Uranium Resources Signs New Sales Contract

A long term contract with a major U.S. electrical utility is expected to generate revenues of about $45 million(US) for Uranium Resources (VSE), which produces uranium in South Texas using low cost in situ solution mining techniques.

Under the terms of the contract, the company will provide almost 2.4 million lb of uranium oxide beginning in the fourth quarter of 1988 and running through 1996.

Raymond Larson, president of the Texas-based mining company, said this new contract brings the company’s total future contracted deliveries as of Sept 30, 1988, (including fourth quarter deliveries already made), to almost seven million pounds through 1997, which represents estimated total revenues of about $152 million (all dollar figures are in U.S. currency).

The company reported earnings of $18,000 in the third quarter compared with a loss of $248,000 for the same period last year. Total revenues amounted to $2,412,000 versus none in the previous year’s third quarter. Larson said the company expects to meet its earning projections substantially in excess of $1 million for 1988.

Production began in May of 1988 on the Kingsville Dome property in Texas and has now settled in at around 3,000 lb per day. The company recently expanded its plant facility and wellfield and said it now expects annual production levels of 1.4 to 1.5 million lb from the expanded operation.

Because of the $2.9 million Kingsville Dome expansion, the company delayed development of its Rosita property in Texas. The project is fully permitted and is expected to be developed in 1989 when additional sales contracts to cover its production are obtained. The company recently acquired a uranium property (in addition to an option for adjoining acreage) in northwest New Mexico with an estimated 10 million lb of proved in- place uranium reserves.

The company said this acquisition, including the reserves to be obtained with the option acreage, will bring its total proved and probable in-place reserves to over 60 million lb.

All the properties are mineable by the in situ solution mining process, which involves a water injection/extraction process that leaches uranium from an orebody without creating mine tailings. (This method is only possible when a uranium orebody is situated in a permeable sandstone deposit.) Water is pumped into the ore by injection wells drilled at intervals along one boundary of the orebody, and taken out through extraction wells along the opposite boundary. The uranium-bearing solution is then processed in a plant using ion exchange technology to remove uranium for further processing.