WESTWATER RESOURCES, INC. - Annual Report: 2008 (Form 10-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

Commission file number 001-33404

URANIUM RESOURCES, INC.
(Exact name of Registrant as specified in its charter)

(972) 219-3330
(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
(Title of class)

          Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes o    No ý

          Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No ý

          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 ý    No o

          Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. o

          Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

          Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

          The aggregate market value of the Common Stock held by non-affiliates of the Registrant at June 30, 2008, was approximately $125,880,730. Number of shares of Common Stock, $0.001 par value, outstanding as of March 9, 2009: 56,098,229 shares.

DOCUMENTS INCORPORATED BY REFERENCE

          Items 10, 11, 12, 13 and 14 of Part III of this Form 10-K report are incorporated by reference to the Registrant's Definitive Proxy Statement for the Registrant's 2009 Annual Meeting of Stockholders.

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URANIUM RESOURCES, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008

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PART I

        The "Company" or "Registrant" or "URI" is used in this report to refer to Uranium Resources, Inc. and its consolidated subsidiaries. This 10-K contains "forward-looking statements." These statements include, without limitation, statements relating to management's expectations regarding the Company's ability to remain solvent, capital requirements, mineralized materials, 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: "Risk Factors" beginning on page 11.

        Certain terms used in this Form 10-K and other industry terms are defined in the "Glossary of Certain Terms" appearing at the end of Part I hereto.

Item 1.    Business.

The Company

        Uranium Resources, Inc. (URI) is a uranium exploration, mine development and production company. We were organized in 1977 to acquire and develop uranium mines in South Texas using the in-situ recovery mining process (ISR). Since its founding, URI has produced over 8 million pounds U₃O₈ from five Texas projects, two of which have been fully restored and returned to the land owners. The Company currently has two fully licensed ISR processing facilities in Texas: Kingsville Dome and Rosita. Since 1986, the Company has built a significant asset base in New Mexico that includes 101.4 million pounds U₃O₈ of in-place mineralized uranium material on 183,000 acres of uranium mineral holdings. We have also been issued a Nuclear Regulatory Commission (NRC) license to build a 3 million pound U₃O₈ per year ISR processing facility at Crownpoint, New Mexico.

New Mexico Assets

        URI holds a NRC source materials license to build and operate an ISR uranium processing facility on company-owned property at Crownpoint, New Mexico. The license allows for ISR mining at the Church Rock and Crownpoint projects that together hold nearly 34 million pounds U₃O₈ of in-place mineralized uranium material. The license allows for the production of up to 1 million pounds per year from Church Rock until a successful commercial demonstration of restoration is made; after which the quantity of production can be increased and mining on other properties can begin. Total production under the license is limited to 3 million pounds U₃O₈ per year. This project is currently being delayed due to depressed uranium prices and by a lawsuit to determine whether the U.S. Environmental Protection Agency ("USEPA") or the State of New Mexico has the jurisdiction to issue the Underground Injection Control (UIC) program permits. The Company believes production could begin within 18 - 24 months after obtaining this permit assuming uranium market improvements.

        Overall in New Mexico, the Company owns 183,000 acres of mineral holdings that contain approximately 101.4 million pounds U₃O₈ of in-place mineralized uranium material that has been verified by an independent engineering firm. A substantial amount of our total acreage remains unexplored or currently has insufficient data to estimate in-place mineralized materials. These properties were acquired during the 1980s and 1990s along with a vast database of exploration logs and drill results that were developed by Conoco, Homestake Mining, Mobil Oil, Kerr-McGee, Phillips Petroleum, United Nuclear and Westinghouse Electric Corporation. Three of our properties were in various stages of being developed as conventional underground mines in the early 1980s with a total designed capacity to produce approximately 4.5 million pounds U₃O₈ per year. We also possess a 16.5%

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royalty interest on a partial section of the Mount Taylor Mine owned by Rio Grande Resources, a division of General Atomics.

        Since 2007, we have digitized approximately 18,800 drill logs in order to secure the data and allow for easier analysis of drill hole information. These logs total nearly 23 million feet of hole drilled in the 1970s and 1980s with an estimated drilling and logging replacement cost of $700 million.

        The Company plans to develop its uranium assets in New Mexico using the most economic and efficient method for each project and will be subject to improvements in uranium prices. These mining methods may include the use of ISR, old stope leaching, and conventional mining techniques.

Texas Production History and Current Status

        The Company developed and produced over 560,000 pounds U₃O₈ from the Longoria and Benavides projects in the early 1980s. These properties were fully restored between 1986 and 1991. From 1988 through 1999, we produced approximately 6.1 million pounds U₃O₈ from two South Texas projects: 3.5 million pounds from the Kingsville Dome project and 2.6 million pounds U₃O₈ from the Rosita project. In 1999, we shut-down production at both projects due to depressed uranium prices. We had no revenue from uranium sales between 2000 and the fourth quarter of 2004, and therefore had to rely on equity infusions to fund operations and maintain our critical employees and assets.

        After uranium prices rose significantly in 2004, we placed our South Texas Vasquez property into production during the fourth quarter of that year. In April 2006, Kingsville Dome returned to production followed by a startup of Rosita in June 2008. From 2004 to the end of 2008, these three projects produced a total of 1.4 million pounds of U₃O_8.

        The Vasquez project was mined out in 2008 and is now being restored. Rosita production was shut-in in October 2008 due to depressed pricing and technical challenges in the first new wellfield that made it uneconomical. The decline in uranium prices throughout 2008 also led to a decision in October 2008 to defer new wellfield development at Rosita and Kingsville Dome. Production continued in two existing wellfields at Kingsville Dome and is expected to be completed by the end of March 2009. By the end of March 2009, the Company does not expect to have any operating mines in Texas.

        The Company believes it has sufficient in-place mineralized uranium material to produce a total of 300,000 to 500,000 pounds U₃O₈ over a one to two year period should realized uranium prices recover to the level of $70 per pound U₃O_8, which is the current long-term uranium price_. Production could begin within 6 - 12 months after a decision to restart is made. Longer-term, additional production could come from new production area authorizations at Kingsville Dome, however, this may take a considerable period of time given local opposition.

2008 Events

        On May 12, 2008, oral arguments were heard in the United States Court of Appeals for the Tenth Circuit in the jurisdictional dispute between the Company aligned with the State of New Mexico, and the USEPA over who has authority to issue the Underground Injection Control (UIC) program permits. This is the final permit needed before mining can commence at the Church Rock Project. As of March 11, 2009, the court has not yet issued its ruling.

        On May 16, 2008, we closed a negotiated private placement with institutional investors for shares of our common stock and warrants. The sale raised $12.8 million, net of costs and fees. The net proceeds of the offering were or will be used for the acquisition, permitting, exploration and development of additional properties in Texas as well as for general corporate purposes.

        In June 2008, the Company and Billiton Investment 15 B.V. agreed to terminate an agreement dated October 12, 2007 under which URI agreed to purchase Rio Algom Mining LLC. Changing capital and uranium market conditions prevented the Company from securing the $180 million that would have been required to finance the acquisition. URI incurred a total of $1.42 million in costs

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associated with the transaction and these costs were expensed in 2008 upon termination of the agreement.

        By October 2008, the Company had closed its Corpus Christi, TX and Albuquerque, NM offices, curtailed production and exploration activities in Texas, and completed its data evaluation activities in New Mexico as part of a cost reduction effort.

        In November 2008, we announced that the Mining and Minerals Division of the New Mexico Energy, Minerals and Natural Resources Department granted URI a permit to conduct exploratory drilling in the Ambrosia Lake area, where the Company has approximately 2.4 million pounds of mineralized uranium material combined on several sections.

        In December 2008, we eliminated three executive officer positions, adopted a salary reduction program for all executives and continue to make further cost reductions.

Review of 2008 Production and 2009 Operational Plans

        The Company produced 300,800 pounds U₃O₈ in 2008 from our Kingsville Dome, Rosita and Vasquez projects. During 2008, we placed five new wellfields into production at Kingsville Dome and one new wellfield at Vasquez. Production from a new wellfield at Rosita was begun in June 2008. However, technical difficulties that raised the cost of production coupled with a sharp drop in uranium prices led to the decision to shut-in this wellfield in the fourth quarter of 2008 after 10,200 pounds were produced.

        Because of the downturn in the uranium market during 2008, the Company decided in October to limit near-term production to existing wellfields. In the fourth quarter, production was reduced to the two remaining operating wellfields at Kingsville Dome. Production from these wellfields is expected to be completed by the end of March 2009. The Company also ceased the majority of its exploration and development activities in Texas in the fourth quarter of 2008.

        During 2008, the Company invested $1.6 million in exploratory drilling in South Texas primarily on the Mosser and Marshall properties we acquired in 2007. We found significant mineralization on the Marshall property; however, further evaluations need to be completed to determine if this property can be mined by ISR methods.

        The Company has signed an agreement with the Kenedy Memorial Foundation, to test 165 water wells on a portion of the Kenedy Ranch, located in South Texas for uranium, radium and radon to determine if there is a potential for uranium mineralization. These tests are scheduled to take place during the first half of 2009.

        By the end of March 2009 we expect our South Texas operations to be fully devoted to restoration activities at Vasquez, Kingsville Dome and Rosita. Full scale restoration of the groundwater at the Vasquez project commenced in the fourth quarter of 2008. At Kingsville Dome, the Company has been restoring Production Areas 1 & 2 while producing from Production Area 3, with such production expected to cease by the end of March 2009.

        The Company is working with Texas A&M-Kingsville to evaluate the use of dissolved hydrogen to enhance bioremediation of mined zones at Kingsville Dome. A test will be conducted on a small portion of a previously mined wellfield at Kingsville Dome. The test is expected to begin in March 2009 and be completed within 9 to 12 months. We are also working with other active ISR mining companies as well as several government labs and agencies to evaluate and develop new technologies in an effort to enhance groundwater restoration methods for ISR mines.

        During 2008, the Company applied for and was issued a permit to drill up to 10 exploration holes on Section 13 T13N R9W, six miles west of San Mateo, New Mexico. The objective of this project is to obtain core samples in order to test the amenability for ISR mining on this property. We also

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completed the digitizing of 23 million feet of drill hole logs during the year which will allow us to further evaluate company-owned properties and data.

        During 2009, our focus in New Mexico will be to continue the requisite government and public relations activities needed to advance toward production at all of our projects beginning with the Church Rock mine of the Crownpoint Project. The Company is also partnering with the Navajo Nation EPA on a study to perform a comprehensive environmental characterization of the Church Rock mine site at Section 17 and lands adjacent to the site area. To that end, the Company and the Navajo Nation have reached agreement on a characterization work plan. The work plan is projected to be executed during the spring of 2009.

Strategy

        The Company adopted a strategic plan in March 2007 that established a goal to produce 10 million pounds of uranium annually by 2014 using both ISR and conventional mining and milling methods. As part of our strategy, we intend to build our uranium reserves to between 200 and 300 million pounds through exploration of our own properties and by acquisition of additional properties. However, the change in the uranium market and the lack of support in the capital markets for the uranium industry has made the achievement of our strategic goals more challenging. As a result, we have modified our plan by not limiting the timeframe in which to achieve our production goal and to identify how we can capitalize on our assets in the near term.

        In Texas, we believe we are well positioned to take advantage of a consolidation of the uranium industry. URI owns two fully-licensed ISR processing facilities that are both capable of receiving and processing resin from remote ion exchange satellite mines. This could allow us to either acquire new projects or potentially monetize valuable assets should we decide to focus company resources in New Mexico. We also have the capability, although limited, to generate cash from renewed production once uranium prices recover. Until then, the Company will focus on completing groundwater restoration activities at our three mining projects, which we believe will help demonstrate the environmental soundness and safety of ISR mining.

        In New Mexico, the Company's strategy is to develop our considerable assets beginning with the startup of the Crownpoint Uranium Project. This ISR production facility could produce up to 3 million pounds per year under our NRC license, the only such license in the state. The Company believes there are more than 200 million pounds of mineralized uranium material owned by URI and other parties that could be developed using ISR production methods and processed at our Crownpoint plant using remote ion exchange technology. We will continue our work to educate the public and government officials on the safety of ISR and conventional mining in an effort to begin uranium mining in New Mexico.

Uranium Reserves/Mineralized Material

        In accordance with the SEC's Guideline on Non-Reserve Mineralized Material, and as shown in the following table, we estimate 101.4 million pounds of in-place mineralized uranium material on our New Mexico properties as of December 31, 2008. This estimate reflects our ongoing reevaluation of our New Mexico properties, including our decision to consider development of certain properties by conventional mining and milling methods in addition to ISR methods. The estimate for each New Mexico property is based on studies and geologic reports prepared by prior owners, along with studies and reports prepared by geologists engaged by the Company. The estimates presented below were reviewed and affirmed by Behre Dolbear & Company (USA) an independent private engineering firm in their report dated February 26, 2008.

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SUMMARY OF IN-PLACE NON-RESERVE MINERALIZED
MATERIAL IN NEW MEXICO

        The following table summarizes our estimates of Proven Reserves for our Kingsville Dome and Rosita properties in South Texas.

SUMMARY OF IN-PLACE RESERVES IN SOUTH TEXAS

        Additionally, we have completed wide spaced drilling on extensions of the Kingsville Dome properties that we intend to mine after the identified reserves have been mined. When we finish the delineation drilling for the wellfields on those extensions we will then assign reserve numbers thereto.

Long-Term Delivery Contracts

        Prior to March 2006 we had two contracts with Itochu Corporation and two with UG USA, Inc. Under those contracts we were obligated to deliver an aggregate of 600,000 pounds in each of the years 2005 through 2008, and the buyer had the right to increase or decrease those deliveries by 15%. The average price for such deliveries was $17.95 in 2005 and was anticipated to have been $14.58 per pound in 2006. These contracts were entered into at a time when the spot price for uranium was less than $15 per pound, substantially below the $40 per pound in effect as of March 25, 2006. Two other contracts with these buyers called for aggregate deliveries of 645,000 pounds by December 31, 2007 priced at the spot price at the time of delivery less an average of $3.80 per pound.

        In March 2006 we entered into new contracts with Itochu and UG that superseded the existing contracts. Each of the new contracts calls for delivery of one-half of our actual production from our Vasquez property and other properties in Texas currently owned or hereafter acquired by the Company (excluding certain large potential exploration plays). The terms of such contracts are summarized below.

        The Itochu Contract.    Under the Itochu contract all production from the Vasquez property will be sold at a price equal to the average spot price for the eight weeks prior to the date of delivery less $6.50 per pound, with a floor for the spot price of $37 and a ceiling of $46.50. Other Texas production will be sold at a price equal to the average spot price for the eight weeks prior to the date of delivery less $7.50 per pound, with a floor for the spot price of $37 and a ceiling of $43. On non-Vasquez production the price paid will be increased by 30% of the difference between the actual spot price and

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the $43 ceiling up to and including $50 per pound. If the spot price is over $50 per pound the price on all Texas production will be increased by 50% of such excess. The floor and ceiling and sharing arrangement over the ceiling applies to 3.65 million pounds of deliveries, after which there is no floor or ceiling. Itochu has the right to cancel any deliveries on six-month's notice.

        On December 5, 2006, HRI-Church Rock, Inc., a wholly-owned subsidiary of the Company, entered into an agreement with a wholly-owned subsidiary of Itochu to develop jointly our Church Rock property in New Mexico (the "Joint Venture"). Such agreement was terminated on March 6, 2009. (See "Business—Joint Venture for Church Rock Property", below).

        The UG Contract.    Under the UG contract all production from the Vasquez property and other Texas production will be sold at a price equal to the month-end long-term contract price for the second month prior to the month of delivery less $6 per pound until (i) 600,000 pounds have been sold in a particular delivery year and (ii) an aggregate of 3 million pounds of uranium has been sold. After the 600,000 pounds in any year and 3 million pounds total have been sold, UG will have a right of first refusal to purchase other Texas production at a price equal to the average spot price for a period prior to the date of delivery less 4%. In consideration of UG's agreement to restructure its previously existing contract, we paid UG $12 million in cash with funds raised in our equity offering completed in April 2006.

Joint Venture for Church Rock Property

        On December 5, 2006, HRI-Churchrock, Inc., a wholly-owned subsidiary of the Company, entered into a Joint Venture with a wholly-owned subsidiary of Itochu to develop jointly our Church Rock property in New Mexico. The Joint Venture provided Itochu an opportunity to participate in New Mexico uranium production in exchange for renegotiating their sales contract with the Company. The new contract included a provision to allow the Company to receive up to an additional $2.10 per pound for certain South Texas uranium production sold to Itochu.

        A feasibility study was completed and delivered at the end of 2006 at a cost of $675,000 that was funded by Itochu. Under the terms of the Joint Venture, both parties had until April 2, 2007 to make a Preliminary Investment Decision whether to move forward with the Joint Venture. Over the past two year the parties had executed multiple extension agreements which extended that date until March 2, 2009. As a result of the extensions, the Company realized approximately $590,000 additional revenue on its South Texas production sold to Itochu since April 2007.

        On March 6, 2009 we received notification that Itochu had made a negative Preliminary Investment Decision for the Joint Venture which resulted in the termination of the Joint Venture. Such action eliminates the potential for reinstatement of the original delivery contracts with Itochu for South Texas production. However, depending on spot market prices, our sales price may be reduced by up to $2.10 per pound on some of our South Texas production for future deliveries under the contract. With the termination, the Company now retains 100% ownership of the approximately 18.6 millions pounds of in place mineralized uranium material at Church Rock.

Overview of the Uranium Industry

        The only significant commercial use for uranium is as a fuel for nuclear power plants for the generation of electricity. According to the World Nuclear Association, as of January 2009 there are now 436 nuclear power plants operating in the world with an annual consumption of about 170 million pounds of uranium. In addition, the WNA lists 43 reactors under construction, 108 being planned, and 266 being proposed.

        Based on reports by Ux Consulting Company, LLC, or Ux, the preliminary estimate for worldwide production of uranium in 2008 is 115 million pounds. Ux reported the gap between production and demand was filled by secondary supplies, such as inventories held by governments, utilities and others in the fuel cycle, including the highly enriched uranium, or HEU, inventories which are a result of the agreement between the US and Russia to blend down nuclear warheads. These secondary supplies are currently meeting nearly a third of worldwide demand, but are depleting.

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        Spot market prices rose from $21/lb in January 2005 to a high of $136/lb in June 2007 in anticipation of sharply higher projected demand as a result of a resurgence in nuclear power, and by the fact that secondary supplies are either becoming depleted or will not be available. The sharp price increase was driven in part by high levels of utility buying, which resulted in most utilities covering their requirements through 2009. A decrease in near-term utility demand coupled with rising levels of supplies from producers and traders led to downward pressure being placed on uranium prices since the third quarter of 2007. During 2008, the spot market price for uranium ranged between a high of $90/lb. in January to a low of $44/lb. in October. As of March 2, 2009, the spot price was $43.75/lb and the long-term contract price was $70/lb. We believe the higher long-term price reflects the continued strong future fundamentals for the uranium market.

        The following graph shows annual average spot prices per pound from 1982 to 2008 and the average price for the period January 1, 2009 to March 2, 2009, as reported by Trade Tech and Ux.

Ux Average Annual U₃O₈ Spot Price

The ISR Mining Process

        The ISR mining process is a form of solution mining. It differs dramatically from conventional mining techniques. The ISR technique avoids the movement and milling of significant quantities of rock and ore as well as mill tailing waste associated with more traditional mining methods. It is generally more cost-effective and environmentally benign than conventional mining. Historically, the majority of United States uranium production resulted from either open pit surface mines or underground shaft operations.

        The ISR process was first tested for the production of uranium in the mid-1960s and was first applied to a commercial-scale project in 1975 in South Texas. It was well established in South Texas by the late 1970's, where it was employed in about twenty commercial projects, including two operated by us.

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        In the ISR 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. The fluid-bearing uranium is then circulated to an ion exchange column on the surface where uranium is extracted from the fluid onto resin beads. The fluid is then reinjected into the ore body. When the ion exchange column's resin beads are loaded with uranium, they are removed and flushed with a salt-water solution, which strips the uranium from the beads. This leaves the uranium in slurry, which is then dried and packaged for shipment as uranium concentrates.

        We have historically used a central plant for the ion exchange. In order to increase operating efficiency and reduce future capital expenditures, we are now using a wellfield-specific remote ion exchange methodology. Instead of piping the solutions over large distances through large diameter pipelines and mixing the waters of several wellfields together, each wellfield is being mined using a dedicated satellite ion exchange facility. This allows ion exchange to take place at the wellfield instead of at the central plant. A wellfield consists of a series of injection wells, production (extraction) wells and monitoring wells drilled in specified patterns. Wellfield pattern is crucial to minimizing costs and maximizing efficiencies of production. The satellite facilities allow mining of each wellfield using its own native groundwater.

Environmental Considerations and Permitting

        Uranium mining is regulated by the federal government, states and, where conducted in Indian Country, by Indian tribes. Compliance with such regulation has a material effect on the economics of our operations and the timing of project development. Our primary regulatory costs have been related to obtaining licenses and permits from federal and state agencies before the commencement of mining activities.

        Radioactive Material License.    Before commencing operations in both Texas and New Mexico, we must obtain a radioactive material license. Under the federal Atomic Energy Act, the United States Nuclear Regulatory Commission has primary jurisdiction over the issuance of a radioactive material license. However, the Atomic Energy Act also allows for states with regulatory programs deemed satisfactory by the Commission to take primary responsibility for issuing the radioactive material license. The Commission has ceded jurisdiction for such licenses to Texas, but not to New Mexico. Such ceding of jurisdiction by the Commission is hereinafter referred to as the "granting of primacy."

        The Texas Commission of Environmental Quality (TCEQ) is the permitting agency for the radioactive material license. For operations in New Mexico, radioactive material licensing is handled directly by the United States Nuclear Regulatory Commission.

        See "Properties" and "Legal Proceedings" for the status of our radioactive material license for New Mexico and our Texas properties.

        Underground Injection Control Permits ("UIC").    The federal Safe Drinking Water Act creates a nationwide regulatory program protecting groundwater. This act is administered by the United States Environmental Protection Agency (the "USEPA"). However, to avoid the burden of dual federal and state (or Indian tribal) regulation, the Safe Drinking Water Act allows for the UIC permits issued by states (and Indian tribes determined eligible for treatment as states) to satisfy the UIC permit required under the Safe Drinking Water Act under two conditions. First the state's program must have been granted primacy. Second, the USEPA must have granted, upon request by the state, an aquifer exemption. The USEPA may delay or decline to process the state's application if the USEPA questions the state's jurisdiction over the mine site.

        Texas has been granted primacy for its UIC programs, and the Texas Commission on Environmental Quality administers UIC permits. In addition to the radioactive Materials License as

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described above, the TCEQ also regulates air quality and surface deposition or discharge of treated wastewater associated with the ISR mining process.

        New Mexico has also been granted primacy for its program. The Navajo Nation has been determined eligible for treatment as a state, but it has not requested the grant of primacy from the USEPA for uranium related UIC activity. Until the Navajo Nation has been granted primacy, ISR uranium mining activities within Navajo Nation jurisdiction will require UIC permit from the USEPA. Despite some procedural differences, the substantive requirements of the Texas, New Mexico and USEPA underground injection control programs are very similar.

        Properties located in Indian Country remain subject to the jurisdiction of the USEPA. Some of our properties are located in areas that are in Indian Country or in areas that are in dispute.

        See "Properties" and "Legal Proceedings" for a description of the status of our UIC permits in Texas and New Mexico.

        Other.    In addition to radioactive material licenses and underground injection control permit, we are also required to obtain from governmental authorities a number of other permits or exemptions, such as for wastewater discharge, for land application of treated wastewater, and for air emissions.

        In order for a licensee to receive final release from further radioactive material license obligations after all of its mining and post-mining clean up have been completed in Texas, approval must be issued by the TCEQ along with concurrence from the United States Nuclear Regulatory Commission and in New Mexico by the United States Nuclear Regulatory Commission.

        In addition to the costs and responsibilities associated with obtaining and maintaining permits and the regulation of production activities, we are subject to 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 current environmental regulatory program for the ISR industry is well established. Many ISR mines have gone full cycle without any significant environmental impact. However, the public anti-nuclear lobby can make environmental permitting difficult and timing unpredictable.

Reclamation and Restoration Costs and Bonding Requirements

        At the conclusion of mining, a mine site is decommissioned and decontaminated, and each wellfield is restored and reclaimed. Restoration involves returning the aquifer to its pre-mining use and removing evidence of surface disturbance. Restoration can be accomplished by flushing the ore zone with native ground water or using reverse osmosis to remove ions, minerals and salts to provide clean water for reinjection to flush the ore zone. Decommissioning and decontamination entails dismantling and removing the structures, equipment and materials used at the site during the mining and restoration activities.

        The Company is required by the State of Texas regulatory agencies to obtain financial surety relating to certain of its future restoration and reclamation obligations. The Company has a combination of bank Letters of Credit (the "L/C's) and performance bonds issued for the benefit of the Company to satisfy such regulatory requirements. The L/C's were issued by Bank of America and the performance bonds have been issued by United States Fidelity and Guaranty Company ("USF&G"). The L/C's relate primarily to our operations at our Kingsville Dome and Vasquez projects and amounted to $5,629,000 and $5,360,000, at December 31, 2008 and 2007, respectively. The L/C's are collateralized in their entirety by certificates of deposit.

        The performance bonds were $2,835,000 on December 31, 2008 and 2007, respectively, and related primarily to our operations at Kingsville Dome and Rosita. USF&G has required that the Company deposit funds collateralizing a portion of the bonds, and we have deposited approximately $385,000 and

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$378,000 at December 31, 2008 and 2007, respectively, as cash collateral for such bonds. We are obligated by agreement with the bonding company to increase the cash collateral to an amount equal to 50% of the amount of the bonds, plus an additional $0.50 for each pound of uranium produced until the account accumulates an additional $1.0 million.

        We estimate that our actual reclamation liabilities for prior operations at Kingsville Dome, Vasquez and Rosita at December 31, 2008, are about $9.8 million of which the present value of $7.0 million is recorded as a liability as of December 31, 2008. Under an agreement reached on March 1, 2004 with the Texas regulatory agencies and our bonding company, we agreed to fund ongoing groundwater restoration at the Kingsville Dome and Rosita mine sites at specified treatment rates, utilizing a portion of our cash flow from sales of uranium from the Vasquez site as a substitute for additional bonding. This agreement expired on August 31, 2007. As a result, the Company is now required to post adequate financial surety, and as of December 31, 2008 has posted letters of credit in the amount of $5.6 million, which are cash collateralized in full.

        These financial surety obligations are reviewed and revised periodically by the Texas regulators.

        In New Mexico, surety bonding will be required before commencement of mining and will be subject to annual review and revision by the United States Nuclear Regulatory Commission and the State of New Mexico or the USEPA.

Water Rights

        Water is essential to the ISR process. It is readily available in South Texas. In Texas, water is subject to capture, and we do not have to acquire water rights through a state administrative process. In New Mexico, water rights are administered through the New Mexico State Engineer and can be subject to Indian tribal jurisdictional claims. New water rights 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 our properties are located, must be obtained by permit from the State Engineer. Applications may be approved subject to conditions that govern exercise of the water rights.

        Jurisdiction over water rights becomes an issue in New Mexico when an Indian nation, such as the Navajo Nation, objects to the State Engineer's authority and claims tribal jurisdiction over Indian Country. This issue may result in litigation between the Indian nation and the state, which may delay action on water right applications, and can require applications to the appropriate Indian nation and continuing jurisdiction by the Indian nation over use of the water. The foregoing issues arise in connection with certain of our New Mexico properties.

        In New Mexico, we hold approved water rights to provide sufficient water to conduct mining at the Church Rock project and Section 24 for the Crownpoint project for the projected life of these mines. We also hold two unprotested senior water rights applications that, when approved, would provide sufficient water for future extensions of the Crownpoint project.

Competition

        A primary area of competition is in the identification and acquisition of properties with high prospects of potential producible reserves that are suitable for our size operation. We believe that we compete with 10 to 20 junior exploration companies for both properties as well as skilled personnel.

        The Company competes for markets for our uranium primarily based on price. We market uranium to utilities and commodity brokers and are in direct competition with supplies available from various sources worldwide. We believe we compete with approximately 10 to 20 operating companies in the mining and sale of uranium.

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Item 1A.    Risk Factors.

        The factors identified below 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, we caution that, while we believe such assumptions or bases to be reasonable and make 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.

General Risks and Uncertainties

         We expect to cease our uranium production by the end of March 2009. If we cannot add additional reserves to replace production in the future, monetize certain existing Company assets and/or have the ability to access additional sources of private or public capital we may not be able to remain in business.

        Our Vasquez project has been depleted of its economically recoverable reserves and our Rosita and Kingsville Dome projects have minimal identified economically recoverable reserves. Our future uranium production, cash flow and income are dependent upon our ability to bring on new, as yet unidentified wellfields and to acquire and develop additional reserves. We cannot assure investors that our properties will be placed into production or that we will be able to continue to find, develop, acquire and finance additional reserves.

         Our ability to function as an operating mining company will be dependent on our ability to mine our properties at a profit sufficient to finance further mining activities and for the acquisition and development of additional properties. The volatility of uranium prices makes long-range planning uncertain and raising capital difficult.

        We have made the decision to defer all activities for delineation and development of new wellfields at our South Texas projects and expect production from our remaining operating wellfields at Kingsville Dome to be depleted in the first quarter of 2009. This decision will limit our ability to generate additional cash from operations. Our ability to operate on a positive cash flow basis will be dependent on mining sufficient quantities of uranium at a profit sufficient to finance our operations and for the acquisition and development of additional mining properties. Any profit will necessarily be dependent upon, and affected by, the long and short term market prices of uranium, which are subject to significant fluctuation. Uranium prices have been and will continue to be affected by numerous factors beyond our control. These factors include the demand for nuclear power, political and economic conditions in uranium producing and consuming countries, uranium supply from secondary sources and uranium production levels and costs of production. A significant, sustained drop in uranium prices may make it impossible to operate our business at a level that will permit us to cover our fixed costs or to remain in operation.

         We face risks related to exploration and development, if warranted, on our properties.

        Our level of profitability, if any, in future years will depend to a great degree on uranium prices and whether any of our exploration stage properties can be brought into production. The exploration for and development of uranium deposits involves significant risks. It is impossible to ensure that the

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current and future exploration programs and/or feasibility studies on our existing properties will establish reserves. Whether a uranium ore body will be commercially viable depends on a number of factors, including, but not limited to: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; uranium prices, which cannot be predicted and which have been highly volatile in the past; mining, processing and transportation costs; perceived levels of political risk and the willingness of lenders and investors to provide project financing; labor costs and possible labor strikes; and governmental regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting materials, foreign exchange, environmental protection, employment, worker safety, transportation, and reclamation and closure obligations. Most exploration projects do not result in the discovery of commercially mineable deposits of uranium.

         The only market for uranium is nuclear power plants world wide, and there are a limited number of customers.

        We are dependent on a limited number of electric utilities that buy uranium for nuclear power plants. Because of the limited market for uranium, a reduction in purchases of newly produced uranium by electric utilities for any reason (such as plant closings) would adversely affect the viability of our business.

         The price of alternative energy sources affects the demand for and price of uranium.

        The attractiveness of uranium as an alternative fuel to generate electricity is to some degree dependent on the relative prices of oil, gas, coal and hydro-electricity and the possibility of developing other low cost sources for energy.

         Public acceptance of nuclear energy is uncertain.

        Maintaining the demand for uranium at current levels and future growth in demand will depend upon acceptance of nuclear technology as a means of generating electricity. Lack of public acceptance of nuclear technology would adversely affect the demand for nuclear power and potentially increase the regulation of the nuclear power industry.

         The Navajo Nation ban on uranium mining in Indian Country encompasses approximately 84% of our in-place mineralized uranium material on our properties in New Mexico and will adversely affect our ability to mine unless the ban is overturned.

        In April 2005, the Navajo Nation Council passed the Diné Natural Resources Protection Act of 2005 prohibiting uranium mining and processing on any sites within Indian Country. We believe that the ban is beyond the jurisdiction of the Navajo Nation. However, the ban may prevent us from developing and operating the properties until the jurisdictional issue is resolved.

        In February 2007, the United States Environmental Protection Agency, or USEPA, determined that Section 8 of our Church Rock property was Indian Country and that the USEPA and not the state of New Mexico has the authority to issue the Underground Injection Control, or UIC, permits for Section 8 that are a precondition to mining. We have appealed that decision to the United States Court of Appeals for the Tenth Circuit. The case has been briefed, and oral argument occurred on May 12, 2008. The expansive definition of Indian Country adopted by the USEPA may encompass properties owned by non-Indians within Navajo chapters in New Mexico. If that expansive definition prevails, as much as 84% of our in-place mineralized uranium materials in New Mexico could be in Indian Country.

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         We may not be able to mine a substantial portion of our uranium in New Mexico until a mill is built in New Mexico.

        A substantial portion of our uranium in New Mexico may not be able to be mined unless a mill is built in New Mexico.

         Itochu has made a negative Preliminary Investment Decision resulting in the termination of our Joint Venture with them for the development of the Church Rock Property and we do not have a committed source of financing for the development of our Church Rock Property.

        On December 5, 2006, HRI-Church Rock, Inc., a wholly owned subsidiary of the Company, entered into a joint venture with a wholly owned subsidiary of Itochu Corporation to develop jointly our Church Rock property in New Mexico. Under the terms of the joint venture, both parties had until April 2, 2007 to make a preliminary investment decision whether to move forward with the joint venture. The parties then agreed to extend that date to March 2, 2009. On March 6, 2009 we received notification that Itochu had made a negative Preliminary Investment Decision for the Joint Venture which resulted in the termination of the Joint Venture. With the negative investment decision, the joint venture terminated and we do not have a committed source of financing for the development of our Church Rock property, but we will retain all of the rights to the asset.

         Our operations are subject to environmental risks.

        We are required to comply with environmental protection laws and regulations and permitting requirements, and we anticipate that we will be required to continue to do so in the future. We have expended significant resources, both financial and managerial, to comply with environmental protection laws, regulations and permitting requirements and we anticipate that we will be required to continue to do so in the future. The material laws and regulations within the U.S. that the Company must comply with include the Atomic Energy Act, Uranium Mill Tailings Radiation Control Act of 1978, or UMTRCA, Clean Air Act, Clean Water Act, Safe Drinking Water Act, Federal Land Policy Management Act, National Park System Mining Regulations Act, and the State Mined Land Reclamation Acts or State Department of Environmental Quality regulations, as applicable.

        We are required to comply with the Atomic Energy Act, as amended by UMTRCA, by applying for and maintaining an operating license from the NRC and the state of Texas. Uranium operations must conform to the terms of such licenses, which include provisions for protection of human health and the environment from endangerment due to radioactive materials. The licenses encompass protective measures consistent with the Clean Air Act and the Clean Water Act. We intend to utilize specific employees and consultants in order to comply with and maintain our compliance with the above laws and regulations. Mining operations may be subject to other laws administered by the federal Environmental Protection Agency and other agencies.

        The uranium industry is subject not only to the worker health and safety and environmental risks associated with all mining businesses, but also to additional risks uniquely associated with uranium mining and milling. The possibility of more stringent regulations exists in the areas of worker health and safety, storage of hazardous materials, standards for heavy equipment used in mining or milling, the disposition of wastes, the decommissioning and reclamation of exploration, mining and in-situ sites, climate change and other environmental matters, each of which could have a material adverse effect on the costs or the viability of a particular project.

        We cannot predict what environmental legislation, regulation or policy will be enacted or adopted in the future or how future laws and regulations will be administered or interpreted. The recent trend in environmental legislation and regulation, generally, is toward stricter standards, and this trend is likely to continue in the future. This recent trend includes, without limitation, laws and regulations relating to air and water quality, mine reclamation, waste handling and disposal, the protection of

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certain species and the preservation of certain lands. These regulations may require the acquisition of permits or other authorizations for certain activities. These laws and regulations may also limit or prohibit activities on certain lands. Compliance with more stringent laws and regulations, as well as potentially more vigorous enforcement policies or stricter interpretation of existing laws, may necessitate significant capital outlays, may materially affect our results of operations and business, or may cause material changes or delays in our intended activities.

        Our operations may require additional analysis in the future including environmental, cultural and social impact and other related studies. Certain activities require the submission and approval of environmental impact assessments. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers, and employees. We cannot assure investors that we will be able to obtain or maintain all necessary permits that may be required to continue our operation or our exploration of our properties or, if feasible, to commence development, construction or operation of mining facilities at such properties on terms which enable operations to be conducted at economically justifiable costs. If we are unable to obtain or maintain permits or water rights for development of our properties or otherwise fail to manage adequately future environmental issues, our operations could be materially and adversely affected.

         Because mineral exploration and development activities are inherently risky, we may be exposed to environmental liabilities and other dangers. If we are unable to maintain adequate insurance, or liabilities exceed the limits of our insurance policies, we may be unable to continue operations, which may result in a loss of an investors' investment.

        The business of mineral exploration and extraction involves a high degree of risk. Few properties that are explored are ultimately developed into production. Unusual or unexpected formations, formation pressures, fires, power outages, labor disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are other risks involved in extraction operations and the conduct of exploration programs. Previous mining operations may have caused environmental damage at certain of our properties. It may be difficult or impossible to assess the extent to which such damage was caused by us or by the activities of previous operators, in which case, any indemnities and exemptions from liability may be ineffective. If any of our properties are found to have commercial quantities of uranium, we would be subject to additional risks respecting any development and production activities.

        Although we carry liability insurance with respect to our mineral exploration operations, we may become subject to liability for damage to life and property, environmental damage, cave-ins or hazards against which we cannot insure or against which we may elect not to insure. In addition, the insurance industry is undergoing change and premiums are being increased. If premiums should increase to a level we cannot afford, we could not continue in business.

         Our inability to obtain financial surety would threaten our ability to continue in business.

        Future bonding requirements to comply with federal and state environmental and remediation requirements and to secure necessary licenses and approvals will increase significantly when future development and production occurs at our sites in Texas and New Mexico. The amount of the bonding for each producing property is subject to annual review and revision by regulators. We expect that the issuer of the bonds will require us to provide cash collateral equal to the face amount of the bond to secure the obligation. In the event we are not able to raise, secure or generate sufficient funds necessary to satisfy these bonding requirements, we will be unable to develop our sites and bring them into production, which inability will have a material adverse impact on our business and may negatively affect our ability to continue to operate.

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         Competition from better-capitalized companies affects prices and our ability to acquire properties and personnel.

        There is global competition for uranium properties, capital, customers and the employment and retention of qualified personnel. In the production and marketing of uranium, there are approximately 15 major producing entities, some of which are government controlled and all of which are significantly larger and better capitalized than we are. Many of these organizations also have substantially greater financial, technical, manufacturing and distribution resources than we have.

        We also compete with uranium recovered from the de-enrichment of highly enriched uranium obtained from the dismantlement of United States and Russian nuclear weapons and imports to the United States of uranium from the former Soviet Union. In addition, there are numerous entities in the market that compete with us for properties and are attempting to become licensed to operate ISR facilities.

         Because we have limited capital, inherent mining risks pose a significant threat to us compared with our larger competitors.

        Because we have limited capital, we are unable to withstand significant losses that can result from inherent risks associated with mining, including environmental hazards, industrial accidents, flooding, interruptions due to weather conditions and other acts of nature which larger competitors could withstand. Such risks could result in damage to or destruction of our infrastructure and production facilities, as well as to adjacent properties, personal injury, environmental damage and processing and production delays, causing monetary losses and possible legal liability.

         We may need to obtain additional financing in order to implement our business plan, and the inability to obtain it could cause our business plan to fail.

        As of December 31, 2008, we had approximately $12.0 million in cash. We could require additional financing in order to complete our plan of operations. We may not be able to obtain all of the financing we require. Our ability to obtain additional financing is subject to a number of factors, including the market price of uranium, market conditions, investor acceptance of our business plan, and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. In recognition of current economic conditions and the planned shut-down of production we have significantly reduced our spending, delayed or cancelled planned activities and substantially changed our current corporate structure. However, these actions could have material adverse effects on our business, revenues, operating results, and prospects, resulting in a possible failure of our business.

         Our business could be harmed if we lose the services of our key personnel.

        Our business and mineral exploration programs depend upon our ability to employ the services of geologists, accountants and other experts. In operating our business and in order to continue our programs, we compete for the services of professionals with other mineral exploration companies and businesses. In addition, several entities have expressed an interest in hiring certain of our employees. Our ability to maintain and expand our business and continue our exploration programs may be impaired if we are unable to continue to employ or engage those parties currently providing services and expertise to us or identify and engage other qualified personnel to do so in their place. To retain key employees, we may face increased compensation costs, including potential new stock incentive grants.

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         Over 29.8% of our Common Stock is controlled by 2 record owners and management.

        Over 21.1% of our Common Stock is controlled by two significant stockholders. In addition, our directors and officers are the beneficial owners of approximately 8.7% of our Common Stock. This includes, with respect to both groups, shares that may be purchased upon the exercise of outstanding options. Such ownership by the Company's principal shareholders, executive officers and directors may have the effect of delaying, deferring, preventing or facilitating a sale of the Company or a business combination with a third party.

         The availability for sale of a large amount of shares may depress the market price of our Common Stock.

        As of December 31, 2008, 55,955,549 shares of our Common Stock were currently outstanding, all of which are registered or otherwise transferable. The availability for sale of a large amount of shares or conversion of the Company's outstanding warrants by any one or several shareholders may depress the market price of our Common Stock and impair our ability to raise additional capital through the public sale of our Common Stock. We have no arrangement with any of the holders of the foregoing shares to address the possible effect on the price of our Common Stock of the sale by them of their shares.

         Terms of subsequent financings may adversely impact an investor's investment.

        In order to finance our cash needs, we may have to raise equity or debt in the future. We currently have no authorized preferred stock. An investor's rights and the value of an investor's investment in our Common Stock could be reduced. For example, if we have to issue secured debt securities, the holders of the debt would have a claim to our assets that would be prior to the rights of stockholders until the debt is paid. Interest on these debt securities would increase costs and negatively impact operating results.

         Shareholders could be diluted if we were to use Common Stock to raise capital.

        Shareholders may be diluted in their ownership if we raise capital. Direct dilution would occur if we sell Common Stock or debt convertible into Common Stock, with conversion and other terms which large institutions can negotiate for substantial capital financings which result in more favorable terms than buying stock in the market. Indirect dilution would occur if institutional financing is raised for a subsidiary company. In this scenario, the percentage of the subsidiary held by us would be diluted.

        Additionally, should the Company complete an equity offering which triggers the provisions of certain ratchet warrants issued in May 2008, such transaction could have a significant dilutive effect on the Company's shareholders.

Item 1B.    Unresolved Staff Comments.

        None.

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Item 2.    Properties.

South Texas

        We currently control 3 major properties in the state of Texas. The Kingsville Dome, Rosita and Vasquez properties are shown in Figure No. 2.1 and are described below.

Figure No 2.1. Texas Properties Location Map

Kingsville Dome (Figure 2.2)

        The Property.    The Kingsville Dome property consists of mineral leases from private landowners on about 2,354 gross and net acres located in central Kleberg County, Texas. The leases provide for royalties based upon a percentage of uranium sales of 6.25%. The leases have expiration dates ranging from 2000 to 2007, however we hold most of these leases by production; and with a few minor exceptions, all the leases contain clauses that permit us to extend the leases not held by production by payment of a per acre royalty ranging from $10 to $30. We have paid such royalties on all material acreage. Mineralization is found in the Goliad formation at depths of 600 to 750 feet.

        Production History.    Initial production commenced in May 1988. From then until July 1999, we produced a total of 3.5 million pounds. Production was stopped in July 1999, because of depressed uranium prices. We resumed production at Kingsville Dome in April 2006 produced 94,100 pounds in

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2006; 338,100 pounds of uranium in 2007 and 254,000 in 2008. We spent about $10.4 million in capital expenditures in 2006; $8.0 million in capital expenditures in 2007 and $3.6 million in 2008.

        Permitting Status.    A radioactive material license and underground injection control permit have been issued. As new areas are proposed for production, additional authorizations under the area permit are required. Approval of our Production Area Authorization #3 was received in February 2006 which allowed for the start-up of production at Kingsville Dome in April 2006. See "Legal Proceedings ."

        Restoration and Reclamation.    During 2008, we conducted restoration activities as required by the permits and licenses on this project, spending approximately $349,000 on such activities. In 2007 and 2006, we spent about $595,000 and $321,000 in restoration costs.

Figure No. 2.2. Kingsville Dome Property

Rosita (Figure 2.3)

        The Property:    The Rosita and Rosita South property consists of mineral leases from private landowners on about 2075 gross and net acres (775 acres in Rosita and 1300 acres in Rosita South) located in north-central Duval County, Texas. The leases provide for sliding scale royalties based on a percentage of uranium sales. Royalty percentages on average increase from 6.25% up to 18.25% when uranium prices reach $80.00 per pound. The leases have expiration dates ranging from 2012 to 2015.

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We are holding these leases by payment of rentals ranging from $10 to $30 per acre. Mineralization is found in the Goliad Formation at depths of 125 to 350 feet.

        Production History:    Initial production commenced in 1990. From then until July 1999, URI produced a total of 2.64 million pounds. Production was stopped in July of 1990 because of depressed uranium prices. Production from a new wellfield at Rosita wellfield was begun in June 2008. However, technical difficulties that raised the cost of production coupled with a sharp drop in uranium prices led to the decision to shut-in this wellfield after 10,200 pounds were produced.

        In order to restart the plant facility, we spent about $4.5 million, 5.0 million and $2.8 million in 2008, 2007 and 2006, respectively for plant refurbishment and wellfield development. We are conducting restoration and reclamation, of which $465,000 was spent in 2008. In 2007 and 2006, we spent about $820,000 and $676,000 for restoration and reclamation activities.

        Permitting Status:    A radioactive material license and an underground injection control permit have been issued for the Rosita property. The underground injection control permit is being amended to include the Rosita South property. Production could resume in areas already included in existing Production Area Authorizations. As new areas are proposed for production, additional authorizations under the permit will be required.

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Figure No. 2.3. Rosita Property Mineral Ownership

Vasquez (Figure 2.4)

        The Property.    We have a mineral lease on 872 gross and net acres located in southwestern Duval County, in South Texas. The primary term expired in February 2008; however, we hold the lease by production. The lease provides for royalties based upon 6.25% of uranium sales below $25.00 per pound and royalty rate increases on a sliding scale up to 10.25% for uranium sales occurring at or above $40.00 per pound. Mineralization is found in the Oakville formation at depths of 200 to 250 feet.

        Production History.    We commenced production from this property in October 2004. We spent about $355,000 in capital expenditures at Vasquez and produced 36,600 pounds of uranium in 2008. We spent about $1.3 million in capital expenditures at Vasquez and produced 78,600 pounds of uranium in

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2007. We spent about $3.4 million in capital expenditures at Vasquez and produced 165,000 pounds of uranium in 2006. We are conducting restoration and reclamation, of which $224,000 and $33,000 was spent in 2008 and 2007, respectively.

        Permitting Status.    All of the required permits for this property have been received.

Figure No. 2.4. Vasquez Property

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Marshall Exploration Property (figure 2.6).

        The Marshall Property is a Goliad and Oakville prospect consisting of 1953 gross and net acres. It is located in Duval and McMullen counties, Texas. During the year we drilled 280 exploration holes and discovered significant mineralization. Further evaluation will need to be conducted to determine if this property can be mined using ISR methods.

Figure No. 2.6. Marshall Exploration Property

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New Mexico Properties

        General.    We have various interests in properties located in New Mexico (Figure 2.7). We have fee lands, patented and unpatented mining claims, mineral leases and some surface leases. We have spent $12.9 million to date on permitting for New Mexico. Additional expenditures will be required and could be material. We are unable to estimate the amount. We expect that whatever is spent will occur over multiple years. See "Legal Proceedings" for a discussion of the current status of our license for New Mexico

Figure No. 2.7. Location of New Mexico Properties

        The Property.    The Church Rock project encompasses about 2,200 gross and net acres. 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. Access to the Church Rock property is via State Highway 566 and access to Mancos is via 4-wheel drive ranch roads west of State Highway 566.

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Church Rock/ Mancos (Figure 2.8)

        We own the mineral estate in fee for the NE ¹/4 and the SW ¹/4 of the NW ¹/4 of Section 17, T16N, R16W. In Section 8, T16N, R16W, we own the SE ¹/4 in fee and hold the minerals in the rest of the section with 26 unpatented federal mining claims (UNC1A thru UNC 26). For the Mancos Property, we own the minerals in Section 13, T16N, R17W, in fee, the minerals in the NW ¹/4 of Section 7, T16N, R16W, in fee and hold the minerals in the E ¹/2 of Section 12, T16N, R17W, with 20 unpatented federal mining claims (KP1A thru KP5A, KP19, KP36, 121617-14A thru 121617-18A, 121617-20A thru 121617-23A and 121617-32A thru 121617-35A). The federal unpatented mining claims are all held through the payment of a $125.00 assessment fee each year on each claim.

        Mineralization occurs in the Westwater Member of the Morrison Formation at depths of 800 to 1700 feet.

        The surface estate on Section 17, Mancos Section 13 and Mancos Section 7 is owned by the United States Government and held in trust for the Navajo Nation. On those sections we have royalty obligations ranging from 5% to 6¹/4% and a 2% overriding royalty obligation to the Navajo Nation for surface use agreements. The total royalties on Section 8 depend on the sales' price of uranium. Aggregate royalties are potentially as much as 39.25% at the current price of uranium.

        Development Plan.    We anticipate that Church Rock will be the first of our New Mexico properties we will develop. We spent about $421,000, $504,000 and $305,000 in 2008, 2007 and 2006, respectively, for permitting activities and land holding costs. In December 2006, we entered into a joint venture with Itochu to jointly develop this property and in March 2009 the joint venture was terminated (see "Business—Joint Venture for Church Rock Property").

        Water Rights.    The State Engineer approved our water rights application in October 1999 and granted us sufficient water rights for the life of Church Rock.

        Permitting Status.    We have the radioactive material license for Section 8. This license is subject to the continuing proceedings described under "Legal Proceedings." With respect to the UIC permits, see "Legal Proceedings." We do not plan to pursue permits for Mancos at this time.

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Figure No. 2.8. Church Rock / Mancos Property Mineral Ownership

Crownpoint (Figure 2.9)

        The Property.    The Crownpoint properties are located in the San Juan Basin, 22 miles northeast of our Church Rock deposits and 35 miles northeast of Gallup, New Mexico, adjacent to the town of Crownpoint, New Mexico. The Properties consist of 619 gross and 521.8 net acres. We hold the minerals in the NW ¹/4 of Section 9, T17N, R13W with 9 unpatented federal mining claims (CP-1 thru CP9) and the minerals in the SW ¹/4 of Section 24, T17N, R13W with 10 unpatented federal mining claims (CP-10 thru CP-19). In the SE ¹/4 of Section 24, T17N, R13W we hold a 40% interest in the minerals through a lease (the "Walker" lease) on approximately 139 acres and hold 100% of the minerals on the remaining 21 acres with two unpatented federal mining claims (Consol I and

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Consol II). In the NE ¹/4 of Section 25, T17N, R13W we hold the minerals with eight unpatented federal mining claims (Hydro-1 thru Hydro-8). The federal unpatented mining claims are held through the payment of a $125.00 assessment fee each year on each claim. Access is via paved road from State Highway 371, through the town of Crownpoint to Church Road to the main gate of the property.

        Mineralization is found in the Westwater Member of the Morrison Formation at a depth of from 2,100 to 2,300 feet. Three pilot shafts were completed on the property in the early 1980's but were never completed. Surface facilities dating from those activities including buildings and their associated electrical/water infrastructure are still in-place and are currently used as offices and storage facilities.

        Development Plan.    We spent about $127,000, $164,000 and $91,000 in 2008, 2007 and 2006, respectively, for permitting activities and land holding costs.

        Water Rights.    We have three pending applications for appropriations of water, which give us the first three "positions in line" on the hearings list for the San Juan Basin. Certain of the water rights may involve a claim of jurisdiction by the Navajo Nation.

        Permitting Status.    See "Legal Proceedings" for a discussion of the radioactive material license for Crownpoint. The surface estate on Section 19 and 29 is owned by the United States Government and held in trust for the Navajo Nation and may be subject to the same jurisdictional dispute with respect to the UIC permit as for Section 8 and 17 in Church Rock.

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Figure No. 2.9. Crownpoint Property Mineral Ownership

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Nose Rock (Figure 2.10)

        The Nose Rock property consists of approximately 6,400 acres and is located about 12 miles northeast of Crownpoint, New Mexico. The minerals is held in fee on Sections 10, 11, 15, 17, 18, 19, 20, 29, 30 and 31 all in T19N, R11W. Access to the property is via a 4¹/2 mile private paved road north of Tribal Road 9. The property was developed by Philips Uranium Corporation in the early 1980's and includes two circular concrete-lined shafts that have been completed to a depth of 3,300 feet. Both shafts have been plugged at surface and just above the Westwater. There is no usable surface infrastructure on site. Mineralization occurs in the Westwater Member of the Morrison Formation.

Figure No. 2.10. Nose Rock Property Mineral Ownership

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West Largo (Figure 2.11)

        The West Largo property is comprised of six contiguous sections of land located in McKinley County, New Mexico about 21 miles north of the town of Milan, New Mexico and about three miles west of State Highway 509. Access is via a nine-mile 4-wheel drive road from State Highway 509. The minerals on sections 17, 19, 21 and 29 T15N, R10W are held in fee and the minerals on sections 20 and 28 T15N, R10W are held by 75 unpatented federal mining claims (ID21 thru ID91 and ID95 thru ID98). The federal unpatented mining claims are held through the payment of a $125.00 assessment fee each year on each claim.

        Mineralization occurs in the Westwater Member of the Morrison Formation at depths ranging from 2,000 to 2,750 feet depending on surface topography. Over 1,000 drill holes were used to define the mineralization in the late 1970's and early 1980's. Other than this exploration drilling, there has been no development on this property.

Figure 2.11. West Largo Property Mineral Ownership

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Roca Honda (Figure 2.12)

        The Roca Honda property is comprised of four sections of land totaling approximately 2,560 acres located about 4 miles northwest of the town of San Mateo in McKinley County, New Mexico. Sections 13, 15 and 17, T13N, R8W are held in fee and Section 8, T13N, R8W is held by 36 unpatented federal mining claims (Roca Honda 55 thru Roca Honda 63, Roca Honda 82 thru Roca Honda 90, Roca Honda 109 thru 117 and Roca Honda 136 thru Roca Honda 144). The federal unpatented mining claims are held through the payment of a $125.00 assessment for each year on each claim. The property is accessed over various 4-wheel drive ranch roads north of State Highway 605.

        Mineralization occurs in the Westwater Member of the Morrison Formation at depths ranging from 1,700 on Section 17 to over 3,300 feet in Section 13. In the late 1970's and early 1980's, various operators drilled 620 exploration holes on the property. In the late 1980's, Kerr-McGee sank a shaft to a depth of 1,475 feet on Section 17 to develop the property, then known as the Lee Mine. The shaft was stopped short of the ore zone and the mine closed down when uranium prices fell in 1983. There is no useable infrastructure on surface.

Figure No. 2.12. Roca Honda Property Mineral Ownership

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        Potential ISR and OSL areas (Figures 2.13 & 2.14).    Several areas in T13N R 9 W and T14 N R 10W are being considered for early application of ISR methods (Sections 13 and 17 of T13N R9W and Sections 5 and 27 of T14 N R 10W). In November of 2008, we received a permit to drill up to 10 holes for the purpose of extracting core to evaluate the suitability of the property for ISR extraction. All land described is owned in fee.

        Two other sections in T14N R10W (Sections 23 and 25) have been the site of extensive development and mining in the past and could provide excellent targets for the application of Old Stope Leaching operations. Mineral on these two sections is owned in fee.

Figure No. 2.13. West Ambrosia area

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Figure 2.14. T13N R9W Area

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Insurance

        Our property is covered by various types of insurance including property and casualty, liability and umbrella coverage. We have not experienced any material uninsured or under insured losses related to our properties in the past and believe that sufficient insurance coverage is in place.

Reclaimed Properties

        We have completed production and groundwater restoration on our Benavides and Longoria projects in South Texas. We completed the final stages of surface reclamation on these projects and received full and final release for these sites in 1999.

        We acquired the Section 17 leases in the New Mexico Church Rock district from United Nuclear Corporation who had conducted underground mining for uranium on Section 17 and had reclaimed these properties. In the acquisition, we assumed any liability of United Nuclear Corporation for any remaining remediation work that might be required. The New Mexico Energy Minerals and Natural Resources Department has not determined what, if any, additional remediation would be required under the New Mexico Mining Act. If more remediation work is required, we believe it would not involve material expenditures as required by the New Mexico Energy Minerals and Natural Resources Department regulation.

        In January 2008 the Navajo Nation Environmental Protection Agency (NNEPA) notified the Company of their analysis that indicated potentially uranium contaminated materials present on the Church Rock Section 17 Mine Site. In response, the Company has agreed with the NNEPA to perform a comprehensive characterization of the Church Rock Site at Section 17 and lands adjacent to the site area during the spring of 2009. The jurisdiction of the Navajo Nation to require additional remediation at the Section 17 site, and their criteria for further remediation, are unknown.

        See "Legal Proceedings" for a description of the status of the Navajo EPA letter and UNC Demand for Indemnity in New Mexico.

Item 3.    Legal Proceedings.

New Mexico Radioactive Material License

        In the State of New Mexico, uranium recovery by ISR technology requires a radioactive material (uranium recovery) license issued by the United States Nuclear Regulatory Commission (the "NRC" or the "Commission"). We applied for one license covering the properties located in both the Church Rock and Crownpoint districts collectively known as the Crownpoint Uranium Project (CUP). The Commission issued a radioactive material (uranium recovery) license for the CUP in January 1998 that allowed licensed ISR operations to begin in the Church Rock district. In mid-1998, the Commission determined that certain interested stakeholders who requested an NRC administrative hearing had standing to raise certain objections to the license. A panel of Administrative Law Judges (NRC's Atomic Safety and Licensing Board (hereinafter "Licensing Board")) conducted a hearing during 1999. The Licensing Board upheld the Church Rock Section 8 portion of the NRC license and granted our request to defer any dispute on the remaining CUP properties until we make a decision whether to mine these other properties.

        The Licensing Board's ruling was then appealed to the full Commission. On January 31, 2000, the Commission issued an order concurring with the technical, substantive, and legal findings of the Licensing Board, but the Commission also determined that we were required to submit restoration action plans for each CUP project site and that we must proceed with the hearing process for the other New Mexico properties beyond Church Rock Section 8. Subsequently, the administrative hearing was held in abeyance until 2004, pursuant to NRC-supervised settlement negotiations between the parties.

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        In February 2004, the Licensing Board issued an order, which concluded that we must make three specific changes to our submitted restoration action plan for Church Rock Section 8 in order to commence mining operations at Church Rock Section 8. The Commission accepted our petition for review on two of the three issues and subsequently overruled the Licensing Board on these issues. Then, the parties agreed to truncate the number and scope of the issues remaining for consideration at the remaining three CUP project sites. Since then, the Licensing Board and the full Commission has endorsed our license and its requirements for the CUP.

        In summary, all contested issues regarding the CUP were decided by the Licensing Board in our favor, with a few minor amendments, and affirmed on appeal by the full Commission. Intervenors have appealed the Commission's final approved action to the United States Court of Appeals for the Tenth Circuit. We have intervened on behalf of NRC to defend the license. All required legal briefs have been filed in this proceeding and oral argument was held before the court on May 12, 2008. We are waiting for the Court to render a decision.

New Mexico UIC Permit

        The State of New Mexico, the USEPA, and the Navajo Nation are engaged in a jurisdictional dispute as to which regulatory entity (i.e., USEPA or the State of New Mexico) has the authority to issue Underground Injection Control ("UIC") program permits, which are required to mine the Church Rock Section 8 property. The dispute was taken to the United States Court of Appeals for the Tenth Circuit, which, in January 2000, remanded to the USEPA the issue whether the Section 8 Church Rock property was Indian Country. In February 2007, the USEPA issued a decision finding that the Church Rock Section 8 property is Indian country and that the USEPA is the proper authority to issue the UIC permit. We have appealed that decision to the United States Court of Appeals for the Tenth Circuit. The decision can be accessed at the USEPA Region 9 website at http://www.epa.gov/region09/water/groundwater/permit-determination.html. All required legal briefs have been filed in this proceeding and oral argument was held before the court on May 12, 2008. We are waiting for the Court to render a decision.

Bonding for Texas Groundwater Restoration Obligations

        In March 2004, the Company entered into the Groundwater Restoration Performance Agreement (GRPA), with the Texas Department of Health ("TDH"), later renamed the Texas Department of State Health Services ("DSHS"), the Texas Commission on Environmental Quality (TCEQ) and United States Fidelity and Guaranty Insurance Company as a means of funding the Company's ongoing groundwater restoration at the Kingsville Dome and Rosita mine sites at specified treatment rates, utilizing a portion of the Company's cash flow from sales of uranium from the Vasquez site as a substitute for additional bonding. Although Kleberg County and an ad hoc citizen group brought suit in April 2004 to challenge the GRPA, Kleberg County settled with the Company and withdrew its support and funding of the suit in December 2004. In June 2007, DSHS' regulatory authority over uranium recovery operations, including its oversight of groundwater restoration bonds posted for uranium mining operations was transferred to TCEQ; and, on August 31, 2007, the GRPA expired according to its terms. The citizen group has taken no further action to pursue the suit.

Dispute over Kleberg County Settlement Agreement

        In February 2007, Kleberg County, Texas advised the Company that the County had retained counsel to investigate its remedies, including injunctive relief against new uranium mining at the Company's Kingsville Dome mine site. The dispute relates to differing interpretations of the Company's December 2004 settlement agreement with Kleberg County as to the level of groundwater restoration the Company agreed to achieve in Kingsville Dome production areas 1 and 2. Seeking to resolve these issues amicably, the Company elected to defer briefly the startup of production at the new wellfield.

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When the negotiations failed, the Company notified the County of its intent to begin new production. The Company believes it is in full compliance and engaged in a mediation of this dispute. On September 28, 2007, after negotiations had stalled, the Company filed suit against the County for declaratory relief interpreting the Settlement Agreement. The County answered the suit with a general denial but has not asserted a counterclaim for relief against the Company. Neither party has pressed the matter further.

Kingsville Dome Production Disposal Well Permit renewals and Production Area Authorization 3

        After an August 2005 hearing, the Texas Commission on Environmental Quality ("TCEQ") voted unanimously February 22, 2006 to renew the Company's disposal well permits, WDW-247 and WDW-248, and to issue Kingsville Dome Production Area Authorization 3 ("PAA 3"). A citizens group and a Ms. Garcia filed for judicial review of the TCEQ action. The Texas Attorney General answered in defense of TCEQ and the Company has intervened to defend the TCEQ. The two cases have been consolidated; a judge has been assigned; and, in June 2007, the TCEQ submitted its administrative record for review.

        In June 2007 an attorney claiming to have been newly engaged by a plaintiff, Ms. Garcia, notified all parties that Garcia wished to withdraw from the litigation and requested that no further action be taken and her action was dismissed. On June 27, 2007, Garcia's original counsel moved to appoint a guardian or representative for Ms. Garcia. The Company challenged the sufficiency of the request for appointment of a guardian or representative for Ms. Garcia; and Ms. Garcia's original counsel set his motion for hearing in August 2007. Before the hearing date, original counsel for Ms. Garcia, tentatively rescheduled the hearing for October 24, 2007 and then canceled that hearing date. No further action on the matter has been scheduled.

        The permits and production area authorization issued by TCEQ remain effective until and unless overturned by a reviewing Court; and, the Company believes the TCEQ action issuing the permits and production area authorization is well-founded and will be affirmed when considered on the merits.

Navajo EPA letter and UNC/GE Demand for Indemnity

        By letter dated January 23, 2008, the Navajo Nation Environmental Protection Agency (NNEPA) sent a document dated September 2007 titled "Radiological Scoping Survey Summary Report for the Old Church Rock Mine Site" (Survey Report) to Hydro Resources Inc (HRI) and United Nuclear Corporation and General Electric (UNC/GE). The Survey Report was reportedly prepared in response to a claim by NNEPA against HRI and UNC/GE for potential liability for uranium contaminated materials present on HRI's Church Rock Mine Site. NNEPA requested HRI and UNC/GE to undertake a "comprehensive and detailed characterization" of HRI's Church Rock Mine Site and adjacent lease areas, as recommended in the Survey Report.

        By letter dated January 29, 2008, UNC and GE, pursuant to a certain Supplemental Purchase Agreement and Guarantee, demanded that HRI and Uranium Resources Inc (URI) defend and indemnify it for all loss, cost, expense, liabilities and obligations that have been or will be incurred or sustained by GE and UNC with respect to the request asserted by NNEPA.

        In response HRI/URI has committed with UNC and GE to perform a site assessment at its expense of the Old Church Rock Site for potential contamination from historic mining. In the event that a governmental authority issues a formal Administrative Order or files a lawsuit, the company and UNC will be considered to have reserved their respective rights and defenses to the indemnity claims, and will immediately seek and attempt to resolve, in good faith, any areas of dispute which may exist at that time.

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        Moreover, the Company has agreed with the Navajo Nation to perform a timely, detailed and comprehensive characterization of the Old Church Rock Site and lands adjacent to the site area. To that end, the Company and the Navajo have reached agreement on a characterization work plan. The work plan is planned during the spring of 2009 at a projected cost of $130,000.

Kingsville Dome Lessor Legal Action

        In June 2008 a suit for declaratory judgment titled, Saenz v. URI Inc., was filed in the 105^th Judicial District Court, Kleberg County, Texas by the owners of the mineral estate of property in Kleberg County, Texas leased to the Company, seeking a declaratory judgment that a certain lease is limited to one specific lot only and does not encompass other adjacent lands. The Company has a lease on the adjacent lands from the same mineral owners and has produced over 340,000 pounds of uranium from those lands in 2007 and 2008. The Company entered a general denial of the claims. On September 24, 2008 the mineral owners amended their suit to include a declaration that both of the leases held by the Company are not valid. The Company has entered a general denial and other specific defenses to the amended complaint. The Company has produced uranium from both leases. On November 5, 2008, the Company engaged in mediation with the plaintiffs but was unable to resolve the matter. The Plaintiffs filed a Motion for Summary Judgment alleging that the leases terminated prior to any production occurring. The Court denied the motion. A trial date has been set for June 1, 2009. The Company will defend the case vigorously. While the Company believes that each of the leases is valid, counsel to the Company is unable to predict the outcome of the litigation. A determination of the invalidity of the lease on the adjacent lands on which the Company has previously produced uranium could have a material adverse affect on the Company's financial condition.

Other

        On July 13, 2007, an employee of a drilling contractor engaged by the Company was killed when the drill rig on which he was making repairs backed over him on lands owned by the Company. At the time of the incident the Contractor and the Decedent were not engaged in drilling activities rather they were performing maintenance to the drilling rig. Decedent's heirs have filed claims against the drilling contractor and the Company in the 105^th Judicial District Court, Kleberg County, Texas asserting claims of negligence. We have filed a Denial of Plaintiff's claims. We have also filed a Motion for Summary Judgment seeking dismissal of the claims based on protections afforded landowners under the Texas Civil Practice and Remedies Code. The Court has yet to rule on the pending Motion. Our insurance carrier is defending the matter on our behalf. We believe we have meritorious defenses to the claims and that, in any event, we have adequate insurance to cover the matter.

        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.

        None.

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GLOSSARY OF CERTAIN URANIUM INDUSTRY TERMS

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PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

        Since April 12, 2007, our Common Stock has been listed on the NASDAQ Global Market under the symbol "URRE." Between April 11, 2007 and October 15, 2004, our shares were quoted on the Over the Counter Bulletin Board and we were dually quoted on both the OTCBB and the Pink Sheets during those dates.

        The following table sets forth the high and low bid prices for our Common Stock as reported on the applicable markets for the periods indicated:

        As of December 31, 2008, 55,955,549 shares of our Common Stock were outstanding. On that date, there were 139 holders of record.

        On March 29, 2006 the Board of Directors declared a 1 for 4 reverse stock split for stockholders of record on April 10, 2006. All of the common stock share information, share price information and share ownership information in this Annual Report on Form 10-K has been revised to give effect to the reverse stock split. The split was approved by the Company's Stockholders at the 2005 Annual Meeting of Stockholders.

Dividends

        We have never paid any cash or other dividends on our Common Stock, and we do not anticipate paying dividends for the foreseeable future.

Securities Authorized for Issuance Under Equity Compensation Plans

        The following table sets forth information as of December 31, 2008 regarding equity compensation to the Company's employees, officers and directors under equity compensation plans.

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Performance Graph

        The following chart compares the yearly changes in total stockholder return on the Company's common stock against two other measures of performance. The comparison is on a cumulative basis for the Company's last five fiscal years. The two other performance measures are the Russell 2000 index and a peer group consisting of Cameco—CCJ, Denison—DNN, Uranerz—URZ, and Uranium Energy—UEC. In each case, we assumed an initial investment of $100 on December 31, 2003 and reinvestment of all dividends. Dates on the following chart represent the last trading day of the indicated fiscal year.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN

Recent Sales of Unregistered Securities.

None.

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Item 6.    Selected Financial Data.

        The following tables provide selected financial and operating data for each of the fiscal years in the five-year period ended December 31, 2008. The selected financial and operating data set forth below should be read in conjunction with, and are qualified in their entirety by reference to, the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operation" and the Company's financial statements and related notes included elsewhere in this annual report. Historical results are not necessarily indicative of results to be expected in any future period.

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CONSOLIDATED BALANCE SHEET DATA

Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operation.

Forward Looking Statements

        This Item 7 contains "forward looking statements." These statements include, without limitation, statements relating to liquidity, financing of operations, continued volatility of uranium prices and other matters. The words "believes," "expects," "projects," "targets," "estimates" or similar expressions identify forward-looking statements. We do 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 our disclosures under the heading: "Risk Factors" beginning on page 9.

Overview

        URI explores for and produces uranium in South Texas where it has three production operations: Kingsville Dome, Vasquez and Rosita. URI also has an estimated 101.4 million pounds of in place mineralized uranium material on 183,000 acres in New Mexico. Our operations are heavily influenced by the price of uranium both on the spot and long-tem markets. The spot price of uranium, which has fluctuated from a high of $136/lb in June 2007 to its recent price level of $43.75/lb, has been the primary driver of the strategic decisions of the Company.

        Our strategy has been focused on two fronts: 1) advancing our New Mexico assets towards production, and 2) expanding our reserve base in Texas so we can continue to generate cash from operations to sustain our efforts in New Mexico.

        Throughout 2008, we have had to adjust our plans in response to changes in the uranium market. Operating margins from our production are impacted by uranium prices and costs. Although uranium prices escalated rapidly from 2004 to 2007, so did costs. In 2008, while prices declined, costs did not, leading to a significant decrease in margins. As a result, in October 2008 we decided to suspend new wellfield development at Kingsville and Rosita until sufficient margins can be made to justify the new investment required to bring on additional production.

        South Texas Production:    We produced 300,800 pounds of uranium from our South Texas operations in 2008. At December 31, 2008, we had only two operating wellfields remaining at Kingsville Dome that are expected to complete their production by the end of March 2009. Current activity at Kingsville Dome is primarily focused on the restoration of depleted wellfields. The last wellfield at Vasquez was fully depleted in October 2008 and the project is now undergoing restoration. Production from Rosita was started in June 2008, but was suspended in October 2008 due to poor economics driven by increased operating costs as a result of technical operating challenges and the decreased price of uranium.

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        The Company believes it has sufficient in-place mineralized uranium material to produce a total of 300,000 to 500,000 pounds U₃O₈ over a one to two year period should realized uranium prices recover to the level of $70 per pound U₃O₈, the current long-term uranium price. A new wellfield typically requires 4 to 5 months to install and 9 to 12 months to mine out. The Company has deferred all activities for delineating or developing wellfields until a stronger pricing environment is realized.

        Reserve development:    A significant portion of the cash on hand at December 31, 2008 was generated from the $12.9 million in net proceeds received from the sale of common stock and warrants in a private placement in May 2008. The equity was raised to fund the acquisition, exploration, permitting and development of new and existing properties in South Texas to increase our resource base in an effort to extend production at our Texas operations beyond 2009 and for general corporate purposes.

        During 2008, we conducted drilling activities on several of our exploration targets including 280 holes on the Marshall property, 100 holes at the South Rosita property and 13 holes on the Cooke property. We found significant mineralization on the Marshall property, however, further evaluations need to be completed to determine if this property can be mined by ISR methods. We also have completed some initial drilling on the Mosser property. At Kingsville, we conducted exploration drilling on our potential extension to Production Area Authorization 2 (known as PAA2 extension), but suspended drilling in the fourth quarter due to poor results. A preliminary program to identify additional reserves within Production Area 3 have had mixed results to-date and have been put on hold.

        Due to higher costs, combined with geologic and technical risk and unknown market risk, we have chosen to suspend our exploration activities until the economics justify further activity. We are seeking opportunities for the rights to potential uranium properties in South Texas in geographic areas that have historically held significant uranium resources. There is no assurance that we will be successful in the acquisition of such properties, or if acquired, that such properties will contain commercially viable uranium deposits.

Financial Condition and Results of Operations

Comparison of Twelve Months Ended December 31, 2008, 2007 and 2006

        Production and production costs.    Our uranium production was 300,800 pounds in 2008, 416,700 pounds in 2007 and 259,100 pounds in 2006. Production began at our Vasquez project in the fourth quarter of 2004 and reached peak production output in 2005. In 2006 and 2007 we saw a decline in Vasquez production and the start-up of production from our Kingsville Dome project. This trend continued in 2007 and 2008. The start-up of production from Kingsville Dome wellfield 13 in January 2007, the first new production from our Production Area 3 at Kingsville Dome resulted in the production increases in 2007 over our 2006 production output. In 2008, we placed five new wellfields into production at Kingsville Dome and one new wellfield at Vasquez. These wellfields were less prolific than the wellfields produced in 2007. Three of the Kingsville Dome wellfields and the Vasquez wellfields were produced out in 2008. The remaining two wellfields at Kingsville Dome are expected to complete production by the end of March 2009.

        Production at our Rosita project began with oxygen injection in June 2008 and resulted in low levels of production using our standard in-situ recovery mining techniques. In late July, we employed a series of alternative operational strategies including the use of various oxidants in an attempt to improve recovery levels. While these tests did improve production over previous levels, the higher cost of production combined with lower uranium prices did not allow the operation to continue on a positive cash basis and production was suspended in the 4^th quarter of 2008. Although technically challenging, we believe the reserves from Rosita can be produced economically with higher uranium prices.

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        We completed production at the Vasquez project and shut-in production at the Rosita project in the 4^th quarter of 2008 and we expect to shut-in production at the Kingsville Dome project by the end of March 2009. The Vasquez project was mined out in 2008 and is now being restored. At the Kingsville Dome and Rosita projects, we shut-in production to conserve the in-place reserve base in response to a drop in uranium market prices. We do not intend to resume production at these sites until there is a significant recovery of uranium prices.

        The following table details our production and production cost breakdown for the year ended December 31, 2008, 2007 and 2006:

        Total operating costs, total depreciation and depletion costs and total production costs incurred for the periods presented above differ from the cost of uranium sales recorded in consolidated statements of operations because of changes in the amounts recorded to inventory for the same periods. The cost of uranium sales amounts include the sales of uranium inventory on hand at the beginning of the period and does not include uranium produced during the period but not sold at period end.

        The following table provides a reconciliation of production costs to cost of uranium sales for the year ended December 31, 2008, 2007 and 2006:

        Our direct production costs in 2008 increased compared with 2007 costs. These total cost increases resulted from production being sourced from higher cost Kingsville Dome and Vasquez wellfields in 2008 and from the unfavorable results we saw from our Rosita production in the current year.

        Uranium Sales.    In 2008, we sold a total of 285,500 pounds of uranium produced from our Kingsville Dome, Vasquez and Rosita projects, resulting in revenue of $18.5 million. In 2007, we sold a total of 434,900 pounds of uranium produced from our Kingsville Dome and Vasquez projects, resulting

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in revenue of $31.1 million. In 2006, we sold a total of 263,000 pounds of uranium produced from our Kingsville Dome and Vasquez projects, resulting in revenue of $8.5 million.

        Cost of Uranium Sales.    Our direct production costs for uranium sales made in 2008, 2007 and 2006 was $13.9 million, $14.4 million and $11.4 million, respectively. The 2006 amounts were exclusive of a gain on derivatives of $34.8 million recorded in connection with our amended uranium sales contracts. Our total cost of uranium sales is comprised of such production costs, including operating expenses, depreciation and depletion expenses, and also includes royalties and commissions related to our uranium sales, amortization of our restoration and reclamation cost estimates, exploration costs incurred during the year and impairment provisions for uranium properties. The following table details our production and royalties/commissions cost of uranium sales breakdown for the years ended December 31, 2008, 2007 and 2006:

        Our Kingsville Dome, Vasquez and Rosita projects all experienced higher production costs in 2008 than our production from Kingsville Dome and Vasquez in 2007. The higher costs at Kingsville Dome and Vasquez were the result of production being sourced from lesser quality ore reserves and the wind-down of production at each of these projects during the year. As the production life of a wellfield extends, the costs to produce those pounds is higher than when a wellfield is first placed into production. Since no new capital expenditures were made in the latter part of the year to bring on new wellfields, there was no new lower cost production to offset the higher latter stage production we experienced at these two projects. The production difficulties we experienced at Rosita forced us to try a number of non-standard methodologies in an attempt to increase our production efficiencies. The costs incurred and the lack of significant progress in resolving our production inefficiencies at Rosita without committing to a capital expenditure program to increase the number of production wells resulted in our high production costs at Rosita during the year. Our average cost of pounds sold in 2008 was $48.60 per pound with Kingsville Dome production contributing approximately 85%, Vasquez pounds totaling approximately 12% and Rosita contributing approximately 3% of total pounds sold during the year.

        We saw an improvement in our overall production costs in 2007 compared with 2006. With the majority of our production in 2007 coming from new wellfields at our Kingsville Dome project, we saw benefits of this historically lower cost production contributing significantly to reducing both our operating and capital costs of production in 2007. Our average cost of pounds sold in 2007 was $33.21 per pound with Kingsville Dome production contributing approximately 77% and Vasquez pounds totaling approximately 23% of the total pounds sold during the year.

        Our average cost of pounds sold was $43.36 for 2006. These costs resulted from our incurring both higher operating and capital costs in 2006 and were primarily caused by inefficiencies at our Vasquez project. We encountered chemical and permeability obstacles in the Vasquez project's formation which caused us to attempt a variety of new operating techniques including the use of different oxidizing components and more concentrated drilling patterns for our wellfields. These and other attempted solutions did not have the desired effect of increasing the production rates and reducing our operating

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and capital costs at Vasquez. The cost of pounds sold includes operating expenses and depreciation and depletion. These costs for 2006 include a cumulative $1.5 million related to lower of cost or market inventory adjustments made quarterly. The adjustments resulted from the book carrying value of our uranium inventory exceeding the expected market value of the inventory. These adjustments had the effect of reducing the carrying value of the uranium inventory and accelerating the timing of recording operating expenses and depreciation and depletion recorded in the statement of operations for each quarter. The cost of goods sold for 2006 exclude $761,000 ($17.77 per pound) from a lower of cost or market adjustment made in December 2005 for 42,900 pounds of Vasquez inventory at that date that were sold in the first quarter of 2006.

        Royalties and Commissions.    During 2008, royalties and commissions for Kingsville Dome, Vasquez and Rosita production sold was $1.710 million, representing a charge of 9.2% of sales. During 2007, royalties and commissions for Vasquez and Kingsville Dome production sold was $3.034 million, representing a charge of 9.7% of sales. During 2006, royalties and commissions for Vasquez and Kingsville Dome production sold was $768,000, or 9.0% of sales. The changes in royalty percentages from 2008 to 2007 and 2006 resulted primarily from the changes in uranium sales prices year to year and the source for our production in each year. Our Vasquez leases contain a sliding scale royalty with percentages that range from 6.25% up to 10.25% dependent on our sales prices. The increase in royalties from 2006 to 2007 resulted from production activities in 2007 at our Kingsville Dome project from leases which have a 6.25% royalty and carry an additional 3.125% royalty payment to certain land owners of the property which have ratified lease agreements with the Company. Our Rosita leases contain 11.25% royalty rates.

        Operating Expenses.    During 2008, operating expenses for Kingsville Dome, Vasquez and Rosita production sold was $6.2 million. In 2008 we incurred $456,000 of stand-by costs at the Rosita project, which were charged to operations. During 2007, operating expenses for Vasquez and Kingsville Dome production sold was $7.9 million. In 2007 we incurred $336,000 of stand-by costs at the Rosita project, such costs were charged to operations. During 2006, operating expenses for Vasquez and Kingsville Dome production sold was $5.5 million. In 2006 we incurred $64,000 of stand-by costs at the Rosita project, such costs were charged to operations.

        Depreciation and Depletion.    During 2008, we incurred depreciation and depletion expense attributable to our Kingsville Dome, Vasquez and Rosita production of $7.2 million. During 2007, we incurred depreciation and depletion expense attributable to our Vasquez and Kingsville Dome production of $6.2 million. During 2006, we incurred depreciation and depletion expense attributable to our Vasquez and Kingsville Dome production of $5.8 million.

        Impairment of Uranium Properties.    During 2008, 2007 and 2006, we determined the carrying value of our uranium project assets exceeded their fair value as provided in SFAS 144 "Accounting for the Impairment or Disposal of Long-Lived Assets". Such determination in 2008 resulted in an impairment provision of $16.0 million. The impairment provision reduced the carrying value of Kingsville Dome by $6.0 million, Rosita by $8.1 million and Vasquez by $1.8 million at December 31, 2008. The impairment provision in 2007 and 2006 resulted primarily from our reducing the estimated recoverable reserves projected to be produced from Vasquez in the future and resulted in an impairment provision related to the Vasquez project assets of approximately $651,000 and $3.2 million in 2007 and 2006, respectively.

        Accretion and Amortization of Future Restoration Costs.    During 2008, 2007 and 2006, the accretion and amortization of future restoration costs was $790,000, $574,000 and $517,000, respectively.

        General and Administrative Charges.    We incurred general and administrative charges and corporate depreciation of $11.6 million, $11.8 million and $6.8 million in 2008, 2007 and 2006, respectively.

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        Significant expenditures for general and administrative expenses for year ended December 31, 2008, 2007 and 2006 were:

        The non-cash compensation expense recorded for the years ended December 31, 2008, 2007 and 2006 resulted from the adoption of SFAS 123(R) in January 2006, requiring the recognition of expense related to the Company's stock option grants. The value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected term of the option award and stock price volatility. The expected term of options granted was derived from historical data on our employee exercise and post-vesting employment termination experience. The expected volatility was based on the historical volatility of our stock.

        Salary and payroll costs were up slightly in 2008 compared with 2007. The $318,000, or 11% increase resulted primarily from increased personnel and benefits and a reduction in personnel costs allocated to operations and projects during the current year. Salary and payroll cost increases of $1.3 million in 2007 compared with resulted primarily from the addition of 21 salaried positions primarily in South Texas and New Mexico during the year and the cash bonus' awarded to non-executive employees at year end 2007.

        The Company's legal, accounting and public company expenses had a net decrease of $194,000 in 2008 compared with 2007. The decrease related to lower Sarbanes-Oxley Section 404 ("SOX 404") audit related costs in 2008 and NASDAQ listing fees, decreased directors' fees and costs related to the preparation for a planned listing on the Toronto Stock Exchange incurred in 2007. The Company's legal, accounting and public company expenses had a net increase of $306,000 in 2007 compared with 2006. The primary increases in these costs were from SOX 404 audit related costs, NASDAQ listing fees, higher directors fees related to the addition of two independent directors during 2007 and an increased directors participation in strategic planning activities and costs related to the preparation for a planned listing on the Toronto Stock Exchange. These increased costs were somewhat offset by a reduction of legal costs charged to general and administrative costs during the year. The primary reduction related to a significant amount of legal activity in 2006 related to the negotiation and preparation of the joint venture in New Mexico with Itochu Corporation. The Company's legal, accounting and public company expenses increased for the year from the increase in transactions and activities occurring in 2006 compared to 2005. Such activities included the renegotiation of the Company's long-term sales contracts, the negotiation of a joint venture in New Mexico with Itochu Corporation, increased costs to conduct the annual shareholder meeting, an increase in the number of Board of Directors meetings and preparation of the Company's NASDAQ application listing.

        Insurance costs increased in 2008 compared to 2007 primarily as a result of an increase in our directors and officers liability premiums which rose during the year primarily as a result of increased

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coverage limits in 2008 compared with the prior year. Insurance costs increased in 2007 compared to 2006 primarily as a result of an increase in our general liability premiums, these premiums rose during the year as a result of increases in production activities seen in 2007 compared with the prior year. We also had increases in our property and casualty premiums resulting from increased vehicle coverage because additional vehicles acquired in 2007. Bank fees also increased in 2007 as a result of additions made to our financial surety requirements for our South Texas uranium projects.

        The 2008 costs for consulting and professional services decreased by $101,000 compared with 2007 and was related primarily to a reduction in costs for financial advisory services provided by a non-employee director of the Company in 2007 ($80,000). The 2007 costs for consulting and professional services increased by $1.0 million compared with 2006. The increased costs were a result of heightened activities involving work performed to review and assess our New Mexico property data bases for their evaluation as potential conventional mining projects ($160,000), the expansion of a broad community relations and community information education effort in both South Texas and New Mexico ($521,000), investor relations costs ($104,000), costs for financial advisory services provided by a non-employee director of the Company ($80,000) and other advisory fees in Texas ($150,000).

        Increased office costs in 2008 compared with 2007 resulted primarily from the full year costs of the Lewisville, Texas and Albuquerque, New Mexico offices offset by cost reductions realized by the closure of the Corpus Christi office mid-year 2008. Increased office costs in 2007 compared with 2006 resulted primarily from the opening of a new corporate office location in Albuquerque, New Mexico, in October, 2007, the move of the corporate headquarters to larger office space in September 2007, the costs for the Corpus Christi office for the entire year and increases in the South Texas Kingsville operations office resulting from the personnel added during the year.

        Write-off of Target Acquisition Costs.    In June 2008, the Company and Billiton Investment 15 B.V. agreed to terminate our agreement to purchase Rio Algom Mining, LLC, which was entered into on October 12, 2007. In connection with the targeted acquisition, we incurred costs of $1.4 million dollars which were originally recorded as a pre-acquisition cost asset. Upon the termination of the agreement these pre-acquisition costs were expensed in 2008.

        Net Income (Loss).    For the year ended December 31, 2008 we had a net loss of $26.5 million compared to a net income of $1.1 million in 2007 and net income of $21.5 million in 2006. On a diluted per share basis, losses were ($0.49) in 2008 compared with earnings of $0.02 and $0.42 in 2007 and 2006, respectively. The 2008 results include an impairment provision for the Kingsville Dome, Vasquez and Rosita projects of $16.0 million and exploration charges of $1.6 million. The 2007 results include an impairment provision for the Vasquez project of $651,000 and exploration charges of $347,000. Included in 2006 results was a non-cash gain on derivatives of $34.8 million somewhat offset by a non-cash impairment provision for the Vasquez project of $3.3 million and exploration charges of $235,000.

        Cash Flow.    As of December 31, 2008 we had a cash balance of approximately $12.0 million compared with approximately $9.3 million and $20.2 million at December 31, 2007 and 2006, respectively.

        In 2008, we raised net proceeds of approximately $12.8 million through the sale of 3,295,920 shares at $4.34 per share in May 2008 and $183,000 from the issuance of 169,250 shares from the exercise of employee stock options.

        In 2008, we generated $1.0 million of cash flow from operations, resulting from our uranium production activities during the year.

        We also used $11.0 million in investing activities, including $8.4 million of capital additions for our South Texas production projects. These expenditures primarily consisted of wellfield evaluation,

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delineation and development costs of $2.8 million and plant and equipment additions of $634,000 at Kingsville Dome. Wellfield evaluation and development costs were $2.4 million and plant and equipment additions totaled $1.9 million at the Rosita project during 2008. Costs at the Vasquez project were $355,000 in 2008 and were primarily for wellfield development and land holding costs and we spent approximately $478,000 for evaluation and delineation activities at the Company's Rosita South project during 2008.

        In 2007, we generated $11.3 million of cash flow from operations, resulting primarily from our increased production and reduced production costs realized incurred during the year.

        We also used $22.9 million in investing activities, including $15.7 million of capital additions for our main South Texas projects. These expenditures primarily consisted of wellfield evaluation, delineation and development costs of $6.5 million and plant and equipment additions of $1.3 million at Kingsville Dome. Wellfield evaluation and development costs were $2.6 million and plant and equipment additions totaled $1.8 million at the Rosita project during 2007. Costs for wellfield development and plant and equipment totaled $1.2 million at the Vasquez project in 2007 and we spent approximately $1.3 million for evaluation and delineation activities at the Company's Rosita South project.

        In 2007, we generated $1.0 million from the issuance of 514,000 shares from the exercise of employee stock options.

        In 2006, we had a negative cash flow from operations of $2.2 million, resulting primarily from our low production volumes coupled with high production costs incurred during the year. We also used $31.9 million in investing activities, the largest component of which was the payment of $12.0 million to one of our customers in connection with the restructuring of our uranium sales contract. Other significant investing activities were for production start-up capital at Kingsville Dome of $10.4 million, additional wellfield development at Vasquez of $3.4 million, Rosita project expenditures of $2.8 million, other Texas property and other assets of $1.7 million and other property additions in New Mexico of $396,000.

        In 2006, we raised net proceeds of approximately $48.2 million through the sale of 10,200,307 shares at $4.90 per share in April 2006 and $458,000 from the issuance of 229,000 shares from the exercise of employee stock options.

Liquidity—Cash Sources and Uses for 2009

        As of December 31, 2008, the Company had $12.0 million in cash. A significant portion of the cash on hand at December 31, 2008 was generated from the $12.8 million in net proceeds received from the sale of common stock and warrants in a private placement in May 2008.

        The Company generated $1.0 million in cash from operations during 2008. Given falling sales prices coupled with higher production costs, the company decided to suspend the development of new wellfields at Kingsville Dome and Rosita as of October 2008. As such, sales revenue for the Company will be limited to the remaining production that is expected to be completed by the end of March 2009.

        In the second half of 2008, we took significant steps to decrease our cost structure by implementing tighter spending controls, closing two offices, reducing employment, limiting exploration activities, and reducing public and government relations activities in New Mexico and Texas. Our objective is to reduce our cash requirements to a level that allows us to sustain our reclamation activities and continue the requisite activities in New Mexico to advance our projects toward production without needing outside sources of capital over the next eighteen to twenty-four months.

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        During 2008, we invested $10.5 million primarily for exploration and development on our South Texas Properties and $296,000 on activities associated with evaluation, analysis and preservation of the New Mexico data we own related to our New Mexico uranium properties.

Derivative Financial Instruments

        The Company determined that its original long-term uranium sales contracts met the definition of derivative financial instruments for financial statement reporting purposes and are recorded on the balance sheet at fair value at December 31, 2005.

        The Company amended these contracts in March 2006 and determined that the terms of the amended contracts substantially eliminated their qualification as derivatives.

        We recorded a gain on derivatives in 2006 of $34.8 million compared to a loss of $30.9 million in 2005. The gain in 2006 resulted from March 2006 amended sales contracts. The terms of such contracts are summarized in "Business—Long Term Delivery Contracts".

Contingent Liabilities

        In May 2008, the Company completed the sale of 3,295,920 shares of common stock to accredited investors at a price of $4.34 per share and warrants to purchase 988,771 additional shares of common stock, at a price of $5.78. These warrants expire 60 months after issuance and are exercisable immediately. In addition, ratchet warrants to purchase shares of common stock at $0.01 per share were issued as part of the private placement. The ratchet warrants are triggered and become immediately exercisable in the event that the Company should issue shares of Common Stock at a price below $4.34 per share. The number of shares that may be purchased upon the exercise of the ratchet warrants is determined by a formula that results in the effective price paid by the investors in this offering being equal to the price paid in a subsequent below $4.34 per share offering. The ratchet warrants expire on the earlier of 12 months following issuance, or ten days after the consummation of the sale of shares of the Company's common stock which raises in one or more transactions at least $80 million in gross proceeds.

        The Company has filed a registration statement under the Securities Act of 1933, as amended, to register the resale of the shares. Such shares are subject to certain resale registration rights that would include penalties in the event the registration statement fails to remain effective. At December 31, 2008, the Company's registration statement was and remains effective.

Off Balance Sheet Arrangements

        The Company has obtained financial surety relating to certain of its future restoration and reclamation obligations as required by the State of Texas regulatory agencies. The Company has bank Letters of Credit (the "L/C's) and performance bonds issued for the benefit of the Company to satisfy such regulatory requirements. The L/C's were issued by Bank of America and the performance bonds have been issued by United States Fidelity and Guaranty Company ("USF&G"). L/C's for $5,629,000, $5,360,000 and $2,072,000 at December 31, 2008, 2007 and 2006, respectively such L/C's are collateralized in their entirety by certificates of deposit.

        Performance bonds totaling $2,835,000 were issued for the benefit of the Company at December 31, 2008, 2007 and 2006. USF&G has required that the Company deposit funds collateralizing a portion of the bonds. The amount of bonding issued by USF&G exceeded the amount of collateral by $2.5 million at December 31, 2008, 2007 and 2006, respectively. In the event that USF&G is required to perform under its bonds or the bonds are called by the state agencies, the Company would be obligated to pay any expenditure in excess of the collateral.

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Critical Accounting Policies

        Our significant accounting policies are described in Note 2 to the consolidated financial statements on page F-8 of this Form 10-K. We believe our most critical accounting policies involve those requiring the use of significant estimates and assumptions in determining values or projecting future costs.

        Specifically regarding our uranium properties, significant estimates were utilized in determining the carrying value of these assets. These assets have been recorded at their estimated net realizable value for impairment purposes on a liquidation basis, which is less than our cost. The actual value realized from these assets may vary significantly from these estimates based upon market conditions, financing availability and other factors.

        Regarding our reserve for future restoration and reclamation costs, significant estimates were utilized in determining the future costs to complete the groundwater restoration and surface reclamation at our mine sites. The actual cost to conduct these activities may vary significantly from these estimates.

        Such estimates and assumptions 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 expenses during the reporting period.

        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.

Impact of Recent Accounting Pronouncements

        Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock.    In June 2008, the FASB issued EITF Issue No. 07-5, EITF 07-Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity's Own Stock ("EITF 07-5") which is effective for financial statements for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Issue addresses the determination of whether an instrument (or an embedded feature) is indexed to an entity's own stock, which would qualify as a scope exception under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. EITF 07-05 does not permit early adoption for an existing instrument. The Company has not completed its analysis of these instruments nor determined the effects of pending adoption, if any, on its financial statements.

        Derivative Instruments and Hedging Activities.    In March 2008, the FASB issued SFAS No. 161 "Disclosures about Derivative Instruments and Hedging Activities an amendment of FASB Statement No. 133". The new standard requires additional disclosures regarding a company's derivative instruments and hedging activities by requiring disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. The standard is effective for our fiscal year and interim periods within such year, beginning January 1, 2009, with early application encouraged. The impact from this standard is not expected to have a material impact on our current disclosures.

        Noncontrolling Interests in Consolidated Financial Statements.    In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51," which establishes new standards governing the accounting for and reporting of noncontrolling interests (NCIs) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs (previously referred to as minority interests) be treated as a separate component of equity, not as a liability; that increases and decrease in the parent's ownership interest that leave control intact be treated as equity transactions, rather than as step acquisitions or dilution gains or losses; and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. This standard also requires changes to certain presentation and disclosure requirements. SFAS No. 160 is effective beginning January 1, 2009. The provisions of the standard are to be applied to all

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NCIs prospectively, except for the presentation and disclosure requirements, which are to be applied retrospectively to all periods presented. The Company does not expect the future impacts and disclosures of this standard to have a material effect on its financial statements or disclosures.

        Business Combinations.    In December 2007, the FASB issued SFAS No. 141R, "Business Combinations," which changes how business acquisitions are accounted for. SFAS No. 141R requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction and establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed in a business combination. Certain provisions of this standard will, among other things, impact the determination of acquisition-date fair value of consideration paid in a business combination (including contingent consideration); exclude transaction costs from acquisition accounting; and change accounting practices for acquired contingencies, acquisition-related restructuring costs, in-process research and development, indemnification assets, and tax benefits. SFAS No. 141R is effective for business combinations and adjustments to an acquired entity's deferred tax asset and liability balances occurring after December 31, 2008. The Company does not expect a material impact upon adoption, and will apply SFAS No. 141R to any future acquisitions as they occur.

        Fair Value Option for Financial Assets and Liabilities.    In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities," which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We have adopted SFAS 159 and we do not plan to implement the fair value option provided in SFAS No. 159.

        Fair Value Measurements.    In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which provides a common definition for the measurement of fair value for use in applying generally accepted accounting principles in the United States of America and in preparing financial statement disclosures. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We adopted SFAS No. 157, on January 1, 2008, and did not have a material impact on our financial condition, results of operations or cash flows. On February 8, 2008, the FASB issued Staff Position 157-2, "Effective Date of FASB 157" (FSP 157-2) which partially deferred the provisions of FAS 157 to annual periods beginning after November 15, 2008 for non-financial assets and liabilities. Non-financial assets include fair value measurements associated with business acquisitions and impairment testing of tangible and intangible assets. We do not believe the adoption of SFAS 157 will have a material effect on our non-financial assets and liabilities in our consolidated financial statements.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

Uranium Price Volatility

        The Company is subject to market risk related to the market price of uranium. The Company's cash flow has historically been dependent on the price of uranium, which is determined primarily by global supply and demand, relative 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 producing and consuming countries and production levels and costs of production of other producing companies.

        The spot market price for uranium has demonstrated a large range since January 2001. Prices have risen from $7.10 per pound at January 2001 to a high of $136.00 per pound as of June 2007 and are $43.75 as of March 2, 2009.

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Derivative Financial Instruments

        The Company determined that its original long-term uranium sales contracts met the definition of derivative financial instruments for financial statement reporting purposes and are recorded on the balance sheet at fair value at December 31, 2005.

        The Company amended these contracts in March 2006 and determined that the terms of the amended contracts substantially eliminated their qualification as derivatives.

        We recorded a gain on derivatives in 2006 of $34.8 million compared to a loss of $30.9 million in 2005. The gain in 2006 resulted from March 2006 amended sales contracts. The terms of such contracts are summarized in "Business—Long Term Delivery Contracts".

Item 8.    Financial Statements and Supplementary Data.

Financial Statements

        The financial statement information called for by this item appears on pages F-1 through F-32.

Supplementary Financial Data Tables

SUPPLEMENTARY FINANCIAL DATA

(UNAUDITED)

(1)

Unaudited quarterly results.

(2)

Net earnings (loss) per common share information reflects the effect of a reverse 1 for 4 stock split made effective April 11, 2006.

Item 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

        None.

Item 9A.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

        The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its filings with the Securities and Exchange Commission (SEC) are recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In designing and evaluating the disclosure controls and procedures, management has recognized that any controls and procedures, no matter how well designed and operated, can provide only

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reasonable assurance of achieving the desired control objectives, and management is required to apply judgment in evaluating its controls and procedures.

        During the fiscal period covered by this report, the Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have certified that our disclosure controls and procedures were effective as of December 31, 2008.

Management's Report on Internal Control Over Financial Reporting

        Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is designed, under the supervision of the Company's Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). The Company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

        The Company conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2008. This evaluation was based on the framework in "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

        Based on the Company's evaluation under the framework in Internal Control—Integrated Framework, our Chief Executive Officer and Chief Financial Officer concluded that internal control over financial reporting was effective as of December 31, 2008.

        The Company's independent auditors, Hein & Associates, LLP, with direct access to the Company's Board of Directors through its Audit Committee, have audited the consolidated financial statements prepared by the Company. Their report on the consolidated financial statements is included in Part II, Item 8. Financial Statements and Supplementary Data. Hein & Associates, LLP's report on the Company's internal control over financial reporting appears on the following page.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Uranium Resources, Inc.
Lewisville, TX 75067

        We have audited Uranium Resources, Inc.'s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Uranium Resources, Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, Uranium Resources, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Uranium Resources, Inc. as of December 31, 2008 and 2007, and the related consolidated statements of operations, shareholders' equity, and cash flows for each of the three years ending December 31, 2008 and our report dated March 10, 2009 expressed an unqualified opinion.

HEIN & ASSOCIATES LLP

Dallas, Texas
March 10, 2009

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Item 9B.    Other Information.

        None.

PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

        The information required by this item is incorporated by reference in our definitive proxy statement for the 2009 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2008.

Item 11.    Executive Compensation.

        The information required by this item is incorporated by reference in our definitive proxy statement for the 2009 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2008.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

        The information required by this item is incorporated by reference in our definitive proxy statement for the 2009 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2008.

Item 13.    Certain Relationships and Related Transactions and Director Independence.

        The information required by this item is incorporated by reference in our definitive proxy statement for the 2009 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2008.

Item 14.    Principal Accountant Fees and Services.

        The information required by this item is incorporated by reference in our definitive proxy statement for the 2009 Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2008.

PART IV

Item 15.    Exhibits and Financial Statement Schedules.

        See Index to Exhibits on page E-1 for a listing of the exhibits filed as part of this Annual Report.

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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 11, 2009

        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.

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URANIUM RESOURCES, INC. AND CONSOLIDATED SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements For The Years Ended December 31, 2008, 2007 and 2006