WESTWATER RESOURCES, INC. - Annual Report: 2015 (Form 10-K)

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)

(303) 531-0470

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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 x

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 x

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes x  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and a “smaller reporting company” 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 x

The aggregate market value of the Common Stock held by non-affiliates of the Registrant at June 30, 2015, was approximately $21,000,000. Number of shares of Common Stock, $0.001 par value, outstanding as of March 18, 2016 was 5,159,717 shares.

DOCUMENTS INCORPORATED BY REFERENCE

None.

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URANIUM RESOURCES, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2015

TABLE OF CONTENTS

GLOSSARY OF CERTAIN URANIUM INDUSTRY TERMS

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PART I  

9

ITEM 1.    DESCRIPTION OF BUSINESS.

9

THE COMPANY

9

OUR STRATEGY

9

RECENT CORPORATE DEVELOPMENTS

9

OVERVIEW OF THE URANIUM INDUSTRY

11

COMPETITION

11

OVERVIEW OF URI PROJECTS

12

THE ISR PROCESS

13

ENVIRONMENTAL CONSIDERATIONS AND PERMITTING

13

AVAILABLE INFORMATION

18

ITEM 1A. RISK FACTORS

18

ITEM 1B. UNRESOLVED STAFF COMMENTS

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ITEM 2.    PROPERTIES

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PROCESSING FACILITIES

29

REPUBLIC OF TURKEY EXPLORATION AND DEVELOPMENT PROJECTS

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SOUTH TEXAS PROPERTIES AND EXPLORATION PROJECTS

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NEW MEXICO PROJECTS

45

OTHER

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WORK COMPLETED ON PROPERTIES IN 2015

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INFRASTRUCTURE

55

INSURANCE

55

RECLAIMED PROPERTIES

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ITEM 3.   LEGAL PROCEEDINGS

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NAVAJO NATION CIVIL TRESPASS VIOLATION AND TEMPORARY ACCESS AGREEMENT

56

DISPUTE OVER KLEBERG SETTLEMENT AGREEMENT

56

NAVAJO EPA LETTER AND UNC/GE DEMAND FOR INDEMNITY

57

LITIGATION BY FORMER CONTRACTOR

57

TCEQ ADJUDICATORY PROCEEDING FOR THE KINGSVILLE FACILITY

58

OTHER

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ITEM 4.  MINE SAFETY DISCLOSURES

58

PART II  

58

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

58

STOCK PRICE INFORMATION

58

DIVIDENDS

59

ITEM 6.   SELECTED FINANCIAL DATA

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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

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INTRODUCTION

60

RECENT DEVELOPMENTS

60

RESULTS OF OPERATIONS

61

FINANCIAL POSITION

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

66

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

67

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

67

CONSOLIDATED BALANCE SHEETS

68

CONSOLIDATED STATEMENTS OF OPERATIONS

69

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

70

CONSOLIDATED STATEMENTS OF CASH FLOWS AND SUPPLEMENTAL CASH

FLOW INFORMATION

71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE.

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ITEM 9A. CONTROLS AND PROCEDURES

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EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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ITEM 9B. OTHER INFORMATION

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PART III

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ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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DIRECTORS OF THE COMPANY

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EXECUTIVE OFFICERS OF THE COMPANY

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

97

CODES OF ETHICS

97

IDENTIFICATION OF AUDIT COMMITTEE AND FINANCIAL EXPERT

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ITEM 11.  EXECUTIVE COMPENSATION.

98

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

98

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

101

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

103

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

105

PART IV

106

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

106

SIGNATURES

108

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GLOSSARY OF CERTAIN URANIUM INDUSTRY TERMS

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USE OF NAMES

In this Annual Report on Form 10-K, unless the context otherwise requires, the terms “we”, “us”, “our”, “URRE”, “URI”, “Corporation”, or the “Company” refer to Uranium Resources, Inc. and its subsidiaries.

CURRENCY

The accounts of the Company are maintained in U.S. dollars. All dollar amounts in referenced in this Annual Report on Form 10-K and the consolidated financial statements are stated in U.S. dollars.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

With the exception of historical matters, the matters discussed in this report are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from projections or estimates contained herein. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, without limitation, statements regarding the adequacy of funding for the Company through the first quarter of 2016, the timing or occurrence of any future drilling or production from the Company’s properties, the ability of the Company to acquire additional properties or partner with other companies, the Company’s anticipated cash burn rate and capital requirements, and the outcome of developments with the Navajo Nation Council. Words such as “may,” “could,” “should,” “would,” “believe,” “estimate,” “expect,” “anticipate,” “plan,” “forecast,” “potential,” “intend,” “continue,” “project” and variations of these words, comparable words and similar expressions generally indicate forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or implied by these forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, among others:

•

the availability of capital to URI;

•

the spot price and long-term contract price of uranium;

•

risks associated with our foreign operations;

•

the ability of URI to enter into and successfully close acquisitions or other material transactions, including without limitation the anticipated transaction with Laramide Resources;

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•

government regulation of the mining industry and the nuclear power industry in the United States and the Republic of Turkey;

•

legislation and other actions by the Navajo Nation;

•

operating conditions at our mining projects;

•

the world-wide supply and demand of uranium;

•

weather conditions;

•

unanticipated geological, processing, regulatory and legal or other problems we may encounter;

•

currently pending or new litigation; and

•

timely receipt of mining and other permits from regulatory agencies

For a more detailed discussion of such risks and other important factors that could cause actual results to differ materially from those in such forward-looking statements and forward-looking information, please see “Item 1A. Risk Factors” below in this Annual Report on Form 10-K. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements and forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that these statements will prove to be accurate as actual results and future events could differ materially from those anticipated in the statements. Except as required by law, we assume no obligation to publicly update any forward-looking statements and forward-looking information, whether as a result of new information, future events or otherwise.

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PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

THE COMPANY

Uranium Resources, Inc. is a uranium exploration, development and production company. We were organized in 1977 to acquire and develop uranium projects in South Texas using the ISR process. Following our acquisition of Anatolia Energy Limited (“Anatolia Energy”), we are focused on advancing to near-term production the Temrezli ISR project in Turkey. URI also controls extensive exploration properties under nine exploration and operating licenses covering approximately 32,000 acres with numerous exploration targets, including the potential satellite Sefaatli project, which is 30 miles southwest of the Temrezli project. We have historically produced uranium by ISR methods in the state of Texas where we currently have ISR projects and two licensed processing facilities. We also have approximately 190,000 acres of mineral holdings in the prolific Grants Mineral Belt of the State of New Mexico, a portion of which we have entered into a binding letter of intent to sell, and 14,000 acres in the South Texas uranium province. URI acquired these properties over the past 25 years along with an extensive information database of historic drill-hole logs and analysis. None of URI’s properties are currently in production.  As of March 18, 2016 we had 40 employees.

OUR STRATEGY

Our vision is to become a leading uranium developer and producer. Our strategy is to build value for stockholders by advancing our projects towards production when uranium markets improve, while prudently managing our cash and liquidity position for financial flexibility. In Turkey, our focus is on advancing to near-term production the Temrezli project with construction for the project anticipated to begin in 2017, subject to the receipt of permits, land access and project financing.  In Texas, our focus is to add quality mineral resources for our licensed Kingsville Dome ISR processing facility by means of advancing our projects in South Texas with drilling, value accretive acquisitions, operating/processing agreements and/or the evaluation of exploration prospects. In New Mexico, we continue to assess the potential for the development of our larger scale projects on a standalone basis or with partners. At any time we may have acquisition or partnering opportunities in various stages of active review, including, for example, our engagement of consultants and advisors to analyze particular opportunities, analysis of technical, financial and other confidential information, submission of indications of interest, participation in preliminary discussions and negotiations and involvement as a bidder in competitive processes.

We expect to complete an updated pre-feasibility study on the Temrezli project in the fourth quarter of 2016.  This will enable us to finalize and submit permit applications at that time.  Because much of the permitting process runs in parallel with our technical work, we can expect permit approvals mid-year 2017.   

Our pipeline of projects is prioritized as near-term, mid-term and long-term projects with a goal of achieving sustainable production over time. Amidst the prevailing low uranium price environment, we continue to balance cash conservation with maintaining readiness to fast track resumption of production at such time as uranium prices show sufficient improvement. We continually adjust near-term and long-term business priorities in accordance with market conditions.

RECENT CORPORATE DEVELOPMENTS

Reverse Stock Split

On March 7, 2016, following the close of trading, URI affected a one-for-twelve reverse split of its common shares.  The consolidated common shares began trading on a split-adjusted basis as of March 8, 2016.  On February 11, 2016, at a special meeting of stockholders, URI received approval for a charter amendment permitting URI to affect a reverse split.  The primary purpose of the reverse split was to bring URI into compliance with the Nasdaq’s $1.00 minimum bid price requirement to maintain URI’s stock listing on Nasdaq.

The reverse split reduced the number of URI’s outstanding common stock from 61,820,734 shares to 5,151,692 shares of common stock.  In addition, effective upon the reverse stock split, the number of authorized shares of URI’s common stock was reduced from 200 million to 100 million.  No fractional shares were issued as a result of the reverse stock split.  Any fractional shares that would have resulted will be settled in cash.

All share data herein has been retroactively adjusted for the reverse stock split.

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Option Agreement with Aspire Capital

On February 3, 2016, URI and Aspire Capital entered into an option agreement by which Aspire Capital granted to URI the right at any time or times prior to April 30, 2017 to require Aspire Capital to enter into up to two common stock purchase agreements, each having a term of up to 24 months and collectively requiring Aspire Capital to purchase up to $10 million in the aggregate of URI’s common stock (or such lesser amount as URI may determine) on an ongoing basis when required by URI. As consideration for Aspire Capital entering into the option agreement, URI issued 75,000 shares of its common stock to Aspire Capital.

Registered Direct Offerings

On February 4, 2016, URI completed a registered direct offering for gross proceeds of $838,000.  Net proceeds to URI, after deducting offering expenses, were approximately $0.8 million.  URI sold 296,667 shares of common stock at a price of $2.82 per share.

On December 18, 2015, URI completed a registered direct offering for gross proceeds of $1.0 million.  Net proceeds to URI, after deducting agent fees and offering expenses, were $0.7 million.  URI sold 208,333 shares of common stock at a price of $4.80 per share.

On March 6, 2015, URI completed a registered direct offering for gross proceeds of $6.0 million.  Net proceeds to URI, after deducting agent’s fees and offering expenses, were $5.4 million.  URI sold 333,333 units at a price of $18.00 per unit, with each unit comprised of one share of URI’s common stock and a warrant to purchase 0.55 shares of common stock at an exercise price of $24.00 per whole share.  The warrants are exercisable for a period of five years beginning on the six-month anniversary of original issuance and ending on a date that five years after the first date of exercisability.

Acquisition of Anatolia Energy Limited

On November 9, 2015, URI completed the acquisition of Anatolia Energy, an Australian public company, pursuant to the scheme implementation agreement between the parties dated June 3, 2015 (the “Anatolia Transaction”). Upon the closing of the Anatolia Transaction, URI issued approximately 1.7 million URI shares, 0.6 million replacement options and replacement performance shares to holders of Anatolia Energy’s securities, and Anatolia Energy became a wholly-owned subsidiary of URI. Immediately after the closing of the Anatolia Transaction, the former Anatolia Energy shareholders held approximately 40% of the outstanding common stock of the combined company (or approximately 43% on a fully diluted basis), and the shares of common stock held by continuing URI shareholders represented approximately 60% of the outstanding common stock of the combined company.

Enhanced Path to Production

We strengthened our path to production with completion of the Anatolia Transaction. We acquired the near-term Temrezli ISR project, including extensive exploration properties under nine exploration and operating licenses covering approximately 44,700 acres with numerous exploration targets, including the potential satellite Sefaatli project, which is 25 miles southwest of the Temrezli project.  

Laramide Asset Sale

On November 9, 2015, URI entered into a letter of intent (“LOI”) with Laramide Resources for the sale of URI’s Churchrock and Crownpoint properties in New Mexico. Under the terms of the LOI, URI and certain of its subsidiaries have agreed, subject to the execution of definitive documentation, to transfer ownership of the Churchrock and Crownpoint properties to Laramide Resources or its subsidiaries. In exchange, URI will receive from Laramide Resources at closing, cash in the amount of $5.25 million and a note receivable in the amount of $7.25 million payable in three equal installments over the next three years. Laramide Resources will also assume any liabilities related to reclamation and remediation on the subject lands. Closing of the transaction is expected to occur during the first half of 2016, subject to financing and other customary conditions, including applicable regulatory approvals.

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Energy Fuels Asset Sale

On June 28, 2015, we completed the sale of our remaining Roca Honda project assets to Energy Fuels Inc. for $2.5 million in cash, $375,000 in Energy Fuels Inc.’s NYSE MKT-listed shares (amounting to 76,455 UUUU shares) plus other non-cash consideration.  The transaction with Energy Fuels Inc. closed on July 31, 2015.

Reclamation progress at the Rosita project.   

We completed the plugging and abandonment phase of reclamation at our Rosita project during 2015.  We are currently performing surface reclamation activities at the Rosita project and are approximately 45% complete in Production Area 1 and 55% complete in Production Area 2.

Exploration Drilling and Data Purchase   

On March 23, 2015, we reported that all five drill holes from a completed preliminary drill program at the Butler Ranch project in South Texas encountered multiple zones of anomalous to low-grade levels of uranium mineralization.  In July 2015, we acquired an extensive data set containing historical mineral resource estimates as well as over 2,000 drill logs, geologic and other data for the Butler Ranch project.  

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 ("WNA"), as of January 2016, there were 396 nuclear reactors operable worldwide, excluding the 43 idled reactors in Japan, with annual requirements of about 147.5 million pounds of uranium. In addition, the WNA lists 66 reactors under construction, 158 being planned and 330 being proposed.

Worldwide uranium production or primary supply in 2016 is estimated by UxC Consulting in its Q4 2015 report at 163 million pounds. This is compared with 151 million pounds of primary supply in 2015. Using estimates from WNA, estimated global uranium demand was 148 million pounds in 2015.

Spot prices rose from $21.00 per pound in January 2005 to a high of $136.00 per pound in June 2007 in anticipation of sharply higher projected demand as a result of a resurgence in nuclear power and the depletion or unavailability of secondary supplies. The sharp price increase was driven in part by high levels of buying by utility companies, 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 on uranium prices since the third quarter of 2007. A rebound in uranium prices in conjunction with a recovery in commodities in 2010 was curtailed by the Fukushima disaster in Japan.

In 2015, the average weekly spot price of uranium was $36.83 per pound compared with $35.50 in 2014 and $39.00 per pound in 2013. In 2015, the weekly spot price of uranium reached a high of $39.50 per pound in March while the low for the year was $33.75 per pound in December. The year end 2015 spot price was $34.25 per pound. As of March 14, 2016, the weekly spot price was $28.75 per pound and the long-term contract price was $44.00 per pound.

Many analysts are calling for improved uranium prices over the mid-term from a supply deficit as uranium market fundamentals for supply and demand improve.  Secondary supply inventories are being drawn down. Demand for uranium is expected to improve over the mid-term from an increase of nuclear power generation in China, and to a lesser extent, India, Russia and other countries. Potential catalysts supportive of uranium prices in the near term include utility long-term contracting and gradual restarting of Japan's idled 43 reactors.

COMPETITION

There is global competition for uranium properties, capital, customers and the employment and retention of qualified personnel. We compete with multiple exploration companies for both properties as well as skilled personnel. In the production and marketing of uranium, there are a number of producing entities globally, some of which are government controlled and several of which are significantly larger and better capitalized than we are. Several of these organizations also have substantially greater financial, technical, manufacturing and distribution resources than we have.

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Our future uranium production will also compete with uranium from secondary supplies, including the sale of uranium inventory held by the U.S. Department of Energy. In addition, there are numerous entities in the market that compete with us for properties and operate ISR facilities. If we are unable to successfully compete for properties, capital, customers or employees or with alternative uranium sources, it could have a materially adverse effect on our results of operations.

With respect to sales of uranium, the Company competes primarily based on price. We will market uranium to utilities and commodity brokers. We are in direct competition with supplies available from various sources worldwide. We believe we compete with multiple operating uranium companies.

OVERVIEW OF URI PROJECTS

Turkey

Following the closing of the Anatolia Transaction, URI is focused on advancing to near-term production the Temrezli ISR project in Central Turkey. In Turkey, URI controls extensive exploration properties under seven exploration and operating licenses covering approximately 32,000 acres with numerous exploration targets, including the potential satellite Sefaatli Project, which is 30 miles southwest of the Temrezli project. The project area enjoys year-round accessibility via sealed roads and a number of unsealed local tracks. Sparsely populated, but with access to major infrastructure such as water and power, the area is gently undulating. The majority of the project area is owned by local families who work the land for grain production.

Temrezli Project.  

The Temrezli project is wholly owned and operated by URI. Uranium was first discovered by Turkey’s Uranium Division of the Department of Energy, Raw Material and Exploration (“MTA”) in the early 1980s. MTA continued to explore the region for the next 10 years. Following a change to the Turkish Mining Law in 2004 the private sector has been able to explore for radioactive substances. Anatolia Energy, through its subsidiary Adur Madencilik Ltd STI, commenced exploration at the Temrezli project in 2010 and confirmed the MTA’s findings. The uranium mineralization is considered to be epigenetic and related to strata controlled redox boundaries influenced by permeability changes and/or stratabound reductants such as organic material or iron sulfides.

Anatolia Energy released a preliminary feasibility study in February 2015 indicating cash operating costs of $16.89 per pound U₃O₈ and all-in operating costs of approximately $30.17 per pound U₃O₈. URI has retained Roscoe Postle Associates, Inc. to update the February 2015 preliminary feasibility study, something that URI currently anticipates to have ready by the end of 2016. Included in the update to the preliminary feasibility study will be the consideration of the capital cost savings and other synergies expected to be realized through the Anatolia Transaction.

Sefaatli Project.  

The Sefaatli project area contains the district’s most significant uranium occurrences outside of our Temrezli project area. The Sefaatli project is located approximately 30 miles southwest of the Temrezli project. The Sefaatli project has been strengthened by the granting of two new exploration licenses, which expire in May 2018.

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Texas

In Texas, URI has the Kingsville Dome licensed processing facility and approximately 14,000 acres of prospective ISR projects. URI plans on relocating key components of the Rosita processing facility from Texas to Turkey for use at the Temrezli project. The wellfields at Kingsville Dome and Rosita have reserves of over 600,000 pounds of in-place uranium within 400,000 tons at an average grade of approximately 0.08%. These wellfields and the Kingsville Dome facility are on standby for a restart of production when there is a sustained improvement in the uranium market.

Key operational elements of URI’s plan for its Texas properties include (1) positioning URI to return to sustainable production by continuing to evaluate potential brownfield and greenfield exploration opportunities and evaluating synergistic opportunities from existing resources held by other entities; and (2) continuing to maintain reclamation activities in South Texas in accordance with URI’s existing agreements and regulatory requirements.

New Mexico

In New Mexico, URI controls minerals rights encompassing approximately 190,000 acres, a portion of which we have entered into a binding letter of intent to sell. URI holds substantial non-reserve mineralized material of over 40 million tons at an average grade of 0.15% at its properties in the prolific Grants Mineral Belt in New Mexico, which holds one of the largest known concentrations of sandstone-hosted uranium deposits in the world.

THE ISR PROCESS

The ISR process is dramatically different from conventional mining techniques. The ISR technique avoids the movement and milling of significant quantities of rock and ore and also avoids the creation of mill tailing waste associated with more traditional mining methods. It is generally more cost-effective and environmentally sensitive than conventional mining and processing. Historically, the majority of U.S. uranium production resulted from either open pit surface mines or underground mining.

The ISR process was initially developed for the production of uranium in the mid-1960’s, and was first utilized at a commercial-scale project in South Texas in 1975. It became a routinely utilized recovery method in the South Texas uranium district by the late 1970’s, where it was employed in about twenty commercial projects, including two operated by us.

In the ISR process, groundwater fortified with oxygen and carbon dioxide is pumped into a permeable ore body within a wellfield, causing the uranium contained in the ore to dissolve. 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 resulting solutions from the wellfields are pumped to the surface, where the uranium-bearing water is circulated through an ion exchange column, and uranium is precipitated from the fluid onto resin beads. The uranium-depleted fluid is then re-injected into the subsurface uranium deposit. When the ion exchange column’s resin beads are loaded with uranium, they are removed and flushed with a salt-water solution, which liberates the uranium from the beads. This process results in uranium residing in a slurry, which is then dried and packaged for shipment as a uranium concentrate. In order to achieve greater operating efficiencies and reducing capital expenditures when developing new wellfields, we employ a wellfield- specific remote ion exchange process as opposed to a central processing plant, as we had done historically. Instead of piping the solutions over long distances through large diameter pipelines, and mixing the waters of several wellfields together, each wellfield is produced using a dedicated satellite ion exchange facility. This allows ion exchange to take place at the wellfield instead of at the central plant. The satellite facilities allow recovery of uranium from each wellfield using its own native groundwater, thus avoiding the introduction of foreign mineral complexes and the attendant complications of doing so.

ENVIRONMENTAL CONSIDERATIONS AND PERMITTING

United States

Uranium extraction is regulated by the federal government, states and, in some cases, 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 production activities. The current environmental regulatory requirements for the ISR industry are well established. Many ISR projects have gone a full life cycle without any significant environmental impact. However, the process can make environmental permitting difficult and timing unpredictable.

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U.S. regulations pertaining to climate change continue to evolve in both the U.S. and internationally. We do not anticipate any adverse impact from these regulations that would be unique to our operations.

Radioactive Material License

Before commencing ISR operations in Texas and either ISR or conventional mining activity in New Mexico, we must obtain a radioactive material license. Under the federal Atomic Energy Act, the NRC 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 NRC to take primary responsibility for issuing the radioactive material license. NRC has ceded jurisdiction for such licenses to Texas, but not to New Mexico. Such ceding of jurisdiction by NRC is hereinafter referred to as the “granting of primacy.”

The Texas Commission of Environmental Quality (“TCEQ”) is the administrative agency with jurisdiction in Texas over the radioactive material license. For operations in New Mexico, radioactive material licensing is handled directly by NRC.

See Item 2, “Properties” for the status of our radioactive material license for New Mexico and Texas.

Underground Injection Control (“UIC”) Permits

The federal Safe Drinking Water Act creates a nationwide regulatory program protecting groundwater. This law is administered by the United States Environmental Protection Agency (the “EPA”). However, to avoid the burden of dual federal and state regulation, the Safe Drinking Water Act allows for the UIC permits issued by 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 EPA must have granted, upon request by the state, an aquifer exemption. The EPA may delay or decline to process the state’s application if the EPA questions the state’s jurisdiction over the ISR site.

Texas has been granted primacy for its UIC programs, and the TCEQ administers UIC permits. The TCEQ also regulates air quality and surface deposition or discharge of treated wastewater associated with the ISR process.

New Mexico has also been granted primacy for its UIC program. Properties located in Indian Country remain subject to the jurisdiction of the EPA. Some of our properties are located in areas that some alleged to be in Indian Country. The Navajo Nation has been determined eligible for treatment as a state, but it has not requested the grant of primacy from the EPA for uranium related UIC activity. Until the Navajo Nation has been granted primacy, ISR activities that may fall within Indian Country will require a UIC permit from the EPA. Despite some procedural differences, the substantive technical requirements of the Texas, New Mexico and EPA underground injection control programs are very similar.

See Item 2, “Properties” and Item 3, “Legal Proceedings” for a description of the status of our UIC permits in Texas and New Mexico.

Mining Permits

All uranium producing states have regulations governing the development, operation and closure of conventional and in-situ recovery mines. In New Mexico, the Mining and Minerals Division of the Energy, Minerals and Natural Resources Department is responsible for issuing permits under the authority of the New Mexico Mining Act of 1978. Well established regulations specify what information is necessary to support mine permit applications and a well-defined application review process. The primary focus of the agency’s review is to ensure that the proposed mine will protect the environment surrounding the mine area, comply with relevant environmental standards, and be reclaimed to a self-sustaining ecosystem or other approved post-mine land use. Application reviews require consultation with other state agencies, public notice and public hearing opportunities. In addition to mine permits, a discharge permit must be obtained from the New Mexico Environmental Department for mine facilities such as ore pads, waste rock piles and tailings impoundments.

In Texas, the Texas Commission on Environmental Quality (TCEQ) regulates uranium mining and issues the necessary license and permits.  URI holds a radioactive material license which covers Kingsville Dome, Rosita and Vasquez sites.  Each site has a class III injection permit also issued by the TCEQ.  Rosita and Vasquez permits have both been renewed in 2014, and the Kingsville permit is in the renewal process.  Within each area’s permit, the TCEQ also issues production area authorizations (PAAs).  Kingsville holds three PAAs, Rosita holds four, and Vasquez holds two PAAs.  Each site also has class I non-hazardous injection permits for operation of waste disposal wells on site, which are regulated by the TCEQ as well.  All permits for the disposal wells are active.  In addition to the required state permits, the United States

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Environmental Protection Agency (USEPA) regulates the underground aquifers and requires areas with uranium mineralization to have that portion of the aquifer exempted before state mining permits are issued.   The aquifer exemptions for all three Texas sites have been issued.

Other

In addition to radioactive material licenses and UIC permits, 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 ISR and post-production reclamation have been completed, approval must be issued by the TCEQ for Texas properties along with concurrence from NRC and for properties in New Mexico by the NRC.

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 (including but not limited to CERCLA, commonly known as Superfund) 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.

Reclamation and Restoration Costs and Bonding Requirements

At the conclusion of ISR or conventional mining, a site is decommissioned and reclaimed, and each well field is restored. Restoration involves returning the aquifer to its pre-development use. Reclamation involves removing evidence of surface disturbance. Restoration can be accomplished by flushing the ore zone with native ground water and/or using reverse osmosis to remove ions, minerals and salts to provide clean water for reinjection to flush the ore zone. Decommissioning and reclamation entails dismantling and removing the structures, equipment and materials used at the site during the ISR 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 provided performance bonds issued for the benefit of the Company in the amount of $9.3 million to satisfy such regulatory requirements. The performance bonds relate primarily to our operations at our Kingsville Dome and Vasquez projects.

In February 2013, the Company secured a new source to satisfy its financial surety obligations for the Texas regulatory agencies. Previously, the Company had met its financial surety obligations through a combination of bank issued letters of credit (the “LOCs”) and bonds issued for the benefit of the Company. These financial surety arrangements required the Company to fully collateralize the face amount of the LOC’s and the bonds with short term investment vehicles. This requirement resulted in the Company posting $9.3 million in cash that was restricted for the purpose of collateralizing these obligations. The Company’s new financial surety arrangements are provided by Lexon Insurance Company (“Lexon”) in the form of bonds issued for the benefit of the Company. The amount of the bonds written by Lexon total approximately $9.3 million and the collateral requirements of these bonds require the Company to maintain 40% of the value of the bonds in the form of restricted cash.

We estimate that our restoration and reclamation liabilities for prior operations at Kingsville Dome, Vasquez, Rosita and the Crownpoint Project at December 31, 2015, are about $6.4 million, with a carrying value of $4.5 million recorded as a liability on our balance sheet as of December 31, 2015.

The Company’s financial surety obligations are reviewed and revised periodically by the Texas regulatory agencies. In New Mexico surety bonding will be required before commencement of uranium recovery operations and will be subject to annual review and revision by NRC and the State of New Mexico or the EPA.

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. Also in New Mexico, 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.

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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 have arisen in connection with certain of our New Mexico properties.

In New Mexico, we hold approved water rights to provide sufficient water to conduct ISR at the Churchrock project and Section 24 of the Crownpoint project for the projected life of these facilities. We also hold two unprotested senior water rights applications that, when approved by the New Mexico State Engineer, would provide sufficient water for future extensions of the Crownpoint project.

Republic of Turkey

Mining Law

The mining industry in Turkey is regulated by the Turkish Mining Law (Law No 3213), which was amended recently in February 2015 (“Amended Mining Law”) and regulations issued thereunder. Mining rights and minerals are exclusively owned by the state. The ownership of minerals in Turkey is not subject to the ownership of the relevant land. The governmental body with responsibility for implementing the Mining Law and issuing the license and permits is the General Directorate of Mining Affairs (“Migem”) under the Ministry of Energy and Natural Resources. The Amended Mining Law distinguishes five groups of minerals. Pursuant to this classification the royalty amount to be paid to the state differs. Uranium mining is listed under Group 4-ç. The three types of licenses granted for prospecting and operating mines under the laws of Turkey are an exploration license, an operation license and an operation permit.

Turkish Atomic Energy Authority (“TAEK”)

Projects that involve radioactive materials are regulated and controlled by TAEK.  TAEK was established by Law No. 2690 to exercise the functions assigned to it by this law.  ISR mining of uranium is included in these functions by Article 4(b). For projects to be considered as a nuclear facility and for operation, several licenses are required from TAEK.  The licensing process moves parallel to the Environmental Impact Assessment (“EIA”) procedure. TAEK must accept a licensee as project owner in accordance with the law.  Once accepted as owner, a licensee must obtain a site license, a construction license and an operation license to operate.  

Institutional Framework for Environmental Management

The lead government agency with responsibility for environmental protection in Turkey is the Ministry of Environment and Urban Planning (“MEUP”).  MEUP has a coordinating role in the development and enforcement of environmental policies in Turkey.  MEUP is also responsible for EIA approvals for projects.

Permits Required Prior to Construction

These permits include the Environmental Impact Assessment (MEUP), the certification as project owner of a nuclear facility (TAEK), a mine operating permit (Migem), a site license (TAEK), a construction license (TAEK), land access agreements or an expropriation decision and infrastructural permits to construct power, access road, water supply well, etc.

Environmental Impact Assessment (“EIA”) Permit

The Turkish EIA permitting process can be initiated with the submission of the EIA Application Document (the “AD”) to MEUP.  Once the submission is made, the AD is checked by MEUP for compliance with the mandatory AD format and the EIA regulation.  If the AD is found suitable, then it is distributed to the EIA Review and Assessment Committee (“RAC”) (made up of representatives of various governmental agencies) and the date of the official Public Meeting is determined.  Following MEUP’s check the AD becomes public.  The date and place of the hearing is then announced in at least one local and one national newspaper.  Following the public hearing, the RAC members upload their comments about the project to the electronic permitting system and the mandatory Terms of Reference (“ToR”) for the EIA report is provided by MEUP following the payment of the EIA permitting fee by the Project owner.  Once the mandatory ToR is received from MEUP, the project owner and its consultant is allowed a maximum of 18 months to complete the draft EIA report for RAC’s review.  

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Once a draft comprehensive EIA report is submitted to the MEUP the draft EIA report is checked by MEUP for compliance with the ToR and the EIA regulation.  The report is reproduced and distributed to the RAC, and the RAC meeting date is decided.  At this stage, the draft EIA report is open to written public comments.  Based on the RAC’s decision and consideration of the public comments, the EIA permitting process is given either a “Positive” or “Negative” decision (i.e., the impacts are found acceptable or not).  The EIA permitting process is finalized by the Minister’s signature.

Mine Operating Permit

A mine operating permit must be obtained after all the permits are received prior to construction.  Application will be made to Migem requesting the operating permit which is in line with the operating license.  Migem will issue the permit after reviewing the application document. This permit will require an affirmative EIA certificate (or a certificate stating that an EIA is not required), land ownership permits, and the workplace opening and operation licenses.  The operating permit must be obtained within three years from the effective date of the operating license.  Failure to do so may result in penalties. Operational activities must be started within one year following the operating permit date.  The royalties paid to the government will also be initiated by the operating permit.  

Project Owner of a Nuclear Facility

According to TEAK, the judicial entities who intend to build and operate a nuclear installation must apply to the TAEK to be recognized as owner.  After the recognition of owner, any financial or administrative change in owner’s structure must be notified to TEAK in 30 days

Site License

Once recognized as an owner, a licensee will prepare the Site Report in order to get the Site License from TAEK.  Site Report is prepared in parallel to the EIA Report.  However, the review and approval of the report will be done once the affirmative EIA decision is obtained from MEUP.

The Site Report is submitted to TAEK and the decision is released to the applicant by TAEK. An affirmative notification is deemed a site license. The conditions of the license are given to the applicant as an appendix to the license. Following the receipt of the site license, Licensee could proceed with the work related to site preparation, potable water supply and electricity supply, access road, and office building construction etc.

Construction License

The initial application will be submitted to TAEK with the Preliminary Safety Analysis Report.  Following the assessment of the Preliminary Safety Analysis Report the Nuclear Safety Department prepares a limited work permit evaluation report which also includes the view of the Committee. When it is established that the protection measures are adequate and that the facility can operate without harming the safety and the health of the public, the Commission will issue the limited work permit. The limited work permit requires that the construction starts in 12 months from the date of affirmative decision, otherwise the permit is lost. This period may be extended if valid reasons are submitted to TAEK.

The comments obtained during the evaluation of the Preliminary Safety Analysis Report will be incorporated into the Final Safety Analysis Report.  Once this report is accepted and finalized then, the affirmative notification is issued as the construction license

Land Access

The project area is located in privately owned agricultural lands.  These lands have to be either purchased or leased from the owners.  If an agreement cannot be reached, then the Licensee can initiate the expropriation process.  In addition, in order to use these lands in mining, the land use has to be changed from agriculture to mining.  This procedure requires that “Public Benefit Decision” be obtained from the Ministry of Agriculture, Food and Livestock.  As a part of the procedure, a site visit will be conducted by the local department of various ministries.  

Turkish Law 3213 specifies voluntary land acquisition.  This is the preferred method of land acquisition.  If this is demonstrated that it would not work, then Licensee can proceed with the expropriation process. Affirmative EIA decision is a prerequisite to initiate the process. The governmental body in charge of expropriation process is the Ministry for Energy and Natural Resources (“ETKB”), and more specifically the General Directorate for Mining Affairs (“MIGEM”).  Application will be made to ETKB.

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Infrastructural Permits

Several permits will be required from various offices.  These permits include access road permits which are obtained from the Provincial Government and the Department of Transportation, permits for the electricity transmission lines which is handled through the local electricity authority, permits for drilling and installing a water supply well which must be obtained from the State Hydraulic Works (DSI) and the domestic water treatment plant must be approved by MEUP prior to installation.  

Permits Required Prior to Operation

During the construction period, the operational period permitting documentation and applications will be made.  Prior to start the operation, the permits required include the Trial Environmental Permit, a workplace operating license, a hazardous waste storage permit and the Operating License (TAEK).

Operating License from TAEK

At least six months before the start of commissioning of plant components and systems, the applicant, who was granted a construction license, must apply to the Authority for a commissioning permit. Following the evaluation of documents, TAEK may grant the commissioning permit.

AVAILABLE INFORMATION

Our internet website address is www.uraniumresources.com. Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to section 13(a) of 15(d) of the Exchange Act, are available free of charge through our website under the tab “Investor Relations” as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. We also make available on our website copies of materials regarding our corporate governance policies and practices, including our Code of Ethics, Nominating and Governance Committee Charter, Audit Committee Charter and Compensation Committee Charter. You may read and copy any materials we file with the Securities and Exchange Commission (“SEC”) at the SEC’s Public Reference Room at 100 F Street, NE., Washington, DC 20549. You may also obtain a printed copy of the foregoing materials by sending a written request to: Uranium Resources, Inc., 6950 S. Potomac Street, Suite 300, Centennial, Colorado 80112, Attention: Information Request, or by calling 303.531.0470. The information found on our internet website is not part of this or any report filed or furnished to the SEC.

ITEM 1A.  RISK FACTORS

Our business activities are subject to significant risks, including those described below. Every investor or potential investor in our securities should carefully consider these risks. If any of the described risks actually occurs, our business, financial position and results of operations could be materially adversely affected. Such risks are not the only ones we face and additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business.

There is substantial doubt about our ability to continue as a going concern.

The accompanying consolidated financial statements have been prepared assuming URI will continue as a going concern. This assumes continuing operations and the realization of assets and liabilities in the normal course of business.

We have incurred significant losses since ceasing production in 2009 and expect to continue to incur losses as a result of costs and expenses related to maintaining our properties and general and administrative expenses. As of December 31, 2015, we had a working capital deficit of approximately $8.9 million, cash of approximately $0.9 million and an accumulated deficit of approximately $217.3 million. As a result, we have included a discussion about our ability to continue as a going concern in our consolidated financial statements, and our auditor’s report for year ended December 31, 2015 includes an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.” Our capital needs have, in recent years, been funded through sales of our debt and equity securities. In the event that we are unable to raise sufficient additional funds, we may be required to delay, reduce or severely curtail our operations or otherwise impede our on-going business efforts, which could have a material adverse effect on our business, operating results, financial condition, long-term prospects and ability to continue as a viable business.

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Defaults under our secured loan agreement with RCF may result in RCF talking possession and disposing of any collateral, and restrictions under the secured loan agreement may prevent us from taking actions that we believe would be in the best interest of our business.

Our $8.0 million loan agreement with RCF matures on December 31, 2016, and we may not be able to repay that indebtedness or to refinance it. Our obligations under the loan agreement are secured by pledges of the equity interests of our subsidiaries and a lien on substantially all of our assets, and if we default on our obligations under the loan agreement, among other remedies, RCF could take possession and dispose of any collateral under the loan agreement and related documents, which would have a material adverse effect on our business, operations, financial condition, and liquidity. Even if we are able to obtain new financing upon a default under the loan agreement, it may not be on commercially reasonable terms or on terms that are acceptable to us.

In addition, the loan agreement contains certain restrictions on our activities, including covenants that may restrict us from, among other things:

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incurring additional indebtedness;

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paying dividends on, redeeming or repurchasing our capital stock;

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making investments or acquisitions;

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creating liens;

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selling assets;

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guaranteeing indebtedness; and

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consolidating, merging or transferring all or substantially all of our assets.

These restrictions may prevent us from taking actions that we believe would be in the best interest of our business. If we violate any of these covenants and are unable to obtain waivers, we would be in default under our loan agreement with RCF and payment of the indebtedness could be accelerated. If our indebtedness is accelerated, we may not be able to repay that indebtedness or to refinance it. In addition, complying with these covenants may also cause us to take actions that are not favorable to holders of our common stock and may make it more difficult for us to successfully execute our business strategy and compete against companies that are not subject to such restrictions.

URI is not producing uranium at this time. As a result, we currently have no sources of operating cash. If we cannot monetize certain existing assets, partner with another company that has cash resources, find other means of generating revenue other than uranium production and/or access additional sources of private or public capital, we may not be able to remain in business.

As a result of low uranium prices, we ceased production of uranium in 2009. While we have approximately 664,000 pounds of reserves at our South Texas properties, we are not planning to commence production at any of our South Texas properties until we are able to acquire additional reserves or mineralized material and uranium prices recover to levels that will ensure that production, once resumed, is sustainable in the 300,000 to 500,000 pound range per year. Our ability to begin plant construction and wellfield development in Turkey and New Mexico is subject to availability of financing and activation of our permits and licenses. In addition, in the event the sale to Laramide Resources is not completed, we expect that we will need to secure significant capital for the development of our Churchrock project in advance of beginning development activities on the project. We do not have a committed source of financing for the development of our Temrezli or Churchrock project. There can be no assurance that we will be able to obtain financing for these projects or our other projects. Our inability to develop the Temrezli or our other properties would have a material adverse effect on our future operations.

Until we begin uranium production, we have no way to generate cash inflows unless we monetize certain of our assets or through financing activities. Our future uranium production, cash flow and income are dependent upon the results of exploration as well as our ability to bring on new, as yet unidentified wellfields and to acquire and develop additional reserves. We can provide no assurance that our properties will be placed into production or that we will be able to continue to find, develop, acquire and finance additional reserves. If we cannot monetize certain existing assets, partner with another company that has cash resources, find other means of generating revenue other than uranium production and/or access additional sources of private or public capital, we may not be able to remain in business and our stockholders may lose their entire investment.

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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.

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 URI’s business at a level that will permit us to cover our fixed costs or to remain in operation.

If we are unable to raise additional capital, our business may fail and stockholders may lose their entire investment.

We had approximately $0.9 million in cash at December 31, 2015 and $0.3 million at March 11, 2016. On average, URI expended approximately $1.1 million of cash per month during 2015 (excluding costs related to the Anatolia Transaction of approximately $3.0 million), which is expected to decrease to $0.9 million per month during 2016.  There can be no assurance that URI will be able to obtain additional capital after it exhausts its current cash. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities would likely result in substantial dilution to existing stockholders. If we borrow money, we will have to pay interest and may also have to agree to restrictions that limit our operating flexibility.

If additional capital is not available in sufficient amounts or on a timely basis, URI will experience liquidity problems, and URI could face the need to significantly curtail current operations, change our planned business strategies and pursue other remedial measures. Any curtailment of business operations would have a material negative effect on operating results, the value of our outstanding stock is likely to fall, and our business may fail, causing our stockholders to lose their entire investment.

Our foreign operations subject us to a number of significant regulatory and legal risks that may have a material adverse impact on our prospects, projects, financial condition and results of operations.

Our acquisition of Anatolia Energy significantly increased the importance of foreign operations to our future prospects and growth, and our foreign operations expose us to a number of risks. These risks include such things as:

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enforcement of unfamiliar or uncertain foreign real estate, mineral tenure, contract, water use, mine safety and environmental laws and policies;

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challenges to mining, processing and related permits and licenses, or to applications for permits and licenses, by or on behalf of regulatory authorities, indigenous populations, non-governmental organizations or other third parties;

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war, crime, terrorism, sabotage, civil unrest and uncertain political and economic environments;

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renegotiation, nullification or forced modification of existing contracts, licenses, permits, approvals, concessions or the like;

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corruption;

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challenges in overseeing employees and contractors, including the risk that our employees and independent contractors may engage in unauthorized or illegal activity;

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exchange and currency controls and fluctuations;

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limitations on foreign exchange and repatriation of earnings;

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restrictions on mineral production and price controls;

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seizure of mineral production and expropriation or nationalization of property;

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changes in legislation, including changes related to taxation, new or increased mining royalty interests, import and export regulations, foreign ownership, foreign trade and foreign investment;

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high rates of inflation; and

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labor practices and disputes.

In addition, we face the numerous risks as a new acquirer that our expectations may not be realized and that we may encounter unexpected problems. After the closing of the Anatolia Transaction, we have begun to review Anatolia Energy’s operations in Turkey, including compliance with local laws and applicable permitting requirements. In the event we determine material noncompliance, we could face fines or restrictions on our ability to develop our projects in Turkey, which could have a material adverse effect on our prospects, projects, financial condition and results of operations.

In addition, regulatory, permitting and business arrangements in foreign jurisdictions are subject to extensive laws and regulations intended to prevent improper payments, fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of business arrangements that are commonplace in such foreign jurisdictions, and violations of such laws and regulations could result in regulatory sanctions and serious harm to our reputation. We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties.

The benefits of integrating URI and Anatolia Energy may not be realized.

To be successful on a going forward basis, we will need to combine and integrate the operations of URI and Anatolia Energy into one company. Integration will require substantial management attention and could detract attention from the day-to-day business of the combined company. We could encounter difficulties in the integration process, such as the need to revisit assumptions about reserves, future production, revenues, capital expenditures and operating costs, including synergies, the loss of key employees or commercial relationships or the need to address unanticipated liabilities. If we cannot integrate URI’s and Anatolia Energy’s businesses successfully, we may fail to realize the expected benefits of the Anatolia Transaction.

The market price of URI’s common stock may decline as a result of the Anatolia Transaction.

The market price of URI’s common stock may decline as a result of the Anatolia Transaction if the integration of Anatolia Energy’s business is unsuccessful, the perceived benefits of the Anatolia Transaction are not achieved as rapidly or to the extent anticipated by financial analysts or investors, or the effect of the Anatolia Transaction on the combined company’s financial results after the completion of the Anatolia Transaction is not consistent with the expectations of financial analysts or investors.

The Anatolia Transaction is expected to result in an ownership change for URI under Section 382 of the Code, potentially limiting the use of URI’s net operating loss carryforwards and certain other tax attributes in future years. In addition, URI’s ability to use its net operating loss carryforwards may be further limited if taxable income does not reach sufficient levels.

As of December 31, 2015, URI had approximately $219.2 million of net operating loss (“NOL”) carryforwards available to reduce U.S. federal taxable income in future years. Under Section 382 of the Code, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its postchange income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in ownership by “5-percent shareholders” that exceeds 50 percentage points over a rolling three-year period.

The Anatolia Transaction is expected to result in an ownership change under Section 382 of the Code for URI, potentially limiting the use of URI’s NOL carryforwards in future taxable years for U.S. federal income tax purposes. These limitations may affect the timing of when these NOL carryforwards can be used which, in turn, may impact the timing of when cash is used to pay the taxes of URI and have a negative impact on URI’s financial position and results of operations. In addition, URI’s ability to use its NOL carryforwards will be dependent on its ability to generate taxable income. Some portion of the NOL carryforwards could expire before URI generates sufficient taxable income.

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Approximately 18.0% of our common stock is beneficially owned by a significant stockholder.

As of March 18, 2016, approximately 13.9% of our common stock is owned by Resource Capital Fund V L.P. (“RCF”). In addition, under the terms of the RCF loan agreement, RCF has the right to acquire an additional 256,410 shares of our common stock upon conversion of the $8.0 million currently drawn under a loan agreement between RCF and URI, which would increase RCF’s ownership to approximately 18.0% of our common stock. In addition, under a stockholders’ agreement between RCF and URI, RCF is entitled to have two designees placed in nomination for a seat on the Board so long as any amounts remain outstanding under the loan agreement or RCF’s partially-diluted ownership exceeds 25% of our common stock, and RCF has the right to participate in future equity offerings by URI in proportion to its percentage ownership (assuming conversion of amounts drawn under the RCF loan agreement) of the outstanding shares of our common stock.

Because of RCF’s ownership of URI common stock, RCF has the ability to exercise a substantial degree of control over matters requiring stockholder approval. Those matters include the election of directors, amendments to the certificate of incorporation and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control of URI or changes in management and will make the approval of certain transactions difficult without the support of RCF, including transactions in which other stockholders might otherwise receive a premium for their shares over the then-current market price. In addition, RCF could privately sell its stake in URI without other stockholders realizing any premium. RCF may also have other interests that are different from, in addition to or not always consistent with URI’s interests or with the interests of other stockholders.

We have previously identified a material weakness in our internal control over financial reporting, and if we cannot maintain an effective system of internal control over financial reporting in the future, we may need to restate our financial statements and we may be delayed or prevented from accessing the capital markets.

We are subject to the requirements of the Sarbanes-Oxley Act of 2002, particularly Section 404, and the applicable SEC rules and regulations that require an annual management report on our internal controls over financial reporting. The management report includes, among other matters, management’s assessment of the effectiveness of our internal controls over financial reporting.

We identified a material weakness in our internal control over financial reporting for certain financial periods in 2012 and 2013 and we may not be capable of maintaining an effective system of internal control in the future. Our ability to identify and remediate any material weaknesses in our internal controls could affect our ability to prepare financial reports in a timely manner, control our policies, procedures, operations, and assets, assess and manage our operational, regulatory and financial risks, and integrate any acquired businesses. Any failures to ensure full compliance with internal control and financial reporting requirements in the future, including as a result of integrating the businesses of Anatolia Energy and URI could result in a restatement, cause us to fail to timely meet our reporting obligations, delay or prevent us from accessing the capital markets, and harm our reputation and the market price for our common stock.

The Navajo Nation’s ban on uranium mining in what it considers to be Navajo Indian Country and its opposition to the transportation of radioactive substances over and across what it views as Navajo Nation lands may have a material adverse effect on our future operations.

In April 2005, the Navajo Nation (“Nation”) Council passed the Diné Natural Resources Protection Act of 2005, 18 Navajo Nation Code §1303, which prohibits uranium mining and processing on any sites within “Navajo Indian Country” as defined by 7 Navajo Nation Code § 254(A). The ban may impede or prevent us from developing and operating our properties located in federally defined Indian Country for two reasons. First, the Nation takes a more expansive view of its own jurisdiction over “Navajo Indian Country” than does current federal law. Specifically, 7 N.N.C. § 254(A) provides that the term “Navajo Indian Country” applies to all land within the exterior boundaries of the Navajo Indian Reservation or of the Eastern Navajo Agency, Navajo Indian allotments, dependent Indian communities, and all land held in trust for, owned in fee by, or leased by the United States to the Nation. This may conflict with federal law as codified by Congress and interpreted by the federal courts. The term “Indian Country” is derived from jurisdictional determinations in criminal law enforcement proceedings under the federal Indian Country statute, 18 U.S.C. § 1151, and understood to encompass territory situated within Indian reservations, land owned by Indian Allottees, and land within a dependent Indian community. Second, while the United States Court of Appeals for the Tenth Circuit has specifically held, en banc, that our Section 8 property in Churchrock, New Mexico is not Indian Country, approximately one-third of our in-place mineralized uranium material is located elsewhere in federally defined Indian Country. Consequently, with respect to the Nation, our ability to operate will be adversely affected unless Navajo law is modified or a waiver or other exemption is provided.

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In February 2012, the Navajo Nation Council passed The Radioactive and Related Substances, Equipment, Vehicles, Persons and Materials Transportation Act of 2012 which would prohibit the transport across Nation lands of any equipment, vehicles, persons or materials for the purposes of exploring for or mining, producing, processing or milling any uranium ore, yellowcake, radioactive waste or other radioactive products on or under the surface of or adjacent to Nation lands unless the transporter has first (i) obtained Nation consent and a federal grant of easement, (ii) consented to full subject matter and personal jurisdiction of the Nation, and (iii) agreed to terms and conditions regarding clean-up and remediation. The Act would also require the Navajo Nation Environmental Protection Agency (“NNEPA”) to promulgate regulations implementing notice requirements, license fees, bonding requirements, route restrictions and curfews for the transportation of radioactive substances over and across Nation lands or otherwise within Navajo Indian Country. The Act, which may conflict with federal laws and regulations governing the transport of radioactive materials, could have a material adverse effect on our future operations, including our ability to transport equipment and personnel to and from our properties and to transport resin from New Mexico to our processing facilities in Texas or the Republic of Turkey.

In April 2012, the Nation’s Division of Natural Resources issued a Notice of Violation and Order to Comply with the Navajo Nation Civil Trespass Act (the “NOV”) against our subsidiary Hydro Resources, Inc. (“HRI”). The NOV assessed a $50 civil assessment for alleged trespass on Section 9, Township 16 North, Range 16 West, N.M.P.M. (“Section 9”), which is land held in trust by the United States for the benefit of the Nation (“Trust Lands”). The NOV stated that HRI’s Section 8 Churchrock property cannot be reached from New Mexico State Highway 566 without crossing either Section 9 or Section 17, both of which are Trust Lands, and that the Highway 566 right-of-way does not abut or extend into the Section 8 Churchrock property. The NOV demanded that HRI cease entering upon and crossing Section 9 and Section 17 for the purpose of transporting vehicles, equipment and/or personnel to the Section 8 Churchrock property until HRI either (i) provided documentation of a validly existing right-of-way or easement; or (ii) obtained an appropriate right-of-way from the Nation.

In July 2012, HRI and the Nation resolved the NOV by entering into a Temporary Access Agreement (the “Agreement”). Under the terms of the Agreement, HRI and its contractors may now access Section 8 through either Section 9 or 17 to support site visits by the Nuclear Regulatory Commission and to satisfy other administrative permitting and licensing requirements related to the Churchrock Project. The Agreement does not extend to construction-related or earth-disturbing activities. HRI has further agreed to remediate any radioactive contamination now existing on Sections 8 and 17 surface lands created by prior operators prior to commencing mining operations on Section 8. Under the terms and for the duration of this Agreement, HRI has agreed to the jurisdiction of the Navajo Nation with respect to the subject matter of the Agreement. HRI and the Nation have been engaged in additional settlement discussions since 2012 in order to determine effective compliance with the remediation requirement included in the Agreement and to address longer-term surface access to the entire licensed Project site consistent with applicable law. While we have entered into an agreement to sell HRI to a third party, if further agreement with the Nation is not reached and we continue to hold HRI, our development plan could be materially adversely affected.

Certain of our mineral properties may be subject to defects in title and we are at risk of loss of ownership.

Many of our mining properties are unpatented mining claims to which we have only possessory title. The validity of unpatented mining claims is often uncertain and such validity is always subject to contest. Unpatented mining claims are generally considered subject to greater title risk than patented mining claims or other real property interests that are owned in fee simple. Because unpatented mining claims are self-initiated and self-maintained, they possess some unique vulnerabilities not associated with other types of property interests. It is impossible to ascertain the validity of unpatented mining claims from public real property records, and, therefore, it can be difficult or impossible to confirm that all of the requisite steps have been followed for location, perfection and maintenance of an unpatented mining claim. The present status of our unpatented mining claims located on public lands allows us the exclusive right to remove locatable minerals, such as uranium. We are also allowed to use the surface of the land solely for purposes related to mining and processing the mineral-bearing ores. However, legal ownership of the public land remains with the federal government. We remain at risk that the mining claims may be lost either to the federal government or to rival private claimants due to failure to comply with statutory requirements. In addition, we may not have, or may not be able to obtain, all necessary surface rights to develop a property.

We may incur significant costs related to defending the title to our properties. A successful claim contesting our title to a property may cause us to compensate other persons or perhaps reduce our interest in the affected property or lose our rights to explore and develop that property. This could result in us not being compensated for our prior expenditures relating to the property.

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Exploration and development of uranium properties are risky and subject to great uncertainties.

The exploration for and development of uranium deposits involve significant risks. It is impossible to ensure that the current and future exploration programs 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; availability of labor, labor costs and possible labor strikes; availability of drilling rigs; 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 and there can be no assurance that any of our exploration stage properties will be commercially mineable or can be brought into production.

We may enter into acquisitions, dispositions or other material transactions at any time.

We are regularly engaged in a review of opportunities to acquire or dispose of properties, to partner with other companies on projects or to acquire or merge with companies. We currently, and generally at any time, have such opportunities in various stages of active review, including, for example, our engagement of consultants and advisors to analyze particular opportunities, technical, financial and other confidential information, submission of indications of interest and participation in discussions or negotiations for acquisitions or dispositions. Any such acquisition or disposition could be material to us. We could issue common stock or incur additional indebtedness to fund our acquisitions. Issuances of common stock may dilute existing stockholders. In addition, any such acquisition, disposition or other transaction may have other transaction specific risks associated with it, including risks related to the completion of the transaction, the project or the jurisdictions in which the project is located. We could enter into one or more acquisitions, dispositions or other transactions at any time.

The developments at the Fukushima Daiichi Nuclear Power Plant in Japan continue to have a negative impact on the uranium markets and public acceptance of nuclear energy is uncertain.

The developments at the Fukushima Daiichi Nuclear Power Plant following the earthquake and tsunami that struck parts of Japan in March 2011 created heightened concerns regarding the safety of nuclear power plants and the ability to safeguard the material used to fuel nuclear power plants. The impact on the perception of the safety of nuclear power resulting from this event may cause increased volatility of uranium prices in the near to mid-term as well as uncertainty involving the continued use and expansion of nuclear power in certain countries. A reduction in the current or the future generation of electricity from nuclear power could result in a reduced requirement for uranium to fuel nuclear power plants which may negatively impact URI in the future.

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. The developments at the Fukushima Daiichi Nuclear Power Plant may affect public acceptance of nuclear technology. 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 only significant 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 may be dependent on the relative prices of oil, gas, coal and hydro-electricity and the possibility of developing other low-cost sources of energy. If the prices of alternative energy sources decrease or new low-cost alternative energy sources are developed, the demand for uranium could decrease, which may result in a decrease in the price of uranium.

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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 lends itself most readily to conventional mining methods and may not be able to be mined unless a mill is built in New Mexico. We have no immediate plans to build, nor are we aware of any third party’s plan to build, a mill in New Mexico and there can be no guarantee that a mill will be built. In the event that a mill is not built, a substantial portion of our uranium may not be able to be mined. Our inability to mine all or a portion of our uranium in New Mexico would have a material adverse effect on future operations.

Our operations are each subject to environmental risks.

We are required to comply with environmental protection laws, regulations and permitting requirements in the United States and the Republic of Turkey, 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. 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, the State Mined Land Reclamation Acts or State Department of Environmental Quality regulations and the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the rules and regulations of the NNEPA, 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. Mining operations may be subject to other laws administered by the USEPA 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 ISR, 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 ISR, mining or milling, the disposition of wastes, the decommissioning and reclamation of exploration, mining and ISR sites, climate change and other environmental matters, each of which could have a material adverse effect on the cost 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, reclamation, waste handling and disposal, the protection of 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 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 provide assurance that we will be able to obtain or maintain all necessary permits that may be required to continue our operation or 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.

Closure and remediation costs for environmental liabilities may exceed the provisions we have made.

Natural resource companies are required to close their operations and rehabilitate the lands in accordance with a variety of environmental laws and regulations. Estimates of the total ultimate closure and rehabilitation costs for uranium operations are significant and based principally on current legal and regulatory requirements and closure plans that may change materially. Any underestimated or unanticipated rehabilitation costs could materially affect our financial position,

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results of operations and cash flows. Environmental liabilities are accrued when they become known, are probable and can be reasonably estimated. Whenever a previously unrecognized remediation liability becomes known, or a previously estimated reclamation cost is increased, the amount of that liability and additional cost will be recorded at that time and could materially reduce our consolidated net income in the related period.

The laws and regulations governing closure and remediation in a particular jurisdiction are subject to review at any time and may be amended to impose additional requirements and conditions which may cause our provisions for environmental liabilities to be underestimated and could materially affect our financial position or results of operations.

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.

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 because of cost or other business reasons. In addition, the insurance industry is undergoing change and premiums are being increased. If we are unable to procure adequate insurance because of cost, unavailability or otherwise, we might be forced to cease operations.

Reserve and other mineralized material calculations are estimates only, and are subject to uncertainty due to factors including the price of uranium, inherent variability of the ore and recoverability of uranium in the recovery process.

The calculation of reserves, other mineralized material tons and grades are estimates and depend upon geological interpretation and geostatistical relationships or assumptions drawn from drilling and sampling analysis, which may prove to be unpredictable. There is a degree of uncertainty attributable to the calculation of reserves and mineralized material and their corresponding grades. Until reserves and other mineralized materials are actually mined and processed, the quantity of ore and grades must be considered as an estimate only. In addition, the quantity of reserves and other mineralized materials may vary depending on the price of uranium. Any material change in the quantity of reserves, other mineralized materials, mineralization or grade may affect the economic viability of our properties.

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

Future financial surety requirements to comply with federal and state environmental and remediation requirements and to secure necessary licenses and approvals will increase significantly as future development and production occurs at certain of our sites in the United States and Turkey. The amount of the financial surety for each producing property is subject to annual review and revision by regulators. We expect that the issuer of the financial surety instruments will require us to provide cash collateral for a significant amount of 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 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.

Competition from better-capitalized companies affects prices and our ability to acquire both 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 a number of 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.

Our future uranium production will 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

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uranium from the former Soviet Union and from the sale of uranium inventory held by the United States Department of Energy. In addition, there are numerous entities in the market that compete with us for properties and are attempting to become licensed to operate ISR and/or underground mining facilities. If we are unable to successfully compete for properties, capital, customers or employees or with alternative uranium sources, it could have a materially adverse effect on our results of operations.

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 may be unable to withstand significant losses that can result from inherent risks associated with mining, including environmental hazards, industrial accidents, flooding, earthquake, 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. 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, engineers 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 and there can be no assurance that the incentive measures we implement will be successful in helping us retain our key personnel.

The availability for sale of a large amount of shares may depress the market price of URI’s common stock.

As of March 18, 2016, approximately 5.2 million shares of our common stock were outstanding, all of which, except for the certain shares owned by RCF and Aspire Capital, are freely transferable. As of March 18 2016, there were 12,313 shares issuable upon the exercise of outstanding options issued under our equity incentive plans, 577,663 shares issuable upon the exercise of options issued to former Anatolia Energy option holders in connection with the Anatolia Transaction, 5,832 shares issuable upon the exercise of options issued to Insight Transportation Services LLC in connection with the closing of the Anatolia Transaction, 32,706 shares issuable upon the vesting of outstanding restricted stock units, 183,333 shares underlying warrants issued in connection with our March 2015 registered direct offering, and 256,410 shares issuable upon the conversion of amounts outstanding under the RCF loan agreement. The availability for sale of a large amount of shares by any one or several stockholders 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 has 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.

The availability for sale of a large amount of shares by any one or several stockholders 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 has 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 our stockholders.

In order to finance our future production plans and working capital needs, we may have to raise funds through the issuance of equity or debt securities. Depending on the type and the terms of any financing we pursue, stockholders’ rights and the value of their investment in our common stock could be reduced. A financing could involve one or more types of securities including common stock, convertible debt or warrants to acquire common stock. These securities could be issued at or below the then prevailing market price for our common stock. We currently have no authorized preferred stock. In addition, if we 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. If the issuance of new securities results in diminished rights to holders of our common stock, the market price of our common stock could be negatively impacted.

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Shareholders could be diluted if we were to use common stock to raise capital.

We may need to seek additional capital to carry our business plan. This financing could involve one or more types of securities including common stock, convertible debt or warrants to acquire common stock. These securities could be issued at or below the then prevailing market price for our common stock. Any issuance of additional shares of our common stock could be dilutive to existing stockholders and could adversely affect the market price of our common stock.

ITEM 1B.  UNRESOLVED STAFF COMMENTS

None.

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ITEM 2.  PROPERTIES

PROCESSING FACILITIES

Kingsville Dome

Our Kingsville Dome property is located in Kleberg County and is situated on several tracts of land leased from third parties. The property is situated approximately eight miles southeast of the city of Kingsville, Texas. The project was constructed in 1987 as an up-flow uranium extraction circuit, with complete drying and packaging facilities within the recovery plant. The Kingsville Dome project produced uranium in the period 1988 through 1990, from 1996 to 1999, and most recently from 2007 through 2009. Two independent resin processing circuits and elution systems are part of the plant’s processing equipment, and it also has a single drying circuit. As currently configured, the Kingsville Dome plant has a production capacity of 800,000 pounds of U₃O₈ per year.  

Uranium production at Kingsville Dome was shut down in 2009 and the plant has been in a standby status since that time. The plant has two 500 gallon per minute reverse osmosis systems for groundwater restoration.  The first unit was idled in 2010 and the second unit was idled in January of 2014, when ground water restoration was completed. The plant can serve as a processing facility that can accept resin from multiple satellite facilities.   In addition to the processing plant there are four satellite ion exchange systems in the project area.  Each of the satellite systems is capable of processing 900 gallons per minute of uranium-bearing ISR fluids from well fields, and these satellite plants can be relocated to alternate extraction sites as needed. As is the case with the main plant, the satellite facilities have been on standby since 2009.

Rosita

Our Rosita uranium processing plant and associated well fields is located in Duval County, Texas on a 200 acre tract of land owned by the Company. The facility is located within the South Texas uranium province, about 22 miles west of the town of Alice. The plant was constructed in 1990, and was originally designed to operate as an up-flow extraction facility, in a similar manner to our Kingsville Dome plant.  Resin was processed at the Rosita plant, and the recovered uranium was precipitated into a slurry, which was then transported to Kingsville Dome for final drying and packaging. Production from the Rosita plant began in 1990 and continued until 1999, when it was placed on standby.  In the 2007-2008 period upgrades were made to the processing equipment and additions to the facility were installed, including revisions to the elution and precipitation circuits, and the addition of a full drying system.  Construction terminated when the plant was 95% complete, due to production and price declines.  We anticipate that the plant will have an operating capacity of 800,000 pounds of U₃O₈ per year when the upgrades have been completed.  We are in the process of evaluating a relocation of our Rosita uranium processing plant to the Temrezli project in Turkey.

One satellite ion exchange system is in place at the Rosita project, but only operated for a short period of time in 2008.  Loaded resin from the Rosita satellite unit was shipped to Kingsville Dome for processing.  

Vasquez  

The Vasquez uranium project is located in Duval County, Texas, a short distance northwest of the town of Hebbronville. The project is situated on a leased tract of land that is being held until final groundwater restoration has been completed. The Vasquez ISR mine was constructed in 2004. Uranium recovered from wellfields at the Vasquez project was partially processed through a satellite ion exchange system, capable of processing 1,200 gallons per minute, and with final uranium recovery was undertaken at the Kingsville Dome plant. In addition to the satellite recovery facility, there is a 500 gallon per minute reverse osmosis system that has been utilized in our groundwater restoration efforts, which were completed in January, 2014. Uranium recovery efforts at the Vasquez project took place between 2004 and 2008.

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REPUBLIC OF TURKEY EXPLORATION AND DEVELOPMENT PROJECTS

Temrezli Project, Yozgat Province, Republic of Turkey

The Property. We acquired the Temrezli uranium project as a result of the Merger. We control six licenses that make up the project area that were granted to our Turkey-based subsidiary Adur Madencilik Ltd. Sti. (“Adur”) by the Turkish General Directorate of Mining Affairs. The granted licenses cover an area of approximately 13,490 acres. We hold these licenses through the payment of fees to the Turkish government and the fulfillment of certain physical work obligations on an annual basis. Four of the licenses are classed as “Operating Licenses”, and a change in status to “Operating License” status is pending for the remaining two licenses. Uranium production from the licenses is subject to the payment of a sliding-scale royalty, ranging from 2% to 16% depending upon the sales price of uranium, as defined by Turkish mining law. The sliding-scale royalty payments are to be made to certain agencies of the local and Turkish governments. A further 1% royalty is payable to the General Directorate of Mining Affairs, who discovered the Temrezli uranium deposit.

Accessibility. The Temrezli uranium project is situated in the Central Anatolia Region, Sorgun District of the Yozgat Province, Republic of Turkey. The project is situated near the center of the country, approximately 150 miles east-southeast of the national capital of Ankara. The project area is located about 10 miles south of the city of Sorgun and 45 miles southeast of the provincial capital of Yozgat.

Well maintained all-weather public highways connect Ankara with the provincial capital of Yozgat and the nearby city of Sorgun. Access to the project area from Sorgun to the general project area is provided by all-weather paved roads. A maintained dirt road connects the nearby villages of Akoluk and Mehmetbeyli and crosses the north-central part of the Temrezli project. Several unimproved dirt tracks and farm trails provide access to other parts of the project area, but these roads may become impassable for short periods of time during heavy precipitation.

Suitable sources of electrical power and water are available within the Temrezli property, and various sources of goods and services, as well as labor are readily available in the city of Sorgun, which is approximately 10 miles north of the project.

Project Activities. Anatolia Energy, and its subsidiary Adur, have conducted an extensive program of diamond core and rotary drilling, as well as comprehensive environmental and cultural resources surveys and a wide range of metallurgical testing on uranium mineralization that was originally discovered by an agency of the Turkish government in the 1980s.

Since acquiring the Temrezli project we have continued the various environmental and hydrological studies required for submission of operating permit applications and undertaking further metallurgical tests. We have carried out detailed studies of the quantity and quality of the uranium mineralization at the Temrezli deposit and are preparing a detailed economic and operational assessment of the project. The focus of these studies is upon the potential development of the Temrezli project as a future ISR uranium mine.

Project Geology. Uranium at the Temrezli project occurs as a series of generally flat lying to gently dipping tabular mineralized bodies that are hosed in medium to coarse-grained nearshore marine sandstones at depths ranging from less than 200 feet to approximately 600 feet beneath the surface. Individual mineralized zones range from a few 100s to about 1,000 feet in length, several 10s to a 100 feet in width, and about 3 to approximately 30 feet in thickness. The mineralized zones are 100 feet or more beneath the local water table.

Permitting Status. We hold permits for exploration and development drilling on the property and hydrological testing of the mineralized zones. We have collected a comprehensive suite of environmental and cultural resource data for the project area, and its immediate vicinity, to serve as the basis for the application of an Environmental Impact Assessment, which, in turn would lead to the issuance of a mine operating permit.

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Şefaatli Project, Yozgat Province, Republic of Turkey

The Property. The property was acquired by URI as a result of the completion of the Anatolia Transaction on November 9, 2015.  URI, through its wholly-owned subsidiary Adur, holds three exploration licenses (with License Numbers: 201100582, 201100583 and 200810035) in the project area. These licenses cover an area of approximately 25,113 acres.  Two of the licenses are in advanced exploration license status.  One license is on a pending operation license status.  

Accessibility.The Sefaatli project is located in the town of Şefaatli district in Yozgat Province in central Turkey.  The project area is located about six miles from city of Şefaatli and 20 miles southwest of the provincial capital of Yozgat.

Well maintained all-weather public highways connect Ankara with the provincial capital of Yozgat and the nearby city of Şefaatli. Access to the properties from Şefaatli is provided by all-weather village roads.  These roads may become impassable for short periods of time during heavy precipitation.

Project Activities. Sefaatli project is first discovered by the Uranium Division of the General Directorate of Mineral Research & Exploration (MTA) of the Ministry of Energy and Natural Resources in late 80’s.  MTA conducted over 15,000 metres drilling during their work. The mineralized zones were discovered but the lateral extents of these zones were not identified at that time.  Since that time no work was done until the property rights were transferred to Adur in 2008 and 2011.   Adur completed 117 exploration and resource drill holes with a total of 11,951.80m.  Adur is planning additional drilling in the property to define the resource boundaries.  

Project Geology. The basement rock in the property consists of Cretaceous aged granite which is overlaid by uranium containing Eocene aged shallow marine sediments. Pliocene limestone is locally covering Eocene units. All these units are overlaid by Quaternary alluvium. Granitic intrusions are considered to be the source of the uranium. Uranium bearing lenses are formed in oxidation reduction boundaries of Eocene aged fine to coarse grained sandstone after uranium was washed and transported by ground and meteoric water.

Permitting Status. URI holds permits for exploration and development drilling on the property of the mineralized zones.  

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SOUTH TEXAS PROPERTIES AND EXPLORATION PROJECTS

We currently control three production properties and five exploration projects in the state of Texas, all of which are located in the South Texas uranium province, an arcuate belt of sandstone-hosted uranium deposits that extends from near the Texas-Mexico border on the south to an area southeast of the city of San Antonio on the northeast. The belt parallels the present-day coast of the Gulf of Mexico, and is approximately 160 miles long and up to 35 miles in width. The Kingsville Dome, Rosita and Vasquez properties are owned by the Company’s wholly owned subsidiary, URI, Inc. and the Butler Ranch and Sejita Dome exploration projects are owned by the Company’s wholly owned subsidiary, Uranco, Inc.  The locations of the Kingsville Dome, Rosita and Vasquez production properties are shown in the above map, and they are described below.

From 1988 to 1999 we produced approximately 6.1 million pounds of U₃O₈ from the Kingsville Dome and Rosita projects, and from 2004 to 2009, Kingsville Dome, Rosita and Vasquez produced an additional 1.4 million pounds of U₃O₈.

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Kingsville Dome Project, Kleberg County, Texas:

The Property.  The Kingsville Dome project is located in central Kleberg County, South Texas, approximately 35 miles southwest of the city of Corpus Christi and eight miles southeast of the town of Kingsville. The project is comprised of numerous mineral leases from private landowners, covering an area of approximately 2,434 gross and 2,227 net acres of mineral rights. The leases are held through the payment of annual rents, and the leases provide for the payment of production royalties, ranging from 6.25% to 9.375%, based upon uranium sales from the respective leases. The leases have expiration dates ranging from 2000 to 2007, however we continue to hold most of these leases through our ongoing restoration activities. With a few minor exceptions, the leases contain clauses that permit us to extend the leases not held by production by payment of royalties ranging from $10 to $30 per acre.

Accessibility. Access to the Kingsville Dome process facility is very good, as an improved company-owned private road connects with Texas Farm to Market Road 1118 about eight miles southeast of Kingsville, Texas, and about four miles east of U.S. Highway 77 at the town of Ricardo. Numerous county and ranch roads, some of which are only intermittently maintained, provide access to the entire project area.

Suitable electrical power is present at the site of the Kingsville Dome process plant, and additional power lines throughout the areas of the wellfields throughout the project area.

History.  Initial production from the Kingsville Dome uranium deposit commenced in May 1988. From the onset of production until July, 1999 we produced a total of 3.5 million pounds of U₃O₈ from the project area. Production was suspended in July, 1999, due to depressed uranium prices, but it resumed in April, 2006. Production in 2006 was 94,100 pounds of U₃O₈, 338,100 pounds in 2007, 252,000 pounds in 2008 and 56,000 pounds in 2009. We have not produced any uranium at the Kingsville Dome project since 2009.  The Kingsville Dome project currently contains immaterial reserves that have yet to be produced.  

Project Geology: Uranium mineralization at the Kingsville Dome project occurs as roll-front deposits hosted in porous and permeable sandstones of the Goliad Formation, at depths ranging from 600 to 750 feet beneath the surface. The mineralization is localized along the southwestern to northern flanks of the Kingsville Dome geological feature, which also hosts oil and gas deposits in geological units that are situated well below the Goliad Formation sandstones.  We do not control those oil and gas deposits.

Restoration and Reclamation.  The Company completed the groundwater restoration program during 2013 and entered the required stabilization period.  As a result, the Company did not incur any costs related to restoration and reclamation activities during 2014 and 2015.  

There are three Texas Commission on Environmental Quality (“TCEQ”) authorized production areas at the Kingsville Dome project. In 2012, restoration was completed within ten wellfields located in production areas 1 and 2. In 2013, URI, Inc. continued to sample and observe the wellfields in production areas 1 and 2 during a stabilization period required by TCEQ rules, and on October 15, 2013 we declared to TCEQ that groundwater restoration was complete in production areas 1 and 2. Groundwater restoration for production area 3 was conducted throughout 2013, completed in December 2013 and simultaneously placed into stability. Subject to regulatory approval, groundwater restoration is completed for the entire project. Since we began our groundwater activities in 1998, we have processed and cleaned approximately 2.6 billion gallons of groundwater at the Kingsville Dome project.

Permitting Status.  A radioactive material license issued by the Texas Commission on Environmental Quality (TCEQ) is in timely renewal. On September 26, 2012, we filed the requisite application for renewal of our underground injection control permit, and on December 12, 2012, we filed an amendment to the application that would provide for resumption of uranium recovery activities. The permit is in renewal and in the contested case hearing process. As new areas are proposed for production, additional authorizations under the area permit would be required.

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Rosita Project, Duval County, Texas

The Property. The Rosita project is located in north-central Duval County Texas, about 14 miles southeast of the town of Freer and 60 miles west-northwest of the city of Corpus Christi. Our property holdings consist of mineral leases from private landowners covering approximately 3,377 gross and net acres of mineral rights. The nearby Rosita South property (also known as the Cadena area) consists of mineral leases from private land owners on approximately 1,795 gross and 1,479 net acres. All of the leases for the Rosita and Rosita South areas provide for payment of sliding scale royalties that are based upon the price of uranium, ranging from 6.25% to18.25% of uranium sales produced from the leased lands. Under the terms of the leases the lands can be held after the expiration of their primary term and secondary terms, as long as we are carrying out restoration and reclamation activities. The leases have primary and secondary terms ranging from 2012 to 2015, and provisions to extend the leases beyond the initial terms.  We hold these leases by payment of annual property rental fees ranging from $10 to $30 per acre.

Accessibility. Access to the Rosita project and process facility is good, from an improved company-owned private drive that connects with an unpaved but maintained county road, which in turn connects with to Texas Farm to Market Road 3196, about one mile northeast of the intersection of State Highway 44 and FM 3196 in Duval County.

Electrical power for the Rosita project is readily available, with an industrial-scale power line extending to the Rosita process plant.

History.  Initial production of uranium from the Rosita project, utilizing the in-situ recovery (ISR) process, commenced in 1990, and continued until July 1999. During that time we produced 2.64 million pounds of U₃O₈. Production was halted in July of 1999 due to depressed uranium prices, and resumed in June 2008 Technical difficulties, coupled with a sharp decline in uranium prices led to the decision to suspend production activities in October, 2008, after the production of 10,200 pounds of U₃O₈. We have had no production from the Rosita project since that time.

Project Geology. Uranium mineralization at the Rosita project occurs as roll-fronts hosted in porous and permeable sandstones of the Goliad Formation, at depths ranging from 125 to 350 feet below the surface.

Restoration and Reclamation.  The Rosita project is comprised of four TCEQ authorized production areas. Production areas 1 and 2 are depleted, and groundwater restoration has been completed to regulatory standards. Production areas 3 and 4 contain immaterial uranium reserves that have yet to be produced. Production areas 1 and 2 consist of seven wellfields whose groundwater has been restored by the circulation and processing of approximately 1.3 billion gallons of reverse osmosis treated water. In 2013 we completed the final phase of TCEQ required stabilization in production areas 1 and 2. The Company began plugging wells in production areas 1 and 2 in 2014 and completed those activities in 2015.  Results from the completed well plugging and abandonment activities have been submitted to the TCEQ for their review and final approval. During 2015, the Company incurred costs relating to the plugging and abandonment and standby of the aforementioned production areas of approximately $534,000. Surface reclamation is now underway and is expected to continue through 2016.

Permitting Status.  A radioactive material license issued by the Texas Commission on Environmental Quality (TCEQ) for the Rosita project is in timely renewal.  On August 30, 2012, we filed the requisite application for renewal of our underground injection control permit and it was issued on October 20, 2014. Production could resume in areas already included in existing production area authorizations. As new areas are proposed for production, additional authorizations from the TCEQ under the permit will be required.

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Vasquez Project, Duval County, Texas

The Property.  Our Vasquez project is located in southwestern Duval County, Texas, about seven miles north-northwest of the town of Hebbronville and 100 miles southwest of Corpus Christi. The property consists of a mineral lease on 872 gross and net acres. While the primary term of the mineral lease expired in February 2008, we continue to hold the lease by carrying out restoration activities. We pay an annual rental fee to the property owner, and the lease provides for the payment of a sliding-scale production royalty of 6.25% of uranium sales below $25.00 per pound, increasing to 10.25% for uranium sales occurring at or above $40.00 per pound of U₃O₈.

Accessibility. Access to the Vasquez project area is good from a Company-owned and improved private drive to an improved ranch road that connects to Texas State Highway 59, a short distance northwest of Hebbronville.

Adequate electrical power is available in the project area, with a power line extending onto the property to service our facilities at the Vasquez project.

History.  We commenced production from the Vasquez project in October 2004, but we have had no production from the project since 2008.

Project Geology. Uranium mineralization at the Vasquez project occurs as roll-fronts within porous and permeable sandstones the Oakville Formation, at depths ranging from 200 to 250 feet below the surface.

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Restoration and Reclamation.  We conducted restoration and reclamation activities at the Vasquez project through 2013, and since 2014 we have been the project has been in the required groundwater stabilization period.  As a result, the Company did not incur significant costs for restoration activities during 2015.

The Vasquez project consists of two authorized production areas. Production area 1 consists of five wellfields and production area 2 consists of two wellfields. At the end of 2013, groundwater restoration was completed at all wellfields in all production areas.  In 2014, both production areas were placed into stability and remained in this status for all of 2015. Subject to regulatory approval, groundwater restoration has been completed for the entire project. Since the commencement of groundwater restoration activities at the end of 2007, we have treated approximately 640 million gallons of groundwater at the Vasquez project.

Permitting Status. A radioactive material license issued by the Texas Commission on Environmental Quality (TCEQ) is in timely renewal. On July 10, 2012 we filed the requisite application for renewal of our underground injection control permit. On September 23, 2014 the renewal was issued by the TCEQ.

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Butler Ranch Project, Karnes County, Texas

The Property. We acquired the Butler Ranch  project from Rio Grande Resources in 2014, as part of a larger property exchange with them. Our property is comprised of nine fee leases that cover an area of about 2,653 gross or 2,592 net acres of mineral rights. We can hold the leases by payment of annual rental fees, ranging from $10 to $25 per acre. Each of the leases makes provision for the payment of royalties of 10% of sales to the property owners. Leases have initial terms of 8 to 10 years and have provisions to “hold by drilling” and identifying uranium mineralization on the specific properties.

Accessibility. The Butler Ranch project is located in the southwestern end of Karnes County, Texas, about 45 miles southeast of the city of San Antonio, and 12 miles northwest of the town of Kenedy. Numerous paved state and federal highways are present within close proximity of the project area, and maintained farm and oilfield access roads cross all parts of the project.

Numerous electrical lines, many of which are of industrial grade to service oil and gas production facilities, are present throughout the area of the project.

History. The project is situated in the southwestern end of the Karnes County uranium mining district, which was one of the largest uranium production areas in Texas. Numerous open pit mines were developed and operated in the area, including important production operations by Conoco, Susquehanna-Western, Pioneer Nuclear, and Chevron Resources. The historic uranium activities focused upon deposits that were situated above the water table, and the mineralization recovered from the open pit mines was processed in conventional mills owned and operated by Conoco, Susquehanna-Western, Pioneer Nuclear and Chevron Resources.

There has not been any uranium production from the Company’s properties.

Project Geology. Uranium mineralization at Butler Ranch occurs primarily in the form of roll-front deposits hosted mostly in sandstones of the Jackson Group, including the Deweesville and Stones Switch units. Some mineralization in the area occurs as tabular bodies associated with lignite (carbonaceous material) or in somewhat permeable units in the Conquista Clay as well.

Historical mining activities in the project area focused upon deposits that were positioned above the water table, while our targets are situated below the water table and may be suitable for in-situ recovery methods.

Project Activities. We carried out a short exploration drilling program on one lease in the project area in late February and early March 2015. The exploration program was comprised of five conventional rotary drill holes that totaled 1,620 feet, and was designed to test for extensions of an adjoining zone of uranium mineralization. All five of our drill holes encountered indications of uranium mineralization, requiring further study.

In 2015, we acquired a substantial amount of historical exploration drilling information and other geological data for our properties in the Butler Ranch area. Detailed technical studies of this information are being carried out, and this new information is being combined with other data that we hold in order to further evaluate the potential of the Butler Ranch project.

Permitting Status. We received an exploration drilling permit for the Butler Ranch project in February 2015 from the Texas Railroad Commission.

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Sejita Dome Project, Duval County, Texas

The Property. Our Sejita Dome project is located in southern Duval County, Texas, about 18 miles east of the town of Hebbronville and approximately 90 miles southwest of the city of Corpus Christi. We acquired the project in 2014 as part of a property exchange with Rio Grande Resources. The project area is comprised of 15 partly contiguous fee (private) mineral leases covering an area of 3,263 gross or 2,176 net acres. The leases are held through the payment of annual rental fees ranging from $10 to $75 per acre. Uranium production from the leased lands is subject to the payment of fixed-rate or sliding scale royalties that range from 4.5% to 20% of sales price.

Accessibility. The project area is comprised of gently rolling countryside, much of which has been cleared of brush and trees for grazing and farming purposes. Accessibility to the overall project area is good, via Texas highway 285, and several paved or maintained gravel roads that traverse project lands.

Power lines are present along the public roads in the project area, and electrical lines are present to service some oil wells within several of our leases.

History. Although situated near the eastern end of the South Duval uranium belt, there has never been any uranium production from the Sejita Dome project area. Several companies, including Elf-Aquitaine, Texasgulf, Coastal States and others carried out exploration drilling programs on lands in the general project area during the 1970s and early 1980s. Several mineralized zones were identified from this historical exploration drilling.

Project Geology. Uranium mineralization at our Sejita Dome exploration project occurs as roll-front style mineralization in sandstone units of the Goliad Formation. Mineralized areas, as identified from historical data, occur along the flanks of Sejita Dome, a geologic feature that has similarities to our Kingsville Dome project.

Project Activities. We have not carried out any exploration work on the Sejita Dome project.

Permitting Status. We do not hold any permits for either exploration drilling or uranium production from the Sejita Dome project.

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NEW MEXICO PROJECTS

General

We hold a significant portfolio of properties throughout the extent of the Grants mineral belt of west-central New Mexico (see the above map). Included within our New Mexico property portfolio are fee surface and mineral rights that we own, fee surface and mineral rights leased from third parties, State of New Mexico mining leases, and owned patented and unpatented lode mining claims. Collectively, this property position represents one of the largest mineral rights holdings in the Grants mineral belt.

The Grants mineral belt is an approximately 100 mile long northwesterly trending belt of sandstone-hosted uranium deposits that historically have been the largest source of uranium production in the United States. During the period of mining activity in the Grants mineral belt, generally between the early 1950’s and the mid-1980’s, more than eighty underground and open pit mines were developed and operated by several mining companies. At various times during the productive life of the Grants mineral belt, six uranium processing mills were built and operated by The Anaconda Company, Homestake Mining Company, Kerr-McGee, Phillips Petroleum, Sohio Western and United Nuclear.

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Cebolleta Project

General. Our Cebolleta project is located in west-central New Mexico, approximately 45 miles west-northwest of the city of Albuquerque. It is situated in the Laguna mining district, an area that has seen considerable uranium mining activity since the 1950s.

The Property. In March 2007, Neutron Energy, Inc. (“Neutron”) (then operating as Cibola Resources LLC, or “Cibola”, both of which are now wholly-owned subsidiaries of the Company) entered into the Cebolleta Lease with La Merced del Pueblo de Cebolleta (the “Cebolleta Land Grant”), a privately held land grant, to lease the Cebolleta property, which is composed of approximately 6,717 acres of fee (deeded) surface and mineral rights. The lease was affirmed by the New Mexico District Court in Cibola County in April 2007. The Cebolleta Lease provides for: (i) a term of ten years and so long thereafter as Cibola is conducting operations on the Cebolleta property; (ii) initial payments to the Cebolleta Land Grant of $5,000,000; (iii) a recoverable reserve payment equal to $1.00 multiplied by the number of pounds of recoverable uranium reserves upon completion of a feasibility study to be completed within six years, less (a) the $5,000,000 referred to in (ii) above, and (b) not more than $1,500,000 in annual advance royalties previously paid pursuant to (iv); (iv) annual advanced royalty payments of $500,000; (v) gross proceeds royalties ranging from 4.50% to 8.00% based on the then current price of uranium; (vi) employment opportunities and job-skills training for the members of the Cebolleta Land Grant and (vii) funding of annual higher education scholarships for the members of the Cebolleta Land Grant. The Cebolleta Lease provides us with the right to explore for, mine, and process uranium deposits present on the Cebolleta Property. In February 2012, Cibola entered into an Amendment of its Mining Lease Agreement (the “Cebolleta Lease Amendment”) amending the Cebolleta Lease, subject to approval of the Thirteenth Judicial District. Pursuant to the Cebolleta Lease Amendment, the date for the completion of the feasibility study was extended from April 2013 to April 2015. In addition, the date has been further extended subject to a reduction in the $6,500,000 initial payment and annual advance royalty payments deductions to the recoverable reserve payment.

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Accessibility. The Cebolleta project is situated in the eastern-most portion of Cibola County, New Mexico. It is located approximately 45 miles west-northwest of the city of Albuquerque, and about 10 miles north of the town of Laguna. A major transcontinental highway (US Interstate Highway I-40) traverses the region about 12 miles south of the project  and a well-maintained State of New Mexico paved highway, New Mexico State Highway 279 connects I-40 at the village of Laguna with the settlement of Seboyeta, which is located approximately four miles northwest of the project. An all-weather graded gravel road and several private roads of varying quality cross the project lands and provide access to nearly all parts of the project area. During periods of precipitation access to the immediate project area on the unmaintained private roads may be hindered due to muddy ground conditions, but these events are normally of short duration.

One power line is present at the north end of the project area, and a major high voltage electrical transmission line and sub-station are present approximately five miles northeast of the main part of the project area.

History. Parts of the Cebolleta project were developed as open pit and underground mines, and uranium was produced from the project area during the 1960s, through the early 1980s. Initial production was attained from a small underground mine in the St. Anthony area developed by Climax Uranium in the 1950s. The project was revitalized in the mid-1960s after various leases were acquired by United Nuclear, who also conducted an extensive exploration program on the property, and subsequently developed two open pit and one underground mine on the southern part of the project area. United Nuclear ceased uranium production from their holdings in the project area in 1979.

Sohio Western Mining and Reserve Oil and Minerals carried out an extensive exploration drilling program on lands that comprise the northern part of the current Cibola project area, and subsequently discovered five discrete uranium deposits. Sohio developed one underground mine, and constructed a uranium processing mill on a nearby parcel of land the early to mid-1970s. Sohio operated the mine and mill complex until it was shut down in 1981. There has been no uranium production from the property since 1981.  

Project Geology. The Cebolleta project is the site for six sandstone-hosted uranium deposits that occur as discrete flat-lying tabular bodies of uranium mineralization that are hosted within the Jackpile sandstone unit of the Jurassic-age Morrison Formation. The mineralized bodies are contained within channels in the Jackpile sandstone, and are found at depths ranging from approximately 250 to 850 feet below the surface. The deposits are situated above the local and regional water tables.  

Development Plan.  The Company completed a Technical Report for the Cebolleta project in April 2014. Based on the quantity and quality of the mineral resource, the Technical Report recommends that we advance the Cebolleta Project to a Preliminary Economic Assessment or scoping level study. The Cebolleta Technical Report recommended proceeding with the next step of “confirmation drilling” with the objective of raising the confidence levels of a significant portion of the mineral resources. Another recommendation in the Technical Report was to drill and develop an initial resource model and mineral resource estimate for the historic St. Anthony mine area. Under our current cash conservation measures and business priorities, we are not contemplating any current work at Cebolleta.

Permitting Status. The Company holds a Sub-part 4 Exploration Permit (CI014ER-R3), issued by the Energy, Minerals and Natural Resources Department of the State of New Mexico for drilling at the Cebolleta project.

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Churchrock Project, McKinley County, New Mexico

General. The Churchrock project is situated at the western-most extent of the Grants mineral belt in McKinley County, western New Mexico. The project lands are located approximately 13 miles northeast of the town of Gallup and 110 miles west-northwest of the city of Albuquerque. The project covers much of the southern portion of the Church Rock mining district, where numerous companies carried out extensive exploration programs in the 1950s through the 1970s. The Church Rock district was the site of several large-scale underground uranium mines that were developed between the late 1950s and the 1970s and operated primarily by Kerr-McGee and United Nuclear. There are no active mining operations in the Church Rock district at this time. Additionally, United Nuclear constructed and operated a uranium processing mill north of our properties, but that facility is no longer in operation.  We have entered into an agreement to sell the Churchrock project.  Please see “Recent Corporate Development – Laramide Asset Sale” under “Item 1. Business” for additional information.

Access to the project area is good. New Mexico State Highway 566, which is a paved two lane highway that crosses the eastern part of the project area, connects with US Interstate Highway I-40 at the village of Church Rock, approximately six miles to the south of our properties. Several maintained and unmaintained paved and dirt roads and trails connect with Highway 566 and traverse much of the project area.  The Navajo Nation has challenged the right of the Company to access Section 8 of the Churchrock project by crossing certain Nation trust lands (please see Item 3: “Legal Proceedings”). Various electrical lines are present in the immediate vicinity of the project area.

The Property.  We hold an extensive property position in the Churchrock mining district, including patented and unpatented lode mining claims, two State of New Mexico General Mining Leases, and deeded mineral rights. The principal areas of uranium mineralization, the Mancos and Sections 8 and 17 (also known as the Church Rock deposit) deposits, are situated on two separate tracts that we own, and these cover an area of approximately 3,458 gross and net acres. None of the lands that comprise the Churchrock project are situated on the Navajo Reservation.

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The surface estate for Sections 7 and 17, T. 16 N. R. 16 W. and  Section 13, T. 16 N, R. 17 W. is owned by the U.S. Government and held in trust for the Navajo Nation. On those sections, we have royalty obligations ranging from 5% to 25% and a further 2% overriding royalty obligation to the Navajo Nation, as provided for in previously existing agreements. The unpatented lode mining claims situated in Section 12, T. 16 N., R. 17 W. are subject to a fixed 6 ¼% gross royalty and a sliding-scale royalty ranging from 5% to 25% that is based upon the selling price of uranium concentrate derived from the property. The mining claims situated in Section 8, T. 16 N., R. 16 W. are subject to two separate royalties, the sliding scale royalty that ranges from 5% to 25% (based upon the selling price of uranium concentrate from the claims) and a fixed 8% gross royalty. Aggregate royalties peak at 33.00% at a uranium sales price of approximately $84.00 per pound.

We own the mineral estate in fee for 200 acres located in the northeast ¼ and the southwest ¼ of the northwest ¼ of Section 17, T. 16 N., R. 16 W. The balance of the 440 acres of mineral Section 17, T. 16 N., R. 16 W. is also held in fee. In Section 8, T. 16 N., R. 16 W., we own the southeast ¼ in fee (as patented lode mining claims), and the minerals in the remainder of Section 8, with 26 unpatented lode mining claims. At the Mancos deposit, we own the minerals in Section 13, T. 16 N., R. 17 W. in fee, the minerals in Section 7, T. 16 N., R. 16 W., in fee and hold the minerals in Section 12, T. 16 N., R. 17 W., with unpatented lode mining claims. The unpatented mining claims are all held through payment of an annual maintenance fee of $155 per claim to the BLM.

During 2015 we added 1 square mile of unpatented lode mining claims (Section 4, T. 16 N., R. 16 W.) and 2 State of New Mexico General Mining Leases (Sections 32 and 36, T. 17 N., R. 16 W.) to our property holdings in the Churchrock project area, as partial consideration for the transfer of our Roca Honda, New Mexico project to Energy Fuels Resources. These newly acquired mineral rights comprise an area of approximately 988 acres.  

We have not carried out any exploration drilling or other work to assess the mineral potential of the other lands that we hold in the Churchrock project area.  Included in the other Churchrock lands are unpatented lode mining claims and two State of New Mexico General Mining Leases that we acquired from Energy Fuels Inc as partial consideration for the sale of our remaining Roca Honda project assets, as described elsewhere.

History. Phillips Petroleum and United Nuclear operated a conventional underground mine (the Old Church Rock mine) on the Section 17 portion of the Section 8 and 17 (Church Rock) deposit intermittently from the late 1950s through the mid-1970s, and historic reports indicate that about 700,000 pounds of U₃O₈ were recovered from that mine. There has been no further uranium production from the Churchrock project.

Project Geology. Two principal sandstone-hosted uranium deposits are present on lands within the Churchrock project areas. The Church Rock deposit, which is situated in Sections 8 and 17, Township 16 North, Range 16 West, is a series of tabular elongated zones of uranium mineralization that are hosted in the Dakota Sandstone and various sandstone units of the underlying Morrison Formation. The mineralized zones occur at depths ranging from approximately 650 to 850 feet below the surface. A portion of the southern extent of the Church Rock deposit was mined by conventional underground mining methods, first in the late 1950’s by Phillips Petroleum, and subsequently by United Nuclear Corporation in the 1970s. The bulk of the Church Rock uranium deposit has not been mined. The Mancos uranium deposit is situated in part of Section 7, T. 16 N., R. 16 W., and parts of Sections 12 and 13, T. 16 N., R. 17 W is also a series of zones of sandstone-hosted uranium mineralization contained within the Morrison Formation, which is of Jurassic age. The mineralized zones in the Mancos deposit ranges in depth from as shallow as 475 feet from the surface at the southwest end of the deposit to as much as 1,800 feet beneath a mesa at the northeast end of the deposit.  

Development Plan.  In December 2012, an independent engineering and consulting firm completed a technical and design review on the potential for the development of an ISR project in the Section 8 mineralized area. This evaluation of the potential development options for the project was based upon drilling and metallurgical test work that we carried out in the late 1990s.  

Water Rights. We hold granted water rights, sufficient for the development and operation of an ISR project on the Section 8 and 17 deposits.

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Permitting Status.  We hold a NRC license for production of uranium from the Section 8 and 17 uranium deposit. We also hold an underground injection control (“UIC”) permit issued by the State of New Mexico for the deposit. The NRC license is in “timely renewal” with the relevant governmental agencies.  We do not plan to pursue production permits for the Mancos deposit at this time.

Crownpoint Project, McKinley County, New Mexico

General. Our Crownpoint project is located at the village of Crownpoint, McKinley County, New Mexico, near the northwestern extent of the Grants mineral belt. It is situated about 35 miles northeast of Gallup and 95 miles northwest of the city of Albuquerque.  We have entered into an agreement to sell the Crownpoint project.  Please see “Recent Corporate Developments – Laramide Asset Sale” under “Item 1. Business” for additional information.

Exploration programs carried out in the Crownpoint area during the 1970s by Mobil Oil, Conoco and Teton/UNC outlined several zones of substantial uranium mineralization within and in the immediate vicinity of the Crownpoint town site. Mobil Oil conducted an ISR test on a portion of their properties, but did not develop a commercial scale ISR uranium production center. Conoco, in partnership with Westinghouse, began development of a conventional underground mine on a part of their property holdings, but never completed the mine, and did not produce any uranium from their properties. Both development programs were curtailed due to the collapse of the uranium market in the early 1980s.

Access to the Crownpoint project is excellent, with a paved road that crosses the property and provides all-weather access to the main part of our property. This road intersects New Mexico Highway 371, which connects the Crownpoint area with the city of Farmington (85 miles to the north) and Interstate Highway I-40 at Thoreau (20 miles south). Adequate electrical power is available at the Crownpoint property, as various electrical lines service the buildings on the property.

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The Property.  The properties that make-up our Crownpoint Project consist of 640 gross and 556 net acres of mineral rights. We hold the mineral rights in the northwest ¹/₄ of Section 9, T. 17 N., R. 13 W. with 9 unpatented lode mining claims, and the mineral rights in the southwest ¹/₄ of Section 24, T. 17 N., R. 13 W. with 10 unpatented lode mining claims. In the southeast ¹/₄ of Section 24, T. 17 N., R. 13 W., we own in fee a 40% interest in the minerals on approximately 140 acres and hold 100% of the minerals on 20 additional acres with two unpatented lode mining claims. In the northeast ¹/₄ of Section 25, T. 17 N., R. 13 W., we hold the mineral rights with eight unpatented lode mining claims. The unpatented lode mining claims are held through the payment of an annual maintenance fee of $155.00 per claim to the BLM. While the rights to the minerals on the unpatented lode mining claims are subject to annual renewal through the payment of the annual maintenance fees, the rights to the minerals on the fee-owned lands are not subject to any renewal process as long as the Company maintains its ownership of the subject lands.

History. The Crownpoint project area was the site of considerable exploration activity by various companies during the 1970s. Conoco, in joint venture with Westinghouse Electric, began the development of a conventional underground mine on property that we now control, and Mobil Oil operated a pilot-scale in-situ recovery operation on a nearby deposit. Neither of these properties ever advanced to commercial-scale operations, and there has never been any uranium produced from the project area.

Project Geology. Uranium mineralization at the Crownpoint project occurs as tabular bodies and roll-fronts hosted in porous and permeable sandstones of the Westwater Canyon Member of the Morrison Formation. The mineralized zones are at depths ranging from 2,100 to 2,300 feet below the surface.

Development Plan.  Three mine shafts were drilled on the property in the early 1980s by Conoco, but they were never completed. It was Conoco’s intent to recover the uranium mineralization by conventional underground mining methods, but there was never any uranium production from the Crownpoint project. Surface facilities related to those activities including buildings and their associated electrical/water infrastructure are still in-place and are currently used as offices and storage facilities.

Water Rights.  We hold sufficient water rights for the development and operation of an ISR operation at the Crownpoint Section 24 deposit. We have two additional pending applications for appropriations of water, which give us the first two “positions in line” on the hearings list for the San Juan Basin. These additional pending water rights applications may involve a claim of jurisdiction by the Navajo Nation.

Permitting Status.  We hold an NRC license to develop and operate an ISR uranium mine and recovery plant at the Crownpoint project.

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Juan Tafoya Project

General. Our Juan Tafoya project is located in west-central New Mexico, near the eastern end of the Grants mineral belt. It is situated approximately 45 miles west-northwest of the city of Albuquerque, and 25 miles northeast of the town of Laguna.

Exploration programs carried out by Bokum Resources, DeVilliers Nuclear, Exxon, and Kerr-McGee during the late 1960s and 1970s discovered a group of sandstone-hosted uranium deposits that were determined to be southeasterly extensions of the Grants mineral belt. Ownership consolidation efforts resulted in the various properties and deposits falling under the control of Bokum and Kerr-McGee. Bokum, and their project partner Long Island Lighting Company undertook a development program on the Juan Tafoya property that resulted in the construction of a uranium mill and the partial development of shafts to access the largest uranium deposit on the Juan Tafoya property. Development of the Juan Tafoya project was halted because of the bankruptcies of the partners, and the project was ultimately abandoned and a portion of the surface facilities (mine infrastructure) and mill were dismantled. There has not been any uranium production from deposits on the project lands.

The project has an industrial grade power line and there are three water wells present on the property. A 14-foot diameter concrete-lined shaft is present at the larger of the two uranium deposits, and a 6-foot diameter steel cased “ventilation” shaft is in place.

The Property. The property is comprised of lands covering an area of approximately of 4,097 acres of fee (deeded) surface and mineral rights that are owned by the Juan Tafoya Land Corporation (JTLC) and 24 leases with private owners of small tracts covering a combined area of approximately 115 acres. The property was leased in 2006 by Neutron Energy, Inc. (Neutron), now a wholly-owned subsidiary of the Company. The JTLC lease has a term of ten years, and it can be extended on a year-to-year basis thereafter, so long as we are conducting operations on the Juan Tafoya property. Additionally, the JT Lease required: (i) an initial payment to JTLC of $1,250,000; (ii) annual rental payments of $225,000 for the first five years

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of the lease and $337,500 for the second five years; (iii) after the second five years, annual base rent of $75 per acre; (iv) a gross proceeds royalty of 4.65% to 6.5% based on the prevailing price of uranium; (v) employment opportunities and job-skills training programs for shareholders of the JTLC or their heirs, (vi) periodic contributions to a community projects fund if mineral production commences from the Juan Tafoya property and (vii) funding of a scholarship program for the shareholders of the JTLC or their heirs. We are obligated to make the first ten years’ annual rental payments notwithstanding the right to terminate the JT Lease at any time, unless (a) the market value of uranium drops below $25 per pound, (b) a government authority bans uranium mining on the Juan Tafoya property, or (c) the project is deemed uneconomical by an independent engineering firm.

The fee mineral leases covering the individually-owned small tracts have similar royalty provisions as the JTLC lease and have annual rental obligations of $9,526.

The JT Lease and the “small tract” fee mineral leases provide us with the right to explore for, mine and process uranium deposits present on the leased premises.

In January 2007, Neutron entered into a letter agreement with International Nuclear, Inc. to acquire certain technical data relating to the Juan Tafoya property. Pursuant to the letter agreement, Neutron made a cash payment and a royalty of $0.25 per pound of uranium recovered from the Juan Tafoya property by the Company with a maximum payout of $1,000,000.

Accessibility.  The Juan Tafoya project is located in west-central New Mexico, about 25 miles north of the town of Laguna. Access to the project area from Albuquerque is over a four lane Interstate highway (US I-40) to the town of Laguna (a distance of approximately 45 miles) and a paved two-lane highway (for a distance of 15 miles) to the village of Seboyeta and a further 16 miles over a well-maintained all weather gravel road. Several private roads of varying quality cross the project lands and provide access to nearly all parts of the project area. Vehicle access to most parts of the Juan Tafoya project area is good, except for short periods following rain or snow storms.

History.  The Juan Tafoya property has been of considerable interest to the U.S. uranium industry since the late 1960s to early 1970s.  Exploration and pre-development activities were carried out on and adjacent to the Juan Tafoya property by several companies, including Bokum Resources, DeVilliers Nuclear, Exxon, Kerr-McGee and Nuclear Dynamics, but no mining operations were ever undertaken on the Juan Tafoya property.

The Juan Tafoya property was nearly fully developed for uranium mining and processing, with the construction of a mill and related mine infrastructure. However, all plant and equipment have been removed from the Juan Tafoya property and the property has no significant plant or equipment, including subsurface improvements and equipment. However, there is a 12-foot diameter concrete lined shaft (to a depth of about 1,850 feet) and a 5-foot diameter steel lined ventilation shaft (to a depth of about 2,200 feet) at the northwestern end of the Marquez deposit.

Project Geology. The uranium mineralization in the Juan Tafoya property is hosted within sandstones of the Westwater Canyon Member, which comprises approximately the lower half of the Morrison Formation. Mineralization in the Marquez deposit, which is the larger of the two defined deposits, occurs as a series of elongate lenses that get progressively deeper to the east. These lenses appear to have shapes that are reminiscent of “trend-type” deposits elsewhere in the Grants mineral belt and are thought not to be amenable to ISR methods. The mineralized zones at the Juan Tafoya property are below the water table, at depths of approximately 2,100 feet from the surface.

Development Plan. We do not have any plans to develop the Juan Tafoya project in the near-term.

A Technical Report was completed for the Juan Tafoya project in June 2014. The Technical Report concluded that the Juan Tafoya project was ready for the next stage of infill confirmation drilling to upgrade the mineral resources. The Technical Report recommended follow-up work in two phases:

·

Phase 1.  Conduct a confirmation drilling program of approximately 35,000 feet in 16 holes; and

·

Phase 2. Prepare a Preliminary Economic Assessment including hydrogeological work, geotechnical analysis, conceptual mining methods study, and capital and operating costs, based upon the results of the Phase 1 work program.

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Under our current cash conservation measures and business priorities, we are not contemplating any near-term work at Juan Tafoya.

Water Rights. Under the terms of the JTLC lease the Company has the right to utilize approximately 1,800 acre feet of water rights that are owned by the Juan Tafoya Land Corporation.

Permits. We have completed numerous meteorological, archaeological, biological, and radiological surveys of the Juan Tafoya project, in order to support applications for drilling permits. We hold a Sub-part 4 Regular Exploration Permit, MK023ER-R3, issued by the New Mexico Energy, Minerals and Natural Resources Department that allows us to conduct exploration drilling at the Juan Tafoya project.

OTHER

Texas Properties

We hold approximately 2,000 acres of non-material properties in Texas including the Nell and Jack Pump projects.  We do not currently have any plans to explore these projects in the near-term.

New Mexico Properties

We hold approximately 34,000 acres of other non-material properties in New Mexico including the Ambrosia Lake, Nose Rock and West Largo projects.  We do not currently have any plans to explore these projects in the near-term.

Azarga Uranium Corp. Transaction, Custer and Fall River Counties, South Dakota

We hold a 30% net proceeds interest from future uranium production from certain unpatented lode mining claims, fee leases and State leases currently controlled by Azarga Uranium Corp. (formerly Powertech Uranium) (“Azarga”) in the Dewey-Burdock area, Custer and Fall River Counties, South Dakota. Prior to our acquisition of Neutron Energy Inc. Neutron transferred its property interests in the Dewey-Burdock area to Azarga for which Neutron received (i) a 30% net proceeds interest of future uranium production and sales from Neutron’s former lands in the Dewey-Burdock area, (ii) 327 acres of mining claims and State leases along with associated historical drilling data for properties situated near Edgemont, South Dakota, (iii) 4,117 acres of mining claims in the Ambrosia Lake mining district in New Mexico and (iv) 1,709 acres of mining claims and leases in the Shirley Basin area of Wyoming. Azarga has filed permit applications with the NRC and USEPA and submitted a Plan of Operation to the BLM for its Dewey-Burdock uranium ISR project.

Our former acreage in the Dewey-Burdock area that is subject to the 30% net proceeds interest payable to us consists of approximately 1,620 acres of unpatented lode mining claims and private leases within Azarga’s proposed Dewey-Burdock permit area and an additional 4,667 acres of prospective claims and leases elsewhere within their project permit area.

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WORK COMPLETED ON PROPERTIES IN 2015

(1)

See Item 7—Management Discussion and Analysis below for discussion of 2015 mineral property expense charged to the Statement of Operations.

(2)

For description of 2015 reclamation activities at the Rosita project, see discussion at Item 2—Properties above.

INFRASTRUCTURE

The Company’s carrying value of property, plant and equipment at December 31, 2015 by location is as follows:

As noted in the table above, the Company’s most significant uranium property infrastructure is located in South Texas. The Company’s two licensed processing facilities are located at the Kingsville Dome project and at the Rosita project. The Kingsville Dome facility is currently capable of processing 800,000 pounds of U₃O₈ annually, expandable to 1.6 million pounds. The Kingsville Dome plant has a carrying value of $2.2 million. The Rosita facility is also currently capable of processing 800,000 pounds of U₃O₈ annually, and is also expandable to 1.6 million pounds. The Rosita plant is a newer facility and has a carrying value of $4.0 million. Each of these plants has been idle since 2009 and each will require approximately $0.8-$1.0 million of capital expenditures to return them to current productive capacity. The Company also has portable satellite ion exchange equipment at the Kingsville Dome project and the Rosita project with carrying values at December 31, 2015 of $1.7 million and $0.8 million, respectively. We are in the process of evaluating a relocation of our Rosita uranium processing plant to the Temrezli project in Turkey.

INSURANCE

Our properties are 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.

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RECLAIMED PROPERTIES

We acquired the Section 17 leases in the New Mexico, Churchrock district from United Nuclear Corporation which 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 determined that no additional remediation would be required under the New Mexico Mining Act.

In January 2008, the Navajo Nation Environmental Protection Agency notified the Company of its analysis that indicated potentially uranium contaminated materials present on the Old Churchrock Section 17 historic production site. In response, the Company has performed a comprehensive characterization of the Old Churchrock Site at Section 17 and lands adjacent to the site area. The Company completed the field work in two phases during the spring/summers of 2009 and 2013, respectively. These studies indicate that any off-site historic impacts at Section 17 and adjacent lands are minor. The extent of contamination and cost of remediation will be subject to the remediation standard and disposal method that are agreed to by the Company and the Nation. See Item 3, “Legal Proceedings” for a description of the status of the Navajo EPA letter and UNC/GE Demand for Indemnity in New Mexico.

ITEM 3.  LEGAL PROCEEDINGS

NAVAJO NATION CIVIL TRESPASS VIOLATION AND TEMPORARY ACCESS AGREEMENT

A civil trespass violation imposed by the Nation against the Company’s wholly-owned subsidiary, Hydro Resources, Inc. (“HRI”), has been resolved. On April 5, 2012, the Nation’s Division of Natural Resources issued a Notice of Violation and Order to Comply with the Navajo Nation Civil Trespass Act (the “NOV”) against HRI. The NOV assessed a $50 civil assessment for alleged trespass on Section 9, Township 16 North, Range 16 West, N.M.P.M. (“Section 9”), which is land held in trust by the United States for the benefit of the Nation (“Trust Lands”). The NOV stated that HRI’s Section 8 Churchrock property cannot be reached from New Mexico State Highway 566 without crossing either Section 9 or Section 17, both of which are Trust Lands, and that the Highway 566 right-of-way does not abut or extend into the Section 8 Churchrock property. The NOV demanded that HRI cease entering upon and crossing Section 9 and Section 17 for the purpose of transporting vehicles, equipment and/or personnel to the Section 8 Churchrock property until HRI either (1) provided documentation of a validly existing right- of-way or easement; or (2) obtained an appropriate right-of-way from the Nation.

On July 19, 2012, HRI and the Nation resolved the NOV by entering into a Temporary Access Agreement (the “Agreement”). HRI agrees not to cross any Nation trust lands for purposes of accessing Section 8 or other lands owned or leased by HRI except pursuant to any lawful grant consented to by the Nation and granted by the United States. Under the terms of the Agreement, HRI and its contractors could access Section 8 through either Section 9 or 17 to support site visits by the NRC and to satisfy other administrative permitting and licensing requirements related to the Churchrock Project. The Agreement does not extend to construction-related or earth-disturbing activities. HRI has further agreed to remediate any radioactive contamination now existing on Sections 8 and 17 surface lands prior to commencing planned ISR operations on Section 8. Under the terms and for the duration of this Agreement, HRI has agreed to the jurisdiction of the Nation.

On December 23, 2013, the Navajo Nation Council Resources and Development Committee (“NNRDC”) acknowledged the Company’s right-of-way and surface use at its Churchrock properties licensed by the NRC and created a subcommittee to negotiate that manner in which the Company could access its right-of-way and effectuate its surface use at the Churchrock properties.  However, in July 2014 the Navajo Nation Council deemed that the NNRDC acted improperly in forming the subcommittee and rescinded the committee’s December 2013 resolution.  The Company anticipates continuing to communicate with the Navajo Nation, but cannot predict with any certainty as to the timing or outcome of this matter.

DISPUTE OVER KLEBERG SETTLEMENT AGREEMENT

On September 28, 2007, the Company filed suit against Kleberg County in the 105^th Judicial District Court, Kleberg County, Texas for declaratory relief interpreting the December 2004 Settlement Agreement between Kleberg County (the “County”) and the Company as to the level of groundwater restoration the Company agreed to achieve in Kingsville Dome production areas 1 and 2 and for recovery of the Company’s legal fees and costs of the suit. The County filed a counterclaim alleging the Company had breached the terms of the December 2004 Settlement Agreement, asked for a Declaratory Judgment and injunctive relief ordering the Company to cure various alleged breaches of that agreement and asked that the County be awarded its legal fees and costs of the suit. On December 13, 2012, the Court ruled that the Company is permitted to continue ISR operations in the Kingsville Dome project but must continue to restore Well I-11A to its previous use.  The

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Court also ruled that the Company breached the December 2004 Settlement Agreement when it tried to rely on 1987 data (in addition to original 1985 data) drawn from Well I-11 to establish clean-up standards applicable under the December 2004 Settlement Agreement for the well, and the Court awarded nominal damages in the amount of $20.00.  On November 13, 2013, the Court ruled on attorney’s fees and found that neither the Company nor the County was entitled to attorney’s fees.

On February 10, 2014, the County filed a notice of appeal on the merits judgment of December 13, 2012 and the attorney’s fee judgment on November 13, 2013. On February 12, 2014, the Company cross-appealed on both the merits judgment and the attorney’s fees judgment. Following the submission of opening briefs, response briefs and reply briefs in the fall of 2014, on January 15, 2015 an oral hearing on the matter was held before the 13^th Court of Appeals in Corpus Christi, Texas.  On January 28, 2016, the 13^th Court of Appeals issued a memorandum opinion that found in favor of Kleberg County on four issues:  use of 1985 data as opposed to 1987 data to establish the clean-up standards for Well I-11 (upholding the trial court decision); an award of attorney fees to Kleberg County as a result of prevailing on that issue (reversing the trial court decision); requiring specific performance by the Company to restore Well I-11 prior to mining in production area 3 (reversing the trial court decision); and requiring the Company to restore production areas 1 and 2 using groundwater at a rate of 240 million gallons a year (reversing the trial court decision).  In addition, the Court of Appeals opinion held in favor of the Company on two issues:  the applicability of and notice made by the Company to invoke the force majeure provisions in the Settlement Agreement as regards groundwater restoration activities (upholding the trial court decision); and that the Company provided Kleberg County with proper notice under and thus substantially performance in accordance with the Settlement Agreement (upholding the trial court decision).  The Company is evaluating the memorandum opinion and considering whether to seek rehearing or rehearing en banc and/or whether to file a petition for review of the decision by the Texas Supreme Court.

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 Churchrock Mine Site” (“Survey Report”) to our subsidiary, 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 Churchrock site. NNEPA requested HRI and UNC/GE to undertake a “comprehensive and detailed characterization” of HRI’s Churchrock site and adjacent lease areas, as recommended in the Survey Report.

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

In response to the 2008 letter from NNEPA, the Company completed a Phase 1 site assessment of the Old Churchrock Mine Site for potential contamination from historic mining. In August 2009, the Company submitted to NNEPA a site characterization report prepared by a third-party environmental consulting firm, Intera, Inc. This assessment concluded that the conditions at the Old Churchrock Mine Site did not result in any significant off-site impact related to the prior mining activity. NNEPA has evaluated the site characterization report and the Company completed a Phase 2 assessment in 2013 at their request. In the event that a governmental authority issues a formal Administrative Order or files a lawsuit, the Company and UNC/GE 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.

LITIGATION BY FORMER CONTRACTOR

Subsequent to completion of the Anatolia Transaction, the Company was intending to continue a consulting contract executed in January 2015 between AEK and Thomas P. Young.  Under the subject contract, Mr. Young agreed to serve as Chief Operating Officer for AEK with a one-year severance payment if Mr. Young's services were terminated other than for cause.  Prior to closing the merger, the Company negotiated with Mr. Young to continue to provide contractual services; however, prior to executing the new consulting contract the Company became aware of numerous issues that justified terminating Mr. Young for cause.  Accordingly, on November 16, 2015, Mr. Young's employment with Anatolia Energy (then a subsidiary of the Company) was terminated for cause.

On November 19, 2015, Mr. Young filed a lawsuit against the Company in the District Court of Arapahoe County in the State of Colorado.  Young v. Uranium Resources, Inc., Case No. 2015CV32750 (filed November 19, 2015), Colorado District Court (Arapahoe County).  Mr. Young's complaint alleges that the Company breached the consulting agreement by failing to pay Mr. Young the one-year severance payment.  On December 7, 2015, Mr. Young filed an amended complaint.  

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Neither the initial complaint nor the amended complaint addressed the Company’s decision to terminate Mr. Young for cause.  On January 19, 2015, the Company filed an answer to the amended complaint denying the allegations and claims for relief and asserting numerous affirmative defenses.  At a case management conference conducted by the Court on February 22, 2016, counsel for both parties agreed to a two-day bench trial that is scheduled for August 29-30, 2016.  The parties are currently engaged in the discovery process.

TCEQ ADJUDICATORY PROCEEDING FOR THE KINGSVILLE FACILITY

In late 2012, the Company’s Texas-based subsidiary, URI Inc., filed an application to renew a radioactive material license for reclamation activities at the Kingsville Dome facility in South Texas with the Texas Commission on Environmental Quality (TCEQ) as well as a new application to conduct ISR mining activities at the Kingsville Dome facility.  After an extensive period of review by the TCEQ of the applications filed, additional site visits and investigations, and a further exchange of communications and documentation, in July 2015 the TCEQ staff concluded that the applications satisfied regulatory requirements and recommended that the permits should be issued or renewed.  As part of the adjudicatory process associated with that decision, TCEQ invited members of the public to comment on its recommendations and several local citizens living near the Kingsville Dome facility requested an opportunity to participate in the process.  In October 2015, TCEQ held initial hearings on the matter and concluded that some of the individuals may have standing to raise certain limited concerns and referred the matter to an administrative law judge for further consideration.

On March 3, 2016, the administrative law judge held a preliminary hearing on the TCEQ proposed decision to issue the permits for the Kingsville facility.  In addition to the parties admitted to the proceeding by the TCEQ order of October 2015, the administrative law judge granted standing to numerous additional landowners.  At the preliminary hearing, all parties agreed to a schedule for the proceeding that includes a hearing on the merits the week of September 26, 2016 with post-hearing filings completed by mid-December 2016.  A decision in the proceeding is not expected until early in calendar year 2017.  The parties are currently engaged in the discovery process.  

OTHER

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 result in material expenditures or have any other material adverse effect on the Company.

ITEM 4.  MINE SAFETY DISCLOSURES

Not Applicable.

PART II

ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

STOCK PRICE INFORMATION

URI’s common stock is traded on the NASDAQ Capital Market.

The following table sets forth the intraday high and low sales prices for our common stock as reported on the NASDAQ Capital Market for the periods indicated:

As of March 18, 2016 there were 41 holders of record of URI’s common stock.

Following the close of business on March 7, 2016, URI affected a one-for-twelve reverse stock split of its issued and outstanding common stock.  The common stock commenced trading on the NASDAQ Capital Market on a split-adjusted basis upon the open of trading on March 8, 2016.  The high and low sales prices of our common stock presented in the above table have been adjusted to give effect to the reverse stock split.

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. We expect to retain our earnings, if any, for the growth and development of our business. In addition, our existing loan agreement with RCF precludes us from paying dividends. Any future determination to declare dividends will be made at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our Board of Directors may consider relevant.

ITEM 6.  SELECTED FINANCIAL DATA

Smaller reporting companies are not required to provide the information required by this item.

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our consolidated financial statements as of and for the two years ended December 31, 2015, and the related notes thereto appearing elsewhere in this Annual Report on Form 10-K, which have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.  Actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under the section heading “Item 1A. Risk Factors” above and elsewhere in this Annual Report on Form 10-K.  See “Cautionary Note Regarding Forward-Looking Statements” above.

INTRODUCTION

URI is a uranium exploration, development and production company. We were organized in 1977 to acquire and develop uranium projects in South Texas using the ISR process. Following our acquisition of Anatolia Energy, we are focused on advancing to near-term production the Temrezli ISR project in Turkey. We also control extensive exploration properties under nine exploration and operating licenses covering approximately 44,700 acres with numerous exploration targets, including the potential satellite Sefaatli project, which is 25 miles southwest of the Temrezli project. We have historically produced uranium by ISR methods in the state of Texas where we currently have ISR projects and two licensed processing facilities. We also have approximately 190,000 acres of mineral holdings in the prolific Grants Mineral Belt of the state of New Mexico, a portion of which we have entered into a binding letter of intent to sell, and 14,000 acres in the South Texas uranium province. We acquired these properties over the past 25 years along with an extensive information database of historic drillhole logs and analysis. None of URI's properties are currently in production.

RECENT DEVELOPMENTS

Reverse Stock Split

Immediately following the close of trading on March 7, 2016, URI affected a one-for-twelve reverse stock split of its common stock.  With the reverse stock split, every twelve shares of URI’s issued and outstanding common stock were combined into one issued and outstanding share of common stock.  The reverse stock split reduced the number of shares outstanding from approximately 61.8 million shares to approximately 5.2 million shares.  In addition, effective upon the reverse stock split, the number of authorized shares of URI’s common stock was reduced from 200 million to 100 million.  The reverse stock split did not have any effect on the par value of URI’s common stock.  No fractional shares were issued as a result of the reverse stock split.  Any fractional shares that would have resulted were settled in cash.  All share data herein has been retroactively adjusted for the reverse stock split.

Option Agreement with Aspire Capital

On February 3, 2016, URI and Aspire Capital, entered into an option agreement by which Aspire Capital granted us the right at any time or times prior to April 30, 2017 to require Aspire Capital to enter into up to two common stock purchase agreements, each having a term of up to 24 months and collectively requiring Aspire Capital to purchase up to $10 million in the aggregate of our common stock (or such lesser amount as we may determine) on an ongoing basis when required by URI. As consideration for Aspire Capital entering into the option agreement, we issued 75,000 shares of our common stock to Aspire Capital.

Registered Direct Offerings

On February 4, 2016, we completed a registered direct offering for gross proceeds of $838,000.  Net proceeds to URI, after deducting offering expenses, were approximately $0.8 million.  We sold 296,667 shares of common stock at a price of $2.82 per share.

On December 18, 2015, we completed a registered direct offering for gross proceeds of $1.0 million.  Net proceeds to URI, after deducting agent fees and offering expenses, were $0.7 million.  We sold 208,332 shares of common stock at a price of $4.80 per share.

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On March 6, 2015, we completed a registered direct offering for gross proceeds of $6.0 million.  Net proceeds to URI, after deducting agent’s fees and offering expenses, were $5.4 million.  We sold 333,333 million units at a price of $18.00 per unit, with each unit comprised of one share of our common stock and a warrant to purchase 0.55 shares of common stock at an exercise price of $24.00 per whole share.  The warrants are exercisable for a period of five years beginning on the six-month anniversary of original issuance and ending on a date five years after the first date of exercisability.

Acquisition of Anatolia Energy

On November 9, 2015, we completed the Anatolia Transaction.  Upon the closing of the Anatolia Transaction, we issued approximately 1.7 million shares of our common stock, 577,663 replacement options and replacement performance shares relating to 58,286 shares of our common stock to holders of Anatolia Energy’s securities, and Anatolia Energy became a wholly-owned subsidiary of URI. Immediately after the closing of the Anatolia Transaction, the former Anatolia Energy shareholders held approximately 40% of the outstanding common stock of the combined company (or approximately 43% on a fully diluted basis), and the shares of common stock held by continuing shareholders represented approximately 60% of the outstanding common stock of the combined company.

Laramide Asset Sale

Also on November 9, 2015, we entered into an LOI with Laramide Resources for the sale of our Churchrock and Crownpoint properties in New Mexico. Under the terms of the LOI, URI and certain of our subsidiaries have agreed, subject to the execution of definitive documentation, to transfer ownership of the Churchrock and Crownpoint properties to Laramide Resources or its subsidiaries. In exchange, we will receive from Laramide Resources at closing, cash in the amount of $5.25 million and a note receivable in the amount of $7.25 million payable in three equal installments over the next three years. Laramide Resources will also assume any liabilities related to reclamation and remediation on the subject lands. Closing of the transaction is expected to occur during the first half of 2016, subject to financing and other customary conditions, including applicable regulatory approvals.

Energy Fuels Asset Sale

On June 28, 2015, we completed the sale of our remaining Roca Honda project assets to Energy Fuels Inc. for $2.5 million in cash, $375,000 in Energy Fuels Inc.’s NYSE MKT-listed shares (amounting to 76,455 UUUU shares) plus other non-cash consideration.  The transaction with Energy Fuels Inc. closed on July 31, 2015, and we sold the Energy Fuels Inc. shares on February 22, 2016 for net proceeds of $0.2 million.

Reclamation progress at the Rosita project.   

We completed the plugging and abandonment phase of reclamation at its Rosita project during 2015.  We are currently performing surface reclamation activities at the Rosita project and are approximately 45% complete in Production Area 1 and 55% complete in Production Area 2.

Exploration Drilling and Data Purchase   

On March 23, 2015, we reported that all five drill holes from a completed preliminary drill program at the Butler Ranch project in South Texas encountered multiple zones of anomalous to low-grade levels of uranium mineralization.  In July 2015, we acquired an extensive data set containing historical mineral resource estimates as well as over 2,000 drill logs, geologic and other data for the Butler Ranch project.  

RESULTS OF OPERATIONS

Summary

Our consolidated net loss for the years ended December 31, 2015 and 2014 was $15.1 million and $10.7 million or $5.63 and $5.28 per share, respectively.  The principal components of these year-over-year changes are discussed below.

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Mineral property expenses

Mineral property expenses for the year ended December 31, 2015 were $4.5 million, as compared with $3.5 million for the year ended December 31, 2014.

The following table details our mineral property expenses for the years ended December 31, 2015 and 2014.

For the year ended December 31, 2015, mineral property expenses increased by $1.0 million as compared with the corresponding period in 2014.  This increase was mostly due to an increase in exploration and evaluation costs of $1.0 million.  During 2015 we incurred $0.6 million on exploration programs at the Alta Mesa Este and Butler Ranch projects, which included the acquisition of an extensive data set containing historical mineral resource estimates as well as over 2,000 drill logs, geologic and other data for the Butler Ranch Project.  The remaining $0.4 million was attributable to evaluation activities at our recently acquired Temrezli Project.  We did not incur any exploration or evaluation costs during 2014.    

General and administrative expenses

Significant expenditures for general and administrative expenses for the years ended December 31, 2015 and 2014 were:

General administrative charges decreased by $1.6 million as compared with the corresponding period in 2014.  This decrease mostly reflects our focus on the Anatolia Transaction during 2015 and our ongoing efforts to reduce costs.

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Acquisition related expenses

During 2015, we incurred acquisition related costs associated with the Anatolia Transaction of $3.0 million.  These costs were mostly the result of legal and accounting costs of $1.7 million and consultant fees, including investment banking fees, of $1.3 million.  

Non-operating income and expenses

Gain on disposal/exchange of uranium properties

2015 Disposal

On June 26, 2015, we entered into a Purchase and Exchange Agreement (“PEA”) with Energy Fuels Inc., pursuant to which at closing on July 31, 2015 subsidiaries of URI transferred ownership of the our Roca Honda project, including mineral fee lands and unpatented lode mining claims to Energy Fuels. In exchange, Energy Fuels delivered to URI (i) $2.5 million in cash, (ii) 76,455 shares of Energy Fuels common stock with a fair value upon closing of  $0.3 million, which we sold on February 22, 2016 for $0.2 million (iii) Energy Fuels’ 4% gross royalty covering 5,640 acres on seven mineral leases in the state of Wyoming at the Kendrick and Barber areas of the Lance uranium ISR project, which is currently under construction by Peninsula Energy Limited, and (iv) unpatented lode mining claims covering 640 acres located near Churchrock, New Mexico, which are contiguous with our Churchrock project.

We also retained a 4% royalty on Section 17 of the Roca Honda project. The royalty can be repurchased by Energy Fuels upon payment to URI of $5.0 million cash at any time at Energy Fuel’s sole discretion prior to the date on which the first royalty payment becomes due.

The divestiture of the Roca Honda project was accounted for as an asset disposal and the non-cash considerations received from Energy Fuels was recorded at fair value. The fair value of the shares of Energy Fuels common stock received was determined using the closing share price of Energy Fuels stock on July 31, 2015. The fair value of the unpatented lode mining claims and mineral leases was determined based upon the per pound value of similar transactions involving unproved uranium assets within the last three years. We determined that the Lance Royalty had de minimus value and therefore determined the fair value to be nil. The following gain was included in our Statement of Operations and was determined using the fair value amounts of the purchase consideration less the carrying value of the Roca Honda project:

2014 Asset Exchange

On September 5, 2014, URI, its wholly owned subsidiary Uranco, Inc. and Rio Grande Resources Corporation (“RGR”) entered into an Asset Exchange Agreement whereby we agreed to acquire from RGR certain uranium properties located in South Texas near the Company’s processing facilities, including, among others, the Alta Mesa Este, Butler Ranch and Sejita Dome exploration projects.  In exchange for these South Texas properties, we agreed to transfer to RGR two parcels of fee-owned mineral rights and a royalty interest in the Roca Honda area of west-central New Mexico.  URI retained certain leases, mining claims and fee-owned mineral interest on separate parcels in the Roca Honda area.  On November 6, 2014, after completing customary due diligence and satisfying certain closing conditions, URI and RGR closed the transaction and effectuated the exchange of properties.

The Asset Exchange Agreement was accounted for as a non-monetary exchange of assets which requires the assets received in an asset exchange be recorded at the fair value of the assets relinquished.  We determined the fair value of the Roca Honda assets relinquished to be $2.3 million.  This fair value was determined based upon the per pound value of similar transactions involving uranium assets within the last 3 years.  The carrying value of the Roca Honda assets relinquished in the transaction had previously been written off to nil in prior years and, as a result, the entire $2.3 million was recognized as a gain on non-monetary exchange of assets and included in our Consolidated Statements of Operations.

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Interest expense

Interest expense of $2.6 million for the year ended December 31, 2015 consisted of interest of $0.7 million payable to RCF, amortization of the debt discount of $1.8 million and amortization of the establishment fee of $0.1 million.  Interest expense of $2.5 million for the year ended December 31, 2014 consisted of interest of $0.8 million payable to RCF, amortization of the debt discount of $1.6 million and amortization of the establishment fee of $0.1 million.    

FINANCIAL POSITION

Operating Activities

Net cash used in operating activities was $12.0 million for the years ended December 31, 2015 and 2014.  The increase in the net loss of $4.5 million for the year ended December 31, 2015 as compared with 2014 was offset by an increase in accounts payable of $2.3 million and an increase in non-cash items of $2.2 million.

Investing Activities

Net cash provided by investing activities was $1.0 million for the year ended December 31, 2015, as compared with net cash used by investing activities of $0.1 million for the same period in 2014. The increase in cash provided by investing activities of $1.1 million for the year ended December 31, 2015 is primarily due to the receipt of $2.5 million from Energy Fuels Inc. as partial consideration for the sale of the remaining Roca Honda project assets, which was offset by cash paid for the Anatolia Transaction of $1.4 million, which represented the amount loaned by URI to Anatolia Energy to fund operations prior to completion of the Anatolia Transaction, offset by cash received from Anatolia Energy upon completion of the Anatolia Transaction.  

Financing Activities

Net cash provided by financing activities was $6.3 million for the year ended December 31, 2015.  For 2015, we received net proceeds of $5.4 million from a registered direct offering completed on March 6, 2015, net proceeds of $0.7 million from a registered direct offering completed on December 18, 2015 and $0.3 million in net proceeds from common stock sold through our ATM program.  Offsetting these amounts were payments made for withholding taxes on net share settlements of equity awards of $0.1 million.  

Net cash provided by financing activities was $16.5 million for the year ended December 31, 2014.  For the year ended December 31, 2014 cash proceeds in aggregate of $5.0 million were received from two separate advances made under our Loan Agreement with RCF.  An advance of $2.0 million was received in January 2014 and an advance of $3.0 million was received in April 2014.  Also during the year ended December 31, 2014, we received net proceeds of $9.3 million from a registered direct offering completed in February 2014 and $2.5 million in net proceeds from common stock sold through the our ATM program.  Offsetting these amounts were payments made for withholding taxes on net share settlements of equity awards of $0.1 million and payments made for the purchase of treasury stock of $0.2 million.  On October 3, 2014, we entered into a Second Amendment to the Uranium Mining Lease and Agreement whereby, on October 6, 2014, we repurchased 7,635 shares of common stock from the Juan Tafoya Land Corporation for an aggregate purchase price of $0.2 million

Liquidity and Capital Resources  

Our Consolidated Financial Statements have been prepared on a “going concern” basis, which means that the continuation of URI is presumed even though events and conditions exist that, when considered in the aggregate, raise substantial doubt about our ability to continue as a going concern because it is possible that we will be unable to meet our obligations as they become due within one year after the date that the financial statements were issued.

Following completion of the Anatolia Transaction, we faced liquidity challenges as we encountered difficulty raising sufficient capital as a result of weakening capital markets, particularly in the commodities sector.  In addition, we incurred higher than expected transaction costs and assumed significant unpaid trade payables from Anatolia Energy.  At December 31, 2015, our cash balances were $0.9 million and we had a working capital deficit of $8.9 million.  Contributing to the working capital deficit was the reclassification of the RCF Loan from long-term to short-term liabilities as the RCF Loan matures on December 31, 2016.  On February 4, 2016, we completed a registered direct offering whereby we sold 296,667 shares of common stock at a price of $2.82 per share.  Net proceeds, after deducting offering expenses, were $0.8

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million.  The ending cash balance of $0.9 million along with the proceeds received from the registered direct offering of $0.8 million provided us with sufficient capital to fund our critical operations through March 31, 2016.  Subsequent to March 31, 2016, we expect to receive funding from the following sources:

·

Laramide Asset Sale

As discussed under “Recent Corporate Developments,” above, on November 9, 2015, we entered into an LOI with Laramide Resources for the sale of our Churchrock and Crownpoint properties in New Mexico.  Under the terms of the binding LOI, we expect to receive a cash payment of $5.25 million upon closing, currently anticipated to occur in the second quarter of 2016.

·

Option Agreement with Aspire Capital

On February 3, 2016, we entered into an option agreement with Aspire by which Aspire Capital granted us the right at any time or times prior to April 30, 2017 to require Aspire Capital to enter into up to two common stock purchase agreements (“SPAs”), each having a term of up to 24 months and collectively requiring Aspire Capital to purchase up to $10 million in the aggregate of our common stock on an ongoing basis when we require.   

·

At-the-Market Sales Agreement

We have an existing ATM Sales Agreement that allows us to sell, from time-to-time, shares of our common stock in at-the-market offerings having an aggregate offering amount up to $15.0 million of which we have approximately $5.6 million available for future sales as of March 18, 2016.

While we believe the sources of capital above may provide us with sufficient liquidity to fund ongoing operations through December 31, 2016 and settle the RCF Loan upon maturity, our market capitalization, low trading volume and potential to fall below the reference price under the SPAs may make it difficult for us to fully utilize the $10.0 million and $5.6 million available under the SPAs and ATM Sales Agreement, respectively.  Therefore we believe that we will need to raise additional funding or renegotiate the terms of the RCF Loan in order to continue as a going concern.  We are currently evaluating our options with respect to the RCF Loan and also continue to explore opportunities to raise additional funds, further monetize our non-core assets and look for ways to further reduce our monthly cash expenditures.

We have been successful at raising capital in the past, most recently with the completion of the registered direct offering on February 4, 2016 for gross proceeds of $0.8 million and two registered direct offerings during 2015 which occurred on December 18, 2015 and March 6, 2015 for aggregate net proceeds of $6.1 million. In addition, we were able to successfully raise capital in 2013 and 2014 through debt and equity fundraising efforts. Specifically, the completion of a registered direct offering in February 2014 for net proceeds of $9.3 million as well as procuring a convertible secured debt facility in November 2013 that provided us with $8.0 million in cash, which debt matures in December 2016.  While we have been successful in the past raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available to us in amounts sufficient to meet our needs, including upon the maturity of our outstanding debt, or on terms acceptable to us. In the event funds are not available, we may be required to change our planned business strategies or we could default under our secured debt facility.

Off- Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies

Our significant accounting policies are described in Note 3 to the consolidated financial statements in Item 8 of this Annual Report on 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.

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Property, Plant and Equipment

We review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets. An impairment loss is measured and recorded based on discounted estimated future cash flows or upon an estimate of fair value that may be received in an exchange transaction. Future cash flows are estimated based on estimated quantities of recoverable minerals, expected U3O8 prices (considering current and historical prices, trends and related factors), production levels, operating costs of production, availability and cost of capital and restoration and reclamation costs, based upon the projected remaining future uranium production from each project. The significant assumptions used in determining the future cash flows for our uranium properties and uranium plant assets at December 31, 2015 included an average long-term U3O8 price of $53.90 per pound and average operating costs and capital expenditure costs based on third-party and internal cost estimates.  Estimates and assumptions used to assess recoverability of our long-lived assets and measure fair value of our uranium properties are subject to risk uncertainty.  Changes in these estimates and assumptions could result in the impairment of our long-lived assets.  Events that could result in the impairment of our long-lived assets include, but are not limited to, decreases in the future U3O8 prices, decreases in the estimated recoverable minerals and any event that might otherwise have a material adverse effect on our costs.  During 2015 and 2014, we recorded impairments of $1.0 million and $0.2 million, respectively, to reduce the carrying value of property, plant and mine equipment. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of uranium properties upon acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of uranium that will be obtained after taking into account losses during processing and treatment. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups.     

Asset Retirement Obligations

Regarding our reserve for asset retirement obligations, significant estimates were utilized in determining the future costs to complete the groundwater restoration, plugging and abandonment of wellfields and surface reclamation at our ISR sites. Estimating future costs can be difficult and unpredictable as they are based principally on current legal and regulatory requirements and ISR site closure plans that may change materially. The laws and regulations governing ISR site closure and remediation in a particular jurisdiction are subject to review at any time and may be amended to impose additional requirements and conditions which may cause our provisions for environmental liabilities to be underestimated and could materially affect our financial position or results of operations. Estimates of future asset retirement obligation costs are also subject to operational risks such as acceptance of treatment techniques or other operational changes.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Smaller reporting companies are not required to provide the information required by this item.

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ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Uranium Resources, Inc.

We have audited the accompanying consolidated balance sheets of Uranium Resources, Inc. and subsidiaries (collectively, the “Company”) as of December 31, 2015 and 2014, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits 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 the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Uranium Resources Inc. and subsidiaries as of December 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses, and has a working capital deficit. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters also are discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Hein & Associates LLP

Denver, Colorado

March 18, 2016

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The accompanying notes are an integral part of these consolidated financial statements.

66

The accompanying notes are an integral part of these consolidated financial statements.

67

The accompanying notes are an integral part of these consolidated financial statements.

68

The accompanying notes are an integral part of these consolidated financial statements.

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URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.”) and include the accounts of URI and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the U.S. (“US GAAP”) requires management to make certain estimates and assumptions. 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimates included in the preparation of the financial statements are related to asset retirement obligations; stock-based compensation; derivative liabilities and asset impairment, including estimates used to derive future cash flows or market value associated with those assets.

Cash and Cash Equivalents

We consider all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. We maintain cash deposits in excess of federally insured limits. We monitor the soundness of the financial institution and believe the risk is negligible.

Available-for-Sale Investments

We determine the appropriate classification of our investments at the time of purchase and re-evaluate such determinations each reporting date.  Marketable equity securities are categorized as available-for-sale and carried at fair market value on the Balance Sheet.

Unrealized gains and losses are included as a component of accumulated other comprehensive loss, unless an other-than-temporary impairment in value has occurred in which case the unrealized loss would be charged to current period loss as an impairment charge.  Unrealized gains and losses originally included in accumulated other comprehensive income are reclassified to current period net loss when the sale of securities occurs or when a security is impaired.  

Property, Plant and Equipment

Facilities and Equipment

Expenditures for new facilities or equipment and expenditures that extend the useful lives of existing facilities or equipment are capitalized and recorded at cost. The facilities and equipment are amortized using the units of production method.  During the periods that our facilities are not in production, depreciation of our facilities and equipment is suspended as the assets are not in service.

Uranium Properties

Mineral rights acquisition costs are capitalized when incurred, and exploration costs are expensed as incurred.  When we determine that a mineral right can be economically developed in accordance with U.S. GAAP, the costs then incurred to develop such property will be capitalized.   During the periods that our facilities are not in production, depletion of our mineral interests, permits, licenses and development properties is suspended as the assets are not in service.  If mineral properties are subsequently abandoned or impaired, any undepleted costs will be charged to loss in that period.

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URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Property, Plant and Equipment

Other property, plant and equipment consists of corporate office equipment, furniture and fixtures and transportation equipment. Depreciation on other property is computed based upon the estimated useful lives of the assets. Repairs and maintenance costs are expensed as incurred. Gain or loss on disposal of such assets is recorded as other income or expense as such assets are disposed.

Asset Impairment

The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets. An impairment loss is measured and recorded based on discounted estimated future cash flows or upon an estimate of fair value that may be received in an exchange transaction. Future cash flows are estimated based on quantities of recoverable minerals, expected uranium prices, production levels and operating costs of production and capital, based upon the projected remaining future uranium production from each project. Existing proven and probable reserves and value beyond proven and probable reserves, including mineralization that is not part of the measured, indicated or inferred resource base, are included when determining the fair value of mine site reporting units at acquisition and, subsequently, in determining whether the assets are impaired. The term “recoverable minerals” refers to the estimated amount of uranium that will be obtained after taking into account losses during processing and treatment.  In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of future cash flows from other asset groups. The Company’s estimates of future cash flows are based on numerous assumptions and it is likely that actual future cash flows will be significantly different than the estimates, as actual future quantities of recoverable minerals, uranium prices, production levels and operating costs of production and availability and cost of capital are each subject to significant risks and uncertainties.

Assets held for sale

The Company considers assets to be held for sale when management approves and commits to a formal plan to actively market the assets for sale at a price reasonable in relation to fair value, the asset is available for immediate sale in its present condition, an active program to locate a buyer and other actions required to complete the sale have been initiated, the sale of the asset is expected to be completed within one year and it is unlikely that significant changes will be made to the plan.  Upon designation as held for sale, the Company records the carrying value of the assets at the lower of its carrying value or its estimated fair value, less costs to sell.

Restricted Cash

At December 31, 2015 and 2014, the Company had pledged certificates of deposit and money market accounts of $4.0 million and $3.9 million, respectively, in order to collateralize performance bonds required for future restoration and reclamation obligations related to our South Texas production properties. These funds are not readily available to the Company and are not included in cash equivalents.

Asset Retirement Obligations

Various federal and state mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its ISR projects to the pre-existing or background average quality after the completion of mining. Asset retirement obligations, consisting primarily of estimated restoration and reclamation costs at the Company’s South Texas ISR projects, are recognized in the period incurred and recorded as liabilities at fair value. Such obligations, which are initially estimated based on discounted cash flow estimates, are accreted to full value over time through charges to accretion expense. In addition, the asset retirement cost is capitalized as part of the asset’s carrying value and amortized over the life of the related asset.  If the Company does not have a recorded value for the related asset, then the asset retirement cost is expensed as incurred. Asset retirement obligations are periodically adjusted to reflect changes in the estimated present value resulting from revisions to the estimated timing or amount of restoration and reclamation costs. As the Company completes its restoration and reclamation work at its properties, the liability is reduced by the carrying value of the related asset retirement liability which is based upon the percentage of completion of each restoration and reclamation activity.  Any gain or loss upon settlement is charged to income or expense and is included as part of the Company’s mineral property expense for the period.  The Company reviews and evaluates its asset retirement obligations annually or more frequently at interim periods if deemed necessary.

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URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Fair Value of Financial Instruments

Our financial instruments consist of cash equivalents, restricted cash and derivative liabilities.  U.S. GAAP defines “fair value” as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price) and establishes a fair-value hierarchy that prioritizes the inputs used to measure fair value using the following definitions (from highest to lowest priority):

·

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

·

Level 2 — Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data by correlation or other means.

·

Level 3 — Prices or valuation techniques requiring inputs that are both significant to the fair-value measurement and unobservable.

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.  The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it invests.  Periodically throughout the year, the Company has maintained balances in various U.S. operating accounts in excess of U.S. federally insured limits.  

The following table presents information about financial instruments recognized at fair value on a recurring basis as of December 31, 2015 and 2014, and indicates the fair value hierarchy:

Loss Per Share

Basic loss per share is computed using the weighted-average number of shares outstanding during the period.  Diluted loss per share is not presented as the effect on the basic loss per share would be anti-dilutive.  At December 31, 2015 and 2014, we had 1,126,543 and 315,195 in potentially dilutive securities, respectively.  

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URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Foreign Currency

The functional currency for the companies recently acquired in the Anatolia Transaction was determined to be the U.S. dollar upon completion of the acquisition since our newly acquired foreign subsidiaries are direct and integral components of URI and are dependent upon the economic environment of URI’s functional currency.  Accordingly, we have translated our monetary assets and liabilities at the period-end exchange rate and the non-monetary assets and liabilities at historical rates, with income and expenses translated at the average exchange rate for the current period.  All translation gains and losses have been included in the current period loss.

Recently Issued Accounting Pronouncements

In August 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity's ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted.  The Company does not expect to early adopt this guidance and do not believe that the adoption of this guidance will have a material impact on our financial statements.  We are still assessing the impact on the related disclosures.

In September 2015, FASB issued ASU 2015-16, “Simplifying the Accounting for Measurement-Period Adjustments,” which eliminates the requirement for an acquirer to retrospectively adjust the financial statements for measurement-period adjustments that occur in periods after a business combination is consummated.  These changes become effective for annual periods ending after December 15, 2015.  The Company is still assessing the impact on its consolidated financial statements and related disclosures.

2. LIQUIDITY AND GOING CONCERN

The Consolidated Financial Statements of the Company have been prepared on a “going concern” basis, which means that the continuation of the Company is presumed even though events and conditions exist that, when considered in the aggregate, raise substantial doubt about the Company’s ability to continue as a going concern because it is possible that the Company will be unable to meet its obligations as they become due within one year after the date that these financial statements were issued.

Following completion of the Anatolia Transaction, the Company faced liquidity challenges as it encountered difficulty raising sufficient capital as a result of weakening capital markets, particularly in the commodities sector.  In addition, the Company incurred higher than expected transaction costs and assumed significant unpaid trade payables from Anatolia Energy.  At December 31, 2015 the Company’s cash balances were $0.9 million and the Company had a working capital deficit of $8.9 million.  Contributing to the working capital deficit was the reclassification of the RCF Loan (defined in Note 6, below) from long-term to short-term liabilities as the RCF Loan matures on December 31, 2016.  On February 4, 2016, the Company completed a registered direct offering whereby it sold 296,667 shares of common stock at a price of $2.82 per share.  Net proceeds to the Company, after deducting offering expenses, were $0.8 million.  The ending cash balance of $0.9 million along with the proceeds received from the registered direct offering of $0.8 million provided the Company with sufficient capital to fund its critical operations through March 31, 2016.  Subsequent to March 31, 2016, the Company expects to receive funding from the following sources:

·

Laramide Asset Sale

On November 9, 2015, the Company entered into a letter of intent (“LOI”) with Laramide Resources for the sale of its Churchrock and Crownpoint properties in New Mexico.  Under the terms of the binding LOI, the Company expects to receive a cash payment of $5.25 million upon closing, currently anticipated to occur in Q2 2016.

·

Option Agreement with Aspire Capital

On February 3, 2016, the Company and Aspire Capital entered into an option agreement by which Aspire Capital granted it the right at any time or times prior to April 30, 2017 to require Aspire Capital to enter into up to two SPAs, each having a term of up to 24 months and collectively requiring Aspire Capital to purchase up to $10 million in the aggregate of its common stock on an ongoing basis when required by the Company.   

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URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

·

At-the-Market Sales Agreement

The Company has an existing ATM Sales Agreement that allows it to sell, from time-to-time, shares of its common stock in at-the-market offerings having an aggregate offering amount up to $15.0 million of which we have approximately $5.6 million available for future sales as of March 12, 2016.

While the Company believes the sources of capital above may provide sufficient liquidity to fund ongoing operations through December 31, 2016 and settle the RCF Loan upon maturity, the Company’s market capitalization, low trading volume and potential to fall below the reference price under the SPAs may make it difficult for the Company to fully utilize the $10.0 million and $5.6 million available under the SPAs and ATM Sales Agreement, respectively.  Therefore the Company believes that it will need to raise additional funding or renegotiate the terms of the RCF Loan in order to continue as a going concern.  The Company is currently evaluating its options with respect to the RCF Loan and also continues to explore opportunities to raise additional funds, further monetize its non-core assets and look for ways to reduce its monthly cash expenditures.

The Company has been successful at raising capital in the past, most recently with the completion of the registered direct offering on February 4, 2016 for gross proceeds of $0.8 million and two registered direct offerings during 2015 which occurred on December 18, 2015 and March 6, 2015 for aggregate net proceeds of $6.1 million. In addition, the Company was able to successfully raise capital in 2013 and 2014 through debt and equity fundraising efforts. Specifically, the completion of a registered direct offering in February 2014 for net proceeds of $9.3 million as well as procuring a convertible secured debt facility in November 2013 that provided us with $8.0 million in cash, which debt matures in December 2016.  While the Company has been successful in the past raising funds through equity and debt financings as well as through the sale of non-core assets, no assurance can be given that additional financing will be available to it in amounts sufficient to meet its needs, including upon the maturity of our outstanding debt, or on terms acceptable to the Company. In the event funds are not available, the Company may be required to change its planned business strategies or it could default under its secured debt facility.

3. ACQUISITIONS AND DISPOSALS

Acquisition of Anatolia Energy

On November 9, 2015, the Company completed its acquisition of 100% of the outstanding securities of Anatolia Energy for total consideration of $17.4 million.  The consideration was comprised of $1.5 million in cash used to fund Anatolia Energy’s operating activities prior to completion of the Anatolia Transaction, $15.9 million in common stock of the Company and listed and unlisted options in the Company.  Each ordinary share of Anatolia Energy was exchanged for 0.00548 common shares of URI and each outstanding Anatolia Energy performance share, listed option or unlisted option was converted into a performance share, listed option or unlisted option (as applicable) to acquire common shares of the Company, on the same terms and conditions as were applicable prior to the Anatolia Transaction, except that the number of shares to be received upon conversion and the exercise price were adjusted based on the fair value of the performance share, listed option or unlisted option prior to completion of the Anatolia Transaction, as to preserve the economic value of such performance share or option.  As a result, the Company issued 1,709,724 new shares, 266,742 listed options, 310,921 options and 58,286 performance shares.  The value of the Company’s stock issued as consideration was based upon the opening share price on November 10, 2015 of $9.00 for those shares issued on the NASDAQ and A$11.88 ($8.38) for those shares issued on the ASX.  The Company did not include the fair value of the performance shares in its determination of the purchase price as in accordance with accounting rules, expense should not be recognized until it is reasonably certain that the performance condition will be satisfied.  As the Company does not believe the performance condition will be satisfied prior to the date the performance shares expire, it did not include the fair value of the performance shares in the determination of the purchase price.  The results of Anatolia Energy are included in the Consolidated Statement of Operations commencing November 10, 2015.

Acquisition related costs were $3.0 million, of which $0.7 million was settled by the issuance of 79,841 shares of URI’s common stock.  Subsequent to December 31, 2015, URI issued an additional 117,097 shares of common stock as settlement of $0.7 million of required termination payments.   

Anatolia Energy is an Australian entity that indirectly holds a 100% interest in the Temrezli project located in Central Turkey, which URI plans to advance to near-term production.  

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URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The acquisition of Anatolia Energy was accounted for as a business combination with URI deemed to be the acquirer, as, post-combination, URI continues to control the Board of Directors and senior management positions and has overall control over the day-to-day activities of the combined entity.

The following summarizes the preliminary allocation of purchase price to the fair value of assets acquired and liabilities assumed as of the acquisition date (in thousands):

The carrying value of the current assets and liabilities assumed approximated the fair value due to the short-term nature of these items.  The fair value of the uranium properties was estimated using a discounted cash flow approach.  Key assumptions used in the discounted cash flow analysis include discount rates, mineral resources, future timing of production, recovery rates and future capital and operating costs.  

The unaudited pro forma financial information below represents the combined results of the Company’s operations as if the acquisition had occurred at the beginning of the periods presented. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have occurred if the acquisition had taken place at the beginning of the periods presented, nor is it indicative of future operating results.

Purchase and Exchange Agreement with Energy Fuels

On June 26, 2015, the Company and certain of its subsidiaries entered into a Purchase and Exchange Agreement (the “PEA”) with Energy Fuels Inc. and a subsidiary of Energy Fuels Inc. (collectively, “Energy Fuels”), pursuant to which at closing on July 31, 2015 subsidiaries of URI transferred ownership of URI’s Roca Honda project, including mineral fee lands and unpatented lode mining claims in Sections 8 and 17 of Township 13 North, Range 8 West, covering approximately 1,240 acres and 3,382 acres of leased claims to Energy Fuels.  In exchange, Energy Fuels delivered to URI (i) $2.5 million in cash, (ii) 76,455 shares of Energy Fuels common stock with a fair value upon closing of $0.3 million, which were subsequently sold on February 22, 2016 for $0.2 million,  (iii) Energy Fuels’ 4% gross royalty covering 5,640 acres on seven mineral

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leases in the state of Wyoming at the Kendrick and Barber areas of the Lance uranium in-situ recovery project, which is currently under construction by Peninsula Energy Limited, and (iv) unpatented lode mining claims covering 640 acres in Section 4 of Township 16 North, Range 18 West, located near Churchrock, New Mexico, which are contiguous with the Company’s Churchrock project, as well as claims in Section 34 and leases from the state of New Mexico in Sections 32 and 36, all situated in Township 17 North, Range 16 West.

URI also retained a 4% royalty on Section 17 of the Roca Honda project.  The royalty can be repurchased by Energy Fuels upon payment to URI of $5.0 million cash at any time at Energy Fuel’s sole discretion prior to the date on which the first royalty payment becomes due.

The divestiture of the Roca Honda project was accounted for as an asset disposal and the non-cash considerations received from Energy Fuels was recorded at fair value.  The fair value of the shares of Energy Fuels common stock received was determined using the closing share price of Energy Fuels stock on July 31, 2015.  The fair value of the unpatented lode mining claims and mineral leases was determined based upon the per pound value of similar transactions involving unproved uranium assets within the last three years.  The Company determined that the Lance Royalty had de minimus value and therefore determined the fair value to be nil.  The following fair value amounts were recorded as the purchase consideration:

The fair value of the shares of Energy Fuel’s common stock received were valued using Level 1 inputs of the fair-value hierarchy and the fair value of the unpatented lode mining claims and mineral leases were valued using Level 3 inputs of the fair-value hierarchy (as defined in Note 1 above).  

During the fourth quarter of 2015, the Company identified an adjustment of $0.6 million to its previously recorded gain on the sale of the Roca Honda assets.  The Company previously did not include the carrying value of the West Endy project in its determination of the amount of the gain.  The Company recorded this out-of-period adjustment in the quarter ended December 31, 2015.  The Company assessed the materiality of this error on our current and prior period financial statements in accordance with Staff Accounting Bulletin (“SAB”) Topic 1.M and SAB Topic 1.N, and concluded the error was not material to the financial condition for the current and prior interim periods.  As a result of this error, the Company reported net income of $0.3 million for the three month period and a net loss of $8.0 million for the nine-month period ended September 30, 2015, which should have been reported as a loss of $0.3 and $8.7 million, respectively.  Additionally, the Company reported earnings per share of $0.01 for the three month period and loss per share of $0.28 per share for the nine-month period ended September 30, 2015, which should have been reported as a loss per share of $0.01 and $0.30, respectively.  The Company evaluated the impact of this error on the loss for the full fiscal year and on the trends of its earnings and determined that it did not have a material impact on either.

The Company recorded the following gain on disposal of uranium properties within its Consolidated Statement of Operations:

Asset Exchange Agreement with Rio Grande Resources Corporation

On September 5, 2014, the Company, its wholly owned subsidiary Uranco, Inc. and Rio Grande Resources Corporation (“RGR”) entered into an Asset Exchange Agreement whereby the Company agreed to acquire from RGR certain uranium properties located in South Texas near the Company’s processing facilities, including, among others, the Alta Mesa

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Este, Butler Ranch and Sejita Dome exploration projects.  In exchange for these South Texas properties, the Company agreed to transfer to RGR two parcels of fee-owned mineral rights and a royalty interest in the Roca Honda area of west-central New Mexico.  The Company retained certain leases, mining claims and fee-owned mineral interest on separate parcels in the Roca Honda area.  On November 6, 2014, after completing customary due diligence and satisfying certain closing conditions, the Company and RGR closed the transaction and effectuated the exchange of properties.

The Asset Exchange Agreement was determined to be a non-monetary exchange of assets having commercial substance in accordance with ASC Topic 845 which requires the assets received in an asset exchange be recorded at the fair value of the assets relinquished.  The Company determined the fair value of the Roca Honda assets relinquished to be $2.3 million.  This fair value was determined based upon the per pound value of similar transactions involving unproved uranium assets within the last 3 years.  The carrying value of the Roca Honda assets relinquished in the transaction had previously been written off to nil in prior years and, as a result, the entire $2.3 million was recognized as a gain on non-monetary exchange of assets and included in the Company’s Consolidated Statements of Operations.

4. PROPERTY, PLANT AND EQUIPMENT

Uranium Properties

Temrezli Project

As discussed in Note 3 above, the Temrezli project was acquired as part of the Anatolia Transaction.  The Company controls six licenses that make up the Temrezli project area that were granted to our Turkey-based subsidiary Adur Madencilik Ltd Sti. by the Turkish General Directorate of Mining Affairs.  The granted licenses cover an area of about 13,490 acres.  We hold these licenses through the payment of fees to the Turkish government and the fulfillment of certain physical work obligations on an annual basis.  Uranium production from the licenses is subject to the payment of a sliding scale royalty, ranging from 2% to 16% depending upon the sales price of uranium, as defined by Turkish mining law.  The sliding scale royalty payments are to be made to certain agencies of the local and Turkish governments.  A further 1% royalty is payable to the General Directorate of Mining Affairs, who discovered the Temrezli uranium deposit.

Kingsville Dome Project

The Kingsville Dome project consists of mineral leases from private landowners on about 2,434 gross and 2,227 net acres located in central Kleberg County, Texas. The leases provide for payment to the landowners of royalties based upon a percentage of uranium sales of 6.25% to 9.375%. 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 an annual per acre royalty ranging from $10 to $30. We have paid such royalties on all material acreage.

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Rosita Project

The Rosita project consists of mineral leases from private landowners on about 3,377 gross and net acres located in north-central Duval County, Texas. The Rosita South property consists of mineral leases from private land owners on about 1,795 gross acres and 1,479 net acres located in Duval County near the Company’s Rosita project. The leases provide for the payment to the landowners of 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 primary and secondary terms to 2015, and provisions to extend the leases for an additional twenty years. We are holding these leases by payment of rentals ranging from $10 to $30 per acre.

Vasquez Project

The Vasquez project is comprised of 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 and reclamation activities. The lease provides for the payment to the landowner 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.

Butler Ranch Project

As discussed in Note 3 above, the Butler Ranch exploration project was acquired as part of the Company’s Asset Exchange Agreement.  The property is comprised of nine fee leases that cover an area of about 2,653 gross or 2,592 net acres of mineral rights. We can hold the leases by payment of annual rental fees, ranging from $10 to $25 per acre. Each of the leases makes provision for the payment of royalties of 10% of sales to the property owners. Leases have initial terms of 8 to 10 years and have provisions to “hold by drilling” and identifying uranium mineralization on the specific properties.

Churchrock Project

The Churchrock project encompasses about 3,458 gross and net acres. The properties that comprise the Churchrock project are located in McKinley County, New Mexico and consist of three targets, known as Section 8, Section 17 and Mancos. None of these targets lies within the area generally recognized as constituting the Navajo Nation. We own the mineral estate in fee for both Section 17 and part of the the Mancos target (Sections 7 and 13). We also own patented and unpatented lode mining claims on the Section 8 target and unpatented lode mining claims on the remainder of the Mancos target.  The assets and liabilities associated with the Churchrock project have been classified as held-for-sale as of December 31, 2015 and 2014. See Note 5 below.

The surface estate on Section 17, Mancos Section 13 and Mancos Section 7 is owned by the U.S. Government and held in trust for the Navajo Nation (the “Nation”). On those sections we have royalty obligations ranging from 5% to 6¹/₄% and a 2% overriding royalty obligation to the Nation for surface use agreements. The total royalties on Section 8 depend on the sales’ price of uranium. All of the Churchrock properties are subject to the payment of a sliding-scale (based upon the selling price of uranium) that ranges up to 25%, and in aggregate royalties are potentially as much as 33% at the current price of uranium.

Crownpoint Project

The Crownpoint project is located in the San Juan Basin, 22 miles northeast of the Company’s Churchrock project and 35 miles northeast of Gallup, New Mexico, adjacent to the town of Crownpoint. The Crownpoint project consists of 640 gross and 556 net acres. The Company holds the mineral rights in the northwest ¹/₄ of Section 9, Township 17 North, Range 13 West with 9 unpatented lode mining claims, and the mineral rights in the southwest ¹/₄ of Section 24, Township 17 North, Range 13 West with 10 unpatented lode mining claims. In the southeast ¹/₄ of Section 24, Township 17 North, Range 13 West, the Company owns in fee a 40% interest in the minerals on approximately 140 acres and hold 100% of the minerals on 20 additional acres with two unpatented lode mining claims. In the northeast ¹/₄ of Section 25, Township 17 North, Range 13 West, the Company holds the minerals with eight unpatented lode mining claims. The unpatented lode mining claims are held through the payment of an annual maintenance fee of $155 per claim to the BLM. While the rights to the minerals on the unpatented lode mining claims are subject to annual renewal through the payment of the annual maintenance fees, the rights to the minerals on the fee-owned lands are not subject to any renewal process as long as the Company maintains its ownership of the subject property. The assets and liabilities associated with the Crownpoint project have been classified as held-for-sale as of December 31, 2015 and 2014. See Note 5 below.

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Cebolleta Project

In connection with the merger of Neutron (and its wholly-owned subsidiary Cibola Resources LLC (“Cibola”)) we acquired the Cebolleta Lease with La Merced del Pueblo de Cebolleta (the “Cebolleta Land Grant”), a privately held land grant, to lease the Cebolleta Project, which is composed of approximately 6,717 acres of fee (deeded) surface and mineral rights. The Cebolleta Lease provides for: (i) a term of ten years and so long thereafter as Cibola is conducting operations on the Cebolleta Project; (ii) initial payments to the Cebolleta Land Grant of $5.0 million; (iii) a recoverable reserve payment equal to $1.00 multiplied by the number of pounds of recoverable uranium reserves upon completion of a feasibility study to be completed within six years, less (a) the $5.0 million referred to in (ii) above, and (b) not more than $1.5 million in annual advance royalties previously paid pursuant to (iv); (iv) annual advanced royalty payments of $0.5 million; (v) gross proceeds royalties from 4.50% to 8.00% based on the then current price of uranium; (vi) employment opportunities and job-skills training for the members of the Cebolleta Land Grant and (vii) funding of annual higher education scholarships for the members of the Cebolleta Land Grant. The Cebolleta Lease provides Cibola with the right to explore for, mine, and process uranium deposits present on the Cebolleta Project. In February 2012, Cibola entered into an Amendment of its Mining Lease Agreement (the “Cebolleta Lease Amendment”) amending the Cebolleta Lease, subject to approval of the Thirteenth Judicial District. Pursuant to the Cebolleta Lease Amendment, the date for the completion of the feasibility study was extended from April 2013 to April 2015. In addition, the date may be further extended subject to a reduction in the $6.5 million initial payment and annual advance royalty payments deduction to the recoverable reserve payment.

Juan Tafoya Project

In connection with the merger with Neutron we acquired the fee interest in 4,097 acres in northwestern New Mexico of fee (deeded) surface and mineral rights owned by the Juan Tafoya Land Corporation (“JTLC”). The Juan Tafoya Project is located approximately 45 miles west-northwest of the city of Albuquerque, and 25 miles northeast of the town of Laguna. The lease has a term of ten years, and it can be extended on a year-to-year basis thereafter, so long as we are conducting operations on the property. Additionally, the lease required: (i) an initial payment of $1.25 million; (ii) annual rental payments of $0.2 million for the first five years of the lease and $0.3 million for the second five years; (iii) after the second five years, annual base rent of $75 per acre; (iv) a gross proceeds royalty of 4.65% to 6.5% based on the then current price of uranium; (v) employment opportunities and job-skills training programs for shareholders of the JTLC or its heirs, (vi) periodic contributions to a community projects fund if mineral production commences from the Juan Tafoya property and (vii) funding of a scholarship program for the shareholders of the JTLC or its heirs. The Company is obligated to make the first ten years’ annual rental payments notwithstanding the right to terminate the JT Lease at any time, unless (a) the market value of uranium drops below $25 per pound, (b) a government authority bans uranium mining on the Juan Tafoya property, or (c) the deposit is deemed uneconomical by an independent engineering firm.

Impairment of Property, Plant and Equipment

The Company recorded the following impairment charges for 2015 and 2014 related to its uranium projects and processing facilities:

The Company’s recorded impairment charge for 2015 and 2014 of $0.2 million on its Kingsville Dome project was due to the physical deterioration of its processing plant equipment resulting from the plant’s idled status and its proximity to the Texas coastline.  The net carrying value of the Kingsville Dome plant equipment after impairment is $0.2 million which is calculated as $2.2 million book value less a $2.0 million liability related to dismantling and decontaminating.  The Company also used a third-party estimate of resale value to determine that no further impairment was needed as the Company’s third-party estimate of resale value exceeded the $0.2 million net carrying value of the Kingsville Dome plant equipment.  

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The Company’s recorded impairment charge for 2015 of $0.8 million on its Alta Mesa Este project was the result of URI’s Board of Directors and management determining that recent exploration results indicated that the Alta Mesa Este Project should be terminated.  As a result, the carrying value of the Alta Mesa Este Project was written down to nil.  

Mineral Property Expenses

During the years ending December 31, 2015 and 2014, the Company’s mineral property expenses were $4.5 million and $3.5 million, respectively.  Included within mineral property costs are standby costs for our three idled South Texas ISR projects along with holding and evaluation costs for all properties.  The Company spent the following amounts for each of its material properties: