The third-party engineering firm concluded that it is an economically viable project requiring an estimated $50 million in capital expenditures to commence production. The Company is currently evaluating the best approach to raising the needed capital for the total project, preparing equipment orders, evaluating construction plans and preparing bids for construction activities.
Once access has been resolved, current plans are to begin infrastructure construction the second half of 2012. After production commences, loaded resin will be transported to either URI’s Kingsville Dome or Rosita processing facility in Texas. This is to accelerate production, utilize existing URI infrastructure, reduce additional capital costs and advance cash flow from the Churchrock Section 8 project.
The total project involves seven well fields that will have in aggregate approximately 1,000 wells including monitoring wells. The well fields will be brought on in phases as they are depleted to provide for continuous uranium production. Of significance is the first wellfield, which will be the first to move to the restoration process. Demonstration of commercial restoration is required for URI to expand its production authorization under its NRC license from 1 million pounds per year to 3 million pounds per year.
- On April 5, 2012, URI’s wholly-owned subsidiary, Hydro Resources, Inc., received a Notice of Violation and Order to comply with the Navajo Nation Civil Trespass Act (the “Order”) from the Navajo Nation Division of Natural Resources. The Order assessed a $50 civil assessment for alleged trespasses on Section 9 and asserts that the Company’s Section 8 Churchrock property cannot be reached without crossing either Section 9 or Section 17, both of which are Trust Lands. The Company has entered into a Tolling Agreement that provides for extended discussions with Navajo officials.
- URI has discussed a proposal for construction of a highway turnout providing safe access to the Section 8 project with the New Mexico Department of Transportation. The proposal will also require being submitted and approved by the Navajo Nation, after which construction may begin.
- In June 2011, URI received confirmation from the New Mexico Environment Department (“NMED”) that its discharge plan is in timely renewal and that the NMED is currently conducting technical review of its renewal application. A Complaint for Declaratory and Injunctive Relief and a Motion for Preliminary Injunction that was filed by a petitioner against the timely renewal confirmation has been postponed by the courts with no future date yet set.
On March 1, 2012, the Company announced the signing of a definitive agreement to acquire 100% of the equity of Neutron Energy, Inc. in a stock-for-stock transaction. It also executed a financing agreement with Resource Capital Fund V L.P. (“RCF”) in conjunction with the transaction. The acquisition requires URI’s and Neutron’s shareholder approval and, assuming all closing conditions are met, is expected to close in the third quarter of 2012.
- This transaction would position URI as one of the largest uranium development companies in the U.S. The acquisition includes assets located in the Grants Mineral Belt of New Mexico including the Cebolleta and Juan Tafoya projects and brings over 18 million tons of non-reserve mineralized material at a weighted average grade of 0.15%. Combined, the companies will have over 206,000 acres of uranium holdings in New Mexico.
- URI intends to file a Form S-4 registration statement including a joint proxy statement and prospectus with the SEC in connection with the Neutron acquisition.
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