The Section 8 project capital requirements are expected to be approximately $50 million for well field development, with staggered production expanding to a total of seven well fields for an estimated one million pounds of annual production. At peak production, URI expects there will be approximately 60 employees in New Mexico and another 35 in Texas, excluding independent contractors. The Company is in discussion with certain royalty owners on the project that, if successful, may provide an increased rate of return on the project.
Given the recent agreement with the Navajo Nation and the need to develop a remediation plan, the Company is reevaluating its production schedule.
Mr. Ewigleben noted, “Given indications by various investors, we have a great deal of confidence in finding supporting funds for this project, but are still evaluating the best approach. The results of the feasibility study have confirmed that development of the project is technically and economically viable. We do not believe that the remediation work will be a deterrent to the project, although we are reviewing our production timeline.”
URI continues to refine the feasibility study performed on Section 8 and is utilizing the study in confidential negotiations with various parties. The Company is developing a plan for confirmation drilling to provide additional support for parties requiring validation of historical data, including potential lenders.
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 was filed by a petitioner against the timely renewal. URI’s motion questioning the standing of the plaintiff to bring the action is set for hearing on August 20, 2012.
Neutron Acquisition Expected to Close on August 31 Pending Shareholder Approvals
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. The value of the acquisition for URI includes:
- Synergistic mid-term and long-term uranium assets located in the Grants Mineral Belt of New Mexico, including the Cebolleta and Juan Tafoya projects
- Over 52 million pounds of in-place, non-reserve, mineralized uranium material
- A previously permitted uranium mill site on the east side of Mt. Taylor that had housed a never used conventional mill since torn down
- Combined, the companies will have over 206,000 acres of uranium holdings in New Mexico
- Positions URI as one of the largest U.S. uranium development companies
Assuming shareholder approvals are received, the transaction is expected to close on or about August 31, 2012. Mr. Ewigleben stated, “This acquisition will represent a significant consolidation of uranium properties in New Mexico and will position URI as one of the largest U.S.-based uranium development companies. It also provides the combined company with significant scale, strategic resource development synergies in the Ambrosia Lake region and a previously permitted conventional mill site.”