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Uranium Resources Inc. Royalty Portfolio

In December 2006, the Company acquired a portfolio of uranium royalties in the Grants Mineral District of New Mexico, USA from United Nuclear Corporation, a wholly owned indirect subsidiary of General Electric Company. The royalty portfolio covers several separate parcels of mineral leases (Section 8, Section 17, and the Mancos area) in the Churchrock area of McKinley County which is located 20 miles northeast of Gallup, New Mexico (the “Churchrock Properties”). The Churchrock Properties are presently owned by a subsidiary of Uranium Resources, Inc. (“URI”), a U.S. publicly traded uranium producer.


SLIDING SCALE ROYALTY STRUCTURE

The royalty is a gross revenue based sliding scale royalty, ranging between 5% and 25% depending on the term price of uranium. For example, at a term price of approximately US$57.00/lb U3O8, the Royalty payments would be 14% of the revenue. The sliding scale Royalty has a maximum royalty rate of 25% if term sales prices reach US$87.41/lb or higher. The portfolio covers the abovementioned parcels on all uranium produced within the mineral lease once the mineral leases reach the production stage. URI’s primary focus in New Mexico is its Churchrock Section 8 property. Laramide’s royalty covers Section 8, which falls within the area covered by URI’s underground injection control permit and Nuclear Regulatory Commission licence.

Under the terms of the acquisition, Laramide must pay US$9.25 million in cash to UNC, structured as follows:

    1. US$3.5 million (C$4.1 million) at settlement (which has been paid);
    2. US$3.0 million (C$3.2 million) on issuance of the final regulatory permit required to allow production to commence on Section 8 (where such permits are yet to be issued);
    3. US$1.25 million (C$1.3 million) on issuance of the final regulatory permit required to allow production to commence on Section 17; and
    4. US$1.5 million (C$1.6 million) on issuance of the final regulatory permit required to allow production to commence on Mancos (also known as Sections 7, 12 and 13).

 


KEY ATTRIBUTES

  • Royalty covers several separate parcels of mineral leases including Uranium Resource Inc.’s (URI) Section 8 lease in the Churchrock area (6.5 million lbs U3O8)
  • URI’s total Churchrock Resource (historic non-NI 43-101 compliant resource):

            Churchrock: 7.8 million tons @ 0.12% U3O8 = 18.6 million lbs U3O8

            Mancos: 5.2 million tons @ 0.11% U3O8 = 11.3 million lbs U3O8


FUTURE OUTLOOK

NRC reactivated ISR licence in 2011

Feasibility Study completed on Section 8

URI entered into project consolidation and financing transaction with Resource Capital Funds.

 

Churchrock
Mesa Looking North