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Executives

Deborah K. Pawlowski - Kei Advisors LLC

David N. Clark - President and Chief Executive Officer

Thomas H. Ehrlich - Vice President and Chief Financial Officer

Analysts

David Snow - Energy Equities

Uranium Resources, Inc. (URRE) Q4 2008 Earnings Call March 11, 2009 11:00 AM ET

Operator

Greetings and welcome to the Uranium Resources, Incorporated Fourth Quarter and Year End 2008 Earnings Release Conference Call. At this time all participants are in a listen-only mode and a brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Ms. Deborah Pawlowski, IR for Uranium Resources. Thank you. Ms. Pawlowski, you may now begin.

Deborah K. Pawlowski

Thank you, Jackie and good morning everyone. We appreciate your time today and your interest in Uranium Resources. With me on the call is President and CEO, Dave Clark; Rick Van Horn, Executive Vice President and Chief Operating Officer; and Tom Ehrlich, Chief Financial Officer.

Dave is going to provide some comments regarding the company and the release, informational release as well as the outlook, and Tom will then do a brief review of the financials. After that, we will open it up for Q&A. If you don't have the news, it can be found at our website which is uraniumresources.com

As you are aware, we may make some forward-looking statements during the formal presentation and the Q&A portion of this teleconference. Those statements apply to future events which are subject to risks and uncertainties as well as other factors that could cause the actual results to differ materially from where we are today.

These factors are outlined in the release as well as in documents filed by the company with the Securities and Exchange Commission. You can find those at our website where we regularly post information as well as at the SEC's website which is www.sec.gov. So, please review our forward-looking statements in conjunction with these precautionary factors.

With that, let me turn it over to Dave to begin the discussion.

David N. Clark

Thanks Debbie. Good morning everybody. And as Debbie said, thank you for your continued interest and your time in URI. I know this is advertised as they look back to fourth quarter in 2008, but given what kind of the year that was. But I really want to spend my time with today as looking forward where we're going from here. I think this is going to be a very important year for URI. And I also think it has a very decent chance of being a very good year. So let's spend the next couple of minutes really sharing what my vision is and how I expect this year will unfold.

As normal, we'll start with a general market analysis and outlook and then discuss our strategy in Texas and our objective there and how we expect the industry to consolidate in Texas this year. Then I'll go into the discussion of all that's happening in New Mexico including what I see as the driving force that's going to help us get into production there.

As far as the market itself, I've been in the uranium industry for more than 30 years, and it's always been a market that's traded on zones separate from economic cycles. Nuclear power plants are base-load plants, you need uranium to fuel those. Uranium always had its own market. As many of you heard me say in the past it's a market that's never been imbalanced. As expected -- it's a history of extreme move and I don't see anything that's going to change that.

Demand for uranium is still growing. Secondary supplies are still being depleted. It's all being driven by the concerns about global warming. So I think the future of nuclear power itself is still very bright.

But what we have seen over the last year certainly is the closer tie between the economic cycle and the stock market as a whole and uranium market. First, we had the hedge funds come in by 20 million pounds or more, that certainly for the market to be upside. Then as the economic war started to come in they liquidated and drove the market down.

The bigger economic question is will this economy and what may happen, is it going to be any kind of threat to nuclear renaissance? That really is a big question as far as I am concerned.

And I would say so far I think the interest surprisingly it hasn't had an effect. If anything I would see nuclear power accelerating or seeing moves in Italy to bring back nuclear power after closing down their reactor 20 years ago. The same thing with Sweden too removed the restriction gone not only continuing the operations of existing plants but building new ones and Germany may be soon to follow.

As I have discussed in the past China and India are definitely leading the way and there is nothing to change their rapid deployment. But even with the economic uncertainty nuclear power seems to be going ahead. And I think there is two reasons for that as far as I see.

The first is there is definitely an outright world on coal. Candidate Obama said go ahead and build your coal plants, they will bankrupt you. And as now President Obama, I think we'll be seeing the EPA declare CO2 a pollutant. He's already put in his proposed budget of cap and trade. The cost of coal is going up; the problem is nobody knows how much. There's a lot of uncertainty in coal.

The other aspect in nuclear power which I've heard nothing about is if it comes in what's going to happen with this economy, and the threat of inflation. Warren Buffett came out two days ago and said we might return to the inflation rates to the 1970s, certainly would lose money, high inflation could be down the road. Nuclear has a definite build in inflation hedge versus coal. If that's the environment you get, and that's mainly because of the cost of nuclear power, 80% of it is the upfront CapEx costs to build the plant and then 20% of the cost is the operating and maintenance moving forward.

It's the exact opposite with coal, 80% is to build the plant -- or 20% to build the plant, 80% is the fuel. But we're moving into an environment with rapid inflation, higher coal prices cap and trade, carbon as a pollutant, coal could have a problem, moving down the line. Obviously, the big economic question is, where are we in the world right now? Are we simply in a deep recession, that's going to have recovery in 2009-2010, or is it something there significantly worse than that?

And how that affects our market is will that impact nuclear unit (ph) demand down the line. Will it impact and slow down the nuclear renaissance? Frankly, the jury is still out on that. As a uranium mining company, we have to determine and make predictions on where things are going to go in the future. So, with the macroeconomic uncertainty, how do we move forward?

As I said in the opening, I think the uranium market still has very strong fundamentals, demand is rising, secondary supplies are being depleted. We are going to need additional production under any scenario, and the oil prices are leading to delays and cancellations. Dominion of Uranium One was -- is basically put on hold and may not operate. You may not see Olympic Dam go to the original plant to go up to 66 million pounds, those are pounds in the out-years that were being carried on, but given the high cost in oil prices, for copper and uranium they may not move forward with that. In fact, continued delays with this regard (ph).

If you look at the supply curve moving forward, most forecasts are based on the marginal costs to production may come in at $50. I think in a $40 market which is where we're at now, that's certainly the lower low end of what I think needs to be paid for uranium to give you supply that you need.

On the top end, you have $70 a pound in the long term price and that is said to reflect that long-term fundamentals. So the reality of the current market, you're looking at a price with 40 to $70.

Moving forward, and this is not a prediction, it is done in the premise that you hope for the best and plan for the worst. The assumption I make moving forward is you have to plan as if you're going to produce into a $40 market. And that's how we'll adjust our strategy to do that and then position the company for the next price hike when it comes and I think given conditions that can be sooner versus later.

The central question for URI is how we build the company to great value in a $40 market. Can we do that? And I think the answer is definitely no. So that's the general market outlook. Now I want to talk little bit about Texas and then I'll move on to the Mexico.

Looking at our Texas operations, it is something that has generated positive cash flow for us over the last several years. We have had limited reserves there, we've known that. We made the decision in October to shut down production, and not take the risk of putting money in the ground, basically because it makes no economic sense to deplete our reserves at breakeven prices. So we want to conserve the reserves, the remaining reserves we have. So when the market turns around we have reserved the stock based plant (ph) surplus.

We continue to mine. We thought originally that might end at the end of February. We still have two wellfields operating. They will continue to go and as long as they are on a breakeven cash basis. We expect the production could go a couple of weeks more and end up in range of 25 to 30,000.

Important consideration for us for shutting down the production is it allows us now to really focus on restoration, groundwater restoration on three projects. To do that, you generally circulate fixed pore volumes of water to pass through reverse osmosis units, and that's how you clean up the groundwater. You go into all the parameters, take you back towards baseline.

The restoration of groundwater is the key issue for ISR mining. Obviously it's what's left after you're done, what's the condition of the groundwater. So it's important not only in Texas but also in New Mexico. So we want to focus on doing the best job we can at restoring groundwater in the most effective manner we can in Texas.

We want to become leaders in that field of ISR restoration technology. We have started a project with Texas A&M where they're coming in to Kingsville Dome and on a mined out wellfield, trying to use hydrogenated water to enhance bioremediation. What that means is you feed anaerobic bacteria in the groundwater, hydrogen and that helps consume the oxygen. Once the oxygen is gone, the uranium precipitates groundwater. So it's a promising technology that Texas A&M is leading. We should be injecting -- begin injection probably this week, I'm not sure if it is not, we may ask it later.

We're also working with other ISR operating companies because it's a common interest to develop that technology can to restore the groundwater. And we are doing this not just because that is our obligation but because it also has strategic purposes. The objective is to demonstrate that we can clean up groundwater in Texas because that will help us demonstrate to the people in New Mexico that it can be done safely and well.

As far as the Texas uranium industry itself, the way I see it there is a lot of valuable pieces in Texas that can be pulled together to form a very profitable company. But that's going to require consolidation in the industry there.

There are several companies that have reserves but they don't have any licensed plants. URI has two of the four licensed processing plants. We have limited reserves. But what does that mean for us? Frankly, we can either be buyers or sellers, or in other words, we can look to monetize assets or we build our capacity to generate profits in cash flow out of Texas.

All the companies in Texas are in same situation with all looking to survive this market, this economy. And you basically rely on the best assets you have, and I think that's what's going to drive the consolidation in the industry in Texas. So stay tuned.

Turning to New Mexico, the big picture in New Mexico you have a state that has 600 million pounds or more of uranium reserves. It has great exploration potential. That's the good side. The bad side it has no production. It has had little, relatively little activity and has had no clarity on the issues that need to be resolved.

Those two main issues are the Navajo ban which has effectively blocked us from starting up our Church Rock project. And the fact that there's no uranium conventional mill in New Mexico which does not help the people with conventional reserves including us.

There is less investors trying to handicap the potential in New Mexico against all the challenges that are there. And there really has not been a roadmap that can be offered to help you analyze that. But I do think that's all changing now. I think there's clear signs of how we can move forward. But all I can do is give you how we see this all unfolding over next year or two.

From our perspective, the market assumptions of $40 market, so can we build our assets based on the $40 market in New Mexico? For us the answer is yes, and that's based on our ISR technology. Our focus has always been that first project which is Church Rock and every thing we've said publicly really talks about Church Rock. It's 15 million pound deposit. It will be producing 1 million pounds a year. We had Itochu as a partner and we've been waiting for a ruling from the Tenth Circuit Court of Appeals.

The fact is Church Rock itself is only the first piece of the Crownpoint Uranium Project. The main asset of that is the NRC license that gives us the ability to build the plant and we could do that the day if we chose. They can process up to 3 million pounds per year.

Church Rock and Crownpoint is 34 million pounds of in-place reserves that would be fed through that plant. Our license also includes 27 million pounds of Unit 1 where we don't have a lease because of the Navajo ban. But put together those two or those three projects add up to 61 million pounds of reserves that go through this plant.

When you look at other reserves that not only we own but others own in the area and are not leased like Unit 1. But it adds up to more than 200 million pounds that go through this plant. This project is the largest project in the U.S. which is the largest uranium consuming country in the world. It is a project of national importance and that's what we intend to focus on that and build the nest on that project. And we think that helps -- give us the help we need to resolve local issues.

When you look at New Mexico the opportunity this year is... it is a resource state. The bad economy is really hurting New Mexico. The effect of that is it really is opening up mines. People all over and not just politicians but the people who've been our opposition want to be educated that uranium issues. They don't want to just reject the economic benefits that uranium mining can bring on hand just because these people oppose to it.

So, what the economy and the bad economy has brought is new opportunity for us to make our case. When you look at the main issues in New Mexico, there are basically two. There is a legacy problem of past mining, and there is a safety concerns of future mine. And Navajo have a nexus between the two and they simply say that Until you clean up the problems in the past we're against future mining. Now the industry has always talked about, the scientists on our side at the same time our opposition has given you gut-rinsing stories of about how bad uranium mine could be.

The fact is there are legacy issues out there that are real and must be dealt with, because if they're not dealt with it'd just be the story that the anti-uranium group gives you. And that story goes something like this. Before the uranium mine came -- the uranium mining companies came everything was great. We had no problems, groundwater was fine. And then uranium companies came and they promised us good paying jobs and they promised to pay taxes and they were going to sponsor the rebuilding. But they never really told us about the risks. They never told us that they knew the dangers. And then after they mined the boom was over, the jobs were lost, the animals started to die, people started to get cancer. And we're left with this huge mess in the ground that's going to take generations to clean up.

Now when you look at the legacy problem some of that is true. When uranium mining started in 1950's there were no environmental woes. You were allowed to smoke in the mines. These things you've heard and acknowledged even in the past. And they did leave a mess, there was nothing to prevent that.

A lot of the clean up has been done. I think what said -- that needs to be done is over exaggerated. But this story does bring true for the past, it has no bearing on the future because it's based on lies and mistrust when you're talking about future mining.

Now what we need to do in this industry and what we have been doing, again we have a population that wants to be educated. We need to tell a story that is equally compelling of life sciences on our side that deals with the issues. And that story goes something like this.

As uranium mining companies, we explore for poisoned water. It's laying with heavy metals and the silent killer radiation. The fact is it isn't poisoned before we find it, it is an economic. But we're only interested in finding and developing poisoned aquifers that in many cases are being used by the local population, before those any ring mining, without any thought that it was dangerous.

We then take that poisoned water and we create jobs and we pay taxes and we support the low leg (ph) and we add millions of dollars to local economies that are -- in cases, our big projects are in rural areas that need economic development. That includes in that variation itself. And what more is we -- before we mine one pound uranium, we kept cash bonding to cover the groundwater restoration and a reclamation of the surface facilities before we ever start, it paid for and put in security -- financial security before we ever start mining.

But when we are done what happens? Yes the jobs are gone but there is still poisoned water. We haven't changed the utility. We've given economic benefits to the local area. And the fact is nothing is going to change that poisoned water being there. The same natural process is deposit in the first place and the same things are going to keep it there. The fact is in 40 year or 40 plus years of ISR mining there has never been an excursion of safe from an ISR facility.

So that is the story that we need to tell, that is the story I think the people are very receptive to. And it's based on fact not just fears. And we are getting valuable help in that area. Sandia and Los Alamos Labs are starting the use of monitored natural attenuation which is a period that is used for the cleaning up of weapons plants and old uranium mill sites. There is a fancy word, bonds are natural attenuation but you already know what it means because I just told you.

What it basically means is the natural process that put the uranium in the first place will keep it there once we're done mining. And this is helpful because it is what happens, it is what we said when we probably say about science being on our side. So, when you look at New Mexico and how it affects our strategy, the economy is giving us this new opportunity to make our case, election cycle along the turmoil which is also giving us the chance to seek new political leadership in New Mexico. So it gives us a chance to educate new people and new leaders coming in of the economic benefits.

How this can be done safely, we began with safety and then we talk about economic benefits and how we move forward.

From our strategic standpoint, our goal has been to build 2 to 300 million pounds of reserves, we will do that. We will focus on the Crownpoint Uranium Projects which gives us a low cost production and then we will to resolve the issues.

Now if we can do all those things, production will return to New Mexico, and Uranium Resources will be the one leading the charge there because we do already have the largest reserve base which we are looking to increase. We have owned the NRC operating license in New Mexico and with ISR technology we can produce in this market.

Just like in Texas, I expect a lot of things to be happening in New Mexico this year. We're going to be looking for every opportunity we can to enhance the value of what we have. And we began that with the announcement last night this morning that we've terminated the agreement with, joint venture agreement with Itochu for the development of Church Rock project. That agreement was entered into in December, 2006. It called for the preliminary investment decision two years ago. We have continued to extend that because we got economic benefits from that in getting $2.10 a pound more from parts of our Texas production that has given us close to 600,000 pounds of revenue.

But the fact that we're cutting down production, we've had lot of discussions with Itochu. Their interest was to extend the PID for several years. Our interest was to get something in return for basically granting them a free option. They came up with lot of ideas, we've worked closely with Itochu, we've had lot of meetings. The fact is at the end of the day we couldn't come up with something that basically compensate us fairly for the free option they were having.

So in this timeframe we expect to resolve the issues in New Mexico. We think that if we're going to spend the money and make the effort to resolve the issues and win a day, we should get a 100% of benefit at the end. So that's the reason that agreement was terminated. We continue to have a lot of discussions with Itochu in both Texas and New Mexico. They are companies we are close to and hopefully we can work something out moving forward.

Now with a 100% of the project back, if there is a ruling in our favor to Tenth Circuit Court, then we have a 100% of that project back. Their arguments were last May 12, so we are coming up on the year on that decision. Your guess is as good as mine when they gets ruled. The story really hasn't changed. We'd expect either side, if we do not prevail, the Appeal Courts to take it to the Supreme Court.

From my perspective, as I have said in the past the big picture is this. It's not just winning the right to mine 8 million pounds in Church Rock. When we have more than 100 million pounds in New Mexico, they can be developed if we resolve in that ratio. But the main objective for me is to resolve that issue if we can get a small victory in the meantime that will be good. But we really want to work to resolve that issue.

That's a lot of information to -- but it'll boil down to this. As a company, as I said in the last call, we need to make do it what we have. We have sufficient cash, we believe to get through 2010. There are lot of changes that could come by the end of 2010 in New Mexico just because of the elections and the changing of public perceptions of uranium. We have a decision in Texas whether we're going to be a buyer or seller, and that really pulls us into New Mexico having the assets, we need to resolve the issues for 2010 and beyond.

But as I said at the opening, I think it's going to be very important year for us. And I hope you agree that I think it could be a very decent year, indeed a very good year for us.

So, with that, I'll turn it over to Tom to review the financials, Tom?

Thomas H. Ehrlich

Thank you, Dave. I am getting an echo here, so everyone can hear me okay?

Yeah, I think you are fine, Tom.

Thomas H. Ehrlich

Okay, good. In reviewing our recent results, I'll start with production. We produced 41,200 pounds in the fourth quarter bringing our total production for the year to just over 300,000 pounds, the majority of 254,000 of those were produced from our Kingsville Dome project, 37,000 pounds were from Vasquez and about 10,000 from Rosita.

As Dave said, the production in the fourth quarter was lower than what we had seen in the prior three quarters as a result of our winding down production and not bringing on new wellfields, not putting on new capital development.

Our direct production cost for the quarter, fourth quarter was about $33 a pound with direct production cost for the year just under $48 a pound.

At the end of the year, we had just over 36,000 pounds of uranium inventory which was carrying an average cost per pound of about $33.50. Of the inventory that we had at year end, almost 28,000 of those pounds were sold in January of 2009 to our two customers at an average price of just over $51.

Our sales revenue for the fourth quarter of 2008 was about $2.2 million on just under 39,000 pounds at an average sales price of 56 -- 76 per pound. Sales for the entire year were about 18.6 million on roughly 285,000 pounds which saw us realizing average sales price of just under $65.

Looking at our cost of sales, specifically our cost of produced uranium sales for the quarter and the full year, our direct cost of uranium sold in Q4 '08 was $2.1 million or just over $53 a pound. For the full year, our costs, similar costs were 13.8 million or just under $49 a pound. The direct operating cost of sales for 2008 related to -- again our operating costs were about $23 a pound where our DD&A costs were about 25 a pound.

During 2008 we also incurred exploration expenses of roughly $1.6 million. These were incurred primarily for activities related to our South Texas exploration projects for the Marshall and the Moser and certain exploration activities that we had at Kingsville Dome.

Our cost of sales for the year included a significant impairment provision of $16 million related to the carrying value of the company's uranium properties. This charge resulted from our reviewing the net book value of the properties at the end of the year and comparing them to the estimated fair value at the same time.

Fair value for each project was calculated by looking at the future cash flows based on the projections for current future production costs, sales prices and the full economic estimates for the life of each project. And we determine that at the -- again in the third quarter and in the fourth quarter determined that the net book value of those projects was above what the realizable value which resulted in the write-downs.

Based upon the analysis of the net property values, Kingsville Dome, Rosita and Vasquez were written down by roughly 6 million, 8 million and $2 million dollars respectively for '08. The other major component of our cost of sales were royalties and commissions which were about $1.7 million for the year, just under $6 a pound or roughly 9.2% of sales.

Going down to our G&A costs, our corporate expenses, including G&A, were about $11.4 million for 2008. And this number is relatively flat compared to our G&A in 2007 of 11.7. However, our 2008 results include 1.4 million related to the write-off of the target acquisition cost for the proposed Rio Algom acquisition.

During the latter stages of 2008, we've implemented significant cost cutting strategies which we expect to reduce our G&A costs in 2009.

Kind of a breakdown of the major categories for the 2008 G&A expenses for the year, were non-cash compensation expense of approximately $2.2 million, personnel costs, salary and benefits of 3.2 million, consulting and professional services of 1.5 million, legal accounting and other public company expenses of 1.4 million. And as I said previously the write-off of the acquisition costs related to Rio Algom potential acquisition was 1.4 million.

Moving into our cash and cash flows, as Dave said we -- our cash balance at the end of 2008 was about $12 million. During the year, we generated cash flow from operations of about $1 million. We have capital expenditures primarily for uranium property and plant equipment of 10.5 million during the year, and that was primarily used at Kingsville Dome for wellfield development and evaluation drilling of just under $4 million. And development costs at our Rosita and Rosita South projects of about 5 million.

In addition, we had additional investing activities where we increased our restricted cash by about $600,000 during the year related to collateral to support financial surety obligations for our South Texas projects.

Finally, our finance activities, in 2008, we raised about $13 million primarily in May from the private placement where we sold just about 3.3 million shares at a gross price of $4.34. And we also had certain finance activities where we raised some capital through the exercise of stock options during the year. Dave?

David N. Clark

Okay. Now I think we're ready for questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Thank you. Our first question is coming from David Snow of Energy Equities.

David Snow - Energy Equities

Hi, good morning. I'm trying to remember -- Itochu contracts at $14 a pound, now your release says that this action eliminated the potential for reinstatement of the original 2003 delivery contracts. I am trying to recall how did that go away if you reversed this joint venture?

David Clark

There were certain conditions, and Tom is going to elaborate if he remembers those that if in the Preliminary Investment Decision, if I recall it correctly probably, if we didn't want to go forward, and they didn't want to go forward or something to that degree that you could revert it back to those original contracts.

Thomas Ehrlich

That's precisely it. If Itochu were to have make a positive investment decision and we were going to make a negative investment decision meaning that the joint venture did not go forward. And the terms and conditions of the original sales contracts would have been reinstated from that point going forward.

David Snow - Energy Equities

So you didn't reinstate the original contracts, right?

Thomas Ehrlich

That is correct. We did not.

David Snow - Energy Equities

And the chance to do that is now gone.

Thomas Ehrlich

Correct.

David Snow - Energy Equities

So are you out of the $14 contracts and the fixed delivery obligations?

Thomas Ehrlich

Well we have been out of those since we renegotiated the contracts. However, pending the outcome of the joint venture decisions they're allowed for the opportunity for us to step back into those. With this decision, it eliminates the opportunity for us to be required to step back into those old contract terms.

David Snow - Energy Equities

So you'd rather be old contracts all together?

Thomas Ehrlich

Yes.

David Snow - Energy Equities

Okay.

David Clark

And part of that the renegotiation was -- the renegotiation at $14 contract was the new pricing structure in Texas and the joint venture at Church Rock. Those two were tied together.

David Snow - Energy Equities

Okay. And I was trying to remember and I couldn't. So you're basically benefiting twice, you got out of any of those contracts and you're 100% in New Mexico.

Thomas Ehrlich

Now, David, remember, we were not under the conditions of those old contracts. The specter of them being reinstated is what we got out under.

David Snow - Energy Equities

Okay, all right. Well I mean you were still under that specter of being...

Thomas Ehrlich

Correct.

David Snow - Energy Equities

So you won twice and lost on the 210 on some of the Texas production?

Unidentified Analyst

Correct.

David Snow - Energy Equities

Then I'm trying to ask also about -- did I hear in New Mexico you would also be a buyer or seller, I wasn't sure if I heard that right.

David Clark

What you heard me say is we'll enhance what we have, our objective is to build out our reserve base from 100 million to 300 million.

David Snow - Energy Equities

Okay, and then one last question. Your Alamos, TradeTech and maybe your own website had you're talking South Africa where you thought the price might go to $80 a pound but you're base modeling cases in the 40 range. Can you give us the upside synopsis there again?

David Clark

To sum again from -- to give clarity to planning, it's the assumption that nothing may change in the $40 market. Again I think that's down, that's the low end of what the market would be. So let's perceive forward on that basis, given all the uncertainty in uranium market and the economy as a whole. Perceive on that basis, that's not my prediction where the market goes.

David Snow - Energy Equities

Okay.

David Clark

Again I think as long as the price is at s are $40, the more inflations and glaze you're going to see at the same time. The reactors are coming online and the demand is going up and the secondary supplies are being depleted. I think that's all the formula for another price spike.

But when that comes I don't know. It's -- where we are as a company right now is not important. What is important is to take advantage of the current conditions which allows us to advance our strategic plans.

David Snow - Energy Equities

Are you totally in spot prices? I am still trying to go back to the old contracted figure?

David Clark

What we have is the blended prices around $50, if I'm correct, Tom, and part of that is duty contract is based on 650 off a long term price which is at 70 and the others let's say 750 off the spot price for Church Rock.

David Snow - Energy Equities

Okay. Thank you very much. I was trying to remember those. Thank you very much.

David Clark

Welcome.

Operator

(Operator Instructions). Thank you. There are no further questions at this time. I would like to hand the floor back over to Dave for any closing comments.

David Clark

Thank you again for your time. I hope what we've discussed this morning gave you clarity and that you forward to 2009.

Deborah Pawlowski

Operator I just noticed -- I am sorry Dave but we just have somebody else queued in for question.

Operator

Yes, we do have someone who has just jumped in. I'll go ahead and ...

Deborah Pawlowski

All right.

David Clark

No problem.

Operator

Sorry about that. Our next question will be coming from Lynn Hedagart, a Private Investor.

Unidentified Analyst

Yes, I'd like to know if you've considered any options for acquisitions or being acquired?

David Clark

That's not something we usually comment on. I think again given the economy and the market, you can make a case that all companies are under valued at this point in time. From our perspective have laid out where I think we build value in this company and we'll follow that strategy.

Unidentified Analyst

But are there any partnerships that you're maintaining at this point? Do you have any letters of intent?

David Clark

Yeah we do. We wouldn't comment on that. The way I view and I think it's a great question, because the way I view -- I think we are close to having what we need to resolve the issues in the Mexico on our own. It will become a question of timing. Do we want to bring in partners just to give us additional security? Or do we want to resolve the issue on ourselves which I think gives us an excellent value for our projects.

But that's something you play by year as you move forward. But at this point in time, as I discussed in Texas and New Mexico I think there is consolidation industry in both places and yeah we expect to be a participant there.

Unidentified Analyst

One last question. You mentioned technology you're developing for cleaning up the groundwater. Do you see that as a product or service that you can monetize and actually gain revenue from?

David Clark

I am not sure -- it's a possibility but I am not leading to that. I think where we are working with other ISR companies now because it's in our interest to do that. And in doing it that way, because we all have different operating parameters and different experience I'd rather share the information and lower the cost for all of us than each of us working separately and finding something and then charging somebody else for use of that technology.

It is in all our interest, there is a lot of interest on the national laboratories and government agencies to resolve this issue. So moving to the patent side, I'd rather have a free exchange of information to do the best job we can because it's in everybody's interest, including the public.

Unidentified Analyst

Are there any companies either private or public that are working to develop a service that they would intend to bring to market?

David Clark

On restoration technology?

Unidentified Analyst

Yes.

David Clark

There is -- I guess it's different technologies. We're trying hydrogen with Texas A&M. There's other substrates that other companies are trying and again the principle is to increase anaerobic bacteria activity so that it consumes oxygen. There may be other ways. Again it's now that we have laboratories involved in, and there's government financing to do this.

It's just really giving it a good hard look on saying what can be done. What generally happens is you have to take the order back to baseline. But the bigger issue is you have to leave with the same utility it had before we started.

As I said earlier the water is already poisoned, it can't be used. So we have to leave it in a condition where it's poisoned, it can't be used, which is one thing. You want to make sure that does not migrate offsite, when natural simulation tends to be what happens. So we need to demonstrate that's what happens.

When you get into the restoration parameters themselves, it gets into very, very small numbers. It's a lot of time to stay distinction and we got the difference. But if you cannot get all the way down to 0.001 or whatever, you can get down to 0.00015, the opposition says we didn't get it good enough. What we want to get is good as we can and we want to make sure it has the same utility.

And if there's private companies that are looking to that technology, it helps but you're really looking at pre-operating ISR approves (ph) in the U.S. you might double or triple that amount. There is an activity in New Mexico and Texas, and Wyoming and Nebraska. So, there will be those companies that are dealing with, and those companies are leading in the technology like we are trying to do. I think it will probably more come from us than the private sector, other company might involve us. Does that answer your question?

Unidentified Analyst

Yeah, I guess one other thing is Ariba or any other global concerns involved in any of it?

David Clark

Ariba has properties in Wyoming which they have restored. So, they have done a lot of work in the technology of it. When you look at the U.S. we -- as we believe -- the substance that puts the oxygen in the water or leave oxygen to put uranium, dissolve uranium in water. In Kazakhstan they use acids, in other countries in Australia they also use acid in some of the projects. We can't use acids here. So it's a different -- it's a different mining technology and therefore different restoration factories for other companies. So the option is pretty much what's used in the U.S. but it's our market.

Unidentified Analyst

Thank you.

David Clark

Welcome.

Operator

Thank you. We have a follow-up question coming from David Snow with Energy Equities.

David Snow - Energy Equities

Yeah I got back in queue alone, so nobody else is here. Just to understand these contracts go in Texas as long as you have Tom any production there or what's the duration?

David Clark

They both UG and Itochu contracts were for 3 million pounds a piece.

David Snow - Energy Equities

And how about ...

David Clark

Half of the production -- they are not production contracts. So the fact that we are shutting down production has no obligation to deliver.

David Snow - Energy Equities

How much did you deliver versus your 3 million each?

David Clark

We can get to that number David. It's well off both hands, it's probably between a million and 1.5 million pounds, it's what we've produced since 2004.

David Snow - Energy Equities

You mean to each one.

David Clark

Total.

David Snow - Energy Equities

And then if you were to resume operations in the future, would you still have that €3 million and million, 1.5 or 2 million left at those prices?

David Clark

We will have that unless we renegotiate the contracts.

David Snow - Energy Equities

But it will sound like that would give you an advantage in acquiring in Texas. You not only have a mill -- you have prices that are right now above the market.

David Clark

I think again, we are looking at everything we have and get value out of everything we have, and I'll leave with that.

David Snow - Energy Equities

And then the other thing I wanted to ask about, you were thinking that if Bill Richardson went to Washington it would put deputy under him in charge and unfortunately he didn't pay his taxes or whatever happened. I wondered if, why do you say that -- what clerical faces there are going to help you if any in change of --.

David Clark

Well Governor Richardson is term limited, so he will be going out in 2010.

David Snow - Energy Equities

Okay. That's a long way though and these new faces around it would help you in addition to that?

David Clark

There's a (inaudible) is very pro business. She is a Democrat. I think she intends to run for the Governor. She was preparing to takeover Richardson seat. She got involved with uranium issue. She understands it, she's got a mining background. Her family has got a mining background, so it can go a long way.

Governor Richardson hasn't come out against uranium mining. So it's not that he has heard of it, it has slowed things in Mexico to some degree. But what we need is just a very pro-business environment and we'll look at it. And that's a political issue along with that all (ph).

David Snow - Energy Equities

So it's pretty much at the end of 2010 election that you are focusing on in the change of the --

David Clark

Correct.

David Snow - Energy Equities

Thank you very much.

Operator

Thank you. There are no further questions. I would like to hand the floor back over to Mr. Clark for any closing comments.

David Clark

Well I would say is thank you again for your time and I hope you look forward to important -- and I think can be a very important year this year. So thank you very much.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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Source: Uranium Resources Q4 2008 Earnings Call Transcript
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