticability or the occurrence of unforeseen events, rendering performance of this License uneconomical, shall not constitute an excuse of nonperformance of any obligation imposed by this License. In the event Licensor or Licensee is prevented from performing any obligations under this License other than payment of money, by an event or occurrence which is beyond the reasonable control of the prevented party and which cannot reasonably be overcome through the exercise of due diligence, performance of that obligation shall be excused for so long as the effects of the event or occurrence prevent performance. 14. CONTINUATION OF PERFORMANCE DURING PERIOD OF BREACH. Licensor and Licensee shall continue to perform and not withhold performance during periods of breach. Continuation of performance, including the receipt of any payment by a nonbreaching party with knowledge of the breach, shall not constitute a waiver of any rights under this License. Notwithstanding the foregoing, if Licensee breaches this License, Licensor may seek to obtain appropriate judicial action, including restraining orders, injunctions and other decrees, to prevent Licensee from continuing operations on the Licensed Premises which cause or imminently threaten to cause irreparable damage to the Licensed Premises or waste of minerals. 15. CHOICE OF LAW AND CHOICE OF FORUM. This License shall be governed by and construed in accordance with the internal law of the State of New Mexico without giving effect to conflicts of law principles thereof. Licensor and Licensee agree that all litigation arising out of or related to this License for the performance or non-performance of actions contemplated by this License shall be brought in a federal or state court of competent jurisdiction within the state of New Mexico. Licensor and Licensee consent to Jurisdiction of such a court. In any action or proceeding brought to enforce any provision of this License, or where any provision hereof is validly asserted as a defense, the prevailing party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. 16. ASSIGNMENT OF LICENSE. Licensee shall not assign its rights and/or obligations under this License without the prior written consent of Licensor, which consent shall not be unreasonably withheld. -10- 11 17. MODIFICATION OF LICENSE. Only written modification of this License duly authorized and signed by Licensor and Licensee shall be effective. No writing shall constitute a modification unless the writing is expressly identified as a modification with specific reference to the provisions of this License to be modified. No modification shall be effective prior to the date the modification is signed by Licensor and Licensee, unless the modification expressly provides. 18. EXECUTIVE CONFERENCE. In the event of any dispute arising between the parties regarding matters set forth in this License, the parties agree that before a request for relief is filed in a court of law or this License is terminated for an Event of Default, an executive from each party with the authority to address and attempt to resolve the dispute will meet in an attempt to reach a resolution of the dispute satisfactory to both parties. This provision shall not be construed to require a meeting with any third parties, such as a mediator or arbitrator. 19. INTEGRATION CLAUSE. This License is entered into by the parties in connection with a transaction involving the transfer of common stock of Licensee owned by Licensor to Uranium Resources, Inc. ("URI") in exchange for common stock of URI, the grant by URI to Licensor of registration rights with respect to the stock of URI to be issued to Licensor, the grant by Licensor to Licensee of a license to explore and an option to purchase in exchange for certain commitments by Licensee, and the guarantee by URI of certain obligations of Licensee to Licensor. In order to effect this transaction, certain of the parties have contemporaneously entered into certain agreements, specifically, the Stock Exchange Agreement and Plan of Reorganization (URI and Licensee), the Agreement of SFPG as Uranco Shareholder and Guarantee of URI (Licensor and URI); the License to Explore and Option to Purchase (Licensor and Licensee); and the Registration Rights Agreement (Licensor and URI). All of such agreements, together with all exhibits or schedules thereto and documents delivered pursuant thereto, contain the entire agreement among the parties with respect to the contemplated transaction, and shall supersede all previous writings and all previous or contemporaneous oral negotiations, commitments, and understandings. 20. MEMORANDUM OF LICENSE. Contemporaneously with executing this License, Licensor and Licensee shall execute a Memorandum of License setting forth certain provisions of this License, and either party may choose to record such Memorandum. 21. COUNTERPARTS. This License may be executed in any number of counterparts, each of which shall be deemed to be an original. -11- 12 LICENSOR: SANTA FE PACIFIC GOLD CORPORATION By:/s/ Bruce D. Hansen ------------------------------ Title: Senior Vice President - ------------------------ Corporate Development ------------------------ LICENSEE: URANCO, INC. By:/s/ Bruce D. Hansen ------------------------------ Title:President --------------------------- -12- 13 LIST OF EXHIBITS TO BE ATTACHED: Exhibit A Description of Licensed Premises Exhibit B Description of Category II Property Exhibit C Matters to Which the License is Made Subject Exhibit D Form of Deed Exhibit E Instruments Granting Surface Rights and Retaining Mineral Rights -13- 14 EXHIBIT A TO LICENSE TO EXPLORE AND OPTION TO PURCHASE CATEGORY 3 LANDS (REVISED 03/10/97) COMPANY: GOLD STATE: NM COUNTY: MCKINLEY
MERIDIAN: NMPM ACRES ----- Township 17 North, Range 5 West ------------------------------- Section 5 LOTS 1-4,S/2 NE/4, S/2 NW/4, SE/4, SW/4 639.68 Section 7 LOTS 1-4, E/2, E/2 W/2 649.16 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 17 ALL 640.00 Section 18 ALL 647.16 Section 19 LOTS 1-4, E/2, E/2 W/2 644.48 Section 20 ALL 640.00 Section 21 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 ALL 641.44 Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 639.76 Section 32 S/2 SW/4 80.00 Section 33 ALL 640.00 Township 19 North, Range 5 West ------------------------------- Section 19 LOTS 1, 2, E/2 NW/4 162.06
A-1 15 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 19 LOTS 3, 4, E/2 SW/4 162.02 Section 29 ALL 640.00 Section 30 ALL 645.24 Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 649.04 Section 33 ALL 640.00 Township 14 North, Range 6 West ------------------------------- Section 5 LOTS 1-8, S/2 N/2, S/2 648.24 Township 15 North, Range 6 West ------------------------------- Section 5 LOTS 1, 2, NW/4 NW/4 102.24 Section 6 LOTS 1, 2, 3, NE/4, NW/4 SE/4, W/2 611.13 Section 7 LOTS 1-4, NE/4 NW/4, W/2 NW/4 237.80 Section 8 LOT 1 14.66 Section 15 LOTS 1-4 142.76 Section 17 LOT 1 4.78 Section 17 LOTS 2-8, W/2 SE/4 357.96 Section 19 LOTS 1-4 114.38 Section 19 SE/4 SE/4 40.00 Section 21 ALL 640.00 Section 22 SE/4, W/2 480.00 Section 23 ALL 640.00 Section 27 ALL 640.00 Section 29 LOTS 1-4 28.00 Section 29 LOTS 5-8, W/2 E/2, W/2 666.40
A-2 16 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 31 ALL 640.00 Section 33 N-E/4, W/2 480.00 Township 16 North, Range 6 West ------------------------------- Section 1 ALL 640.00 Section 3 ALL 640.00 Section 4 ALL 640.00 Section 5 LOTS 1-4,W/2 E/2, W/2 584.00 Section 5 LOTS 5-8 45.16 Section 6 ALL 640.00 Section 7 LOTS 1-4,E/2 NW/4, E/2 SW/4, NE/4, SE/4 639.46 Section 8 ALL 628.56 Section 9 ALL 640.00 Section 10 ALL 640.00 Section 11 ALL 640.00 Section 13 ALL 640.00 Section 14 NE/4, N/2 SE/4 240.00 Section 15 ALL 640.00 Section 17 LOTS 1-4, W/2 E/2 267.40 Section 17 W/2 320.00 Section 17 LOTS 5-8 42.12 Section 18 ALL 638.66 Section 19 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 639.84 Section 20 ALL 632.20
A-3 17 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 21 W/2 320.00 Section 21 NE/4 160.00 Section 22 NE/4, W/2 480.00 Section 23 ALL 640.00 Section 25 LOTS 1-4, N/2, N/2 S/2 521.12 Section 26 LOTS 1-4, N/2, N/2 S/2 530.20 Section 27 LOTS 1-4, N/2, N/2 S/2 537.88 Section 28 N/2, N/2 SE/4 400.00 Section 29 LOTS 1-7, W/2 NE/4, NW/4, NW/4 SE/4, N/2 SW/4 582.82 Section 29 LOTS 8-14 131.60 Section 30 LOTS 1-6, 9-11, NE/4, E/2 NW/4, N/2 SE/4, NE/4 SW/4 666.50 Section 31 ALL 640.00 Township 17 North, Range 6 West ------------------------------- Section 1 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 640.72 Section 3 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 641.12 Section 4 ALL 641.12 Section 5 LOTS 1-7, SW/4 NE/4, S/2 NW/4, W/2 SE/4, SW/4 588.88 Section 5 LOTS 8-11 43.26 Section 6 ALL 641.44 Section 7 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 641.00 Section 12 ALL 640.00 Section 13 ALL 640.00
A-4 18 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Township 18 North, Range 6 West ------------------------------- Section 1 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 640.28 Section 2 LOTS 1-4 160.98 Section 3 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 640.64 Section 4 ALL 640.76 Section 5 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 640.80 Section 6 ALL 638.76 Section 7 NE/4, E/2 SE/4 240.00 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 11 ALL 640.00 Section 13 W/2 W/2 160.00 Section 14 NE/4 160.00 Section 15 N/2 320.00 Section 17 NE/4, N/2 NW/4 240.00 Section 27 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 ALL 633.20 Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 631.76 Section 32 ALL 640.00 Section 33 ALL 640.00 Section 35 ALL 640.00
A-5 19 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 36 N/2, SW/4 480.00 Township 19 North, Range 6 West ------------------------------- Section 8 SE/4 160.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 18 ALL 639.44 Section 19 LOTS 1-4,-E/2 NW/4, E/2 SW/4, NE/4, SE/4 638.88 Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 ALL 640.00 Section 25 ALL 640.00 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 ALL 639.68 Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 639.28 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00
A-6 20 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Township 15 North, Range 7 West ------------------------------- Section 12 N/2 SW/4, SE/4 240.00 Section 12 S/2 SW/4, N/2 400.00 Township 17 North, Range 7 West ------------------------------- Section 1 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 638.68 Section 3 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 642.40 Section 4 ALL 642.96 Section 5 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 643.80 Section 6 ALL 635.07 Section 7 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 645.36 Section 8 ALL 640.00 Section 9 N/2, SE/4 480.00 Section 9 SW/4 160.00 Section 10 ALL 640.00 Section 11 ALL 640.00 Section 12 ALL 640.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 18 ALL 644.24 Section 19 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 642.52 Section 20 ALL 640.00
A-7 21 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 ALL 640.00 Section 25 ALL 640.00 Section 26 N/2 NE/4, SW/4 NE/4, NW/4, S/2 600.00 Section 27 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 ALL 640.88 Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, NE/4, SE/4 640.20 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 18 North, Range 7 West ------------------------------- Section 1 LOTS 1-4, S/2 NE/4, S/2 NW/4, SE/4, SW/4 639.60 Section 3 LOTS 1-4, S/2 NE/4, S/2 NW/4, S/2 636.40 Section 4 ALL 635.60 Section 5 LOTS 1-4, S/2 NE/4, S/2 NW/4, S/2 633.38 Section 9 NW/4 160.00 Section 19 LOTS 1-4, E/2 NW/4, E/2 SW/4, E/2 642.88 Section 20 ALL 640.00 Section 21 ALL 640.00
A-8 22 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 22 ALL 640.00 Section 23 ALL 640.00 Section 25 ALL 640.00 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 E/2 320.00 Section 31 LOTS 1-4, E/2 NW/4, E/2 SW/4, E/2 644.56 Section 32 ALL 640.00 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 19 North, Range 7 West ------------------------------- Section 13 LOTS 1-4, W/2 NE/4, W/2 SE/4, W/2 635.96 Section 14 S/2, NE/4 480.00 Section 23 ALL 640.00 Section 25 LOTS 1-4, W/2 NE/4, W/2 SE/4, W/2 637.88 Section 27 SE/4 160.00 Section 29 ALL 640.00 Section 31 LOTS 1-14, NE/4, E/2 NW/4 692.02 Section 33 N/2 320.00 Section 33 LOTS 1-12 362.88
A-9 23 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 34 ALL 669.80 Section 35 LOTS 1-4, N/2 SE/4, N/2 SW/4, N/2 657.80 Township 20 North, Range 7 West ------------------------------- Section 22 ALL 640.00 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 17 North, Range 8 West ------------------------------- Section 1 LOTS 1-4, S/2 N/2, S/2 639.60 Section 2 ALL 639.04 Section 3 LOTS 1-4, S/2 N/2, S/2 637.12 Section 5 LOTS 1-4, S/2 N/2, S/2 636.88 Section 7 LOTS 1-4, E/2 W/2, E/2 637.56 Section 9 ALL 640.00 Section 10 ALL 640.00 Section 11 ALL 640.00 Section 12 ALL 640.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 21 ALL 640.00 Section 22 ALL 640.00
A-10 24 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 23 ALL 640.00 Section 24 ALL 640.00 Section 25 ALL 640.00 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 28 ALL 640.00 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 18 North, Range 8 West ------------------------------- Section 13 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 18 LOTS 1-4, E/2, E/2 W/2 637.40 Section 19 LOTS 1-4, E/2, E/2 W/2 638.18 Section 20 ALL 640.00 Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 ALL 640.00 Section 25 ALL 640.00 Section 26 ALL 640.00 Section 27 ALL 640.00
A-11 25 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 ALL 638.66 Section 31 LOTS 1-4, E/2 W/2, E/2 628.48 Section 32 ALL 640.00 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 19 North, Range 8 West ------------------------------- Section 4 ALL 621.87 Section 5 LOTS 1-7, S/2 NE/4, SE/4 NW/4, SE/4, E/2 SW/4 656.01 Section 6 ALL 624.29 Section 7 LOTS 1-7, NE/4, E/2 NW/4, N/2 SE/4, NE/4 SW/4 616.89 Section 8 ALL 647.46 Section 9 LOTS 1-4, E/2 NW/4 209.56 Section 17 ALL 640.00 Section 21 NE/4, N/2 SE/4, W/2 560.00 Township 20 North, Range 8 West ------------------------------- Section 5 LOTS 1-4, S/2 N/2, S/2 642.00 Section 6 ALL 639.60 Section 7 LOTS 1-4, E/2 W/2, E/2 641.08 Section 8 ALL 640.00 Section 17 ALL 640.00
A-12 26 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 18 ALL 642.52 Section 19 LOTS 1-4, E/2 W/2, E/2 642.64 Section 20 ALL 640.00 Section 21 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 ALL 640.64 Section 31 LOTS 1-4, E/2 W/2, E/2 644.44 Section 33 ALL 640.00 Township 16 North, Range 9 West ------------------------------- Section 18 ALL 620.56 Section 20 ALL 640.00 Township 17 North, Range 9 West ------------------------------- Section 1 LOTS 1-11, SW/4 NE/4, S/2 NW/4, W/2 SE/4, SW/4, 675.87 LESS 11.928 ACRES IN NW/4 SW/4 AND W/2 NW/4 Section 1 11.928 ACRES IN NW/4 SW/4 AND W/2 NW/4 11.93 Section 3 LOTS 1-4, S/2 N/2, S/2 637.44 Section 4 ALL 637.92 Section 5 ALL 637.44 Section 6 ALL 628.36 Section 7 LOTS 1-4, E/2 W/2, E/2 628.64 Section 8 ALL 640.00
A-13 27 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 9 ALL 640.00 Section 10 ALL 640.00 Section 11 NE/4 160.00 Section 11 NW/4, S/2 480.00 Section 13 LOTS 1-8, W/2 E/2, W/2 686.12 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 18 ALL 632.56 Section 19 LOTS 1-4, E/2, E/2 W/2 636.16 Section 20 ALL 640.00 Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 ALL 686.68 Section 25 LOTS 1-8, W/2 E/2, W/2 688.28 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Township 18 North, Range 9 West ------------------------------- Section 1 LOTS 1-4, S/2 N/2, S/2 640.36 Section 3 LOTS 1-4, S/2 N/2, S/2 639.76
A-14 28 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 5 LOTS 1-4, S/2 N/2, S/2 638.88 Section 6 ALL 664.77 Section 7 LOTS 1-4, E/2 W/2, E/2 669.40 Section 8 ALL 640.00 Section 9 S/2 320.00 Section 9 N/2 320.00 Section 11 ALL 640.00 Section 13 ALL 640.00 Section 15 ALL 640.00 Section 17 N/2 320.00 Section 17 S/2 320.00 Section 18 LOTS 1, 2, NE/4, E/2 NW/4 336.17 Section 18 LOTS 3, 4, SE/4, E/2 SW/4 337.23 Section 19 LOTS 1-4, E/2 W/2, E/2 677.92 Section 21 ALL 640.00 Section 23 ALL 640.00 Section 25 ALL 640.00 Section 27 ALL 640.00 Section 29 ALL 640.00 Section 30 LOTS 1-4, E/2 W/2, E/2 682.32 Section 31 LOTS 1-4, E/2, E/2 W/2 686.44 Section 33 ALL 640.00 Section 35 ALL 640.00
A-15 29 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Township 19 North, Range 9 West ------------------------------- Section 1 LOTS 1-4, S/2 N/2, S/2 639.08 Section 4 ALL 641.44 Section 5 LOTS 1-4, S/2 N/2, S/2 642.28 Section 6 ALL 645.29 Section 7 LOTS 1-4, E/2, E/2 W/2 646.72 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 17 ALL 640.00 Section 18 ALL 649.92 Section 19 LOTS 1-4, E/2, E/2 W/2 653.84 Section 20 ALL 640.00 Section 21 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 LOTS 3, 4, E/2, E/2 W/2 569.41 Section 31 LOTS 1-4, E/2, E/2 W/2 661.76 Section 33 ALL 640.00 Township 20 North, Range 9 West ------------------------------- Section 1 LOTS 1-4, S/2 N/2, S/2 641.04 Section 2 NW/4 SE/4, S/2 SE/4 120.00 Section 3 LOTS 1-4, S/2 N/2, S/2 643.40 Section 5 LOTS 1-4, S/2 N/2, SE/4 483.76
A-16 30 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 7 LOTS 3, 4, E/2 SW/4 154.64 Section 10 ALL 640.00 Section 11 ALL 640.00 Section 12 ALL 640.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 S/2 320.00 Section 18 LOTS 1-4, SE/4, E/2 W/2 471.32 Section 19 LOTS 1-4, E/2, E/2 W/2 634.60 Section 20 S/2 320.00 Section 20 N/2 320.00 Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 ALL 640.00 Section 25 ALL 640.00 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 29 ALL 640.00 Section 31 LOTS 1-4, E/2, E/2 W/2 640.36 Section 33 ALL 640.00 Section 34 ALL 640.00
A-17 31 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 35 ALL 640.00 Township 16 North, Range 10 West -------------------------------- Section 3 ALL 625.92 Section 11 ALL 640.00 Section 13 ALL 640.00 Township 17 North, Range 10 West -------------------------------- Section 1 LOTS 1-4, S/2 N/2, S/2 639.44 Section 2 LOTS 1-4, S/2 N/2, S/2 638.56 Section 3 LOTS 1-4, S/2 N/2, S/2 638.08 Section 4 LOTS 1-4, S/2 N/2, S/2 638.48 Section 5 LOTS 1-4, S/2 N/2, S/2 638.72 Section 6 LOTS 1-7, S/2 NE/4, SE/4 NW/4, SE/4, E/2 SW/4 636.95 Section 7 LOTS 1-4, E/2 W/2, E/2 637.76 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 10 ALL 640.00 Section 11 ALL 640.00 Section 12 ALL 640.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 18 LOTS 1-4, E/2 W/2, E/2 638.32
A-18 32 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 23 ALL 640.00 Section 24 ALL 640.00 Section 30 LOT 4, SE/4 SW/4, S/2 SE/4 160.09 Section 33 ALL 640.00 Section 34 S/2, SE/4 NW/4, W/2 NW/4, SE/4 NE/4 480.00 Township 18 North, Range 10 West -------------------------------- Section 1 ALL 622.23 Section 3 ALL 629.36 Section 4 LOTS 1, 2, S/2 NE/4, SE/4 316.90 Section 5 ALL 639.76 Section 6 ALL 621.18 Section 7 ALL 621.52 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 10 SW/4 160.00 Section 10 N/2, SE/4 480.00 Section 11 ALL 640.00 Section 12 ALL 648.29 Section 13 LOTS 3, 4, W/2 SE/4, SW/4 323.12 Section 13 LOTS 1, 2, W/2 NE/4, NW/4 323.12 Section 14 N/2 320.00 Section 14 S/2 320.00 Section 15 N/2 320.00
A-19 33 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 15 S/2 320.00 Section 17 N/2 320.00 Section 17 S/2 NORTH OF NM STATE HWY 57 162.60 Section 17 S/2 SOUTH OF NM STATE HWY 57 157.40 Section 19 LOTS 1-4, E/2 W/2, E/2 626.88 Section 21 ALL 640.00 Section 22 E/2, SW/4 480.00 Section 22 SE/4 NW/4 40.00 Section 23 ALL 640.00 Section 24 LOTS 1-4, W/2 E/2, W/2 642.86 Section 25 LOTS 1-4, W/2 E/2, W/2 639.56 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 28 E/2 320.00 Section 28 W/2 320.00 Section 29 ALL 640.00 Section 30 LOTS 1-4, E/2 W/2, E/2 631.20 Section 31 LOTS 1-4, E/2 W/2, E/2 635.04 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 19 North, Range 10 West -------------------------------- Section 1 ALL 639.60
A-20 34 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 3 ALL 638.72 Section 4 ALL 639.00 Section 5 ALL 639.32 Section 6 ALL 636.84 Section 7 ALL 637.52 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 10 N/2 N/2, SE/4 NE/4, SW/4 NW/4, NE/4 SE/4, NW/4 480.00 SW/4, S/2 S/2 Section 11 ALL 640.00 Section 12 ALL 640.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 18 ALL 637.32 Section 19 ALL 637.92 Section 20 ALL 640.00 Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 ALL 640.00 Section 25 ALL 640.00
A-21 35 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 26 NW/4 SE/4, S/2 SE/4, SW/4 280.00 Section 26 N/2, NE/4 SE/4 360.00 Section 27 ALL 640.00 Section 28 NE/4, N/2 SE/4, SW/4 SE/4, W/2 600.00 Section 29 ALL 640.00 Section 30 ALL 637.68 Section 31 ALL 637.32 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 20 North, Range 10 West -------------------------------- Section 3 ALL, EXCEPT 50.20 ACRES IN THE NE/4 LYING 592.96 NORTHEASTERLY OF THE 6400' ELEVATION CONTOUR LINE, DESCRIBED IN QUITCLAIM DEED DATED 3/3/1987 TO USA Section 4 ALL 642.00 Section 5 ALL 641.48 Section 7 ALL 638.28 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 10 ALL 640.00 Section 11 ALL 640.00 Section 12 ALL, EXCEPT 192.4 ACRES IN N/2 AND SE/4 447.60 LYING NORTHEASTERLY OF THE 6400' ELEVATION CONTOUR LINE, DESCRIBED IN QUITCLAIM DEED DATED 3/3/1987 TO USA
A-22 36 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 18 ALL 638.84 Section 19 ALL 638.92 Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 ALL 640.00 Section 25 ALL 640.00 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 29 ALL 640.00 Section 31 ALL 637.40 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 18 North, Range 11 West -------------------------------- Section 1 ALL 639.36 Section 3 ALL 638.32 Section 4 ALL 639.04 Section 5 ALL 638.80
A-23 37 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 6 ALL 636.64 Section 7 ALL 637.84 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 10 ALL 640.00 Section 11 ALL 640.00 Section 12 ALL 640.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 19 ALL 639.36 Section 20 ALL 640.00 Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 SW/4 160.00 Section 25 ALL 640.00 Section 26 ALL 640.00 Section 27 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 ALL 638.40
A-24 38 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 31 ALL 638.80 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 19 North, Range 11 West -------------------------------- Section 1 ALL 639.76 Section 3 ALL 638.68 Section 4 ALL 639.20 Section 5 ALL 639.88 Section 6 ALL 636.80 Section 7 ALL 637.88 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 12 ALL 640.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 21 ALL 640.00 Section 22 ALL 640.00 Section 23 ALL 640.00 Section 24 ALL 640.00 Section 25 ALL 640.00 Section 26 NE/4, N/2 NW/4, SE/4 NW/4, S/2 600.00 Section 27 ALL 640.00
A-25 39 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 28 ALL 640.00 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 20 North, Range 11 West -------------------------------- Section 1 ALL 642.56 Section 3 ALL 642.32 Section 4 ALL 643.16 Section 5 ALL 643.64 Section 6 ALL 644.20 Section 7 ALL 639.16 Section 8 ALL 640.00 Section 9 ALL 640.00 Section 10 NW/4, S/2 480.00 Section 10 NE/4 160.00 Section 11 ALL 640.00 Section 12 S/2 320.00 Section 12 N/2 320.00 Section 13 ALL 640.00 Section 14 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 18 ALL 638.40
A-26 40 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 19 ALL 637.32 Section 20 ALL 640.00 Section 21 ALL 640.00 Section 22 S/2, NW/4, S/2 NE/4, NW/4 NE/4 600.00 Section 23 E/2, SW/4, E/2 NW/4, SW/4 NW/4, E/2 NW/4 NW/4 620.00 Section 24 ALL 640.00 Section 25 ALL 640.00 Section 26 N/2, SW/4, W/2 SE/4 560.00 Section 27 ALL 640.00 Section 28 ALL 640.00 Section 29 ALL 640.00 Section 30 ALL 636.12 Section 31 ALL 635.16 Section 33 ALL 640.00 Section 34 ALL 640.00 Section 35 ALL 640.00 Township 20 North, Range 13 West -------------------------------- Section 1 LOTS 1-4, S/2 N/2, S/2 641.74 Section 3 LOTS 1-4, S/2 N/2, S/2 643.20 Section 5 LOTS 1-4, S/2 N/2, S/2 648.22 Section 7 LOTS 1, 3, 4, NE/4 NW/4, E/2 SW/4, SE/4, N/2 NE/4, 529.57 SE/4 NE/4, E/2 SW/4 NE/4 Section 9 ALL 640.00
A-27 41 COMPANY: GOLD STATE: NM COUNTY: MCKINLEY Section 11 ALL 640.00 Section 13 ALL 640.00 Section 15 ALL 640.00 Section 17 ALL 640.00 Section 19 LOTS 1-4,.E/2 W/2, E/2 622.34 Section 21 ALL 640.00 Section 23 ALL 640.00 Section 25 ALL 640.00 Section 27 ALL 640.00 Section 29 ALL 640.00 Section 31 LOTS 1-4, E/2 W/2, E/2 621.18 Section 33 ALL 640.00 Section 35 ALL 640.00 ------------ GRAND TOTAL 344,323.88
A-28 42 EXHIBIT 10.21 EXHIBIT B TO LICENSE TO EXPLORE AND OPTION TO PURCHASE CATEGORY 2 LANDS (REVISED 03/13/97) COMPANY: GOLD STATE: NM COUNTY: McKINLEY
MERIDIAN: NMPM ACRES ----- Township 14 North, Range 8 West ------------------------------- Section 10 All 640.00 Township 13 North, Range 10 West -------------------------------- Section 5 Lots 1-4, S/2 N/2, S/2 639.36 Section 7 Lots 1-4, E/2, E/2 W/2 650.24 Section 9 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 21 W/2 SW/4 SE/4 NE/4, N/2 NE/4, SW/4 595.00 NE/4, N/2 SE/4 NE/4, NW/4, S/2 SE/4, NW/4 SE/4 Section 27 All 640.00 Section 29 All 640.00 Section 31 Lots 1-4, E/2 W/2, E/2 640.56 Section 33 All 640.00 Section 35 All 640.00 Township 15 North, Range 10 West -------------------------------- Section 1 All, except 31.07 acres in Baca 608.93 Rail Spur Section 3 All 641.00 Section 13 All 640.00 Section 23 All, except 29.81 ac. in Baca Rail 610.19 Spur
B-1 43 Section 25 All, except 25.79 ac. in Baca Rail 614.21 Spur Section 31 All 663.60 Section 33 All 640.00 Section 35 All 640.00 Township 16 North, Range 10 West -------------------------------- Section 5 All 639.76 Section 9 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 21 All 640.00 Section 23 All 640.00 Section 25 All 640.00 Section 27 All 640.00 Section 29 All 640.00 Section 31 All 667.68 Section 33 All 640.00 Section 35 All 640.00 Township 17 North, Range 10 West -------------------------------- Section 31 Lots 1-4, E/2 W/2, E/2 640.32 Township 13 North, Range 11 West -------------------------------- Section 3 Lots 3, 4, S/2 NW/4 160.98 Section 5 All, except 24.71 ac. in Baca Rail 610.17 Spur Section 7 All that portion lying North and 495.00 East of the AT&SF Railway Co. R/W Section 9 NE/4, N/2 NW/4, N/2 SE/4, SE/4 SE/4 360.00
B-2 44 Section 9 S/2 NW/4, SW/4, SW/4 SE/4 280.00 Section 15 All 640.00 Section 17 All that portion lying North and 96.71 East of the AT&SF Railway Co. R/W, except 39.63 ac. in Baca Rail Spur Section 17 Lots 5-8, SW/4 SE/4, SW/4 275.53 Section 19 All 640.06 Section 21 All that part lying North and East 199.59 of the AT&SF Railway Co. R/W Section 21 Lots 5-10, NW/4 SW/4 155.74 Section 22 All 640.00 Section 23 All 640.00 Section 24 SE/4, W/2 480.00 Section 25 All 640.00 Section 26 All 640.00 Section 27 All that part lying North and East 549.31 of the AT&SF Railway Co. R/W Section 29 All 640.00 Section 31 All 640.96 Section 33 All 640.00 Section 34 That portion of the E/2 lying South 23.70 and West of the AT&SF Railway Co. R/W Section 34 That portion of the E/2 lying North 283.09 and East of the AT&SF Railway Co. R/W Section 35 All 640.00 Township 15 North, Range 11 West -------------------------------- Section 27 E/2 E/2 160.00 Section 35 NW/4 NW/4 40.00
B-3 45 Township 14 North, Range 13 West -------------------------------- Section 31 All, except 200 ft. R/W of AT&SF 619.15 Ry. Co. Section 35 All that portion lying North and 531.25 East of R/W of AT&SF Ry. Co. Township 14 North, Range 14 West -------------------------------- Section 7 Lots 3, 4, that portion of E/2 SW/4 139.78 lying South & West of AT&SF RR R/W Section 21 All that portion lying North & East 114.06 of AT&SF RR R/W Section 25 All that portion lying North & East 494.75 of AT&SF RR R/W Township 17 North, Range 14 West -------------------------------- Section 1 Lots 1-4 2.02 Section 31 Lots 1-4, S/2 S/2 321.60 Section 33 Lots 1-4, S/2 S/2 317.76 Section 35 Lots 1-4, S/2 S/2 318.20 Township 14 North, Range 15 West -------------------------------- Section 1 Part Northeast of Northeast line of 96.34 AT&SF station grounds at S. Guam, said line parallel to & 1320 ft. northeasterly from centerline of original AT&SF main track, except portion conveyed by SFPR to AT&SF 8-29-17, recorded in Bk. 5, Pg. 152, and portion of SE SE northeasterly of AT&SF R/W and southeasterly of southeast end of station grounds at S. Guam Township 15 North, Range 15 West -------------------------------- Section 25 All, except 26.55 ac. in R/W 613.45 Section 27 All that portion lying North & East 515.85 of AT&SF RR R/W Section 35 All that portion lying North & East 197.84 of AT&SF RR R/W
B-4 46 Township 17 North, Range 15 West -------------------------------- Section 31 All 315.20 Section 33 All 317.98 Section 35 All 315.20 Township 15 North, Range 16 West -------------------------------- Section 1 All 639.52 Section 3 All 641.90 Section 5 All 638.82 Section 7 All 616.18 Section 9 All 640.00 Section 11 All 640.00 Section 13 Lots 1-4 195.60 Section 15 Lots 1-4 185.28 Section 17 Lots 1-4 174.16 Township 16 North, Range 16 West --------------------------------- Section 1 All 595.20 Section 5 All 606.88 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 19 All 602.52 Section 21 All 640.00 Section 23 All 640.00 Section 25 All 640.00 Section 27 All 640.00
B-5 47 Section 29 All 640.00 Section 33 All 640.00 Section 35 All 640.00 Township 17 North, Range 16 West -------------------------------- Section 31 Lots 1-4, S/2 S/2 305.28 Section 33 Lots 1-4, S/2 S/2 308.21 Township 14 North, Range 17 West -------------------------------- Section 3 Lots 1-5, SW/4 NW/4, W/2 SW/4 235.56 Section 5 Lots 1-4, S/2 N/2, E/2 SE/4, NW/4 598.88 SE/4, N/2 SW/4 SE/4, W/2 SW/4, NE/4 SW/4, N/2 SE/4 SW/4 Section 7 All 638.12 Section 9 W/2, E/2 SE/4, SW/4 SE/4, N/2 NE/4 480.00 NE/4, E/2 NW/4 NE/4 Section 9 SW/4 NE/4, NW/4 SE/4 80.00 Section 9 S/2 NE/4 NE/4 20.00 Section 9 NW/4 NW/4 NE/4 10.00 Section 9 SW/4 NW/4 NE/4 10.00 Section 15 Lots 1-4, W/2 W/2 236.88 Section 17 All 640.00 Section 19 All 640.88 Section 21 All 640.00 Section 27 Lots 1-4, W/2 W/2 239.82 Section 29 N/2, SW/4 480.00 Section 33 S/2 320.00 Township 15 North, Range 17 West -------------------------------- Section 1 All 689.84 Section 3 All 640.42
B-6 48 Section 7 All 639.94 Section 9 NE/4, S/2 480.00 Section 13 Lots 1-4 164.48 Section 15 Lots 1-6, W/2 W/2, less 24.24 ac. 300.37 in AT&SF RR R/W for East bound main track Section 19 Lots 1, 2, E/2, E/2 NW/4 481.09 Section 21 E/2, W/2 NW/4, S/2 SW/4 480.00 Section 27 W/2 SW/4 80.00 Section 29 All 640.00 Section 31 All 638.84 Township 16 North, Range 17 West -------------------------------- Section 1 All 614.40 Section 3 All 622.04 Section 5 All 624.52 Section 7 All 632.52 Section 9 All 640.00 Section 11 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 19 All 636.44 Section 21 All 640.00 Section 25 All 640.00 Section 27 All 640.00 Section 29 All 640.00 Section 31 All 637.44 Section 33 All 640.00
B-7 49 Section 35 All 640.00 Township 17 North, Range 17 West -------------------------------- Section 31 Lots 1-4, S/2 S/2 297.38 Section 33 Lots 1-4, S/2 S/2 307.78 Section 35 Lots 1-4, S/2 S/2 306.02 Township 14 North, Range 18 West -------------------------------- Section 5 All 639.48 Township 15 North, Range 18 West -------------------------------- Section 1 All 638.56 Section 11 NE/4, E/2 NW/4 240.00 Section 23 All 640.00 Section 27 SE/4, NE/4 SW/4 200.00 Section 27 S/2 NE/4, NE/4 NE/4 120.00 Section 27 SE/4 NW/4, S/2 NW/4 NE/4, NW/4 NW/4 70.00 NE/4 Section 27 S/2 NE/4 NW/4 20.00 Section 27 N/2 NE/4 NW/4 20.00 Section 31 NE/4 NE/4 40.00 Section 31 Lots 1-4, SE/4 NE/4, NE/4 NW/4, 436.40 SE/4, SE/4 SW/4 Section 35 E/2, E/2 NW/4 400.00 Township 16 North, Range 18 West -------------------------------- Section 1 All 622.84 Section 3 All 622.72 Section 5 All, except 10.30 acres 614.26
B-8 50 Section 5 That portion lying within 40 ft. & 10.30 on both sides of survey line of Road 32, Section 2 as relocated for construction and known as F.A.P. #146-A Section 7 All, except 10.00 ac. quitclaimed 620.16 to County of McKinley by deed dated 6-19-25 Section 7 That portion lying within 40 ft. & 10.00 on both sides of survey line of Road 32, Section 2 as relocated for construction and known as F.A.P. #146 Section 9 All 640.00 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 19 All 634.08 Section 21 N/2 320.00 Section 23 All 640.00 Section 25 All 640.00 Township 17 North, Range 18 West -------------------------------- Section 31 Lots 1-4, S/2 S/2 290.40 Section 33 Lots 1-4, SW/4 SE/4, S/2 SW/4 255.58 Section 33 N/2 SE/4 SE/4, SE/4 SE/4 SE/4 30.00 Section 35 Lots 1-4, S/2 S/2 298.78 Township 15 North, Range 19 West -------------------------------- Section 7 Lots 3, 4, E/2 SW/4 156.27 Section 17 NE/4, E/2 NW/4, S/2 560.00 Section 19 All 633.40
B-9 51 Section 21 NW/4, SE/4, SW/4 NE/4, W/2 SE/4 389.00 NE/4, W/2 E/2 SE/4 NE/4, except 1 ac. in W/2 E/2 SE/4 NE/4 Section 21 1 ac. tract in W/2 E/2 SE/4 NE/4 1.00 Section 29 All, except AT&SF RR R/W and 512.25 station grounds Section 31 SE/4, NW/4, except AT&SF RR R/W 288.91 Section 33 All 640.00 Section 35 N/2, SW,/4 480.00 Township 16 North, Range 19 West -------------------------------- Section 1 All 630.12 Section 3 All 636.30 Section 5 All 637.60 Section 7 All 629.24 Section 9 All 640.00 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 17 All 640.00 Section 19 All 630.48 Section 23 All 640.00 Section 25 All 640.00 Section 31 All 629.80 Township 17 North, Range 19 West -------------------------------- Section 31 Lots 1-4, S/2 S/2 288.60 Section 33 Lots 1-4, S/2 S/2 290.40 Section 35 Lots 1-4, S/2 S/2 295.58
B-10 52 Township 16 North, Range 20 West -------------------------------- Section 1 All 638.12 Section 13 All 640.00 Section 17 SW/4 160.00 Section 19 All 640.92 Section 21 W/2 W/2 160.00 Section 25 All 640.00 Section 27 S/2 SW/4, NW/4 SW/4, S/2 SE/4, 240.00 NE/4 SE/4 Section 29 All 640.00 Section 31 All 638.00 Section 33 All 640.00 Section 35 All 640.00 Township 16 North, Range 21 West -------------------------------- Section 1 W/2 322.00 Section 3 All 123.86 Section 11 N/2, N/2 SW/4, SW/4 SW/4 440.00 Section 15 Lots 1-4 128.06 Section 23 All 640.00 Section 25 All 640.00 Section 27 Lots 1-4 128.80 Section 35 All 640.00 ---------- County Total 105,447.60 ==========
B-11 53 EXHIBIT B TO LICENSE TO EXPLORE AND OPTION TO PURCHASE CATEGORY 2 LANDS (Revised 03/13/97) COMPANY: GOLD STATE: NM COUNTY: CIBOLA
MERIDIAN: NMPM ACRES ----- Township 11 North, Range 7 West ------------------------------- Section 31 Lots 1-4, E/2 NW/4, E/2 SW/4, NE/4, 634.52 SE/4 Township 11 North, Range 8 West ------------------------------- Section 25 All 640.00 County Total 1,274.52 --------
B-12 54 EXHIBIT B TO LICENSE TO EXPLORE AND OPTION TO PURCHASE CATEGORY 2 LANDS (Revised 03/13/97) Township 13 North, Range 8 West ------------------------------- Section 25 Lots 5, 6, 8, 9, 10, E/2 NE/4 234.52 **Royalty Interest Only**
B-13 55 EXHIBIT B TO LICENSE TO EXPLORE AND OPTION TO PURCHASE CATEGORY 2 LANDS (Revised 3/13/97) COMPANY: GOLD STATE: NM COUNTY: SANDOVAL
MERIDIAN: NMPM ACRES ----- Township 12 North, Range 1 East ------------------------------- Section 5 Lots 7, 8 SE/4, S/2 NW/4, Lot 6 451.11 NE/4, Lot 3 NW/4, Lot 5 NE/4, Lot 4 NW/4, SW/4 Section 6 All 614.74 Section 7 All 615.68 Section 8 Lots 1-4, NW/4, W/2 SW/4 354.06 Section 17 Lots 1-4 171.63 Section 18 All 614.56 Section 19 All 611.44 Section 20 Lots 1-4 178.14 Section 29 Lots 1-4, W/2 SW/4, SE/4 SW/4 253.05 Section 30 All 613.28 Section 31 All 616.80 Township 13 North, Range 1 East ------------------------------- Section 4 All 647.16 Section 5 All 650.80 Section 6 All 615.05 Section 7 All 599.88 Section 8 All 640.00 Section 9 All 640.00 Section 17 All 640.00
B-14 56 Section 18 All 600.68 Section 19 All 602.52 Section 20 All 640.00 Section 21 All 640.00 Section 28 All 640.00 Section 29 All 640.00 Section 30 All 606.27 Section 31 All, except North 300 ft. of 555.09 Section Section 33 All 534.92 Township 14 North, Range 1 East ------------------------------- Section 5 Lots 1-4, S/2 N/2, SE/4, NE/4 SW/4 531.88 Section 5 NW/4 SW/4, S/2 SW/4 120.00 Township 12 North, Range 1 West ------------------------------- Section 1 Lots 1-4,, S/2 N/2, S/2 641.98 Section 3 Lots 1-4, S/2 N/2, S/2 647.18 Section 4 Lots 1-8 343.57 Section 9 Lots 1-8 341.56 Section 10 NE/4, NE/4 SE/4, W/2 SE/4, W/2 600.00 Section 11 All 640.00 Section 12 All 640.00 Section 13 All 640.00 Section 14 NE/4, S/2 480.00 Section 15 All 640.00 Section 21 Lots 1-8 341.64 Section 22 All 640.00
B-15 57 Section 23 All 640.00 Section 24 All 640.00 Section 25 All 640.00 Section 26 All 640.00 Section 27 E/2, E/2 SW/4 400.00 Section 27 NW/4, W/2 SW/4 240.00 Section 28 Lots 1-8 345.84 Section 33 Lots 1-8 344.52 Section 34 All 640.00 Section 35 W/2 320.00 Section 35 E/2 320.00 Township 13 North, Range 1 West ------------------------------- Section 12 All 640.00 Section 14 All 640.00 Section 22 N/2 320.00 Section 22 E/2 SE/4, N/2 SW/4 160.00 Section 24 All 640.00 Section 26 N/2, W/2 SE/4, SW/4 560.00 Section 28 Lots 1-4, E/2 338.88 Section 34 All, except North 300 ft. of 603.64 Section ------ County Total 31,307.55 ---------
B-16 58 EXHIBIT B TO LICENSE TO EXPLORE AND OPTION TO PURCHASE CATEGORY 2 LANDS (Revised 3/13/97) COMPANY: GOLD STATE: NM COUNTY: BERNALILLO
MERIDIAN: NMPM ACRES ----- Township 11 North, Range 1 East ------------------------------- Section 5 Lots 3-7, SW/4 NW/4, NW/4 SW/4 257.09 Section 7 All 623.58 Section 19 All 622.72 Township 11 North, Range 1 West ------------------------------- Section 1 Lots 1-4, S/2 NE/4, S/2 NW/4, SE/4, 634.78 SW/4 Section 3 Lots 1-4, S/2 NE/4, S/2 NW/4, SE/4, 626.78 SW/4 Section 9 Lots 1-4, E/2 NE/4, E/2 SE/4 332.78 Section 11 All 640.00 Section 13 All 640.00 Section 15 All 640.00 Section 21 Lots 1-4, E/2 NE/4, E/2 SE/4 319.66 Section 23 All 640.00 Section 25 Lots 1-4, N/2 NE/4, N/2 NW/4 181.60 Section 27 Lots 1-4, N/2 NE/4, N/2 NW/4 180.40 -------- County Total 6,339.39 --------
B-17 59 McKinley County, New Mexico EXHIBIT C LICENSE TO EXPLORE AND OPTION TO PURCHASE Lease Option Agreement dated October 8, 1987, between Cerrillos Land Company and Santa Fe Energy Company, as amended on July 1, 1988, and as amended on December 1, 1989, a memorandum of which is recorded in Book 2, Page 1630, in the official records of McKinley County, New Mexico. Special Warranty Deed dated June 25, 1993, from Hospah Coal Company, Santa Fe Pacific Minerals Corporation, Santa Fe Pacific Mining, Inc., The Atchison, Topeka and Santa Fe Railway Company, and the Star Lake Railroad Company to San Juan Basin Coal Holding Company, recorded in Book 6 Comp., Page 8560, of the official records of McKinley County, New Mexico, covering coal and coal development rights or mining rights. Special Warranty Deed dated June 24, 1993, from Santa Fe Pacific Minerals Corporation to Hanson Natural Resources Company covering coal and related mining rights in Section 18, T.17N., R.10W., Section 31, T.18N., R.10W., Sections 19, 20, 21, 26, 27, 28, 29, 30, 31, 33, 34 and 35, T.18N., R.11 W., McKinley County, New Mexico. Special Warranty Deed dated June 24, 1993, from Santa Fe Pacific Minerals Corporation to Hanson Natural Resources Company covering coal and related mining rights in Sections 18 and 20, T.16N., R.9W., Section 13, T.16N., R.10W., Sections 6, 7, 8, 15 and 17, T.17N., R.10W., Sections 13 and 14, T.19N., R.6W., Section 31, T.15N., R.6W., recorded in Book 6 Comp., Page 8480, in the official records of McKinley County, New Mexico. Amended and Restated San Juan Basin Agreement dated June 25, 1993, by and between Hospah Coal Company and Chaco Energy Company. Grazing Lease dated October 1, 1973, from Santa Fe Pacific Railroad Company to Tesoro Petroleum, covering Section 1, T.17N., R.9W., McKinley County, New Mexico. Surface Lease dated April 23, 1992, from Cerrillos Land Company to Giant Industries covering 2.96 acres in Section 1, T.17N., R.9W., McKinley County, New Mexico. Easement dated May 1, 1974, from Santa Fe Pacific Railroad Company to Tenneco Oil Company, covering 2.17 acres in NE/4 of Section 1, T.17N., R.9W., McKinley County, New Mexico. Right of Way Agreement dated March 4, 1957, from Santa Fe Pacific Railroad Company to El Paso Natural Gas Products Company, covering a portion of Section 1, T.17N., R.9W., C-1 60 McKinley County, New Mexico. Oil and Gas Lease dated July 19, 1979, from Santa Fe Pacicific Railroad Company to Rio Colorado Oil and Gas Company, covering Sections 19, 20, 21, 28 and 29, T17N, R9W, McKinley County, New Mexico. Oil and Gas Lease dated September 16, 1953, from Santa Fe Pacific Railroad Company to N.T. Grier and Marjorie M. Grier (Brana Corp.), covering the S/2 of Section 20, and the N/2 of Section 29, T20N, R9W, McKinley County, New Mexico. Oil and Gas Lease dated May 26, 1967, from Santa Fe Pacific Railroad Company to Henry S. Birdseye (Brana Corp.), covering the SE/4 of Section 21, SW/4 of Section 22, and the NW/4 of Section 27, from the surface to 600 feet, McKinley County, New Mexico. Oil and Gas Lease dated January 1, 1966, from Santa Fe Pacific Railroad Company to Tenneco Oil Company, covering the W2, SW/4 of Section 11, Sections 13 and 24, T17N, R9W, and Section 7, T17N, R8W, McKinley County, New Mexico. Oil and Gas Lease dated June 1, 1972, from Santa Fe Pacific Railroad Company to Tenneco Oil Company covering the S/2 of Section 29, the N/2 NE/4 of Section 31, and the NW/4 NW/4 of Section 33, T20N, R9W, McKinley County, New Mexico. Oil and Gas Lease dated October 10, 1973, from Santa Fe Pacific Railroad Company to Tenneco Oil Company, covering Sections 17, 18, 19, 20, the N12, SW/4 of Section 21, Section 27, the N/2, N/2 SE/4 of Section 28, Sections 29 and 30, T16N, R6W, McKinley County, New Mexico. Oil and Gas Lease dated May 1, 1975, from Santa Fe Pacific Railroad Company to Tenneco Oil Company, covering Sections 18 and 20, T16N, R9W, and Section 13, T16N, R10W, McKinley County, New Mexico. Oil and Gas Lease dated November 23, 1923 from Santa Fe Pacific Railroad Company to Paul C. Hancock, covering Section 1, T17N, R9W, McKinley County, New Mexico. Oil and Gas Lease dated February 1, 1938, from Santa Fe Pacific Railroad Company to Clarence B. Osborne, et al, covering Lots 2, 3 and 4, the E/2 SW/4 of Section 31, T18N, R8W, McKinley County, New Mexico. Oil and Gas Lease dated March 3, 1965, from Santa Fe Pacific Railroad Company to Tesoro Petroleum Corporation, covering the N/2 and SW/4 of Section 5, the N/2 and SW/4 of Section 7, and the N/2 and SW/4 of Section 9, T17N, R8W, McKinley County, New Mexico. C-2 61 Surface Owners Agreement by and between Santa Fe Pacific Railroad Company and Fernandez Company, Ltd., dated July 31, 1979, a memorandum of which was recorded at Book 76, Page 938 of the official records of Mckinley County, New Mexico, which agreement was partially released on April 2, 1982, which release is recorded at Book 52, Pages 961-962 of the official records of Mckinley County New Mexico, and which Agreement was amended on March 2, 1987, a memorandum of which was recorded in Book 90 Misc., Pages 639-642 of the official records of McKinley County, New Mexico. Surface Use Agreement by and between Santa Fe Pacific Railroad Company and R.M. Albers, et al., dated June 3, 1980, a memorandum of which was recorded at Book 78, Page 252-253 of the official records of McKinley County, New Mexico. C-3 62 EXHIBIT D TO LICENSE TO EXPLORE AND OPTION TO PURCHASE DEED Category III STATE OF NEW MEXICO ) COUNTY OF McKINLEY ) SANTA FE PACIFIC GOLD CORPORATION, successor in interest by name change to Santa Fe Pacific Minerals corporation, which is successor by merger to Cerrillos Land Company ("Grantor") whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, for consideration paid, GRANTS to URANCO, INC. ("Grantee"), whose address is 6200 Uptown Boulevard N.E., Suite 400, Albuquerque, New Mexico 87110, all of the interest reserved by Santa Fe Pacific Railroad Company in the instruments described in Exhibit A hereto but only so far as such reservations and exceptions pertain to and cover the real estate in McKinley County, New Mexico more particularly described in Exhibit B hereto, less and except the interests described in Exhibit C hereto and subject to the grants and interests set forth in the instruments set forth in Exhibit D hereto, all of which exhibits are incorporated herein by reference. LIMITATION OF REMEDY. Any warranty of title by the Grantor and any remedies of the Grantee or its successors and assigns related to the property covered by this Deed shall be limited to the remedies set forth in that certain AGREEMENT OF SANTA FE PACIFIC GOLD CORPORATION, AS URANCO, INC. SHAREHOLDER, AND URANIUM RESOURCES, INC., dated effective as of March 25, 1997 and that certain LICENSE TO EXPLORE AND OPTION TO PURCHASE by and between Grantor and Grantee, dated effective as of March 21, 1997 (copies of which are maintained in the offices of Grantor and Grantee and attorneys for Grantor, Modrall, Sperling, Roehl, Harris & Sisk, P.A., 500 Fourth St. N.W., Albuquerque, New Mexico 87102) and shall not include any other rights, damages or claims than those specifically set forth therein. Any rights asserted under the terms of such agreements must be brought within the time period set forth in those agreements. CONVEYANCE DOES NOT INCLUDE COAL IN PLACE, INCLUDING DEVELOPMENT OR MINING RIGHTS. This conveyance does not and is not intended to affect or purport to affect, in any way, coal in place, including development or mining rights related to coal, in any of the property of Grantor or any of its subsidiaries or affiliates 63 including, but not limited to, the San Juan Basin Coal Holding Company, and coal in place and all such rights are EXCEPTED herefrom and RESERVED to Grantor. WITNESS its hand and seal this ________ day of March, 1997. SANTA FE PACIFIC GOLD CORPORATION By: ----------------------------------- (Seal) Bruce D. Hansen Senior Vice President-Corporate Development STATE OF NEW MEXICO COUNTY OF BERNALILLO This instrument was acknowledged before me on March ________, 1997, by Bruce D. Hansen as Senior Vice President-Corporate Development of Santa Fe Pacific Gold Corporation. --------------------------------------- (Seal) Notary Public My commission expires: ---------------- 64 McKinley County, New Mexico EXHIBIT E LICENSE TO EXPLORE AND OPTION TO PURCHASE Warranty Deed dated April 11, 1922, from Santa Fe Pacific Railroad Company to Ruby Oil Company, recorded in Book 6 of Deeds, Page 240, in the official records of McKinley County, New Mexico. Warranty Deed dated May 4, 1927, from Santa Fe Pacific Railroad Company to Frances E. Nixon, recorded in Book 7 of Deeds, Page 70, in the official records of McKinley County, New Mexico. Warranty Deed dated December 12, 1928, from Santa Fe Pacific Railroad Company to Geo. E. Bruce and H.F. Prewitt. Warranty Deed dated March 15, 1938, from Santa Fe Pacific Railroad Company to Mike Michael. Warranty Deed dated February 27, 1941, from Santa Fe Pacific Railroad Company to Mike Michael and Azize Michael, recorded in Book 12 of Deeds, Page 37, in the official records of McKinley County, New Mexico. Warranty deed dated January 7, 1942, from Santa Fe Pacific Railroad Company to R. G. Smith, Jr., recorded in Book 12 of Deeds, Page 456, in the official records of McKinley County, New Mexico. Warranty Deed dated October 1, 1942, from Santa Fe Pacific Railroad Company to I.K. Westbrook, recorded in Book 12 of Deeds, Page 208, in the official records of McKinley County, New Mexico. Warranty Deed dated May 1, 1944, from Santa Fe Pacific Railroad Company to Edward Sargent, recorded in Book 12 of Deeds, Page 365, in the official records of McKinley County, New Mexico. Warranty Deed dated April 10, 1945, from Santa Fe Pacific Railroad Company to Harold F. Prewitt and Hazel W. Prewitt, recorded in Book 12 of Deeds, Page 476, in the official records of McKinley County, New Mexico. Warranty Deed dated July 7, 1945, from Santa Fe Pacific Railroad Company to Muriel E. Buck, recorded in Book 12 of Deeds, Page 499, in the official records of McKinley County, New Mexico. E-1 65 Warranty Deed dated June 1, 1946, from Santa Fe Pacific Railroad Company to Emery Floyd Burnham, recorded in Book 10 of Warranty Deeds, Page 368, in the official records of McKinley County, New Mexico. Warranty Deed dated January 15, 1947, from Santa Fe Pacific Railroad Company to John Snyder and George E. Wood, recorded in Book 13 of Deeds, Page 172, in the official records of McKinley County, New Mexico. Warranty Deed dated January 15, 1947, from Santa Fe Pacific Railroad Company to Tom Snyder, recorded in Book 13 of Deeds, Page 173, in the official records of McKinley County, New Mexico. Warranty Deed dated March 15, 1947, from Santa Fe Pacific Railroad Company to R. E. Albers and W. M. B. Albers, recorded in Book 13 of Deeds, Page 235, in the official records of McKinley County, New Mexico. Warranty Deed dated June 1, 1948, from Santa Fe Pacific Railroad Company to Tom Morris, recorded in Book 9 of Warranty Deeds, Page 23, in the official records of McKinley County, New Mexico. Warranty Deed dated December 28, 1948, from Santa Fe Pacific Railroad Company to Jean Carrica and Company, recorded in Book 13 of Deeds, Page 339, in the official records of McKinley County, New Mexico. Warranty Deed dated January 4, 1949, from Santa Fe Pacific Railroad Company to I.K. Westbrook, recorded in Book 13 of Deeds, Page 341, in the official records of McKinley County, New Mexico. Warranty Deed dated April 22, 1949, from Santa Fe Pacific Railroad Company to Gates A. Davis, recorded in Book 9 of Warranty Deeds, Page 87, in the official records of McKinley County, New Mexico. Warranty Deed dated May 13, 1949, from Santa Fe Pacific Railroad Company to Chaco Land and Cattle Company, recorded in Book 9 of Warranty Deeds, Page 90, in the official records of McKinley County, New Mexico. Warranty Deed dated August 1, 1949, from Santa Fe Pacific Railroad Company to Chaco Land and Cattle Company, recorded in Book 10 of Warranty Deeds, Page 325, in the official records of McKinley County, New Mexico. Warranty Deed dated August 1, 1949, from Santa Fe Pacific Railroad Company to Star Lake Land and Livestock Company, recorded in Book 10 of Warranty Deeds, Page 327, in the official records of McKinley County, New Mexico. E-2 66 Warranty Deed dated January 2, 1950, from Santa Fe Pacific Railroad Company to Charlie Arviso, recorded in Book 10 of Warranty Deeds, Page 354, in the official records of McKinley County, New Mexico. Warranty Deed dated January 1, 1950, from Santa Fe Pacific Railroad Company to Emery Floyd Burnham, recorded in Book 11 of Misc., page 195, in the official records of McKinley County, New Mexico. Warranty Deed dated August 10, 1988, from Santa Fe Pacific Railroad Company to State Highway Department of New Mexico. Warranty Deed dated October 15, 1945, from Santa Fe Pacific Railroad Company to Fernandez Company, recorded in Book 12 DR, Page 536, in the official records of McKinley County, New Mexico. Warranty Deed dated March 4, 1952, from Santa Fe Pacific Railroad Company to Hazel W. Prewitt, recorded in Book 11 Misc., Page 370, in the official records of McKinley County, New Mexico. Warranty Deed dated March 15, 1947, from Santa Fe Pacific Railroad Company to Hazel W. Prewitt, an individual, and Hazel W. Prewitt, Guardian Estate of Joan M. Prewitt, a minor, recorded in Book 13 of Deeds, Page 240, in the official records of McKinley County, New Mexico. Warranty Deed dated November 1, 1948, from Santa Fe Pacific Railroad Company to W. F. Pitt and Susie Bell Pitt, husband and wife, recorded in book 9 of W. D., Page 53, in the official records of McKinley County, New Mexico. Warranty Deed dated January 20, 1947, from Santa Fe Pacific Railroad Company to Frank Bond & Son, Inc., recorded in book 13 of Deeds, Page 219, in the official records of McKinley County, New Mexico. E-3 EX-21.1 8 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 SUBSIDIARIES OF THE COMPANY URI, Inc., a Delaware corporation URI Minerals, Inc., a Delaware corporation Beltline Resources, Inc., a Texas corporation Hydro Restoration Corporation, a Delaware corporation Hydro Resources, Inc., a Delaware corporation Uranco Inc., a Delaware corporation EX-23.1 9 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report dated February 14, 1997, included in the Company's 1996 Form 10-K, into the Company's previously filed Registration Statements on Form S-8 File Nos. 333-05617, 333-00403 and 333-00349, and the Company's previously filed Registration Statements on Form S-3 File Nos. 333-05619 and 333-01371. /s/ ARTHUR ANDERSEN LLP ----------------------- Arthur Andersen Dallas, Texas March 27, 1997 EX-27 10 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1996 DEC-31-1996 16,934,276 2,779,840 1,829,539 0 3,575,285 25,446,858 71,911,546 (29,335,818) 68,793,670 10,177,635 6,407,054 0 0 10,966 45,285,726 68,793,670 24,264,309 24,264,309 20,122,719 23,177,413 0 0 610,403 758,863 0 758,863 0 0 0 758,863 .08 .08
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