Uranium Resources aims to boost output

The Dallas-based company produces uranium in South Texas using low cost in situ mining techniques and sells its production to electric utilities, almost exclusively under long-term contracts.

For the 3-month period ended Dec 31, Uranium Resources reported earnings of $983,000(US) or 4 cents per share compared with a loss of $1,576,000 for the same period last year. Revenue for the quarter was reported at $8,428,000 compared with none in 1987.

Earnings for the year rose to $1,691,000 or 6 cents per share compared with a loss of $1,296,000 in 1987. Revenues rose dramatically to $17,760,000 in 1988 from $3,966,000 in 1987.

Raymond Larson, president, cited several factors as contributors to the record results.

“Our ability to produce at low cost (about $10 per lb) at our Kingsville Dome property, and our ability to secure significant sales contracts ov er the past two years with selling prices substantially over spot, were the major factors,” he said.

The contracts resulted in 1988 sales of 870,000 lbs at an average sales price of $20.41. Larson said 1989 earnings are expected to be “at least double 1988’s net income.”

During the past two years, the company signed five uranium supply contracts of 5-8 years duration for about seven million lbs of uranium. Larson noted that the contracts accounted for “about 31% of all contracts signed by U.S. utilities with U.S. uranium producers during the period, and for about 35% of the contracted production.”

During the past year, ongoing exploration work at the producing Kingsville Dome property resulted in additions to proved in place reserves of about one million lbs, and to probable in place reserves of about 1.5 million lbs. Proven reserves now stand at 2.5 million lbs, and probable at 4.5 million lbs.

The company has resumed plans to bring its fully-permitted Rosita property into production. Capital costs for plant construction and wellfield development are estimated at $5 million, to be funded from cash balances on hand and from cash flow from operations.

Larson said the company does not intend at this time to sell its Rosita production in the weak spot market unless substantial price increases occur.

“The Rosita mine is being developed now in order to meet 1990 sales commitments under contracts which the company are currently negotiating and expect to enter during 1989,” he stated.

Construction is expected to be completed in September, 1989 with production to follow at annual levels of about 800,000 to 900,000 lbs. Proved reserves are reported as six million lbs, and production costs are anticipated to be equal to or less than Kingsville Dome. The company also has uranium properties in New Mexico.

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