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Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K

(Mark One)ý

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2010oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from            to


Commission file number 001-33404

URANIUM RESOURCES, INC.(Exact name of Registrant as specified in its charter)

DELAWARE(State of Incorporation)

75-2212772(I.R.S. Employer Identification No.)405 State Highway Bypass 121,
Building A, Suite 110
Lewisville, Texas(Address of principal executive offices)

75067(Zip code)


(972) 219-3330(Registrant's telephone number, including area code)

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

Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value per share

NASDAQ Capital Market


Securities
registered pursuant to Section 12(g) of the Act:None

(Title
of class)

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 ý

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 ý

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 ý    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 o    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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, or a non-accelerated filer. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a
smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes o    No ý

The aggregate market value of the Common Stock held by non-affiliates of the Registrant at June 30, 2010, was approximately $21,613,583. Number
of shares of Common Stock, $0.001 par value, outstanding as of March 14, 2011: 93,395,030 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Items 10,
11, 12, 13 and 14 of Part III of this Form 10-K report are incorporated by reference to the Registrant's Definitive Proxy Statement for the
Registrant's 2011 Annual Meeting of Stockholders.



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Table of Contents

URANIUM RESOURCES, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2010

TABLE OF CONTENTS



PART I


1Item 1. Business


1The Company


1New Mexico Assets


1Texas Production History and Current Status


22010 Events


3Strategy


3Uranium Reserves/Mineralized Material


4Long-Term Delivery Contracts


5Joint Venture for Churchrock Property


5Overview of the Uranium Industry


5The ISR Mining Process


6Environmental Considerations and Permitting


7Reclamation and Restoration Costs and Bonding
Requirements


8Water Rights


9Competition


9Available Information


10Item 1A. Risk Factors


10General Risks and Uncertainties


10Item 1B. Unresolved Staff Comments


15Item 2. Properties


16South Texas


16New Mexico


24Insurance


34Reclaimed Properties


34Item 3. Legal Proceedings


35New Mexico Radioactive Material License


35New Mexico UIC Permit


35Dispute over Kleberg County Settlement
Agreement


35Kingsville Dome Production Disposal Well Permit Renewals and
Area Authorization 3


36


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Navajo EPA Letter and UNC/GE Demand for Indemnity


36Saenz Litigation


37Other


37Item 4. Submission of Matters to a Vote of Security
Holders


37GLOSSARY OF CERTAIN URANIUM INDUSTRY TERMS


37PART II


40Item 5. Market for Registrant's Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity Securities


40Dividends


40Securities Authorized for Issuance Under Equity Compensation
Plans


40Performance Graph


41Item 6. Selected Financial Data


42Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation


43Forward Looking Statements


43Financial Condition and Results of
Operations


43LiquidityCash Sources and Uses for 2010


48Off Balance Sheet Arrangements


48Contractual Obligations


49Critical Accounting Policies


49Impact of Recent Accounting Pronouncements


49Item 7A. Quantitative and Qualitative Disclosures About
Market Risk


50Uranium Price Volatility


50Item 8. Financial Statements and Supplementary
Data


50Financial Statements


50Supplementary Financial Data Tables


50Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure


50Item 9A. Controls and Procedures


50Evaluation of Disclosure Controls and
Procedures


50Management's Report on Internal Control Over Financial
Reporting


51Item 9B. Other Information


51


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PART III


52Item 10. Directors, Executive Officers and Corporate
Governance


52Item 11. Executive Compensation


52Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder
Matters


52Item 13. Certain Relationship and Related Transactions and Director Independence


52Item 14. Principal Accountant Fees and
Services


52PART IV


52Item 15. Exhibits and Financial Statement
Schedules


52SIGNATURES


53Index to Consolidated Financial Statements


F-1Exhibit Index


E-1


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PART I

The "Company" or "Registrant" or "URI" is used in this report to refer to Uranium Resources, Inc. and
its consolidated subsidiaries. This 10-K contains "forward-looking statements." These statements include, without limitation, statements relating to management's expectations regarding the
Company's ability to remain solvent, capital requirements, mineralized materials, timing of receipt of mining permits, production capacity of mining operations planned for properties in South Texas
and New Mexico and planned dates for commencement of production at such properties, business strategies and other plans and objectives of the Company's management for future operations and activities
and other such matters. The words "believes," "plans," "intends," "strategy," "projects," "targets," or "anticipates" and similar expressions identify forward-looking statements. The Company does not
undertake to update, revise or correct any of the forward-looking information. Readers are cautioned that such forward-looking statements should be read in conjunction with the Company's disclosures
under the heading: "Risk Factors" beginning on page 9[?].

Certain terms used in this Form 10-K and other industry terms are defined in the "Glossary of Certain Terms" appearing at the end of
Part I hereto.

Item 1.    Business.

The Company

Uranium Resources, Inc. (URI) is a uranium exploration, development and production company. We were organized in 1977 to acquire
and develop uranium mines in South Texas using the in-situ recovery mining process (ISR). Since its founding, URI has produced over 8 million pounds U3O8
from five Texas projects, two of which have been fully restored and returned to the land owners. The Company currently has two fully licensed ISR processing facilities in Texas: Kingsville Dome and
Rosita. Since 1986, the Company has built a significant asset base in New Mexico that includes 101.4 million pounds U3O8 of in-place mineralized uranium
material on 183,000 acres of uranium mineral holdings. We have a Nuclear Regulatory Commission (NRC) license to build a 3 million pound U3O8 per year ISR processing
facility at Crownpoint, New Mexico. As of March 14, 2011 we had 40 employees. As a result of low uranium prices, we ceased production in 2009. Our plan is to preserve cash and maintain
liquidity to allow the Company to be in a position to resume uranium production when sustained prices support such activities.

New Mexico Assets

URI holds a NRC source materials license to build and operate an ISR uranium processing facility on company-owned property at
Crownpoint, New Mexico. The license allows for ISR mining at the Churchrock and Crownpoint projects that together hold nearly 34 million pounds U3O8 of
in-place mineralized uranium material. The license allows for the production of up to 1 million pounds per year from Churchrock until a successful commercial demonstration of
restoration is made; after which the quantity of production can be increased and mining on other properties can begin. Total production under the license is limited to 3 million pounds
U3O8 per year. This project has been delayed due to depressed uranium prices and by a lawsuit to determine whether the U.S. Environmental Protection Agency ("USEPA") or the
State of New Mexico has the jurisdiction to issue the Underground Injection Control (UIC) program permits. On June 15, 2010 the United States Court of Appeals for the Tenth Circuit en banc held
that the Company's Section 8 property in Churchrock, New Mexico is not Indian Country. The ruling means that the authority to issue a UIC permit to URI falls under the jurisdiction of the State
of New Mexico and not the U.S. Environmental Protection Agency (USEPA). The opposing parties had the right to petition the Supreme Court for review until September 13, 2010; however no
petitions were filed as of the deadline and the ability for opposing parties to petition the United States Supreme Court has expired. The Company is in the process of preparing feasibility studies on
its New Mexico properties and believes that subject to sustained increases in uranium prices,

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available
sources of financing and activation of our permits and licenses that we could begin plant construction and wellfield development as early as 2012 with production following in 2013.

Overall
in New Mexico, the Company owns 183,000 acres of mineral holdings that contain approximately 101.4 million pounds U3O8 of in-place
mineralized uranium material that has been verified by an independent engineering firm. A substantial amount of our acreage remains unexplored or currently has insufficient data to estimate
in-place mineralized materials. These properties were acquired during the 1980s and 1990s along with a vast database of exploration logs and drill results that were developed by Conoco,
Homestake Mining, Mobil Oil, Kerr-McGee, Phillips Petroleum, United Nuclear and Westinghouse Electric Corporation. Three of our properties were in various stages of being developed as
conventional underground mines in the early 1980s with a total designed capacity to produce approximately 4.5 million pounds U3O8 per year. We also possess a 16.5%
royalty interest on a partial section of the Mount Taylor Mine owned by Rio Grande Resources, a division of General Atomics.

Since
2007, we have digitized approximately 18,800 drill logs in order to secure the data and allow for easier analysis of drill hole information. These logs total nearly
23 million feet of hole drilled in the 1970s and 1980s with an estimated drilling and logging replacement cost of $700 million.

The
Company plans to develop its uranium assets in New Mexico using the most economic and efficient method for each project and will be subject to improvements in uranium prices. These
mining methods may include the use of ISR, old stope leaching, and conventional mining and milling techniques.

Texas Production History and Current Status

The Company developed and produced over 560,000 pounds U3O8 from the Longoria and Benavides projects in the
early 1980s. These properties were fully restored between 1986 and 1991. From 1988 through 1999, we produced approximately 6.1 million pounds U3O8 from two South Texas
projects: 3.5 million pounds from the Kingsville Dome project and 2.6 million pounds U3O8 from the Rosita project. In 1999, we shut-down production at
both projects due to depressed uranium prices. We had no revenue from uranium sales between 2000 and the fourth quarter of 2004, and therefore had to rely on equity infusions to fund operations and
maintain our critical employees and assets.

After
uranium prices rose significantly in 2004, we placed our South Texas Vasquez property into production during the fourth quarter of that year. In April 2006, Kingsville Dome
returned to production followed by a startup of Rosita in June 2008. From 2004 to the end of 2009, these three projects produced a total of 1.4 million pounds of U3O8.

The
Vasquez project was mined out in 2008 and is now in restoration. Rosita production was shut-in in October 2008 due to depressed pricing and technical challenges in the
first new wellfield that made mining uneconomical. The decline in uranium prices throughout 2008 also led to a decision in October 2008 to defer new wellfield development at Rosita and Kingsville
Dome. Production continued in two existing wellfields at Kingsville Dome and was completed in July 2009. The Company has not had any operating mines in Texas since that time, and is currently
evaluating the factors for resuming production at our South Texas projects.

The
Company's strategy with regard to restarting production in South Texas is to insure that production, once resumed, is sustainable in the 300,000 to 500,000 pound range. The Company
believes its existing South Texas reserve base from its existing production areas at Kingsville Dome and Rosita and the reserves identified at its Rosita South and adjacent Rosita production acreage
will enable it to produce at that level for up to two years. The Company is in the process of finalizing the necessary permits for its Rosita South and adjacent Rosita acreage and expects the required
permits will be granted. Production could begin within 6 - 12 months after a decision to restart is made and will be dependent upon sustainable realized uranium prices stabilizing at profitable
levels.

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Longer-term,
the Company plans to expand its resources through acquisition of additional South Texas properties and through exploration activities. The first phase of the exploration
component of this plan was initiated with the Company signing a three-year exploration agreement covering 53,500 acres in Kenedy County, Texas. The exploration agreement includes an option to lease
the acreage for uranium production.

2010 Events

The Company raised additional capital in mid-2010 in underwritten public offerings of 27,142,830 shares of common stock
that resulted in net proceeds of approximately $10.2 million, after deducting underwriting discounts and commissions and offering expenses.

The
Company raised additional capital in November 2010 through an underwritten public offering. A total of 8,222,500 shares of common stock were sold in the offering with net proceeds of
approximately $9.0 million, after deducting underwriting discounts and commissions and offering expenses.

On
June 15, 2010 the United States Court of Appeals for the Tenth Circuit en banc held that the Company's Section 8 property in Churchrock, New Mexico is not Indian
Country. As a result, the authority to issue a UIC permit to URI falls under the jurisdiction of the State of New Mexico and not the U.S. Environmental Protection Agency (USEPA). The opposing parties
had the right to petition the Supreme Court for review until September 13, 2010; however no petitions were filed and the time to petition the United States Supreme Court has expired. As a
result of this ruling the question of jurisdiction over the UIC permitting process has been concluded in favor of the State of New Mexico which will allow the Company to move forward with the
development of our Churchrock/Crown Point project after many years of delay."

On
September 29, 2010, we settled the litigation titledSaenz v. URI Inc., by agreeing to pay to the plaintiffs
$1.375 million, which includes amounts for prior royalties. The payment was made in February 2011 and amendments to the leases were executed and the suit was dismissed.

In
November 2010, the United States Supreme Court denied the opponents' petition to review a March 2010, 10th Circuit Court of Appeals' ruling that upheld the Company's U.S.
Nuclear Regulatory Commission ("NRC") license to conduct in-situ recovery (ISR) uranium mining at the Churchrock/Crownpoint project, which cleared the last remaining legal challenge to our
NRC license.

On
November 3, 2010, the Company signed a non-binding letter of intent with Power Resources, Inc. doing business as Cameco Resources ("CR"), a subsidiary of
Cameco, for a three-phase exploration program funded by CR and an option for a production joint venture on a large ranch in South Texas. The agreement is contingent upon URI successfully completing
the negotiation and execution of final definitive agreements between the Company and CR.

Strategy

In early 2010, the Company adopted a new strategic plan which emphasized cash preservation and maintaining liquidity to allow the
Company to be in a position to resume uranium production when sustained prices support such activities. As part of this plan the Company completed financings that we believe will provide sufficient
working capital for the Company to maintain its liquidity into 2012. Key operational elements of the strategic plan for our Texas properties include (1) positioning the Company to return to
production in Texas should the price of uranium return to a level sufficient to generate positive cash flow; (2) complete an analysis of the exploration potential in South Texas and enhance the
Company's exploration capabilities; (3) continue to maintain our restoration activities in South Texas in accordance with the Company's existing agreements and regulatory requirements and
(4) analyze any synergistic opportunities and potential asset monetization prospects in Texas. In New Mexico, our strategic plan calls for continuing to advance our discussions with others in
the region that also hold

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uranium
assets, as well as with entities that would benefit from the production of the uranium. In addition, we will continue our communication efforts with the local communities, State and local
governments and the Navajo Nation to address legacy issues while continuing education efforts on the safety of today's uranium mining practices with the objective of bridging the gap that currently
exists between uranium mining entities and others with stakeholder interests in the State.

Uranium Reserves/Mineralized Material

In accordance with the SEC's Guideline on Non-Reserve Mineralized Material, and as shown in the following table, we
estimate 101.4 million pounds of in-place mineralized uranium material on our New Mexico properties as of December 31, 2010. The estimate for each New Mexico property is
based on studies and geologic reports prepared by prior owners, along with studies and reports prepared by geologists engaged by the Company. The estimates presented below were reviewed and affirmed
by Behre Dolbear & Company (USA) an independent private engineering firm in their report dated February 26, 2008. Since the date of the report, the Company has maintained its ownership
position of these properties, the properties have not been subject to any production activities and the estimates remain unchanged.

SUMMARY OF IN-PLACE NON-RESERVE MINERALIZED  MATERIAL IN NEW MEXICO

Property

Tonnage
Millions

Grade
Percent

Non-Reserve
Mineralized
Material
Millions of Lbs U3O8Mancos


5.2


0.11
%

11.3Churchrock


7.8


0.12
%

18.6Nose Rock


7.6


0.15
%

21.9West Largo


2.8


0.30
%

17.2Roca Honda


3.9


0.19
%

14.7Crownpoint


4.8


0.16
%

15.3Ambrosia Lake


0.71


0.17
%

2.4Total








101.4


The Company believes the Mancos, Churchrock and Crownpoint properties will be amenable to ISR mining methods, the Roca Honda to conventional
mining and the Nose Rock, West Largo and Ambrosia Lake to ISR and/or conventional mining methods.

The
following table summarizes our estimates of Proven Reserves for our Kingsville Dome and Rosita properties in South Texas. These estimates have been produced by the Company's
professional engineering and geologic staff.

SUMMARY OF IN-PLACE RESERVES IN SOUTH TEXAS

Property

Tonnage
Millions

Grade
Percent

Proven Uranium Reserves
Millions of Lbs U3O8
at 12/31/10Kingsville Dome


0.035


0.071
%

0.050Rosita


0.133


0.080
%

0.224Rosita South(1)


0.129


0.077


0.198Rosita(1)


0.112


0.086


0.192Total








0.664
  (1)The
Company is in the process of finalizing the necessary permits for these areas and expects the required permits will be granted.


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Long-Term Delivery Contracts

In March 2006 we entered into contracts with Itochu Corporation and UG USA, Inc. (superseding prior agreements), each of which
calls for delivery of one-half of our actual production from our Texas properties (excluding certain large potential exploration plays). The terms of these new contracts are summarized
below.

The Itochu Contract.Under the Itochu contract all production from the Vasquez property was sold at a price equal to the average spot
price for the
eight weeks prior to the date of delivery less $6.50 per pound, with a floor for the spot price of $37.00 per pound and a ceiling of $46.50 per pound. Other Texas production will be sold at a price
equal to the average spot price for the eight weeks prior to the date of delivery less $7.50 per pound, with a floor for the spot price of $37.00 per pound and a ceiling of $43.00 per pound. On
non-Vasquez production the price paid will be increased by 30% of the difference between the actual spot price and the $43.00 ceiling up to and including $50.00 per pound. If the spot
price is over $50.00 per pound, the price on all Texas production will be increased by 50% of such excess. The floor and ceiling and sharing arrangement over the ceiling applies to 3.65 million
pounds of deliveries, after which there is no floor or ceiling. Itochu has the right to cancel any deliveries on six-month's notice. Since the inception of the new contract through
December 31, 2010 we have delivered approximately 510,000 pounds to Itochu.

The UG Contract.Under the UG contract all production from the Vasquez property and other Texas production will be sold at a price
equal to the
month-end long-term contract price for the second month prior to the month of delivery less $6 per pound until (i) 600,000 pounds have been sold in a particular delivery
year and (ii) an aggregate of 3 million pounds of uranium has been sold. After the 600,000 pounds in any year and 3 million pounds total have been sold, UG will have a right of
first refusal to purchase other Texas production at a price equal to the average spot price for a period prior to the date of delivery less 4%. In consideration of UG's agreement to restructure its
previously existing contract, we paid UG $12 million in cash. Through December 31, 2010 we have delivered approximately 482,000 pounds to UG.

Joint Venture for Churchrock Property

On December 5, 2006, HRI-Churchrock, Inc., a wholly-owned subsidiary of the Company, entered into a Joint
Venture with a wholly-owned subsidiary of Itochu to develop jointly our Churchrock property in New Mexico. The Joint Venture provided Itochu an opportunity to participate in New Mexico uranium
production in exchange for renegotiating their sales contract with the Company. The new contract included a provision to allow the Company to receive up to an additional $2.10 per pound for certain
South Texas uranium production sold to Itochu.

Under
the terms of the Joint Venture Itochu elected to terminate the Joint Venture. As a result of the termination of the joint venture, the Company now retains 100% ownership of the
18.6 millions pounds of in place mineralized uranium material and depending on the level of spot prices, our sales price under the Itochu contract could be reduced by up to $2.10 per pound for
future deliveries. We presently have no committed source of financing for development of this 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 February 2011, there were 443 nuclear power plants operating in the world with an annual consumption of about 163 million pounds of uranium. In
addition, the WNA lists 62 reactors under construction, 156 being planned and 322 being proposed.

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Based on reports by Ux Consulting Company, LLC, or Ux, the preliminary estimate for worldwide production of uranium in 2010 is 120 million pounds.
Ux reported that the gap between production and demand was filled by secondary supplies, such as inventories held by governments, utilities and others in the fuel cycle, including the highly enriched
uranium, or HEU, inventories which are a result of the agreement between the US and Russia to blend down nuclear warheads. These secondary supplies are currently meeting over 25% of worldwide demand
but are depleting.

Spot
market 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 utility buying, 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. The spot market price for uranium at the start of 2010 was $44.50 per pound and ranged between a low of $40.50 per pound in March to a high at year-end of $62.50
per pound. As of March 14, 2011, the spot price was $60.00 per pound and the long-term contract price was $73.00 per pound.

The
following graph shows annual average spot prices per pound from 1992 to 2010 and the average price for the period January 1, 2011 to March 14, 2011, as reported by Ux
Consulting.

Ux Average Annual U3O8 Spot Price

GRAPHIC

The ISR Mining Process

The ISR mining process is a form of solution mining. It differs dramatically from conventional mining techniques. The ISR technique
avoids the movement and milling of significant quantities of rock and ore as well as mill tailing waste associated with more traditional mining methods. It is generally more cost-effective
and environmentally benign than conventional mining. Historically, the majority of United States uranium production resulted from either open pit surface mines or underground mining.

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The
ISR process was first tested for the production of uranium in the mid-1960s and was first applied to a commercial-scale project in 1975 in South Texas. It was well
established in South Texas 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 other solubilizing agents is pumped into a permeable ore body causing the uranium contained in the ore to dissolve. The
resulting solution is pumped to the surface. The fluid-bearing uranium is then circulated to an ion exchange column on the surface where uranium is extracted from the fluid onto resin beads. The fluid
is then reinjected into the ore body. When the ion exchange column's resin beads are loaded with uranium, they are removed and
flushed with a salt-water solution, which strips the uranium from the beads. This leaves the uranium in slurry, which is then dried and packaged for shipment as uranium concentrates.

For
greater operating efficiency and lower capital expenditures, when developing new wellfields we use a wellfield-specific remote ion exchange methodology as opposed to a central plant
as we had done historically. Instead of piping the solutions over large distances through large diameter pipelines and mixing the waters of several wellfields together, each wellfield is being mined
using a dedicated satellite ion exchange facility. This allows ion exchange to take place at the wellfield instead of at the central plant. 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 satellite facilities
allow mining of each wellfield using its own native groundwater.

Environmental Considerations and Permitting

Uranium mining 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 mining activities. The current environmental regulatory requirements for the ISR industry are well established. Many ISR mines have gone full cycle without any
significant environmental impact. However, the public anti-nuclear lobby can make environmental permitting difficult and timing unpredictable.

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 operations in both Texas and New Mexico, we must obtain a radioactive material
license. Under the
federal Atomic Energy Act, the United States Nuclear Regulatory Commission 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 the Commission to take primary responsibility for issuing the radioactive material license. The Commission has ceded jurisdiction for such
licenses to Texas, but not to New Mexico. Such ceding of jurisdiction by the Commission 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 the United States Nuclear Regulatory Commission.

See
"Properties" and "Legal Proceedings" for the status of our radioactive material
license for New Mexico and Texas.

Underground Injection Control Permits ("UIC").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 "USEPA"). However, to avoid the burden of dual federal and

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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 USEPA must have granted, upon request by the state, an aquifer exemption. The USEPA may delay or decline to process the state's application if the
USEPA questions the state's jurisdiction over the mine site.

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

New
Mexico has also been granted primacy for its UIC program. The Navajo Nation has been determined eligible for treatment as a state, but it has not requested the grant of primacy from
the USEPA for uranium related UIC activity. Until the Navajo Nation has been granted primacy, ISR uranium mining activities within Navajo Nation jurisdiction will require a UIC permit from the USEPA.
Despite some procedural differences, the substantive requirements of the Texas, New Mexico and USEPA underground injection control programs are very similar.

Properties
located in Indian Country remain subject to the jurisdiction of the USEPA. Some of our properties are located in areas that may be in Indian Country.

See
"Properties" and "Legal Proceedings" for a description of the status of our UIC
permits in Texas and New Mexico.

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 mining and post-mining clean up have been completed,
approval must be issued by the TCEQ for Texas properties along with concurrence from the United States Nuclear Regulatory Commission and for properties in New Mexico by the United States Nuclear
Regulatory Commission.

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 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 mining, a mine site is decommissioned and decontaminated, and each wellfield is restored and reclaimed.
Restoration involves returning the aquifer to its pre-mining use and 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 decontamination entails dismantling and removing
the structures, equipment and materials used at the site during the mining 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 a
combination of bank Letters of Credit (the "L/Cs) and performance bonds issued for the benefit of the Company to satisfy such regulatory requirements. The L/Cs were issued by Bank of America and the
performance bonds have been issued by United States Fidelity and Guaranty Company ("USF&G"). The L/Cs relate primarily to our operations at our Kingsville Dome and Vasquez projects and amounted to
$5,858,000 and $5,761,000, at December 31, 2010 and 2009, respectively. The L/Cs are collateralized in their entirety by certificates of deposit.

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The
performance bonds were $2,834,000 on December 31, 2010 and 2009, and related primarily to our operations at Kingsville Dome and Rosita. USF&G has required that the Company
deposit funds collateralizing a portion of the bonds, and we have deposited approximately $884,000 and $386,000 at December 31, 2010 and 2009, respectively, as cash collateral for such bonds.
In September 2010, the Company received notice from the bonding company requesting that the Company either increase the collateral supporting the bonds to 100% of the bond amount by making equal
quarterly payments of $500,000 or cause the release of the bonds by the fourth quarter of 2011. The amount of bonding issued by the carrier exceeded the amount of collateral by $2.0 million and
$2.5 million at December 31, 2010 and 2009, respectively. In the event that the carrier is required to perform under its bonds or the bonds are called by the state agencies, the Company
would be obligated to pay any expenditure in excess of the collateral.

We
estimate that our actual reclamation liabilities for prior operations at Kingsville Dome, Vasquez and Rosita at December 31, 2010, are about $7.6 million of which the
net present value of $5.0 million is recorded as a liability on our balance sheet as of December 31, 2010.

The
Company's financial surety obligations are reviewed and revised periodically by the Texas regulators.

In
New Mexico, surety bonding will be required before commencement of mining and will be subject to annual review and revision by the United States Nuclear Regulatory Commission and the
State of New Mexico or the USEPA.

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. 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.

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 mining at the Churchrock project and Section 24 for the Crownpoint project for the projected
life of these mines. 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.

Competition

A primary area of competition is in the identification and acquisition of properties with high prospects of potential producible
reserves. We compete with multiple exploration companies for both properties as well as skilled 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.

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Our
uranium production also competes 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 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 facilities. If we are unable to successfully compete for properties, capital,
customers or employees or 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 market uranium to utilities and commodity brokers and are in direct competition with supplies
available from various sources worldwide. We believe we compete with multiple operating companies in the mining and sale of uranium.

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 of 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 Securities and Exchange
Commission. 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 also obtain a printed copy of the foregoing materials by sending written request to: Uranium Resources, Inc., 405
State Highway 121 Bypass, Building A, Suite 110, Lewisville, Texas 75067, Attention: Information Request or by calling 972.219.3330. 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.

The factors identified below are important factors (but not necessarily all of the important factors) that could cause actual results
to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company. Where any such forward-looking statement includes a statement of the assumptions or
bases underlying such forward-looking statement, we caution that, while we believe such assumptions or bases to be reasonable and make them in good faith, assumed facts or bases almost always vary
from actual results, and the differences between assumed facts or bases and actual results can be material, depending upon the circumstances. Where, in any forward-looking statement, the Company, or
its management, expresses an expectation or belief as to the future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no
assurance that the statement of expectation or belief will result, or be achieved or accomplished. Taking into account the foregoing, the following are identified as important risk factors that could
cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company.

General Risks and Uncertainties

We are not producing uranium at this time, nor do we expect to begin production in the near future unless uranium prices recover to sustained profitable levels. As a result,
we currently have no sources of operating cash. If we cannot monetize certain existing Company assets, partner with another Company that has cash resources, find other means of generating revenue
other than uranium production and/or have the ability to access additional sources of private or public capital we may not be able to remain in business.

We will not commence production at our existing properties until uranium prices recover to sustainable profitable levels. Until such
uranium price recovery we will have no way to generate cash

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inflows
unless we monetize certain Company assets or find other means to generate cash. In addition, our Vasquez project has been depleted of its economically recoverable reserves and our Rosita and
Kingsville Dome projects have limited identified economically recoverable reserves. Our future uranium production, cash flow and income are dependent upon 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.

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.

In addition to ceasing all production, we have deferred all activities for delineation and development of new wellfields at our South
Texas projects. This decision limits our ability to be ready to begin production when uranium prices improve to profitable levels. 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 depends on 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 . A significant, sustained drop in uranium prices may make it impossible to operate our business at a level that will permit us to cover our fixed costs
or to remain in operation.

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

The exploration for and development of uranium deposits involves significant risks. It is impossible to ensure that the current and
future exploration programs and/or feasibility studies 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; labor costs and
possible labor strikes; 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.

Potential impact on the uranium markets of the earthquake in Japan.

The aftermath of the catastrophic earthquake and tsunami that struck parts of Japan and the subsequent developments at the Fukushima
Nuclear Power Plant has created heightened concerns regarding the ability to safeguard the material used to fuel the operations of this nuclear power facility. The potential impact on the perception
of the safety of nuclear power resulting from this event may cause an increased volatility of uranium prices in the near to mid-term as well as uncertainty involving the expansion of nuclear power in
certain countries around the world. A reduction in the current and future generation of electricity from nuclear power could result in a reduced requirement for uranium to fuel nuclear power plants
which may negatively impact the Company in the future.

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The only 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 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 to some degree be dependent on the relative prices of
oil, gas, coal and hydro-electricity and the possibility of developing other low cost sources for energy. If the price of alternative energy sources decrease or new low-cost alternative
energy sources are developed, the demand for uranium could decrease, which may result in the decrease in the price of uranium.

Public acceptance of nuclear energy is uncertain.

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. 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.

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 guaranty 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.

We do not have a committed source of financing for the development of our New Mexico Properties, including the Churchrock Property, which is the property we expect to
develop first in New Mexico.

With the election by Itochu to terminate the Churchrock Joint Venture we do not have a committed source of financing for the
development of our Churchrock property. There can be no assurance that we will be able to obtain financing for this project or our other New Mexico projects. Our inability to develop the New Mexico
properties would have a material adverse effect on our future operations.

Our operations are subject to environmental risks.

We are required to comply with environmental protection laws and regulations and permitting requirements, 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. that the Company must comply with 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, and the State Mined Land
Reclamation Acts or State Department of Environmental Quality regulations, as applicable.

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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. We intend to utilize specific employees and consultants in order to comply with and maintain our compliance with the
above laws and regulations. Mining operations may be subject to other laws administered by the federal Environmental Protection Agency 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 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
mining or milling, the disposition of wastes, the decommissioning and reclamation of exploration, mining and in-situ 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, mine 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 in 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 our 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.

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

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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, we might be forced to cease operations.

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

Future bonding requirements to comply with federal and state environmental and remediation requirements and to secure necessary
licenses and approvals will increase significantly when future development and production occurs at our sites in Texas and New Mexico. The amount of the bonding for each producing property is subject
to annual review and revision by regulators. We expect that the issuer of the bonds will require us to provide cash collateral equal to 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 bonding 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.

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 are unable to withstand significant losses that can result from inherent risks associated with
mining, including environmental hazards, industrial accidents, flooding, 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.

We will need to obtain additional financing in order to implement our business plan, and the inability to obtain it could cause our business plan to fail.

As of December 31, 2010, we had approximately $15.4 million in cash. We may require additional financing in order to
complete our plan of operations. We may not be able to obtain all of the financing we require. Our ability to obtain additional financing is subject to a number of factors, including the market price
of uranium, market conditions, investor acceptance of our business plan, and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or
unavailable to us. In recognition of current economic conditions and the shut-down of production, we have significantly reduced our spending, delayed or cancelled planned activities and
substantially changed our current corporate structure. However, these actions may not be sufficient to offset the detrimental effects of the weak economy and cessation of production, which could
result in material adverse effects on our business, revenues, operating results, and prospects.

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

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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.

Approximately 27.1% of our Common Stock is controlled by one record owner and management.

Approximately 22.9% of our common stock is controlled by three significant stockholders. In addition, our directors and officers are
the beneficial owners of approximately 4.2% of our common stock. This includes, with respect to both groups, shares that may be purchased upon the exercise of outstanding options. Such ownership by
the Company's principal shareholders, executive officers and directors may have the effect of delaying, deferring, preventing or facilitating a sale of the Company or a business combination with a
third party.

The availability for sale of a large amount of shares may depress the market price of our Common Stock.

As of December 31, 2010, 92,430,306 shares of our Common Stock were currently outstanding, all of which are freely transferable.
Approximately 5,704,000 shares of Common Stock are reserved for issuance upon the exercise of outstanding options and warrants. The availability for sale of a large amount of shares or conversion of
the Company's outstanding warrants by any one or several shareholders 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 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. We currently have no authorized preferred stock. Depending on the type and the terms of any financing we pursue, stockholder's rights and the value of their investment in our Common
Stock could be reduced. For example, if we have to 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.

Shareholders would be diluted if we were to use Common Stock to raise capital.

As previously noted, we may need to seek additional capital in the future to satisfy our working capital requirements. This financing
could involve one or more types of securities including common stock, convertible debt, preferred stock or warrants to acquire common or preferred 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.

South Texas

We currently control three production properties and two exploration properties in the state of Texas. These properties are owned by
the Company's wholly owned subsidiary, URI, Inc. The Kingsville Dome, Rosita and Vasquez production properties and the Los Finados exploration property are shown in Figure No. 2.1 and
are described below.

Figure No 2.1. Texas Properties Location Map

GRAPHIC

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The Property.The Kingsville Dome property 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 royalties based upon a percentage of uranium sales of 6.25%. The leases have expiration dates ranging from 2000 to 2007, however we hold most of
these leases through our continuing restoration activities; 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 a
per acre royalty ranging from $10 to $30. We have paid such royalties on all material acreage. Mineralization is found in the Goliad formation at depths of 600 to 750 feet.

Production History.Initial production commenced in May 1988. From then until July 1999, we produced a total of 3.5 million
pounds. Production
was stopped in July 1999, because of depressed uranium prices. We resumed production at Kingsville Dome in April 2006 and produced 94,100 pounds of uranium in 2006; 338,100 pounds in 2007, 254,000
pounds in 2008 and 56,000 pounds in 2009. We had no production in 2010. We made approximately $3.6 million in capital expenditures in 2008, $159,000 in 2009 and $150,000 in 2010.

Permitting Status.A radioactive material license and underground injection control permit have been issued. As new areas are proposed
for
production, additional authorizations under the area permit are required. See "Legal Proceedings."

Restoration and Reclamation.During 2010, we conducted restoration activities as required by the permits and licenses on this project
spending
approximately $903,000 on restoration activities. In 2009 and 2008, we spent approximately $963,000 and $349,000, respectively. Since we began our groundwater activities in 1998, we have processed and
cleaned approximately 2.2 billion gallons of groundwater at the Kingsville Dome project.

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Figure No. 2.2. Kingsville Dome Property

GRAPHIC



The Property:The Rosita property consists of mineral leases from private landowners on about 3,377 gross and net acres and the Rosita
South property
consists of mineral leases from private land owners on about 2,130 gross acres and 1,984 net acres located in north-central Duval County, Texas. The leases provide for 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 expiration dates ranging from 2012 to 2015.
We are holding these leases by payment of rental fees ranging from $10 to $30 per acre. Mineralization is found in the Goliad Formation at depths of 125 to 350 feet.

Production History:Initial production commenced in 1990. From then until July 1999, URI produced a total of 2.64 million pounds.
Production
was stopped in July of 1999 because of depressed uranium prices. Production from a new wellfield at Rosita wellfield was begun in June 2008. However, technical difficulties that raised the cost of
production coupled with a sharp drop in uranium prices led to the decision to shut-in this wellfield in October 2008 after 10,200 pounds were produced. We had no production from Rosita in
2009 or 2010.

Our
capital expenditures were approximately $137,000, $40,000 and $4.5 million in 2010, 2009 and 2008, respectively primarily for plant refurbishment and wellfield development.

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Restoration and Reclamation.We are conducting restoration and reclamation activities at this project and are currently in
stabilization in our first
two PA's. During 2010, our primary groundwater activity consisted of collecting groundwater samples throughout the year for stability testing. We spent $0 in 2010 and approximately $247,000 and
$465,000 on restoration activities in 2009 and 2008, respectively. Since we began our groundwater activities in 2000, we have processed and cleaned approximately 1.3 billion gallons of
groundwater at the Rosita project.

Permitting Status:A radioactive material license and an underground injection control permit have been issued for the Rosita property.
Production
could resume in areas already included in existing Production Area Authorizations. As new areas are proposed for production, additional authorizations under the permit will be required.

Figure No. 2.3. Rosita Property

GRAPHIC



The Property.We have 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 held the lease by production and are currently in restoration. The lease provides for 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. Mineralization is found in the Oakville formation at depths of 200 to 250 feet.

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Production History.We commenced production from this property in October 2004. Our capital expenditures in 2010 were approximately
$78,000. We had
approximately $194,000 in capital expenditures at Vasquez in 2009. We had approximately $355,000 in capital expenditures at Vasquez and produced 36,600 pounds of uranium in 2008. We had no production
from Vasquez in 2010.

Restoration and Reclamation.We are conducting ongoing restoration and reclamation activities at this project and have spent $470,000,
$591,000 and
$224,000 in 2010, 2009 and 2008, respectively for such activities. Since the commencement of groundwater restoration activities at the end of 2007, we have treated approximately 244 million
gallons of groundwater.

Permitting Status.All of the required permits for this property have been received.

Figure No. 2.4. Vasquez Property

GRAPHIC

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Los Finados Project (Figure 2.5)

On December 30, 2010, we entered into a three year lease option agreement with a large Texas landowner for the exploration of
53,500 acres in Kenedy County, Texas. The agreement includes an option to lease the acreage for future uranium production.

The
property is located within the prolific South Texas uranium district which has been a major producer of uranium for half a century. Situated near uranium mining operations which
produce from the Goliad Formation, the property also hosts several oil and gas fields and is bisected by a major depositional channel system. These provide the geologic, stratigraphic, and geochemical
components for uranium deposition and water-saturated host sand with good rock permeability. Locally, water samples taken from a number of wells on the property contain levels of uranium or uranium
decay products that indicate anomalously high concentrations of uranium in nearby rock.

The
lease option agreement included a $1 million fee paid at signing. It requires a minimum exploration obligation of one hundred exploration wells or $1.0 million
investment in the first year, an additional two hundred exploration wells or $1.5 million investment in the second year and, in the third year, an additional two hundred exploration wells or
$2.0 million investment. Investment or drilling in excess of the minimum requirement in any year counts toward the following year's requirements. The uranium
mining lease can be acquired at any time at a cost of $200 per acre. Royalties on uranium sales are determined by a sliding scale ranging from 10% to 20.5% based on the price received. In a separate
letter agreement, the parties established guidelines for securing a major partner for the exploration projects, which is a condition for exercise of the lease option.

In
connection with the planned exploration program for this project we have signed a non-binding letter of intent with Cameco Resources, a subsidiary of Cameco (NYSE: CCJ),
for a three-phase exploration program that will be funded by Cameco Resources with an option for a production joint venture. Upon execution of the final exploration agreement, Cameco Resources would
pay URI $300,000.

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Figure No. 2.5. Los Finados Property

GRAPHIC

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The Marshall Property is a Goliad and Oakville prospect consisting of 2,467 gross and net acres. It is located in Duval and McMullen
counties, Texas. During 2008 we drilled 280 exploration holes and discovered significant mineralization. Further evaluation will need to be conducted to determine if this property can be mined using
ISR methods.

Figure No. 2.6. Marshall Exploration Property

GRAPHIC

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New Mexico

General.We have various interests in properties located in New Mexico, these properties are owned by the Company's wholly owned
subsidiary, Hydro
Resources, Inc. ("HRI") (Figure 2.7). We have fee lands, patented and unpatented mining claims, mineral leases and some surface leases. We have spent $13.3 million to date on
permitting for New Mexico. Additional expenditures will be required and could be material. We are unable to estimate the amount. We expect that these costs will be incurred over multiple years. See
"Legal Proceedings" for a discussion of the current status of our license for New Mexico

Figure No. 2.7. Location of New Mexico Properties

GRAPHIC



The Property.The Churchrock project encompasses about 2,200 gross and net acres. The properties are located in McKinley County, New
Mexico and
consist of three parcels, known as Section 8, Section 17 and Mancos. None of these parcels lies within the area generally recognized as constituting the Navajo Reservation. See,
"Item 3. Legal Proceedings." Access to the Churchrock property is via State Highway 566 and access to Mancos is via 4-wheel drive ranch roads west of State Highway 566.

We
own the mineral estate in fee for the NE 1/4 and the SW 1/4 of the NW 1/4 of Section 17, T16N, R16W. In Section 8, T16N,
R16W, we own the SE 1/4 in fee and hold the minerals in the rest of the

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section
with 26 unpatented federal mining claims (UNC1A thru UNC 26). For the Mancos Property, we own the minerals in Section 13, T16N, R17W, in fee, the minerals in the NW 1/4
of Section 7, T16N, R16W, in fee and hold the minerals in the E 1/2 of Section 12, T16N, R17W, with 20 unpatented federal mining claims (KP1A thru KP5A, KP19, KP36,
121617-14A thru 121617-18A, 121617-20A thru 121617-23A and 121617-32A thru 121617-35A). The federal unpatented mining claims are
all held through the payment of a $125.00 assessment fee each year on each claim.

Mineralization
occurs in the Westwater Member of the Morrison Formation at depths of 800 to 1700 feet.

The
surface estate on Section 17, Mancos Section 13 and Mancos Section 7 is owned by the United States Government and held in trust for the Navajo Nation. On those
sections we have royalty obligations ranging from 5% to 61/4% and a 2% overriding royalty obligation to the Navajo Nation for surface use agreements. The total royalties on
Section 8 depend on the sales' price of uranium. Aggregate royalties are potentially as much as 39.25% at the current price of uranium.

Development Plan.We anticipate that Churchrock will be the first of our New Mexico properties we will develop. We spent about $139,000,
 $219,000 and
$421,000 in 2010, 2009 and 2008, respectively, for permitting activities and land holding costs. In December 2006, we entered into a joint venture with Itochu to jointly develop this property and in
March 2009 the joint venture was terminated.

Water Rights.The State Engineer approved our water rights application in October 1999 and granted us sufficient water rights for the
life of
Churchrock.

Permitting Status.We have the radioactive material license for Section 8. This license is subject to the continuing proceedings
described
under "Legal Proceedings." With respect to the UIC permits, see "Legal Proceedings." We do not plan to
pursue permits for Mancos at this time.

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Table of Contents

Figure No. 2.8. Churchrock / Mancos Property Mineral Ownership

GRAPHIC



The Property.The Crownpoint properties are located in the San Juan Basin, 22 miles northeast of our Churchrock deposits and 35 miles
northeast of
Gallup, New Mexico, adjacent to the town of Crownpoint, New Mexico. The properties consist of 619 gross and 521.8 net acres. We hold the minerals in the NW 1/4 of Section 9,
T17N, R13W with 9 unpatented federal mining claims (CP-1 thru CP9) and the minerals in the SW 1/4 of Section 24, T17N, R13W with 10 unpatented federal mining claims
(CP-10 thru CP-19). In the SE 1/4 of Section 24, T17N, R13W we own in fee a 40% interest in the minerals on approximately 139 acres and hold 100% of the
minerals on 20 additional acres with two unpatented federal mining claims (Consol I and Consol II). In the NE 1/4 of Section 25, T17N, R13W we hold the minerals with eight
unpatented federal mining claims (Hydro-1 thru Hydro-8). The federal unpatented mining claims are held through the payment of a $140.00 assessment fee each year on each claim.
Access is via paved road from State Highway 371, through the town of Crownpoint to Church Road to the main gate of the property.

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Mineralization is found in the Westwater Member of the Morrison Formation at a depth of from 2,100 to 2,300 feet. Three pilot shafts were commenced on the
property in the early 1980's but were never completed. Surface facilities dating from those activities including buildings and their associated electrical/water infrastructure are still
in-place and are currently used as offices and storage facilities.

Development Plan.We spent about $3,000, $3,000 and $127,000 in 2010, 2009 and 2008, respectively, for permitting activities and land
holding costs.

Water Rights.The State Engineer approved our water rights application in 2004 and granted us sufficient water rights for ISR
operations for the life
of Crownpoint Section 24 mining. 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.See "Legal Proceedings" for a discussion of the radioactive material
license for
Crownpoint. The surface estate on Section 19 and 29 is owned by the United States Government and held in trust for the Navajo Nation and may be subject to the same jurisdictional dispute with
respect to the UIC permit as for Section 8 and 17 in Churchrock.

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Table of Contents

Figure No. 2.9. Crownpoint Property Mineral Ownership

GRAPHIC



The Nose Rock property consists of approximately 6,400 acres and is located about 12 miles northeast of Crownpoint, New Mexico. The
minerals are held in fee on Sections 10, 11, 15, 17, 18, 19, 20, 29, 30 and 31 all in T19N, R11W. Access to the property is via a 41/2 mile private paved road north of Tribal
Road 9. The property was developed by Philips Uranium Corporation in the early 1980's and includes two circular concrete-lined shafts that have been completed to a depth of 3,300 feet. Both shafts
have been plugged at surface and just above the Westwater. There is no usable surface infrastructure on site. Mineralization occurs in the Westwater Member of the Morrison Formation.

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Table of Contents

Figure No. 2.10. Nose Rock Property Mineral Ownership

GRAPHIC

29

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Table of Contents



The West Largo property is comprised of six contiguous sections of land located in McKinley County, New Mexico about 21 miles north of
the town of Milan, New Mexico and about three miles west of State Highway 509. Access is via a nine-mile 4-wheel drive road from State Highway 509. The minerals on
sections 17, 19, 21 and 29 T15N, R10W are held in fee and the minerals on sections 20 and 28 T15N, R10W are held by 75 unpatented federal mining claims (ID21 thru ID91 and ID95
thru ID98). The federal unpatented mining claims are held through the payment of a $125.00 assessment fee each year on each claim.

Mineralization
occurs in the Westwater Member of the Morrison Formation at depths ranging from 2,000 to 2,750 feet depending on surface topography. Over 1,000 drill holes were used to
define the mineralization in the late 1970's and early 1980's. Other than this exploration drilling, there has been no development on this property.

Figure 2.11. West Largo Property Mineral Ownership

GRAPHIC

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The Roca Honda property is comprised of four sections of land totaling approximately 2,560 acres located about 4 miles northwest of the
town of San Mateo in McKinley County, New Mexico. Sections 13, 15 and 17, T13N, R8W are held in fee and Section 8, T13N, R8W is held by 36 unpatented federal mining claims (Roca Honda 55
thru Roca Honda 63, Roca Honda 82 thru Roca Honda 90, Roca Honda 109 thru 117 and Roca Honda 136 thru Roca Honda 144). The federal unpatented mining claims are held through the payment of a $125.00
assessment for each year on each claim. The property is accessed over various 4-wheel drive ranch roads north of State Highway 605.

Mineralization
occurs in the Westwater Member of the Morrison Formation at depths ranging from 1,700 on Section 17 to over 3,300 feet in Section 13. In the late 1970's and
early 1980's, various operators drilled 620 exploration holes on the property. In the late 1980's, Kerr-McGee sank a shaft to a depth of 1,475 feet on Section 17 to develop the
property, then known as the Lee Mine. The shaft was stopped short of the ore zone and the mine closed down when uranium prices fell in 1983. There is no useable infrastructure on surface.

Figure No. 2.12. Roca Honda Property Mineral Ownership

GRAPHIC

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Potential ISR and OSL areas (Figures 2.13 & 2.14).Several areas in T13N R 9 W and T14 N R 10W are being
considered for application of ISR methods (Sections 13 and 17 of T13N R9W and Sections 5 and 27 of T14 N R 10W). All land described is owned in fee.

In
November 2008, we received an exploration permit from the New Mexico Mining and Minerals Division on Section 13. The permit allowed URI to drill up to ten holes for the purpose
of extracting core samples. The drilling was completed in September 2010, and we received preliminary results from a third-party laboratory analysis which demonstrated low organic carbons. This result
indicates that some of the 860,000 pounds of in-place mineralized material at this property may be amenable to ISR mining. This property is not yet licensed or permitted. Although further
leaching studies will be required to establish recovery percentages in a full scale mining scenario, we do not currently plan such additional work until after the completion of the feasibility study
currently underway on our Churchrock/Crownpoint ISR project.

Two
other sections in T14N R10W (Sections 23 and 25) have been the site of extensive development and mining in the past and could provide targets for the application of Old
Stope Leaching operations. Mineral on these two sections is owned in fee.

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Figure No. 2.13. West Ambrosia area

GRAPHIC

33

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Table of Contents

Figure 2.14. T13N R9W Area

GRAPHIC

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.

Reclaimed Properties

We have completed production and groundwater restoration on our Benavides and Longoria projects in South Texas. We completed the final
stages of surface reclamation on these projects and received full and final release for these sites in 1999.

We
acquired the Section 17 leases in the New Mexico Churchrock district from United Nuclear Corporation who 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 not determined what, if any, additional remediation would be required under the New Mexico Mining Act. If more remediation work is required, we believe it would not
involve material expenditures as required by the New Mexico Energy Minerals and Natural Resources Department regulation.

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Table of Contents

In January 2008 the Navajo Nation Environmental Protection Agency (NNEPA) notified the Company of their analysis that indicated potentially uranium contaminated
materials present on the Churchrock Section 17 mine site. In response, the Company has performed a comprehensive characterization of the Churchrock Site at Section 17 and lands adjacent
to the site area and completed the field work during the spring/summer of 2009. This study was completed in September 2009 and we believe that any off-site mine-related impacts
at Section 17 and adjacent lands are minor. The jurisdiction of the Navajo Nation to require additional remediation at the Section 17 site, and their criteria for further remediation,
are unknown.

See
"Legal Proceedings" for a description of the status of the Navajo EPA letter and UNC Demand for Indemnity in New Mexico.

Item 3.    Legal Proceedings.

New Mexico Radioactive Material License

In the State of New Mexico, uranium recovery by ISR technology requires a combined source and 11e. (2) byproduct material
(uranium recovery) license issued by the United States Nuclear Regulatory Commission (the "NRC" or the "Commission"). In January 1998 the Commission issued a uranium recovery license for our
Crownpoint Uranium Project ("CUP") that allowed operations to begin in the Churchrock district. After various objections were raised by intervenors, a final Commission decision upholding HRI's
license. That decision was appealed by intervenors to the United States Court of Appeals for the Tenth Circuit, which rejected the petition and affirmed the action of the Commission in all respects on
March 8, 2010. The Tenth Circuit denied the petition for a rehearingen bancand on November 2010, the United States Supreme Court denied the
opponents' petition for certiorari. This cleared the last remaining legal challenge to our NRC license.

New Mexico UIC PermitTenth Circuit Court of Appeals Decision

On June 15, 2010 the United States Court of Appeals for the Tenth Circuit en banc held that the Company's Section 8
property in Churchrock, New Mexico is not Indian Country. The result of the ruling is that the authority to issue a UIC permit to URI falls under the jurisdiction of the State of New Mexico and not
the U.S. Environmental Protection Agency (USEPA). The opposing parties had the right to petition the Supreme Court for review until September 13, 2010; however no petitions were filed as of
deadline and the ability for opposing parties to petition the United States Supreme Court has expired.

Dispute over Kleberg County Settlement Agreement

In February 2007, Kleberg County, Texas adopted a resolution alleging violations of its December 2004 Settlement Agreement with the
Company and authorizing outside counsel to bring suit against the Company to force it to cease mineral production unless the Company promptly resolved the matter to the County's satisfaction. The
County disputes the Company's interpretation of the December 2004 Settlement Agreement as to the level of groundwater restoration the Company agreed to achieve in Kingsville Dome Production Areas 1
and 2. The Company believes it is in full compliance and engaged in a mediation of this dispute. On September 28, 2007, after
negotiations had stalled the Company filed suit against the County in the 105th Judicial District Court, Kleberg County, Texas for declaratory relief interpreting the Settlement Agreement and
for recovery of the Company's legal fees and costs of the suit.

The
County has answered the suit and has asserted counterclaims alleging the Company had violated the December, 2004 Settlement Agreement with Kleberg County and asked for 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 suit. The County's motion for partial summary judgment
was

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heard
on February 24, 2011, and taken under advisement by the court. Because the County's motion for partial summary judgment does not seek to dispose of the entire case, the Company expects
this case will go to trial unless settled.

If
this matter goes to trial, the Company will defend the case vigorously.

Kingsville Dome Production Disposal Well Permit Renewals and Production Area Authorization 3

After an August 2005 hearing, the Texas Commission on Environmental Quality ("TCEQ") voted unanimously February 22, 2006 to
renew the Company's disposal well permits, WDW-247 and WDW-248, and to issue Kingsville Dome Production Area Authorization 3 ("PA 3"). A citizens group and a Ms. Garcia
filed in the 201st Judicial District Court, Travis County, Texas for judicial review of the TCEQ action in June 2006. The Texas Attorney General answered in defense of TCEQ and the Company
intervened to defend the TCEQ's action granting the permit renewals and production area authorization. The two cases have been consolidated; a judge has been assigned; and, in June 2007, the TCEQ
submitted the administrative record to the court for review.

In
June 2007 an attorney claiming to have been newly engaged by a plaintiff, Ms. Garcia, notified all parties that Garcia wished to withdraw from the litigation and requested that
no further action be taken and that her action be dismissed. On June 27, 2007, Garcia's original counsel moved to appoint a guardian or representative for Ms. Garcia. The Company
challenged the sufficiency of the request for appointment of a guardian or representative for Ms. Garcia; and Ms. Garcia's original counsel set his motion for hearing in August 2007.
Before the hearing date, original counsel for Ms. Garcia, tentatively rescheduled the hearing for October 24, 2007 and then canceled that hearing date. No further action on the matter
has been scheduled; and mining in Production Area 3 and the rest of the Company's
Kingsville Dome mines has ceased, leaving the entire mine site in the process of groundwater restoration.

There
were no further developments in this matter during 2010.

The
permits and production area authorization issued by TCEQ remain effective unless overturned by a reviewing 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 Mine
Site. NNEPA requested HRI and UNC/GE to undertake a "comprehensive and detailed characterization" of HRI's Churchrock Mine Site and adjacent lease areas, as recommended in the Survey Report.

By
letter dated January 29, 2008, UNC and 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 GE and UNC with respect to the request asserted by NNEPA.

In
response HRI/URI has committed with UNC and GE to perform a site assessment at its expense of the Old Churchrock 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. The assessment concluded that site conditions did
not constitute a threat to human health or the environment. NNEPA is presently evaluating the site characterization report. In the event that a governmental authority issues a formal Administrative

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Table of Contents

Order
or files a lawsuit, the Company and UNC 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.

Saenz Litigation

In the matter titled,Saenz v. URI Inc,in the 105th Judicial District Court,
Kleberg County, Texas, the owners of the mineral estate of property in Kleberg County, Texas leased to the Company sought a declaratory judgment that the leases were not valid. The Company had
produced uranium from both leases. On September 29, 2010, our counsel and the plaintiffs' counsel signed a settlement agreement in this matter and the settlement was finalized in February 2011.
Under the Settlement, the Plaintiffs ratified, confirmed and recognized the validity of the leases, agreed to cooperate with the Company and execute a stipulation of interest with regard to their
respective interests. Plaintiffs agreed to support and not interfere, either directly or indirectly, with the Company's efforts to obtain permits, licenses or other authorizations from the different
regulatory and governmental agencies with regard to any mining or other operations. We paid to Plaintiffs $1.375 million in cash, which includes amounts for prior royalties that the plaintiffs
had previously rejected. In addition royalties due for future production from the leases will be amended from a 6.25% royalty rate to a sliding scale royalty.

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.    Submission of Matters to a Vote of Security Holders.

None.

GLOSSARY OF CERTAIN URANIUM INDUSTRY TERMS

claim

A claim is a 20 acre tract of land, the right to mine of which is held under the federal General Mining Law of 1872 and applicable local laws.concentrates

A product from a uranium mining and milling facility, which is commonly referred to as uranium concentrate or
U3O8.conversion

A process whereby uranium concentrates are converted into forms suitable for use as fuel in commercial nuclear
reactors.cut-off grade

Cut-off grade is determined by the following formula parameters: estimates over the relevant period of mining
costs, ore treatment costs, general and administrative costs, refining costs, royalty expenses, process and refining recovery rates and uranium prices.gross acres

Total acres under which we have mineral rights and can mine for uranium.Indian Country

A term derived from jurisdictional determinations in criminal law enforcement proceedings under 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.


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in-situ recovery (ISR)

Groundwater fortified with oxygen and other solubilizing agents is pumped into a permeable ore body causing the uranium contained
in the ore to dissolve. The resulting solution is pumped to the surface. The fluid-bearing uranium is then circulated to an ion exchange column on the surface where uranium is extracted from the fluid onto resin beads. The fluid is then reinjected
into the ore body. When the ion exchange column's resin beads are loaded with uranium, they are removed and flushed with a salt-water solution, which strips the uranium from the beads. This leaves the uranium in slurry, which is then dried and
packaged for shipment as uranium powder, or yellowcake.mineralized material

A mineralized body which has been delineated by appropriately spaced drilling and/or underground sampling to
support a sufficient tonnage and average grade. Such a deposit does not qualify as a reserve, until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors conclude legal and economic feasibility.net acres

Actual acres under lease which may differ from gross acres when fractional mineral interests are not
leased.old stope leaching

Old stope leaching involves the pumping of ground water, through stopes, drifts, and other flooded underground
mine workings of previously conventionally mined areas to remove the residual and soluble post mining uranium values. The resulting uranium-bearing ground water is pumped to the surface for uranium removal and then is re-circulated directly into the
mine workings or into injection wells that are completed in or near to the workings. This re-circulation of the same ground water is repeated, until the residual uranium in the old underground mine is depleted.ore

Naturally occurring material from which a mineral or minerals of economic value can be extracted at a reasonable
profit.probable reserves

Reserves for which quantity and grade and/or quality are computed from information similar to that used for
proven (measured) reserves, but the sites for inspection, sampling and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume
continuity between points of observationproven reserves

Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or
drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and
mineral content of reserves are well-established.reclamation

Reclamation involves the returning of the surface area of the mining and wellfield operating areas to a condition
similar to pre-mining.


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Table of Contents

recoverable reserves

Reserves that are either proven or probable, are physically minable and can be profitably recovered under conditions specified at
the time of the appraisal, based on a positive feasibility study. The calculation of minable reserves is adjusted for potential mining recovery and dilution.reserve

That part of a mineral deposit which could be economically and legally extracted or produced at the time of the
reserve determination.restoration

Restoration involves returning an aquifer to a condition consistent with our pre-mining use. The restoration of
wellfield can be accomplished by flushing the ore zone with native ground water and/or using reverse osmosis to remove ions to provide clean water for reinjection to flush the ore zone.roll front

The configuration of sedimentary uranium ore bodies as they appear within the host sand. A term that depicts an
elongate uranium ore mass that is "C" shaped.shut in

A term that refers to ceasing production or the absence of production.shut-in royalty

A lease clause permitting the extension of a lease not held by production by payment of a per acre
royalty.spot price

The price at which uranium may be purchased for delivery within one year.surety obligations

A bond, letter of credit, or financial guarantee posted by a party in favor of a beneficiary to ensure the
performance of its or another party's obligations, e.g., reclamation bonds, workers' compensation bond, or guarantees of debt instruments.tailings

Waste material from a mineral processing mill after the metals and minerals of a commercial nature have been
extracted; or that portion of the ore which remains after the valuable minerals have been extracted.uranium or uranium concentrates

U3O8 or triuranium octoxide.U3O8

Triuranium octoxide equivalent contained in uranium concentrates, referred to as uranium concentrate.waste

Barren rock in a mine, or uranium in a rock formation that is too low in grade to be mined and milled at a
profit.yellowcake

Uranium in powder form, the end-result of the ISR process.


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Table of Contents

PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

From April 12, 2007 to July 1, 2010 our common stock was listed on the NASDAQ Global Market under the symbol "URRE."
Effective, July 2, 2010, our listing was transferred to the NASDAQ Capital Market because we had failed to regain compliance with the $1.00 per share minimum bid price by July 7, 2101,
and we were granted until January 4, 2011 to demonstrate compliance with the minimum $1.00 bid price requirement of The NASDAQ Capital Market. In October 2010, we regained compliance with the
$1.00 per share minimum bid price requirement for continued listing on the NASDAQ Capital Market.

The
following table sets forth the high and low bid prices for our common stock as reported on the applicable markets for the periods indicated:

Common StockFiscal Quarter Ending

High

LowDecember 31, 2010

$
3.75

$
1.14September 30, 2010


1.38


0.39June 30, 2010


0.76


0.40March 31, 2010


0.86


0.69December 31, 2009


1.33


0.76September 30, 2009


1.32


0.89June 30, 2009


1.73


0.50March 31, 2009


1.92


0.40


As
of December 31, 2010, 92,430,306 shares of our common stock were outstanding. As of March 14, 2010 there were 117 holders of record.

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.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of December 31, 2010 regarding equity compensation to the Company's employees,
officers and directors under equity compensation plans. We have no plans under which equity securities are authorized for issuance to non-employees (including lenders, suppliers,
customers, advisors or consultants) in exchange for goods and services.

Plan category

Number of shares
issuable under
outstanding options
and rights

Weighted average
exercise price

Number of shares
available for
future issuanceEquity compensation plans approved by security holders


3,968,875

$
2.55


626,833Equity compensation plans not approved by security holders(1)


735,982

$
0.80


Total


4,704,857

$
2.27


626,833


(1)Plans
include the Company's Deferred Compensation Plans for 2000 to 2004.


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Table of Contents




Performance Graph

The following chart compares the yearly changes in total stockholder return on the Company's common stock against two other measures of
performance. The comparison is on a cumulative basis for the Company's last five fiscal years. The other performance measures are the Russell 2000 index, a peer group consisting of
DenisonDNN, UranerzURZ, Uranium EnergyUEC and Strathmore MineralsSTHJF In each case, we assumed an initial investment of $100 on December 31,
2005 and reinvestment of all dividends. Dates on the following chart represent the last trading day of the indicated fiscal year.

Comparison of 5 Year Cumulative Total Return  Assumes Initial Investment of $100  December 2010

GRAPHIC

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Table of Contents

Item 6.    Selected Financial Data.

The following tables provide selected financial and operating data for each of the fiscal years in the five-year period
ended December 31, 2010. The selected financial and operating data set forth below should be read in conjunction with, and are qualified in their entirety by reference to, the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of Operation" and the Company's financial statements and related notes included
elsewhere in this annual report. Historical results are not necessarily indicative of results to be expected in any future period.

For the Year Ended December 31,2010

2009

2008

2007

2006(In thousands except per share and per pound amounts)Uranium sales

$


$
4,673

$
18,551

$
31,143

$
8,581Cost of salesoperations


1,309


4,504


16,372


18,051


12,687(Gain) loss on derivatives














(34,821
)Writedown of uranium properties and exploration expenses


961


3,580


17,623


999


3,495Total cost of uranium sales


2,270


8,084


33,995


19,050


(18,639
)Earnings (loss) from operations before corporate expenses


(2,270
)

(3,411
)

(15,444
)

12,093


27,220Corporate expenses


8,430


6,766


11,553


11,768


6,791Earnings (loss) from operations


(10,700
)

(10,177
)

(26,996
)

325


20,429Other income


345


111


487


753


1,081Net income (loss)

$
(10,355
)
$
(10,066
)
$
(26,509
)
$
1,078

$
21,510Net income (loss) per common share:Basic

$
(0.14
)
$
(0.18
)
$
(0.49
)
$
0.02

$
0.44Diluted

$
(0.14
)
$
(0.18
)
$
(0.49
)
$
0.02

$
0.42Weighted average common stock and equivalents outstanding:Basic


72,313


56,400


54,569


52,119


48,338Diluted


72,313


56,400


54,569


56,081


51,560CONSOLIDATED OPERATING AND OTHER DATACash provided by (used in) operations

$
(7,360
)
$
(5,033
)

1,042


11,294

$
(2,215
)Capital expenditures and investing activities


(2,366
)

(820
)

(11,016
)

(22,908
)

(31,906
)Financing activities


19,020


(97
)

12,731


722


48,445Net increase (decrease) in cash and equivalents

$
9,294

$
(5,950
)
$
2,757

$
(10,893
)
$
14,324Pounds of uranium produced





59


301


417


259Pounds of uranium delivered





95


286


435


263Average sales price per pound

$


$
49.08

$
64.99

$
71.61

$
32.63Average cost of produced pounds sold

$


$
39.73

$
48.60

$
33.21

$
43.36Royalties/commissions per pound sold

$


$
4.87

$
5.99

$
6.98

$
2.92


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CONSOLIDATED BALANCE SHEET DATA

At December 31,2010

2009

2008

2007

2006(In thousands)Cash and cash equivalents

$
15,386

$
6,092

$
12,042

$
9,284

$
20,177Working capital


10,601


3,276


9,494


8,072


18,371Net property, plant and equipment


19,612


18,944


22,778


30,611


18,196Total assets


42,562


32,012


43,224


52,937


45,936Total debt


653


770


928


839


838Total liabilities


9,885


9,151


11,616


10,060


9,167Total shareholders' equity

$
32,677

$
22,861

$
31,608

$
42,877

$
36,769


Item 7.    Management's Discussion and Analysis of Financial Condition and Results of Operation.

Forward Looking Statements

This Item 7 contains "forward looking statements." These statements include, without limitation, statements relating to
liquidity, financing of operations, continued volatility of uranium prices and other matters. The words "believes," "expects," "projects," "targets," "estimates" or similar expressions identify
forward-looking statements. We do not undertake to update, revise or correct any of the forward-looking information. Readers are cautioned that such forward-looking statements should be read in
conjunction with our disclosures under the heading: "Risk Factors" beginning on page 9.

Financial Condition and Results of Operations

Comparison of Twelve Months Ended December 31, 2010, 2009 and 2008

Production and production costs.Our uranium production was zero in 2010, 59,000 pounds in 2009 and 300,800 pounds in 2008. In 2006 and
2007 we saw a
decline in Vasquez production and the start-up of production from our Kingsville Dome project. The Vasquez project was mined out in 2008 and existing wellfields at Kingsville Dome
completed production in the second quarter of 2009.

Production
at our Rosita project was suspended in October 2008 because of high cost of production combined with lower uranium prices. Although technically challenging, we believe the
reserves from Rosita can be produced economically with higher uranium prices.

We
completed production at the Vasquez project in the fourth quarter of 2008 and we shut-in production at the Kingsville Dome project in the second quarter of 2009. The
Vasquez project and is now being restored. At the Kingsville Dome and Rosita projects, we shut-in production to conserve the in-place reserve base in response to a drop in
uranium market prices. We do not intend to resume production at these sites until there is a significant recovery of uranium prices.

43

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Table of Contents

The
following table details our production and production cost breakdown for the year ended December 31, 2010, 2009 and 2008:

2010

2009

2008Kingsville Dome production





56,100


254,000Vasquez production





2,200


36,600Rosita production





700


10,200Total production





59,000


300,800Total operating costs

$
395,000

$
1,682,000

$
7,173,000Per pound operating costs

$
n/a

$
28.51

$
23.84Total depreciation and depletion costs

$
756,000

$
887,000

$
7,165,000Per pound DD&A cost

$
n/a

$
15.02

$
23.82Total production cost

$
1,151,000

$
2,569,000

$
14,338,000Production cost per pound

$
n/a

$
43.53

$
47.66


Total
operating costs, total depreciation and depletion costs and total production costs incurred for the periods presented above differ from the cost of uranium sales recorded in
consolidated statements of operations because of changes in the amounts recorded to inventory for the same periods. The cost of uranium sales include the sales of uranium inventory on hand at the
beginning of the period and do not include uranium produced during the period but not sold at period end.

The
following table provides a reconciliation of production costs to cost of uranium sales for the year ended December 31, 2010, 2009 and 2008:

2010

2009

2008Operating costs

$
395,000

$
1,682,000

$
7,173,000Change in uranium inventory





1,011,000


(508,000
)Operating expense for uranium production sold

$
395,000

$
2,693,000

$
6,665,000Depreciation and depletion costs

$
756,000

$
887,000

$
7,165,000Change in uranium inventory





203,000


43,000Depreciation and depletion for uranium production sold

$
756,000

$
1,090,000

$
7,208,000Total production costs

$
1,191,000

$
2,569,000

$
14,338,000Change in uranium inventory





1,214,000


(466,000
)Direct cost of uranium production sold

$
1,151,000

$
3,783,000

$
13,872,000


The
costs incurred in 2010 for operations and depreciation/depletion resulted from stand-by, maintenance and monitoring activities at our Rosita and Kingsville Dome projects.
Total expenditures for direct production costs in 2009 were significantly lower than 2008 as a result of the scale back of production during the year when compared to 2008. The reduced production in
2009 resulted from the decline in uranium prices throughout 2008 which led to the Company's decision in October 2008 to defer new wellfield development.

Our
direct production costs in 2008 increased compared with 2007. These increases resulted from production being sourced from higher cost Kingsville Dome and Vasquez wellfields in 2008
and from the unfavorable results we saw from our Rosita production during 2008.

Uranium Sales.We had no uranium sales in 2010. In 2009, we sold a total of 95,200 pounds of uranium produced from our Kingsville Dome,
Vasquez and
Rosita projects, resulting in revenue of $4.7 million. In 2008, we sold a total of 285,500 pounds of uranium produced from our Kingsville Dome, Vasquez and Rosita projects, resulting in revenue
of $18.5 million.

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Cost of Uranium Sales.Our costs incurred in 2010 for operations and depreciation/depletion resulted from stand-by, maintenance and
monitoring activities at our Rosita and Kingsville Dome projects during the year. Our direct production costs for uranium sales made in 2009 and 2008 was $3.8 million and $13.9 million,
respectively. Our total cost of uranium sales is comprised of such production costs, including operating expenses, depreciation and depletion expenses, and also includes royalties and commissions
related to our uranium sales, amortization of our restoration and reclamation cost estimates, exploration costs incurred during the year and impairment provisions for uranium properties. The following
table details our production and royalties/commissions cost of uranium sales breakdown for the years ended December 31, 2010, 2009 and 2008:

2010

2009

2008Total pounds sold





95,200


285,500Total operating expenses

$
395,000

$
2,693,000

$
6,664,000Per pound operating expense

$
n/a

$
28.29

$
23.35Depreciation and depletion

$
756,000

$
1,090,000

$
7,208,000Per pound DD&A expense

$
n/a

$
11.44

$
25.25Direct cost of sales

$
1,151,000

$
3,783,000

$
13,872,000Direct cost of sales per pound

$
n/a

$
39.74

$
48.60Royalties and commissions

$


$
464,000

$
1,710,000Royalties and commissions per pound

$
n/a

$
4.87

$
5.99


Production
costs in 2009 were significantly lower than 2008 as a result of the scale back of production during the year when compared to 2008. As a result of lower sales, royalties and
commissions were lower in 2009 than 2008. Our average cost of pounds sold in 2008 was $48.60 per pound, with Kingsville Dome production contributing approximately 85% of total pounds sold, Vasquez
contributing approximately 12% of total pounds sold and Rosita contributing approximately 3% of total pounds sold during the year.

Royalties and Commissions.There were no royalties or commissions incurred in 2010. During 2009, royalties and commissions were $464,000,

representing 9.9% of sales. During 2008, royalties and commissions for Kingsville Dome, Vasquez and Rosita were $1.710 million, representing 9.2% of sales. The changes in royalty percentages
from 2009 to 2008 resulted primarily from the changes in uranium sales prices year to year and the source of our production in each year. Our Vasquez leases contain a sliding scale royalty with
percentages that range from 6.25% up to 10.25% depending on our sales prices. Our Kingsville Dome leases have a 6.25% royalty and carry an additional 3.125% royalty payment to certain land owners. Our
Rosita leases contain a 11.25% royalty.

Operating Expenses.During 2010 we incurred operating expenses related to our South Texas projects of $395,000, all such costs were from
stand-by and/or care and maintenance activities. During 2009, operating expenses for Kingsville Dome, Vasquez and Rosita were $2.7 million which included $548,000 of
stand-by and other operating costs at our South Texas projects, which were charged to operations. During 2008, operating expenses were $6.2 million. In 2008 we incurred $456,000 of
stand-by costs at the Rosita project, which were charged to operations.

Depreciation and Depletion.During 2010 we incurred deprecation and depletion expense related to our South Texas projects of $756,000,
all such costs
were from stand-by and/or care and maintenance activities. During 2009, we incurred depreciation and depletion expense of $1.1 million compared to $7.2 million during 2008.

Impairment of Uranium Properties.During 2010, 2009 and 2008, we determined the carrying value of our uranium project assets exceeded
their fair
value. In 2010, this resulted in an impairment provision of $961,000, and we reduced the carrying value of Kingsville Dome by $590,000, Rosita by $58,000 and Vasquez by $313,000 at December 31,
2010. In 2009, we recorded an impairment provision

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of
$3.5 million, and we reduced the carrying value of Kingsville Dome by $2.5 million, Rosita by $214,000, Vasquez by $263,000 and other South Texas projects by $567,000 at
December 31, 2009. In 2008 our impairment provision totaled $16.0 million reducing the carrying value of Kingsville Dome by $6.0 million, Rosita by $8.1 million and Vasquez
by $1.8 million at December 31, 2008.

Accretion and Amortization of Future Restoration Costs.During 2010, 2009 and 2008, the accretion and amortization of future
restoration costs was
$156,000, $257,000 and $790,000, respectively.

General and Administrative Charges.We incurred general and administrative charges and corporate depreciation of $8.4 million,
$6.8 million and $11.6 million in 2010, 2009 and 2008, respectively.

Significant
expenditures for general and administrative expenses for the years ended December 31, 2010, 2009 and 2008 were:

Year Ended2010

2009

2008(Amounts in 000's)Stock compensation expense

$
1,032

$
1,258

$
2,154Salaries and payroll burden


2,597


2,186


3,180Legal, accounting, public company expenses


1,656


1,348


1,584Provision for legal settlement


1,375





Write-off of target acquisition costs








1,422Insurance and bank fees


565


539


703Consulting and professional services


593


748


1,247Office expenses


231


313


724Travel and other expenses


238


232


391Total

$
8,287

$
6,624

$
11,405


The
non-cash compensation expense recorded for the years ended December 31, 2010, 2009 and 2008 resulted from the recognition of expense related to the fair value of
the Company's stock option grants. The value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the
input of subjective assumptions, including the expected term of the option award and stock price volatility. The expected term of options granted was derived from historical data on our employee
exercise and post-vesting employment termination experience. The expected volatility was based on the historical volatility of our stock.

The
increases in salary and payroll burden in 2010 resulted primarily from a change in executive level personnel in late 2009, the reinstatement of the non-cash portion of
executive level salaries in the 2nd half of 2010, the payment of performance related bonuses in 2010 and a 50% increase in medical premium costs for the 2010 plan year.
Significant reductions in salary and payroll costs were made in 2009 compared with 2008. The $994,000, or 31% decrease resulted primarily from a reduction in personnel headcount that resulted from
lower activities created by the shut down of the Company's production during the current year.

The
Company's legal, accounting and public company expenses increased by $308,000 in 2010 compared with 2009. These increases resulted from legal fees related to the Saenz lawsuit, the
recording of our regulatory fees as G&A costs in 2010 because of our no longer being in active uranium production during the year, increased Board of Director fees related to the addition of a Board
member in January 2010 and an increase in the number of meetings held during the year and higher accounting fees related to services performed for the audit of the Company's 401k plan. The Company's
legal, accounting and public company expenses decreased $236,000 in 2009 compared with

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Table of Contents

2008.
The decrease resulted from reduced audit and Sarbanes-Oxley Section 404 ("SOX 404") related costs during the year that were partially offset by increases in legal fees.

In
September, 2010, we recorded $1.375 million in settlement of the lawsuit titled,Saenz v. URI Inc.The payment of
$1.375 million in cash included amounts for prior royalties that the plaintiffs had previously rejected. The payment was made in February 2011, upon the execution of amendments to the leases
and to documentation of other aspects of the settlement and dismissal of the suit.

Insurance
costs increased in 2010 primarily because of increase in director's and officer's liability premiums in 2010 compared to 2009. Insurance costs decreased in 2009 compared to
2008 as a result of lower general liability and umbrella coverage premiums because of reductions in payroll during the year.

Consulting
and professional service expenses in 2010 were lower than 2009 by $155,000. This reduction resulted primarily because fees incurred in 2009 for New Mexico legacy and site and
property characterization activities were not repeated in 2010. Consulting and professional service expenses were reduced significantly in 2009 compared to the prior year as a result of lower public
relations costs associated with New Mexico community relations and community information education activities. This reduced spending resulted in savings of approximately $499,000 year over
year.

Reduced
office related costs in 2010 resulted from executive search fees and employee allowances paid in 2009 that were not incurred in 2010. Reduced office related costs in 2009
resulted from closures of the Company's New Mexico and Corpus Christi office locations along with peripheral office related cost reductions resulting from the reductions in work force seen in 2009.

Write-off of Target Acquisition Costs.In June 2008, the Company and Billiton Investment 15 B.V. agreed to terminate our agreement
to purchase Rio Algom Mining, LLC, which was entered into on October 12, 2007. In connection with the targeted acquisition, we incurred costs of $1.4 million
dollars which were originally recorded as an asset. Upon the termination of the agreement these pre-acquisition costs were expensed in 2008.

Net Income (Loss).For the year ended December 31, 2010 we had a net loss of $10.4 million compared to net losses of
$10.1 million and $26.5 million in 2009 and 2008, respectively. On a diluted per share basis, losses were ($0.14) in 2010, ($0.18) in 2009 and ($0.49) in 2008. These losses in 2010, 2009
and 2008 include an impairment provision for the Kingsville Dome, Vasquez and Rosita projects of $961,000, $3.5 million and $16.0 million, respectively and exploration charges of $2,000,
$62,000 and $1.6 million, respectively.

Cash Flow.As of December 31, 2010 we had a cash balance of approximately $15.4 million compared with approximately
$6.1 million
and $12.0 million at December 31, 2009 and 2008, respectively.

In
2010, we had a negative cash flow from operations of $7.4 million, resulting primarily from our cessation of uranium production in 2009 and the related lack of uranium sales
during the year. In 2009, we had a negative cash flow from operations of $5.0 million, resulting primarily from low uranium production and related sales volumes. In 2008, we generated
$1.0 million of cash flow from operations, resulting from our uranium production activities during the year.

In
2010, we raised net proceeds of approximately $19.1 million through the sale of 35,365,330 shares. In the June/July period we issued 27,142,830 shares at $0.42 per share and in
November 8,222,500 shares at $1.16 per share in underwritten public offerings. In 2008, we raised net proceeds of approximately $12.8 million through the sale of 3,295,920 shares at
$4.34 per share in May 2008 and $183,000 from the issuance of 169,250 shares from the exercise of employee stock options.

47

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Table of Contents

During 2010 we used $2.4 million in investing activities, which includes $1.2 million of capital additions for the acquisition of exploration
property in South Texas. Additionally, we increased the collateral required for our financial surety obligation by $551,000 during the year. The deferral of wellfield development activities resulted
in our capital expenditures used in investing activities being reduced by approximately $10.2 million to $820,000 in 2009 compared to 2008.

We
also used $11.0 million in investing activities in 2007, including $8.4 million of capital additions for our South Texas production projects. These expenditures
consisted primarily of wellfield evaluation, delineation and development costs of $2.8 million and plant and equipment additions of $634,000 at Kingsville Dome. Wellfield evaluation and
development costs were $2.4 million and plant and equipment additions totaled $1.9 million at the Rosita project during 2008. Costs at the Vasquez project were $355,000 in 2008 and were
primarily for wellfield development and land holding costs and we spent approximately $478,000 for evaluation and delineation activities at the Company's Rosita South project during 2008.

LiquidityCash Sources and Uses for 2011

As of December 31, 2010, the Company had $15.4 million in cash and our cash balance at February 28, 2011 was
approximately $12.3 million. The Company is not currently conducting uranium production activities and has no uranium inventory. The Company is not projecting any sales revenue and related cash
inflows for 2011.

During
2010 we significantly strengthened our balance sheet through the capital raises completed during the year. The approximately $19.1 million raised in 2010 has positioned the
Company to move forward with its near term-plans in South Texas and New Mexico and we expect that our current financial resources will allow us to maintain the Company's liquidity for a
period of twelve to fifteen months. While the Company believes it has sufficient capital resources to sustain its operating plans, as part of its strategy, it continues to seek opportunities to expand
its resource base in both New Mexico and South Texas and such activities would require it to seek additional sources of financing. There can be no assurance that such activities will result in the
acquisition of new properties or that we will be able to raise sufficient funds to allow the Company to move forward with such activities.

Off Balance Sheet Arrangements

The Company has obtained financial surety relating to certain of its future restoration and reclamation obligations as required by the
State of Texas regulatory agencies. The Company has bank Letters of Credit (the "L/Cs) and performance bonds issued for the benefit of the Company to satisfy such regulatory requirements. The L/Cs
were issued by Bank of America and the performance bonds have been issued by United States Fidelity and Guaranty Company ("USF&G"). L/Cs for $5,858,000, $5,761,000 and $5,629,000 at
December 31, 2010, 2009 and 2008, respectively such L/Cs are collateralized in their entirety by certificates of deposit.

Performance
bonds totaling $2,834,000 were issued for the benefit of the Company at December 31, 2010, 2009 and 2008. USF&G has required that the Company deposit funds
collateralizing a portion of the bonds. The amount of bonding issued by USF&G exceeded the amount of collateral by $2.5 million at December 31, 2009, 2008 and 2007, respectively. In the
event that USF&G is required to perform under its bonds or the bonds are called by the state agencies, the Company would be obligated to pay any expenditure in excess of the collateral.

48

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Table of Contents

Contractual Obligations

The table below sets forth our best estimates as to the amounts and timing of future payments relating to our most significant
contractual obligations as of December 31, 2010, except as otherwise noted.

Payment Due by PeriodContractual Obligations

Total

Less than
1 year

1 - 3 years

3 - 5 years

More than
5 yearsCapital leases

$
245,088

$
102,215

$
142,874

$


$
Corporate office lease


94,713


56,828


37,885





Crownpoint


450,000











450,000Total

$
789,801

$
159,043

$
180,759

$


$
450,000


Critical Accounting Policies

Our significant accounting policies are described in Note 2 to the consolidated financial statements on
page F-8 of this 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.

Specifically
regarding our uranium properties, significant estimates were utilized in determining the carrying value of these assets. These assets have been recorded at their estimated
net realizable value for impairment purposes, which is less than our cost. The actual value realized from these assets may vary significantly from these estimates based upon market conditions,
financing availability and other factors.

Regarding
our reserve for future restoration and reclamation costs, significant estimates were utilized in determining the future costs to complete the groundwater restoration and
surface reclamation at our mine sites. The actual cost to conduct these activities may vary significantly from these estimates.

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 expenses during the reporting period.

The
accounts of the Company are maintained in United States dollars. All dollar amounts in the financial statements are stated in United States dollars except where indicated.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued ASC 2010-06, Improving Disclosures about Fair Value Measurements (ASC 820-10).
These new disclosures require entities to separately disclose amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and the reasons for the
transfers. In addition, in the reconciliation for fair value measurements for Level 3, entities should present separate information about purchases, sales, issuances, and settlements. This
guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll
forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal
years. Our adoption of the disclosures, excluding the Level 3 activity disclosures, did not have a material impact on the notes to the consolidated financial statements. We are still evaluating
the impact of the Level 3 disclosure requirements on the notes to the consolidated financial statements.

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Table of Contents

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

Uranium Price Volatility

The Company is subject to market risk related to the market price of uranium. We have two uranium supply contracts whose pricing
mechanisms are based upon the market price of uranium. Future sales under these contracts would be impacted by both spot and long-term uranium price fluctuations. The Company's cash flow
has historically been dependent on the price of uranium, which is determined primarily by global supply and demand, relative to the Company's costs of production. Historically, uranium prices have
been subject to fluctuation, and the price of uranium has been and will continue to be affected by numerous factors beyond the Company's control, including the demand for nuclear power, political and
economic
conditions, and governmental legislation in uranium producing and consuming countries and production levels and costs of production of other producing companies.

The
spot market price for uranium has demonstrated a large range since January 2001. Prices have risen from $7.10 per pound at January 2001 to a high of $136.00 per pound as of June
2007. The spot market price was $60.00 per pound as of March 14, 2011.

Item 8.    Financial Statements and Supplementary Data.

Financial Statements

The financial statement information called for by this item appears on pages F-1 through F-24.

Supplementary Financial Data Tables

SUPPLEMENTARY FINANCIAL DATA        (UNAUDITED)

For the Quarter Ended12/31/2010

9/30/2010

6/30/2010

3/31/2010

12/31/2009

9/30/2009

6/30/2009

3/31/2009(Amounts in Thousands)Uranium sales

$


$


$


$


$
57

$
1,407

$
1,787

$
1,422Earnings (loss) from operations


(2,632
)

(3,731
)

(1,992
)

(2,345
)

(3,711
)

(2,554
)

(2,291
)

(1,621
)Net earnings (loss)


(2,622
)

(3,664
)

(1,721
)

(2,348
)

(3,721
)

(2,525
)

(2,246
)

(1,574
)Net earnings (loss) per common share:Basic

$
(0.03
)
$
(0.04
)
$
(0.03
)
$
(0.04
)
$
(0.07
)
$
(0.04
)
$
(0.04
)
$
(0.03
)Diluted

$
(0.03
)
$
(0.04
)
$
(0.03
)
$
(0.04
)
$
(0.07
)
$
(0.04
)
$
(0.04
)
$
(0.03
)


Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A.    Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its
filings with the Securities and Exchange Commission (SEC) are recorded, processed, summarized and reported within the time period specified in the SEC's rules and forms, and that such information is
accumulated and communicated to management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the
definition of "disclosure controls and procedures" as defined in

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Rule 13a-15(e)
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In designing and evaluating the disclosure controls and procedures, management
has recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required
to apply judgment in evaluating its controls and procedures.

During
the fiscal period covered by this report, the Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer of the Company, carried out
an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have certified that our disclosure controls and
procedures were effective as of December 31, 2010.

Management's Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is designed, under the supervision of the Company's
Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with accounting principles generally accepted in the United States of America (GAAP). The Company's internal control over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of the Company's assets that could have a material effect on the financial statements.

The
Company conducted an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2010. This evaluation was based on the framework in
"Internal ControlIntegrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). All internal control systems, no matter how well designed,
have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.

Based
on the Company's evaluation under the framework inInternal ControlIntegrated Framework, our Chief Executive Officer
and Chief Financial Officer concluded that internal control over financial reporting was effective as of December 31, 2010.

There
were no changes in our internal controls over financial reporting that occurred during the fourth quarter of 2010 that materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

Item 9B.    Other Information.

None.

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Table of Contents

PART III

Item 10.    Directors, Executive Officers and Corporate Governance.

The information required by this item is incorporated by reference from our definitive proxy statement for the 2011 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2010.

Item 11.    Executive Compensation.

The information required by this item is incorporated by reference from our definitive proxy statement for the 2011 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2010.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is incorporated by reference from our definitive proxy statement for the 2011 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2010.

Item 13.    Certain Relationships and Related Transactions and Director Independence.

The information required by this item is incorporated by reference from our definitive proxy statement for the 2011 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2010.

Item 14.    Principal Accountant Fees and Services.

The information required by this item is incorporated by reference in our definitive proxy statement for the 2011 Annual Meeting of
Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, 2010.

PART IV

Item 15.    Exhibits and Financial Statement Schedules.

See Index to Exhibits on page E-1 for a listing of the exhibits filed as part of this Annual Report.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:
March 30, 2011

URANIUM RESOURCES, INC.By:

/s/ DONALD C. EWIGLEBEN Donald C. Ewigleben, President, Chief Executive Officer and
Chief Operating Officer


Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on
the dates indicated.

Signature

Date/s/ PAUL K. WILLMOTT Paul K. Willmott, Director and Executive Chairman

March 30, 2011/s/ DONALD C. EWIGLEBEN Donald C. Ewigleben Director, President, CEO and COO

March 30, 2011/s/ THOMAS H. EHRLICH Thomas H. Ehrlich, Vice PresidentFinance and Chief Financial Officer (Principal Financial and Accounting Officer)

March 30, 2011/s/ LELAND O. ERDAHL Leland O. Erdahl, Director

March 30, 2011/s/ TERENCE J. CRYAN Terence J. Cryan, Director

March 30, 2011/s/ MARVIN K. KAISER Marvin K. Kaiser, Director

March 30, 2011


53

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Table of Contents

URANIUM RESOURCES, INC. AND CONSOLIDATED SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



Consolidated Financial Statements For The Years Ended December 31, 2010, 2009 and 2008Report of Independent Registered Public Accounting Firm

F-2Consolidated Balance Sheets

F-3Consolidated Statements of Operations

F-5Consolidated Statements of Shareholders' Equity

F-6Consolidated Statements of Cash Flows

F-7Notes to Consolidated Financial Statements

F-8


F-1

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors
Uranium Resources, Inc.
Lewisville, Texas 75067

We
have audited the consolidated balance sheets of Uranium Resources, Inc. as of December 31, 2010 and 2009, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period ended December 31, 2010. These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated 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 audit 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. as of
December 31, 2010 and 2009, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with accounting
principles generally accepted in the United States.

Hein &
Associates, LLP
Dallas, Texas
March 30, 2011

F-2

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Table of Contents

URANIUM RESOURCES, INC.        CONSOLIDATED BALANCE SHEETS

ASSETS

December 31,2010

2009Current assets:Cash and cash equivalents

$
15,386,472

$
6,092,068Receivables, net


46,244


63,890Prepaid and other current assets


179,231


125,400Total current assets


15,611,947


6,281,358Property, plant and equipment, at cost:Uranium properties


82,989,579


82,212,719Other property, plant and equipment


905,511


886,992Lessaccumulated depreciation, depletion and impairment


(64,282,888
)

(64,155,311
)Net property, plant and equipment


19,612,202


18,944,400Long-term investment:Certificate of deposit, restricted


7,337,366


6,786,000$
42,561,515

$
32,011,758


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

F-3

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Table of Contents

URANIUM RESOURCES, INC.        CONSOLIDATED BALANCE SHEETS (Continued)

LIABILITIES AND SHAREHOLDERS' EQUITY

December 31,2010

2009Current liabilities:Accounts and short term notes payable

$
602,190

$
641,727Current portion of restoration reserve


1,239,588


1,236,588Royalties and commissions payable


665,745


693,303Deferred compensation


697,028


Accrued legal settlement


1,375,000


Accrued interest and other accrued liabilities


348,269


321,235Current portion of capital leases


83,183


112,559Total current liabilities


5,011,003


3,005,412Other long-term liabilities and deferred credits


4,304,057


5,487,389Long-term capital leases, less current portion


119,588


207,922Other long-term debt


450,000


450,000Commitments and contingencies (Notes 2, 3, 4, 5 and 13)Shareholders' equity:Common stock, $0.001 par value, shares authorized: 200,000,000; shares issued and outstanding (net of treasury shares): 201092,430,306;
200956,781,792;


92,468


56,820Paid-in capital


167,971,955


147,837,204Accumulated deficit


(135,378,138
)

(125,023,571
)Less: Treasury stock (38,125 shares), at cost


(9,418
)

(9,418
)Total shareholders' equity


32,676,867


22,861,035$
42,561,515

$
32,011,758


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

F-4

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Table of Contents

URANIUM RESOURCES, INC.        CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended December 31,2010

2009

2008Revenues:Uranium sales

$


$
4,673,169

$
18,551,065Total revenue





4,673,169


18,551,065Costs and expenses:Cost of uranium sales:Royalties and commissions





464,028


1,709,748Operating expenses


394,763


2,692,960


6,664,341Accretion/amortization of restoration reserve


155,943


257,791


790,204Depreciation and depletion


756,377


1,089,612


7,207,719Writedown of uranium properties


961,278


3,517,970


15,992,623Exploration expenses


1,646


61,677


1,630,043Total cost of uranium sales


2,270,007


8,084,038


33,994,678Loss from operations before corporate expenses


(2,270,007
)

(3,410,869
)

(15,443,613
)Corporate expenses:General and administrative (includes stock compensation expense of $1,032,000, $1,258,000 and $2,154,000 in 2010, 2009 and 2008, respectively)


6,911,672


6,624,023


11,405,169Provision for legal settlement


1,375,000





Depreciation


143,361


142,531


147,561Total corporate expenses


8,430,033


6,766,554


11,552,730Loss from operations


(10,700,040
)

(10,177,423
)

(26,996,343
)Other income (expense):Interest expense


(25,362
)

(40,637
)

(43,549
)Interest and other income, net


370,835


152,198


530,536Total other income, net


345,473


111,561


486,987Net loss

$
(10,354,567
)
$
(10,065,862
)
$
(26,509,356
)Net loss per common share:Basic

$
(0.14
)
$
(0.18
)
$
(0.49
)Diluted

$
(0.14
)
$
(0.18
)
$
(0.49
)


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

F-5

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Table of Contents

URANIUM RESOURCES, INC.        CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Common StockTreasury StockShares

Amount

Paid-In Capital

Accumulated DeficitBalances, December 31, 2007


52,305,129

$
52,343

$
131,282,687

$
(88,448,353
)
$
(9,418
)Net loss











(26,509,356
)

Common stock issuance


3,295,920


3,296


12,806,899





Common stock issued for services


115,250


115


92,085





Restricted common stock issued for services


70,000


70


(70
)




Stock compensation expense








2,154,281





Common stock issued for stock option exercise


169,250


170


182,871





Balances, December 31, 2008


55,955,549


55,994


146,518,753


(114,957,709
)

(9,418
)Net loss











(10,065,862
)

Restricted common stock issued for services


826,243


826


(826
)




Stock compensation expense








1,257,909





Common stock issuance








61,368





Balances, December 31, 2009


56,781,792


56,820


147,837,204


(125,023,571
)

(9,418
)Net loss











(10,354,567
)

Restricted common stock issued for services


282,071


282


(282
)




Common stock issued for stock option exercise


1,113


1


807





Stock compensation expense








1,032,308





Common stock issuance


35,365,330


35,365


19,101,918





Balances, December 31, 2010


92,430,306

$
92,468

$
167,971,955

$
(135,378,138
)
$
(9,418
)


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

F-6

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Table of Contents



URANIUM RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Year Ended December 31,2010

2009

2008Cash flows from operations:Net loss

$
(10,354,567
)
$
(10,065,862
)
$
(26,509,356
)Reconciliation of net loss to cash provided by (used in) operationsAccretion/amortization of restoration reserve


155,943


257,791


790,204Depreciation and depletion


899,738


1,232,143


7,355,280Writedown of uranium properties and exploration expenses


961,278


3,517,970


15,992,623Decrease in restoration and reclamation accrual


(1,373,228
)

(1,802,370
)

(840,416
)Stock compensation expense


1,032,308


1,257,909


2,154,281Write-off of target acquisition costs








1,422,410Other non-cash items, net


19,700


34,584


78,521Effect of changes in operating working capital items(Increase) decrease in receivables


17,646


(23,530
)

2,612,214(Increase) decrease in inventories





1,010,845


(508,342
)(Increase) decrease in prepaid and other current assets


(53,831
)

388,089


(43,585
)Increase (decrease) in payables and accrued liabilities and deferred credits


1,334,939


(840,545
)

(1,462,326
)Net cash provided by (used in) operations


(7,360,074
)

(5,032,976
)

1,041,508Investing activities:Increase in certificate of deposit, restricted


(551,366
)

(149,285
)

(553,639
)Additions to property, plant and equipmentKingsville Dome


(149,652
)

(158,911
)

(3,577,994
)Rosita


(58,504
)

(40,274
)

(4,471,110
)Vasquez


(77,500
)

(193,528
)

(354,600
)Rosita South


(78,813
)

(19,926
)

(477,912
)Los Finados project


(1,168,780
)




(671
)Churchrock


(138,541
)

(218,966
)

(421,484
)Crownpoint


(2,972
)

(2,991
)

(127,479
)Other property


(139,775
)

(36,340
)

(1,059,439
)Other assets/notes receivable








28,773Net cash used in investing activities


(2,365,903
)

(820,221
)

(11,015,555
)Financing activities:Payments of borrowings


(117,710
)

(157,695
)

(261,867
)Issuance of common stock, net


19,138,091


61,368


12,993,236Net cash provided by (used in) financing activities


19,020,381


(96,327
)

12,731,369Net increase (decrease) in cash and cash equivalents


9,294,404


(5,949,524
)

2,757,322Cash and cash equivalents, beginning of year


6,092,068


12,041,592


9,284,270Cash and cash equivalents, end of year

$
15,386,472

$
6,092,068

$
12,041,592


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

F-7

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Table of Contents

URANIUM RESOURCES, INC.        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        DECEMBER 31, 2010 AND 2009

1. DESCRIPTION OF THE COMPANY

Uranium Resources, Inc. ("URI") was formed in 1977 and domesticated in Delaware in 1987. The Company is primarily engaged in the business of acquiring, exploring, developing and
mining uranium properties, using thein siturecovery ("ISR") or solution mining process. Historically, the primary customers of the Company have been
major utilities who utilize nuclear power to generate electricity. At present the Company owns both developed and undeveloped uranium properties in South Texas and undeveloped uranium properties in
New Mexico.

The
Company resumed uranium production in 2004 at its Vasquez project, in 2006 at its Kingsville Dome project and in the 3rd quarter of 2008 at its Rosita project, each of such
projects are located in South Texas. As a result of declining uranium market prices and high production costs, the Company ceased development of additional wellfields and curtailed production from its
South Texas projects as existing production wellfields from each project were depleted. Production at our Vasquez and Rosita projects were shut down in the 4th quarter of 2008 and production
was shut-in at the Kingsville Dome project in June 2009. The Vasquez project was mined out in 2008 and is now being restored. At the Kingsville Dome and Rosita projects, our production
shut-in was done to conserve the in-place reserve base until higher prices can be realized.

Prior
to resuming Vasquez production, the Company had been in production stand-by since the first quarter of 1999 at its Kingsville Dome and Rosita projects. Groundwater
restoration and
reclamation activities have been conducted at these two sites and are currently ongoing at each of the Kingsville Dome, Vasquez and Rosita projects.

2. 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 and include the accounts of URI and its wholly owned subsidiaries (collectively "the Company"). All significant intercompany transactions have been eliminated in consolidation.

Uranium Properties

All acquisition and development costs (including financing, salary and related overhead costs) incurred in connection with the various
uranium properties are capitalized. Exploration and evaluation costs associated with uranium properties are expensed as incurred until such time that the existence of a commercially minable uranium
deposit is confirmed. All properties with significant acquisition or incurred costs are evaluated for their realizability on a property-by-property basis. Any impairment of
such costs is recognized through a reduction in the net carrying value of the asset. (See Note 4"Uranium Properties").

Depreciation
and Depletion. Depletion of uranium mineral interests, permits, licenses and related development costs are computed on a property-by-property basis
using the units-of-production method based on each project's pounds of recoverable uranium. The determination of the depletable base for each uranium mineral interest is
calculated by the Company's professional geologists to determine the estimated recoverable uranium to be produced over the projected life for each uranium mineral interest. Depreciation and depletion
are provided on the investment costs, net of salvage value, of the

F-8

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

various
uranium properties' production plants and related equipment using the estimated production life of the uranium reserves. During the periods that our facilities are not in production, depletion
on our mineral interests, permits, licenses and development properties are suspended. Depreciation and depletion of our plant facilities, machinery and equipment continues, at significantly reduced
amounts, in accordance with the level of stand-by activity being conducted at each site.

Other
ancillary plant equipment and vehicles are depreciated using a straight line method based upon the estimated useful lives of the assets.

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.

Capitalization of Interest

The Company capitalizes interest cost with respect to properties undergoing exploration or development activities that are not subject
to depreciation or depletion. The average interest rate on outstanding borrowings during the period is used in calculating the amount of interest to be capitalized. No interest was capitalized in the
twelve months ended December 31, 2010, 2009 and 2008. Total interest costs in these periods were $25,400, $40,600 and $43,500, respectively.

Restoration and Remediation Costs (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 mine projects to the pre-existing mine area average quality after the completion of mining. The Company records the estimated present value of reclamation liabilities and
increases the carrying amount of the related asset. Reclamation costs are allocated to expense over the life of the related assets and are periodically adjusted to reflect changes in the estimated
present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and remediation costs.

Future
reclamation and remediation costs are accrued based on management's best estimate at the end of each period of the costs expected to be incurred at each project. Such estimates
are determined by the Company's engineering studies calculating the cost of future of surface and groundwater activities.

Contingent LiabilitiesOff Balance Sheet Arrangements

The Company has obtained financial surety relating to certain of its future restoration and reclamation obligations as required by the
State of Texas regulatory agencies. The Company has bank Letters of Credit (the "L/Cs) and performance bonds issued for the benefit of the Company to satisfy such regulatory requirements. The L/Cs
were issued by Bank of America and the performance bonds have been issued by United States Fidelity and Guaranty Company ("USF&G"). L/Cs for $5,858,000,

F-9

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

$5,761,000
and $5,629,000 at December 31, 2010, 2009 and 2008, respectively. Such L/Cs are collateralized in their entirety by certificates of deposit.

Performance
bonds totaling $2,834,000 were issued for the benefit of the Company at December 31, 2010, 2009 and 2008. USF&G has required that the Company deposit funds
collateralizing a portion of the bonds. In September 2010, the Company received notice from the bonding company requesting that the Company either increase the collateral supporting the bonds
to 100% of the bond amount by making quarterly payments of $500,000 or cause the release of the bonds by the fourth quarter of 2011.
The amount of bonding issued by USF&G exceeded the amount of collateral by $2.0 million at December 31, 2010 and $2.5 million at December 31, 2009 and 2008, respectively.
In the event that USF&G is required to perform under its bonds or the bonds are called by the state agencies, the Company would be obligated to pay any expenditure in excess of the collateral.

Revenue Recognition for Uranium Sales

The Company delivers uranium to its customers at third-party conversion facilities. The third-party converters warehouse our uranium
and transfer title to our customers via book transfer upon instructions supplied by the Company. The Company recognizes revenue from the sale of uranium when title to the uranium transfers and
delivery is completed through such book transfer. The Company bears the risk of loss while its uranium is held at the converter prior to its sale to our customers, except in the case of negligence by
the converter, whereby the converter would bear such risk. Upon completion of the book transfer, which is a record keeping entry, not a physical transfer of goods to the customer, the risk of loss
passes to our customer.

Earnings Per Share

Net earnings (loss) per common sharebasic has been calculated based on the weighted average shares outstanding during the
year and net earnings (loss) per common sharediluted has been calculated assuming the exercise or conversion of all dilutive securities. Due to net losses incurred for 2010 there were no
dilutive securities included in this year.

The
weighted average number of shares used to calculate basic and diluted earnings (loss) per share was 72,313,464 in 2010, 56,400,466 in 2009 and 54,568,550 in 2008. The potential
Common Stock that was excluded from the calculation of diluted earnings per share was 5,947,143 in 2010, 6,216,989 in 2009 and 5,961,583 in 2008.

Consolidated Statements of Cash Flows

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

F-10

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Additional
disclosures of cash flow information follow:

Year Ended December 31,2010

2009

2008Cash paid during the period for:Interest

$
25,400

$
40,600

$
43,600The following non-cash transactions occurred in 2010, 2009 and 2008 and such transactions are summarized as follows:Restricted share issuance of Common Stock in connection with a cash conservation plan

$
106,500

$
324,000

$
Restricted share issuance of Common Stock in connection with the Amended and Restated 2004 Directors' Stock Option and Restricted Stock
Plan

$


$


$
92,200


During
2008, the Company entered into capital leases and financings to acquire certain property plant and equipment totaling $301,000. No new capital leases or financings were entered
into in 2010 and 2009. The balance of the capital leases at December 31, 2010 was $203,000.

Cash Balances in Excess of Federally Insured Limits

The Company's cash balance at December 31, 2010 was $15.4 million and it maintains its cash accounts primarily with Bank
of America, N.A. The total cash balances are insured by the Federal Deposit Insurance Corporation up to $250,000 per account. The Company has cash balances with Bank of America, N.A. that exceeded the
balance insured by the FDIC that totaled approximately $14.6 million at December 31, 2010.

Restricted Cash

At December 31, 2010 and 2009, the Company had pledged certificates of deposit and money market accounts of $7,337,000 and
$6,786,000, respectively, in order to collateralize letters of credit required for future restoration and reclamation obligations related to the Company's South Texas production and development
properties. These funds are not readily available to the Company and are not included in cash equivalents.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain
estimates and assumptions. Such estimates and assumptions may 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. Specifically regarding the Company's uranium properties,
significant estimates were utilized in determining the carrying value of these assets and in the case of producing and development properties, the pounds of uranium to be recovered. The actual values
received from the disposition of these assets and the amount of uranium recovered from

F-11

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

these
projects may vary significantly from these estimates based upon market conditions, financing availability and other factors.

Regarding
the Company's reserve for future restoration and reclamation costs, significant estimates were utilized in determining the future costs and timing to complete the groundwater
restoration and surface reclamation at the Company's mine sites. The actual cost to conduct these activities may vary significantly from these estimates.

Risks and Uncertainties

Historically, the market for uranium has experienced significant price fluctuations. Prices are significantly impacted by global supply
and demand, which is affected by the demand for nuclear power, political, and economic conditions, governmental legislation in uranium producing and consuming countries, and production levels and
costs of production of other producing companies. Increases or decreases in prices received could have a significant impact on the Company's future results of operations.

Reclassifications

Certain reclassifications have been made to the prior years' financial statements to conform to the current year presentation. These
reclassifications had no effect on previously reported results of operations or retained earnings.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued ASC 2010-06, Improving Disclosures about Fair Value Measurements (ASC 820-10).
These new disclosures require entities to separately disclose amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and the reasons for the
transfers. In addition, in the reconciliation for fair value measurements for Level 3, entities should present separate information about purchases, sales, issuances, and settlements. This
guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll
forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal
years. Our adoption of the disclosures, excluding the Level 3 activity disclosures, did not have a material impact on the notes to the consolidated financial statements. We are still evaluating
the impact of the Level 3 disclosure requirements on the notes to the consolidated financial statements.

3. LIQUIDITY

The Company had negative cash flow from operations of $7.4 million and $5.0 million for the year ended December 31 2010 and 2009, respectively and generated cash
from operations for the year ended December 31, 2008 of $1.0 million.

On
September 29, 2010, in connection with the legal action initiated in June 2008 titled,Saenz v. URI Inc.,
we entered into a settlement agreement under which we agreed to pay to the plaintiffs $1.375 million in cash which includes amounts for prior royalties that the plaintiffs had

F-12

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

3. LIQUIDITY (Continued)

previously
rejected. The payment of this settlement was made in February 2011, upon the execution of amendments to the leases and to documentation of other aspects of the settlement and dismissal of
the suit.

We
had $15.4 million in cash at December 31, 2010 and $6.1 million at December 31, 2009. As of December 31, 2009 the Company had sold its entire
uranium inventory and as such, we are currently evaluating the opportunities for additional sales revenue and related cash inflows for the Company in 2011. The Company raised additional capital in
June and July 2010 through an underwritten public offering. Under the transactions, a total of 27,142,830 shares of common stock were sold in the offering with net proceeds of approximately
$10.2 million, after deducting underwriting discounts and commissions and estimated offering expenses. The Company raised additional capital in November 2010 through an underwritten public
offering. Under the transaction, a total of 8,222,500 shares of common stock were sold in the offering with net proceeds of approximately $8.9 million, after deducting underwriting discounts
and commissions and estimated offering expenses.

The
Company expects that its existing cash will provide sufficient liquidity into 2012.

4. PROPERTY, PLANT AND EQUIPMENT

Property, Plant and
Equipment Balances (net)
At December 31,2010

2009Uranium plant

$
9,241,000

$
9,349,000Permits and licenses


2,663,000


2,529,000Mineral rights


2,877,000


1,598,000Evaluation and delineation


2,460,000


2,460,000Vehicles/depreciable equipment


1,702,000


2,113,000Wellfield development


115,000


Other uranium properties


354,000


580,000Other property, plant and equipment


200,000


315,000Total

$
19,612,000

$
18,944,000


Uranium Properties

Impairment of Uranium Properties

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. An 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. 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. The Company's estimates of future cash flows
are based on numerous assumptions and it is possible that actual future

F-13

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

4. PROPERTY, PLANT AND EQUIPMENT (Continued)

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 capital are
each subject to significant risks and uncertainties.

At
December 31, 2010, we determined the carrying value of our project assets at each of our South Texas production locations exceeded their fair value. A decline in the current
and projected market price of uranium and an increase in the estimated production costs for each of our South Texas projects resulted in a decrease in the estimated future cash flow to be generated
from each site. Such determination resulted in an impairment provision of approximately $961,000 for the year. The impairment provision for 2010 was approximately $590,000 for the Kingsville Dome
project, $58,000 for the Rosita project, $313,000 for the Vasquez project and $567,000 for other South Texas projects. The impairment provision recorded in 2009 was approximately $3.5 million
and included approximately $2.6 million for the Kingsville Dome project, $214,000 for the Rosita project, $263,000 for the Vasquez project and $576,000 for other South Texas projects.

Kingsville Dome Property

The Kingsville Dome property 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 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.

The
net carrying value of the property was approximately $5,355,000 at December 31, 2010. Such assets consisted of plant buildings/uranium processing/drying facilities
($4,285,000), and restoration and other equipment ($1,070,000).The net carrying value of the property was approximately $5,583,000 at December 31, 2009. Such assets consisted of plant
buildings/uranium processing/drying facilities ($4,393,000) and restoration and other equipment ($1,190,000).

Vasquez Property

The Company has a mineral lease on 1369 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. The lease provides for 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.

The
net carrying value of the property was approximately $493,000 at December 31, 2010. Such assets consisted of plant buildings/uranium processing/drying facilities ($154,000)
and restoration and other equipment ($339,000). The net carrying value of the property was approximately $590,000 at December 31, 2009. Such assets consisted of plant buildings/uranium
processing/drying facilities ($305,000), restoration and other equipment ($305,000) and asset retirement obligations ($435,000).

F-14

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

4. PROPERTY, PLANT AND EQUIPMENT (Continued)

Rosita Property

The Rosita property consists of mineral leases from private landowners on about 3,377 gross and net acres located in north-central
Duval County, Texas. The leases provide for 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 expiration dates ranging from 2012 to 2015. We are holding these leases by payment of rentals ranging from $10 to $30 per acre.

The
net carrying value of the Rosita property at December 31, 2010 was approximately $5,003,000. Such assets consisted of plant buildings/uranium processing/drying facilities
($4,801,000) and restoration and other equipment of ($202,000). The net carrying value of the Rosita property at December 31, 2009 was approximately $5,186,000. Such assets consisted of plant
buildings/uranium processing/drying facilities ($4,802,000) and restoration and other equipment of ($384,000).

South Rosita

The Rosita South property consists of mineral leases from private land owners on about 2,130 gross acres and 1,984 net acres located in
Duval County near its Rosita property. Evaluation of the uranium mineralization of this property began in 2006 and continued in 2007.

The
net carrying value of the property at December 31, 2010 was approximately $2,744,000. Such assets consisted of mineral rights ($548,000), evaluation costs ($2,022,000) and
permits/licenses ($174,000). The net carrying value of the property at December 31, 2009 was approximately $2,665,000. Such assets consisted of mineral rights ($469,000), evaluation costs
($2,021,000) and permits/licenses ($174,000).

Los Finados Project

The Los Finados Project consists of an exploration lease from private land owners on about 53,500 gross acres located in Kenedy County
near its Kingsville Dome property. Evaluation of the uranium mineralization of this property is scheduled to begin in the second quarter of 2011 and continue for up to three years.

The
net carrying value of the property at December 31, 2010 was approximately $1,169,000. Such assets consisted entirely of the acquisition costs to obtain the mineral rights to
the property.

Churchrock Properties

The Churchrock project encompasses about 2,200 gross and net acres. The properties are located in McKinley County, New Mexico and
consist of three parcels, known as Section 8, Section 17 and Mancos. None of these parcels lies within the area generally recognized as constituting the Navajo Reservation. We own the
mineral estate in fee for both Section 17 and the Mancos properties. We own patented mining claims on Section 8.

The
surface estate on Section 17 is owned by the United States Government and held in trust for the Navajo Nation. We have royalty obligations ranging from 5% to
61/4% and a 2% overriding royalty obligation to the Navajo Nation for surface use agreements.

F-15

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

4. PROPERTY, PLANT AND EQUIPMENT (Continued)

Permitting
activities are currently ongoing on both of these properties. The net carrying value of these properties was $2,094,000 and $1,955,000 at December 31, 2010 and 2009,
respectively and the assets consisted of mineral rights and permitting/licensing costs.

Crownpoint Property

The Crownpoint properties are located in the San Juan Basin, 22 miles northeast of our Churchrock deposits and 35 miles northeast of
Gallup, New Mexico, adjacent to the town of Crownpoint. The Properties consist of 619 gross and 522 net acres.

The
net carrying value of these properties was $885,000 and $906,000 at December 31, 2010 and 2009, respectively, and consisted primarily of mineral rights, permits/licenses and
plant buildings and equipment.

West Largo and Roca Honda

In March 1997, we acquired the fee interest in 177,000 acres in northwestern New Mexico. Several significant occurrences of uranium
mineralization are known to be within this acreage, including a uranium mineralized property called the West Largo and a uranium mineralized property called Roca Honda.

The
West Largo property is about 21 miles north of the town of Milan and about 1.5 miles west of State Highway 509 in McKinley County, New Mexico. The property lies about 3 miles to the
northwest of the Ambrosia Lake District, a major producer of uranium by means of underground operations from the late 1950s to the early 1980s.

The
Roca Honda property lies about 4 miles northwest of the town of San Mateo in McKinley County, New Mexico. We also own 36 unpatented mining claims encompassing approximately 640 acres
that are adjacent to the fee land. The net carrying value of the properties was $398,000 and $381,000 at December 31, 2010 and 2009, respectively.

5. CONTRACT COMMITMENTS

Sales Contracts

In March 2006 we entered into new sales contracts with Itochu Corporation ("Itochu") and UG U.S.A., Inc. ("UG") that superseded
the previously existing contracts. Each contract provides for delivery of one-half of our actual production from our properties in Texas currently owned or hereafter acquired by the
Company (excluding certain large potential exploration plays). The Itochu contract contains separate pricing terms for the Vasquez property that are no longer applicable since Vasquez has reached the
end of its useful life. Our Texas production will be sold to Itochu at a price equal to the average spot price for the eight weeks prior to the date of delivery less $7.50 per pound, with a floor for
the spot price of $37 per pound and a ceiling of $43 per pound. If the spot price is over $50 per pound the price will be increased by 50% of such excess. The floor and ceiling and sharing arrangement
over the ceiling applies to 3.65 million pounds of deliveries, after which there is no floor or ceiling. Itochu has the right to cancel any deliveries on six-month's notice. Uranium
deliveries from

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

5. CONTRACT COMMITMENTS (Continued)

the
inception of the contracts through December 31, 2010 have totaled approximately 510,000 pounds to Itochu and 480,000 pounds to UG.

Under
the amended Itochu contract there was potential for reinstatement of the original contract terms if our joint venture with Itochu to develop our Churchrock property in New Mexico
was terminated by us. On March 6, 2009, Itochu terminated the Joint Venture. The only consequence of the termination is that for sales prices in excess of $43 per pound, we will not receive 30%
of the amount of the spot price that exceeds the ceiling price for future uranium sales from $43 per pound to $50 per pound.

Under
the UG contract all production from our Texas properties will be sold at a price equal to the month-end long-term contract price for the second month prior
to the month of delivery less $6 per pound until (i) 600,000 pounds have been sold in a particular delivery year and (ii) an aggregate of 3 million pounds of uranium has been
sold. After the 600,000 pounds in any year and 3 million pounds total have been sold, UG will have a right of first refusal to purchase other Texas production at a price equal to the average
spot price for a period prior to the date of delivery less 4%. In 2006, we paid UG $12 million in cash to restructure its previously existing contract.

6. LONG-TERM DEBT

Summary of Long-Term Debt

At December 31,2010

2009Long-term debt of the Company consists of:Crownpoint property

$
450,000

$
450,000Capital leases


202,771


320,481652,771


770,481LessCurrent portion


(83,183
)

(112,559
)Total long-term debt

$
569,588

$
657,922


Maturities
of long-term debt and capital leases are as follows:

For the Twelve Months Ended:

Long-Term Debt

Capital LeasesDecember 31, 2011

$


$
102,215December 31, 2012





76,054December 31, 2013





52,423December 31, 2014





14,396December 31, 2015 and beyond


450,000


Totals

$
450,000

$
245,088Less amounts representing imputed interest





(42,317
)Present value of future payments




$
202,771


F-17

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

7. RELATED-PARTY TRANSACTIONS

On January 4, and April 1, 2010, 65,820 and 73,751 shares of restricted stock were granted, respectively to executive officers of the Company in connection with a cash
conservation plan for 2010. All of these shares were scheduled to vest one year from the date of grant. On November 12, 2010, 20,000 restricted shares granted to the CEO were cancelled.
Restricted stock grants are valued using the fair market value of the stock on the date of grant.

In
June 2010, the Company issued a total of 200,000 shares of restricted stock to non-employee directors of the Company at the annual meeting under the terms of the Company's
stock option plans.

In
August 2010, the Company issued a total of 63 shares of Common Stock at $0.160 per share to a non-employee director of the Company upon his election to exercise stock
options under the terms of the Company's Directors' stock option plans.

Effective
September 30, 2010, Robert M. Gallagher resigned as a member of the Board of Directors and, as of October 1, 2010 was engaged as a consultant to assist the
Company in its efforts to advance toward production in New Mexico. Mr. Gallagher is engaged through the entity RMG Consulting, LLC, a government and community relations firm in which he
is a principal.

In
connection with this change, the terms of the equity awards granted to Mr. Gallagher were modified whereby the vesting attributable to 25% of the 50,000 share stock option
grant made on January 20, 2010 was accelerated to the date of his resignation and the exercise period was extended to September 30, 2012. In addition, the vesting attributable to 25% of
the 50,000 share restricted stock grant made on June 3, 2010 was accelerated to the date of his resignation. The Company recognized stock compensation expense for the modifications of
approximately $24,000 during 2010. All remaining unvested equity awards were forfeited upon his resignation.

On
January 2, April 1, July 1, and October 1, 2009, 142,680, 164,016, 69,092 and 50,455 shares of restricted stock were granted, respectively to executive
officers of the Company in connection with a cash conservation plan for 2009. All of these shares were scheduled to vest one year from the date of grant. On September 3, 2009 the vesting
schedule with respect to the former CEO's 115,628 restricted shares was modified to provide for immediate vesting. Restricted stock grants are valued using the fair market value of the stock on the
date of grant.

In
August 2008, the Company issued a total of 50,000 shares of Common Stock at $0.80 per share to an executive officer of the Company upon his election to exercise stock options under
the terms of the Company's stock option plans.

In
July 2008, the Company issued a total of 115,250 shares of Common Stock at $0.80 per share to a non-employee director of the Company upon his election to convert deferred
compensation into shares under the terms of the deferred compensation plans. Also in July 2008, the Company issued a total of 119,250 shares of Common Stock (at prices ranging from $0.16 per share to
$1.80 per share, the weighted average exercise price was $1.20 per share) to the same non-employee director of the Company upon his election to exercise stock options under the terms of
the Company's Directors' stock option plans.

F-18

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

8. SHAREHOLDERS' EQUITY

Restricted Stock Plan

In 2007, the Board of Directors adopted and the shareholders approved the 2007 Restricted Stock Plan (the "2007 Plan"). The 2007 Plan
permits the Company to make Restricted Stock grants of shares of Common Stock to management personnel and other key employees of the Company. Unless otherwise specified by the Committee, the term of
the restricted period for any Restricted Stock grant under the 2007 Plan shall not be less than five years from the date of grant. Employee participants who receive Restricted Stock grants will have
all of the rights of a stockholder, including the right to vote the shares of Restricted Stock that are the subject of the grant and the right to receive any regular cash dividends paid out of current
earnings. The Company may issue an aggregate maximum of 1,500,000 shares of Common Stock under the 2007 Plan.

A
total of 70,000 shares of restricted stock were granted in the first quarter of 2008. Total restricted share grants of 60,000 shares were made to three non-executive
employees on March 6, 2008. 30,000 of these shares vested ratably over five years and 30,000 shares vest ratably over four years. Another 10,000 restricted share grant was made to an executive
of the Company on March 24, 2008, these shares vest ratably over 5 years. In November 2008, the terms of the restricted stock grants were modified to permit the acceleration of their
vesting upon certain conditions. In the first quarter of 2009, the vesting for 60,000 of the Restricted Shares was accelerated to be fully vested. Restricted stock grants are valued using the fair
market value of the stock on the later of the date of grant or modification. The Company recognized a reduction of stock compensation expense for the restricted share grants of approximately $36,000
during the first quarter of 2009 as a result of the vesting modification.

A
total of 142,680 shares of restricted stock were granted to five executive officers on January 2, 2009 at a price of $0.615 per share in connection with a cash conservation plan
for 2009. The issuance price is determined by the average closing price of the last ten trading days of the previous quarter. The shares were to vest one year from date of grant. On
September 3, 2009 the vesting schedule with respect to 43,902 of these restricted shares was modified to provide for immediate vesting.

On
April 1, 2009 a total of 164,016 shares of restricted stock were granted to five executive officers at a price of $0.535 per share in connection with the cash conservation plan
for 2009. The issuance price is determined by the average closing price of the last ten trading days of the previous quarter. The shares were to vest one year from the date of grant. On
September 3, 2009 the vesting schedule with respect to 50,467 of these restricted shares was modified to provide for immediate vesting.

On
July 1, 2009 a total of 69,092 shares of restricted stock were granted to five executive officers at a price of $1.27 per share in connection with the cash conservation plan
for 2009. The issuance price is determined by the average closing price of the last ten trading days of the previous quarter. The shares were to vest one year from the date of grant. On
September 3, 2009 the vesting schedule with respect to 21,259 of these restricted shares was modified to provide for immediate vesting.

On
October 1, 2009 a total of 50,455 shares of restricted stock were granted to four executive officers at a price of $1.20 per share in connection with the cash conservation plan
for 2009. The issuance price is determined by the average closing price of the last ten trading days of the previous quarter and these shares vest one year from their date of grant.

F-19

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

8. SHAREHOLDERS' EQUITY (Continued)

On
September 3, 2009, the Company granted a total of 400,000 restricted shares of the Company's common stock in connection with the hire of Donald C. Ewigleben as its
President/CEO/COO. 100,000 of these shares vest on March 3, 2010; the remaining 300,000 shares vest 1/3 on each of September 2010, 2011 and 2012. The vesting of the remaining
300,000 restricted shares is also subject to certain annual performance objectives as specified in Mr. Ewigleben's employment agreement. In November 2010, 20,000 restricted shares for
Mr. Ewigleben were cancelled. Restricted stock grants are valued using the fair market value of the stock on the date of grant.

On
January 4, and April 1, 2010, 65,820 and 73,751 shares of restricted stock were granted, respectively to executive officers of the Company in connection with a cash
conservation plan for 2010. All of these shares were scheduled to vest one year from the date of grant. On November 12, 2010, 20,000 restricted shares granted to the CEO were cancelled.
Restricted stock grants are valued using the fair market value of the stock on the date of grant.

In
June 2010, the Company issued a total of 200,000 shares of restricted stock to non-employee directors of the Company at the annual meeting under the terms of the Company's
stock option plans.

Effective
September 30, 2010, Robert M. Gallagher resigned as a member of the Board of Directors and, as of October 1, 2010 was engaged as a consultant to assist the
Company in its efforts to advance toward production in New Mexico. Mr. Gallagher is engaged through the entity RMG Consulting, LLC, a government and community relations firm in which he
is a principal.

In
connection with this change, the terms of the equity awards granted to Mr. Gallagher were modified whereby the vesting attributable to 25% of the 50,000 share stock option
grant made on January 20, 2010 was accelerated to the date of his resignation and the exercise period was extended to September 30, 2012. In addition, the vesting attributable to 25% of
the 50,000 share restricted stock grant made on June 3, 2010 was accelerated to the date of his resignation. The Company recognized stock compensation expense for the modifications of
approximately $24,000 during 2010. All remaining unvested equity awards were forfeited upon his resignation.

A
summary of the status of non-vested shares for the years ended December 31, 2010 and 2009, is presented below:

Number of
Shares

Weighted
Average
Grant Date
Fair ValueNon-vested at January 1, 2009


70,000

$
8.21Granted


826,243

$
0.85Vested


(177,628
)
$
3.31Non-vested at December 31, 2009


718,615

$
0.96Granted


339,571

$
0.63Vested


(505,115
)
$
0.87Cancelled


(57,500
)
$
0.68Non-vested at December 31, 2010


495,571

$
0.86


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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

8. SHAREHOLDERS' EQUITY (Continued)

The
unrecognized compensation of $219,000 related to the non-vested shares will be recognized over a remaining service period of 1.6 years.

Equity InfusionPublic Offering

The Company raised additional capital in June and July 2010 through an underwritten public offering. Under the transactions, a total of
27,142,830 shares of common stock were sold in the offering with net proceeds of approximately $10.2 million, after deducting underwriting discounts and commissions and estimated offering
expenses.

The
Company raised additional capital in November 2010 through an underwritten public offering. Under the transaction, a total of 8,222,500 shares of common stock were sold in the
offering with net proceeds of approximately $8.9 million, after deducting underwriting discounts and commissions.

Common Stock Issued Upon Conversion of Options and Deferred Compensation

In August 2010, the Company issued a total of 63 shares of Common Stock at $0.160 per share to a non-employee director of
the Company upon his election to exercise stock options under the terms of the Company's Directors' stock option plans.

In
November 2010, the Company issued a total of 1,050 shares of Common Stock at $0.76 per share to an employee director of the Company upon his election to exercise stock options under
the terms of the Company's stock option plans.

Stock Options

Employee Stock Options

The Company has two stock Incentive Plans for Employees, both of which were approved by the Company's shareholders.

At
December 31, 2010 there were outstanding under the 1995 Stock Incentive Plan (the "1995 Plan") options to purchase 1,881,212 shares of Common Stock with exercise prices ranging
from $0.76 to $3.12 per share. No new options may be granted under the 1995 Plan.

Under
the Company's 2004 Stock Incentive Plan (the "2004 Plan") a total of 1,750,000 shares may be issued upon exercise of options granted under the 2004 Plan. At December 31,
2010 there were outstanding under the 2004 Plan options to purchase 1,194,876 shares of Common Stock at exercise prices ranging from $0.73 to $5.19 per share. At December 31, 2010, 420,583
shares were available for future grants under the 2004 Plan.

Employee
stock options generally vest ratably over a 3 or 4 year time frame and have a contractual term of 10 years.

Directors' Stock Options

On June 19, 2001, the Company granted to certain outside directors options to purchase 75,000 shares of the Company's Common
Stock at an exercise price of $0.88 per share. 25,000 options were

F-21

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

8. SHAREHOLDERS' EQUITY (Continued)

exercised
in both July 2008 and April 2007, and 25,000 were cancelled in 2006. None of such options remains outstanding at December 31, 2010.

On
June 2, 2004 the Company adopted the 2004 Directors' Stock Option Plan (the "2004 Directors' Plan"). Under the 2004 Directors' Plan, each non-employee director on
the date the Plan was adopted was granted an option to purchase 75,000 shares of Common Stock. Each non-employee Director elected or appointed to the Board of Directors for the first time
will be granted an option to purchase 25,000 shares of Common Stock and, each Non-Employee Director shall be granted an option to purchase 25,000 shares either, (a) upon his or her
reelection at an annual meeting of the Company's stockholders or (b) in any calendar year in which an annual meeting of shareholders is not held, on June 1 of such year.

In
June 2006, the Directors' Stock Option Plan was amended to increase the initial grants and the annual re-election grants to non-employee Directors to 50,000
shares of Common Stock. The 2004 Directors' Plan replaces an earlier plan that expired in 2004. None of such options remains outstanding at December 31, 2010.

In
January 2010, an option to purchase 50,000 shares of the Company's Common Stock was granted to Robert M. Gallagher, a non-employee director of the Company at an exercise
price of $0.76 per share. Effective September 30, 2010, Robert M. Gallagher resigned as a member of the Board of Directors.

In
connection with this change, the terms of the equity awards granted to Mr. Gallagher were modified whereby the vesting attributable to 25% of the 50,000 share stock option
grant made on January 20, 2010 was accelerated to the date of his resignation and the exercise period was extended to September 30, 2012. In addition, the vesting attributable to 25% of
the 50,000 share restricted stock grant made on June 3, 2010 was accelerated to the date of his resignation. The remaining unvested equity awards were forfeited upon his resignation. Additional
stock compensation expense of $6,000 was recognized in 2010 in connection with the modifications of these options.

At
the June 2010 annual meeting of the stockholders, each of the non-employee directors of the Company (Leland O. Erdahl, Terence J. Cryan, Marvin K. Kaiser and Robert M.
Gallagher) was granted restricted stock under the 2004 Directors' Plan to purchase 50,000 shares of the Company's common stock at an exercise price of $0.53 per share. Upon the resignation of
Mr. Gallagher in September 2010, the vesting attributable to 25% of the 50,000 share restricted stock grant made on June 3, 2010 was accelerated to the date of his resignation. The
remaining unvested equity awards were forfeited upon his resignation. The non-employee directors held options covering 706,250 shares under the 2004 Directors' Plan at December 31,
2010. At December 31, 2010, 206,250 shares were available for future grants under the 2004 Directors' Plan.

At
the June 2009 annual meeting of the stockholders, each of the non-employee directors of the Company (Leland O. Erdahl, Terence J. Cryan and Marvin K. Kaiser) was granted
an option under the 2004 Directors' Plan to purchase 50,000 shares of the Company's common stock at an exercise price of $1.49 per share. The non-employee directors held options covering
731,250 shares under the 2004 Directors' Plan at December 31, 2009. At December 31, 2009, 381,250 shares were available for future grants under the 2004 Directors' Plan.

F-22

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

8. SHAREHOLDERS' EQUITY (Continued)

At the June 2008 annual meeting of the shareholders, each of the non-employee
directors of the Company (Leland O. Erdahl, George R. Ireland, Terence J. Cryan and Marvin K. Kaiser) was granted an option under the 2004 Directors Plan to purchase 50,000 shares of the Company's
common stock at an exercise price of $4.10 per share.

Options Issuable for Deferred Compensation

The Company has a 1999 Deferred Compensation Plan (the "1999 Plan") and Deferred Compensation Plans for 2000-2001, 2002,
2003 and 2004 (the "2000-2004 Plans") whereby executive officers and directors were permitted to defer up to 100% of their compensation for the years 1999-2004.

Under
the 1999 Deferred Compensation Plan (the "1999 Plan"), executive officers and directors of the Company and its subsidiaries were permitted to defer until January 11, 2006 up
to 100% of their 1999 salary. At the time of the deferral election, a participant could elect to receive payment of up to 100% of the deferred amount of salary in shares of our Common Stock. A total
of approximately $242,000 was deferred under the 1999 Plan of which $133,450 was paid by issuing 88,965 shares of Common Stock at $1.50 per share. As of December 31, 2010, approximately
$108,200 remains outstanding as deferred compensation under the 1999 Plan.

Under
the 2000-2004 Plans, the executive officers and directors were permitted to defer up to 100% of their 2000, 2001, 2002, 2003 and 2004 salary with payment thereof to be
made on January 11, 2006. On or before that date, the participant may elect to receive the deferred amount in shares of our Common Stock valued at $0.80 per share. A total of $829,000 was
deferred under the 2000-2004 Plans of which $95,300 was paid in 2004 by issuing 119,125 shares of Common Stock at $0.80 per share. As of December 31, 2010, approximately $588,800
remains outstanding as deferred compensation under the 2000-2004 Plans.

In
December 2005, the 1999 Plan and the 2000-2004 Plans were amended, extending the election of the participants under the plans to receive their deferred compensation until
January 11, 2011. All of the participants with accrued deferred compensation at December 2005 elected to defer their election to such date. On January 11, 2011 the participants elected
to receive restricted stock totaling 885,021 shares.

Warrants

In connection with the May 2008 equity infusion, the Company issued warrants to purchase 988,771 additional shares of common stock at a
price of $5.78 per share. These warrants expire in May 2013 and are outstanding and exercisable as of December 31, 2010.

9. STOCK-BASED COMPENSATION PLANS

Our stock based compensation programs consist of stock options granted to employees and directors and restricted stock grants made to employees.

F-23

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

9. STOCK-BASED COMPENSATION PLANS (Continued)

Stock
Compensation Expense

Stock
compensation expense for the year ended December 31, 2010, 2009 and 2008 of $1,032,000, $1,258,000 and $2,154,000, respectively, was recorded to
general and administrative expenses. The Company has not recognized a tax benefit from the stock compensation expense because the Company considers it is more likely than not that the related deferred
tax assets, which have been reduced by a full valuation allowance, will not be realized.

The
Black-Scholes option-pricing model was used to estimate the option fair values. The option-pricing model requires a number of assumptions, of which the most significant are, expected
stock price volatility, the expected pre-vesting forfeiture rate and the expected option term (the amount of time from the grant date until the options are exercised or expire). Expected
volatility was calculated based upon actual historical stock price movements through the measurement date of the stock option grant. Expected pre-vesting forfeitures were estimated based
on actual historical pre-vesting forfeitures over the most recent periods ending December 31, 2010 for the expected option term. The expected option term was estimated based on
historical averages over the most recent periods ending December 31, 2010.

In
April 2010, three employees and one officer of the Company were granted options under the 2004 Employee Incentive Program to purchase a total of 85,000 shares of the Company's common
stock at an exercise price of $0.73 per share. These options vest ratably over 3 years.

In
December 2010, four officers of the Company were granted options under the 2004 Employee Incentive Program to purchase a total of 95,000 shares of the Company's common stock at an
exercise price of $3.29 per share. These options vest in one year.

In
September 2009, the Company hired Donald C. Ewigleben as the Company's President, CEO and COO. In connection with the hire, the Company granted Mr. Ewigleben a total of 400,000
restricted shares of the Company's common stock. 100,000 of these shares vest on March 3, 2010; the remaining 300,000 shares vest 1/3 on each of September 3, 2010, 2011
and 2012. The vesting of the remaining 300,000 restricted shares is also subject to certain annual performance objectives as specified in Mr. Ewigleben's employment agreement. As of
December 31, 2010 280,000 restricted shares remain outstanding. Restricted stock grants are valued using the fair market value of the stock on the date of grant.

On
September 3, 2009, in connection with the resignation of David N. Clark as President and CEO, the Company and Mr. Clark entered into an agreement which extended to
September 3, 2011 the termination date for the stock options previously granted to Mr. Clark and the immediate vesting of 12,500 previously granted stock options scheduled to vest in
June 2010. The Company recognized $260,000 of stock compensation expense in the third quarter of 2009 in connection with the modification of these stock options.

At
the June 2009 annual meeting of the stockholders, each of the four non-employee directors of the Company was granted an option under the 2004 Directors' Plan to purchase
50,000 shares of the Company's common stock at an exercise price of $1.49 per share. The non-employee directors held options covering 731,250 shares under the 2004 Directors' Plan at
December 31, 2009. At December 31, 2009, 381,250 shares were available for future grants under the 2004 Directors' Plan.

F-24

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

9. STOCK-BASED COMPENSATION PLANS (Continued)

At
the June 2008 annual meeting of the stockholders, each of the three non-employee directors of the Company was granted an option under the 2004 Directors' Plan to purchase
50,000 shares of the Company's common stock at an exercise price of $4.10 per share.

On
January 4, and April 1, 2010, 65,820 and 73,751 shares of restricted stock were granted, respectively to executive officers of the Company in connection with a cash
conservation plan for 2010. All of these shares were scheduled to vest one year from the date of grant. On November 12, 2010, 20,000 restricted shares granted to the CEO were cancelled.
Restricted stock grants are valued using the fair market value of the stock on the date of grant.

In
January 2010, an option to purchase 50,000 shares of the Company's Common Stock was granted to Robert M. Gallagher, a non-employee director of the Company at an exercise
price of $0.76 per share. Effective September 30, 2010, Robert M. Gallagher resigned as a member of the Board of Directors. In connection with this change, the terms of the equity awards
granted to Mr. Gallagher were modified whereby the vesting attributable to 25% of the 50,000 share stock option grant made on January 20, 2010 was accelerated to the date of his
resignation and the exercise period was extended to September 30, 2012. In addition, the vesting attributable to 25% of the 50,000 share restricted stock grant made on June 3, 2010 was
accelerated to the date of his resignation. The remaining unvested equity awards were forfeited upon his resignation. Additional stock compensation expense of approximately $13,000 was recognized in
2010 in connection with the modification of this equity award.

At
the June 2010 annual meeting of the stockholders, each of the non-employee directors of the Company (Leland O. Erdahl, Terence J. Cryan, Marvin K. Kaiser and Robert M.
Gallagher) was granted restricted stock under the 2004 Directors' Plan to purchase 50,000 shares of the Company's common stock valued at $0.53 per share. Upon the resignation of Mr. Gallagher
in September 2010, 25% of the 50,000 share was vested on the date of his resignation. The remaining unvested equity awards were forfeited upon his resignation. The non-employee directors
held options covering 706,250 shares under the 2004 Directors' Plan at December 31, 2010. At December 31, 2010, 206,250 shares were available for future grants under the 2004 Directors'
Plan.

A
total of 142,680, 164,016, 69,092 and 50,455 shares of restricted stock were granted in the first, second, third and fourth quarters of 2009, respectively to five executive officers on
January 2, April 1 and July 1, 2009 and four executive officers on October 1, 2009 in connection with a cash conservation plan for 2009. All of these shares were scheduled
to vest one year from the date of grant. On September 3, 2009 the vesting schedule with respect to the former CEO's 115,628 restricted shares was modified to provide for immediate vesting. The
Company has recognized $110,000 of compensation cost for modification of the vesting schedule for these restricted shares. Restricted stock grants are valued using the fair market value of the stock
on the date of grant.

A
total of 70,000 shares of restricted stock were granted in the first quarter of 2008. The vesting with respect to 60,000 of these restricted shares was modified in the first quarter of
2009 to provide for immediate vesting, which resulted in a reduction of stock compensation expense of approximately $24,000 being recorded in 2009. The remaining 10,000 restricted shares vest ratably
over 5 years.

The
Company recognized stock compensation expense for its restricted share grants of approximately $350,000 for the year ended December 31, 2010. The Company recognized stock
compensation cost for the restricted share grants of approximately $339,000 for the year ended

F-25

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

9. STOCK-BASED COMPENSATION PLANS (Continued)

December 31,
2009. The total estimated unrecognized compensation cost from the unvested restricted grants at December 31, 2010 was approximately $219,000, which is expected to be
recognized over the weighted average vesting period of the individual grants which range from 1-3 years.



The Company has four stock option plans as summarized under Footnote 8 "Shareholders EquityStock Options." The following
table summarizes stock options outstanding and changes during the year ended December 31, 2010:

Outstanding OptionsNumber of
Shares

Weighted Average
Exercise Price

Weighted Average
Remaining
Contractual
Term
(in years)

Aggregate
Intrinsic
ValueOptions outstanding at January 1, 2010


4,406,074

$
2.75Granted


230,000

$
1.79Exercised


(1,113
)
$
0.73Canceled or forfeited


(815,123
)
$
2.73Options outstanding at December 31, 2010


3,819,838

$
2.70


5.07

$
5,539,826Options exercisable at December 31, 2010


3,414,838

$
2.64


4.63

$
4,541,783


The
total intrinsic value of options exercised during the years ended December 31, 2010, 2009 and 2008 was $2,976, $0 and $153, respectively.

Shares
available for grant under the Plans as of December 31, 2010 were 626,833.

Stock
options outstanding and currently exercisable at December 31, 2010 are as follows:

Options Outstanding

Options ExercisableStock Option Plan

Number of
Options
Outstanding

Weighted Average
Remaining
Contractual Life
(in years)

Weighted Average
Exercise price

Number of
Options
Exercisable

Weighted Average
Exercise Price1995 Stock Incentive Plan


1,881,212


3.89

$
1.31


1,881,212

$
1.312004 Employee Incentive Plan


1,194,876


5.57


3.15


1,014,876


3.342004 Directors Plan


743,750


7.25


5.49


518,750


6.133,819,838


5.07

$
2.70


3,414,838

$
2.64


Total
estimated unrecognized compensation cost from unvested stock options as of December 31, 2010 was approximately $752,000, which is expected to be recognized over a weighted
average period of approximately 2 to 3 years.

The
fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model.

F-26

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

9. STOCK-BASED COMPENSATION PLANS (Continued)

Using
the Black-Scholes option pricing model, the weighted average assumptions for grants in 2010: fair market value: $0.73, $0.70, $0.69 and $2,51; expected volatility of 144%, 147%,
103% and 89%; and risk-free interest rate of 4.25%, $.75%, #.75% and 3.125%. An expected life of 7.91 years, 7.27 years, 2 years and 6.32 years was used for the
options granted. The weighted average fair value of the options granted in 2010 was $1.71

Using
the Black-Scholes option pricing model, the weighted average assumptions for grants in 2009: fair market value: $1.44, expected volatility of 143% and risk-free
interest rate of 4.5%. An expected life of 8.01 years was used for the options granted. The weighted average fair value of the options granted in 2009 was $1.44.

Using
the Black-Scholes option pricing model, the weighted average assumptions for grants in 2008: fair market value: $4.10, expected volatility of 143% and risk-free
interest rate of 4.25%. An expected life of 9.42 years was used for the options granted. The weighted average fair value of the options granted in 2008 was $4.10.

The
exercise price for the options granted under the plans is the fair market value of the Common Stock on the date granted. The terms of the options are determined by the Board of
Directors upon grant; however, no options may be exercised after a period of ten years. The weighted average fair value of options granted in 2010, 2009 and 2008 was $1.71, $1.44 and $4.10,
respectively.

10. FEDERAL INCOME TAXES

The deferred federal income tax asset (liability) consists of the following:

December 31,2010

2009

2008Property development costsnet of amortization

$
11,583,000

$
13,018,000

$
13,688,000Accelerated depreciation


(151,000
)

(193,000
)

(195,000
)Restoration reserves


(1,560,000
)

(1,093,000
)

(480,000
)Net operating loss and percentage depletion carryforwards


34,766,000


29,621,000


26,235,000Valuation allowance and othernet


(44,638,000
)

(41,353,000
)

(39,248,000
)Total deferred income tax asset (liability)

$


$


$



F-27

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

10. FEDERAL INCOME TAXES (Continued)

Major
items causing the Company's tax provision to differ from the federal statutory rate of 34% were:

For the Twelve Months Ended December 31,2010

2009

2008Amount

% of Pretax
Income

Amount

% of Pretax
Income

Amount

% of Pretax
IncomePretax income (loss)

$
(10,354,567
)



$
(10,065,862
)



$
(26,509,356
)

Pretax income (loss) times statutory tax rate


(3,521,000
)

34
%

(3,422,000
)

34
%

(9,013,000
)

34
%Increases (decreases) in taxes resulting from:Change in valuation allowance


3,521,000


(34
)%

2,105,000


(21
)%

9,013,000


(34
)%Correction to deferred tax








1,317,000


(13
)%




Income tax benefit

$
0


0
%
$
0


0
%
$
0


0
%


The Company also has available for regular federal income tax purposes at December 31, 2010 estimated net operating loss
("NOL") carryforwards of approximately $102,252,000, before limitations which expire primarily in 2011 through 2030, if not previously utilized. Following the issuance of the Company's
Common Stock in 2001, use of the Company's NOL will be severely limited on an annual and aggregate basis. For this reason, and due to no expectation of profitable operations in the near future, the
NOL has a full valuation allowance and is not shown as a deferred tax asset in the table above.

11. OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS

Other long-term liabilities and deferred credits on the balance sheet consisted of:

December 31,2010

2009Reserve for future restoration and reclamation costs (Asset Retirement Obligations), net of current portion of $1,240,000 and $1,237,000 in 2010 and
2009. (Note 2)

$
3,804,057

$
4,290,361Royalties payable


500,000


500,000Deferred compensation, net of current portion of $697,028 and $0 in 2010 and 2009





697,028$
4,304,057

$
5,487,389


F-28

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

11. OTHER LONG-TERM LIABILITIES AND DEFERRED CREDITS (Continued)

The
following table shows the change in the balance of the restoration and reclamation liability (Asset Retirement Obligation) during the years ended December 31, 2010 and 2009:

December 31,2010

2009Reserve for future restoration and reclamation costs at January 1,

$
5,526,949

$
6,994,772Changes in cash flow estimates


733,981


79,604Costs incurred


(1,373,228
)

(1,802,369
)Accretion expense


155,943


254,942Reserve for future restoration and reclamation costs at December 31,

$
5,043,645

$
5,526,949


12. EARNINGS (LOSS) PER SHARE

Basic earnings per share includes no dilution and is computed by dividing income or loss attributed to common stockholders by the weighted-average number of common shares outstanding for
the period.
Diluted earnings per share reflects the potential dilution that could occur if security interests were exercised or converted into common stock.

The
Company has issued potentially dilutive instruments in the form of common stock warrants, deferred compensation plan and common stock options granted to our employees. There were
5,736,341 and 6,216,989 dilutive securities outstanding at December 31, 2010 and 2009, respectively. The Company did not include any of these instruments in the calculation of diluted loss per
share during the period because to include them would be anti-dilutive due to the net loss during the periods.

13. COMMITMENTS AND CONTINGENCIES

The Company's mining operations are subject to federal and state regulations for the protection of the environment, including water quality. These laws are constantly changing and
generally becoming more restrictive. The ongoing costs of complying with such regulations have not been significant to the Company's annual operating costs. Future mine closure and reclamation costs
are provided for as each pound of uranium is produced on a unit-of-production basis. The Company reviews its reclamation obligations each year and determines the appropriate
unit charge. The Company also evaluates the status of current environmental laws and their potential impact on their accrual for costs. The Company believes its operations are in compliance with
current environmental regulations.

Registration
Statement

In
May 2008, the Company completed the sale of 3,295,920 shares of common stock to accredited investors at a price of $4.34 per share and warrants to purchase
988,771 additional shares of common stock, at a price of $5.78. These warrants expire 60 months after issuance and are exercisable immediately. The Company filed a registration statement under
the Securities Act of 1933, as amended, to register the resale of the shares of its common stock issued in the May 2008 private placement. The registration rights agreement executed in connection with
the private placement and pursuant to which

F-29

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

13. COMMITMENTS AND CONTINGENCIES (Continued)

the
shares were registered, provides for penalties in the event the registration statement fails to remain effective. At December 31, 2010, the Company's registration statement was and remains
effective.

Compensation
Agreements

The
Company has entered into Compensation Agreements with Executive Officers of the Company, with the exception of the CEO/President/COO, that provide that, in
the event of a change in control, such officers will have certain rights and benefits for a period of thirty-six months for the Executive Chairman of the Company and
twenty-four months for the other officers, following such change in control. The Compensation Agreements provide that the executive's base salary payments shall be made on a monthly basis
for the duration of the term and any incentive payments shall be paid annually until the obligation to make such payments expires. In September, 2009 the Company entered into a Compensation Agreement
with the CEO/President /COO of the Company that provides that, in the event he terminates employment following a change in control he would be entitled to two years salary and bonus plus medical and
dental benefits for up to 12 months. A change in control would also result in the immediate vesting of all unvested restricted shares of stock granted to him.

Kingsville
Dome Contingent Royalty

The
Company accrued a royalty obligation from its production activities at the Kingsville Dome Project in 2007 from leases which have a 6.25% royalty and carry
and additional 3.125% royalty payment to certain land owners of the property that have ratified lease agreements with the Company. At December 31, 2007, none of these additional leases had been
ratified and the contingent liability and related royalty expense recorded for the first nine months of 2007 of approximately $453,000 was reversed.

Legal
Contingencies

In
the matter titled,Saenz v. URI Inc,in the 105th Judicial District Court, Kleberg County, Texas, the
owners of the mineral estate of property in Kleberg County, Texas leased to the Company sought a declaratory judgment that the leases were not valid. The Company had produced uranium from both leases.
On September 29, 2010, our counsel and the plaintiffs' counsel signed a settlement agreement in this matter and the settelment was finalized in February 2011. Under the Settlement, the
Plaintiffs ratified, confirmed and recognized the validity of the leases, agreed to cooperate with the Company and execute a stipulation of interest with regard to their respective interests.
Plaintiffs agreed to support and not interfere, either directly or indirectly, with the Company's efforts to obtain permits, licenses or other authorizations from the different regulatory and
governmental agencies with regard to any mining or other operations. We paid to Plaintiffs $1.375 million in cash, which includes amounts for prior royalties that the plaintiffs had previously
rejected. In addition royalties due for future production from the leases will be amended from a 6.25% royalty rate to a sliding scale royalty.

In
connection with the resignation of David N. Clark as President and CEO of the Company on September 3, 2009, the Company and Mr. Clark entered into an agreement which
provided for his salary continuation through December 2, 2009, continuation of employee benefits through March 31, 2010, extension to September 3, 2011 of the termination date for
the stock options granted to Mr. Clark and immediate vesting of the restricted shares and stock options granted to Mr. Clark.

F-30

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Table of Contents

URANIUM RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

DECEMBER 31, 2010 AND 2009

14. JOINT VENTURE FOR CHURCHROCK PROPERTY

On December 5, 2006, HRI-Churchrock, Inc., a wholly-owned subsidiary of the Company, entered into a Joint Venture with a wholly-owned subsidiary of Itochu to
develop jointly our Churchrock property in New Mexico.

A
feasibility study was completed and delivered at the end of 2006. Under the terms of the Joint Venture, both parties had until April 2, 2007 to decide whether to terminate the
Joint Venture. The parties extended that date until March 2, 2009. On March 6, 2009 we received notification that Itochu had decided to terminate the Joint Venture which resulted in the
termination of the Joint Venture. Such action eliminates the potential for reinstatement of the original delivery contracts with Itochu for South Texas production. However, depending on spot market
prices, our sales price may be reduced by up to $2.10 per pound on some of our South Texas production for future deliveries under the contract.

F-31

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Table of Contents

EXHIBIT INDEX

Exhibit
Number

Description3.1
*
Restated Certificate of Incorporation of the Company, dated February 15, 2004 (filed with the Company's Registration Statement on Form SB-2 dated July 26, 2004, SEC File Number 333-117653).3.1.1
*
Certificate of Amendment of Restated Certificate of Incorporation of the Company (filed with the Company's Form 8-K dated April 11, 2006, SEC File Number 000-17171 and as corrected in the Company's
Form 8-K dated December 7, 2007).3.2
*
Restated Bylaws of the Company (filed with the Company's Form 10-K on March 10, 2010).4.2
*
Form of Warrant to Purchase Common Stock (filed with the Company's Form 8-K on May 19, 2008).10.3
*
Amended and restated 1995 Stock Incentive Plan (filed with the Company's Form SB-2 Registration No. 333-117653 on July 26, 2005).10.7
*
Summary of Supplemental Health Care Plan (filed with Amendment No. 1 to the Company's Form S-1 Registration Statement (File No. 33-32754) as filed with the Securities and Exchange Commission on
February 20, 1990).10.12
*
Compensation Agreement dated June 2, 1997 between the Company and Paul K. Willmott (filed with the Company's Annual Report on Form 10-K dated June 30, 1998, SEC File Number 000-17171).10.13
*
Compensation Agreement dated June 2, 1997 between the Company and Richard A. Van Horn (filed with the Company's Annual Report on Form 10-K dated June 30, 1998, SEC File Number 000-17171).10.14
*
Compensation Agreement dated June 2, 1997 between the Company and Thomas H. Ehrlich (filed with the Company's Annual Report on Form 10-K dated June 30, 1998, SEC File Number 000-17171).10.15
*
Compensation Agreement dated June 2, 1997 between the Company and Mark S. Pelizza (filed with the Company's Annual Report on Form 10-K dated June 30, 1998, SEC File Number 000-17171).10.16
*
Uranium Resources, Inc. 1999 Deferred Compensation Plan (filed with the Company's Annual Report on Form 10-K dated June 30, 1999, SEC File Number 000-17171).10.16.1
*
Amendment No. 1 to the Uranium Resources, Inc. 1999 Deferred Compensation Plan (filed with the Company's Annual Report on Form 10-KSB dated March 31, 2006, SEC File Number 000-17171).10.17
*
2000-2001 Deferred Compensation Plan (filed with the Company's Annual Report on Form 10-K dated December 31, 2004, SEC File Number 000-17171).10.17.1
*
Amendment No. 2 to the Uranium Resources, Inc. Deferred Compensation Plan for 2000-2001 (filed with the Company's Annual Report on Form 10-KSB dated March 31, 2006, SEC File
Number 000-17171).10.22
*
Uranium Resources, Inc. Deferred Compensation Plan for 2002 (filed with the Company's Quarterly Report on Form 10-QSB dated November 13, 2002, SEC File Number 000-17171).10.23
*
Uranium Resources, Inc. Deferred Compensation Plan for 2003 (filed with the Company's Quarterly Report on Form 10-QSB dated November 13, 2002, SEC File Number 000-17171).


E-1

---



Table of Contents

Exhibit
Number

Description10.24
*
Uranium Resources, Inc. Deferred Compensation Plan for 2004 (filed with the Company's Quarterly Report on Form 10-QSB dated May 14, 2004, SEC File Number 000-17171).10.24.1
*
Amendment No. 2 to the Uranium Resources, Inc. Deferred Compensation Plan for 2002, Deferred Compensation Plan for 2003, and Deferred Compensation Plan for 2004 (filed with the Company's Annual Report on
Form 10-KSB dated March 31, 2006, SEC File Number 000-17171).10.35
*
Uranium Resources, Inc. 2004 Stock Incentive Plan (filed with the Company's Quarterly Report on Form 10-QSB/A dated November 18, 2005, SEC File No. 000-17171).10.37
*
Amended and Restated Uranium Supply Contract between Itochu Corporation and Uranium Resources, Inc. effective March 1, 2006 (filed with the Company's Form 10-KSB dated March 31, 2006, SEC file
Number 000-17171).10.38
*
Agreement for the Sale of Uranium Concentrates between UG U.S.A., Inc. and Uranium Resources, Inc. dated March 31, 2006 (filed with the Company's Form 10-KSB dated March 31, 2006, SEC file
Number 000-17171).10.43
*
Amended and Restated 2004 Directors' Stock Option Plan dated April 10, 2007 (filed with the Company's Post-Effective Amendment No. 1 to Registration Statement on Form S-3 dated April 11, 2007, SEC File
No. 333-133960)10.43.1
*
Amended and Restated 2004 Directors' Stock Option and Restricted Stock Plan dated April 1, 2010 (filed with the Company's Form 10-Q dated August 9, 2010, SEC File No. 000-17171).10.44
*
Uranium Resources, Inc. 2007 Restricted Stock Plan (filed with the Company's Form 10-Q dated May 10,2007, SEC File No. 000-17171)10.45
*
Agreement dated September 3, 2009 between the Company and David N. Clark (Filed with the Company's Form 8-K dated September 4, 2009, SEC File No. 001-33404).10.46
*
Letter Agreement dated September 3, 2009 between the Company and Donald C. Ewigleben (Filed with the Company's Form 8-K dated September 4, 2009, SEC File No. 001-33404).10.47
*
Consulting Services Agreement with RMG Consulting, LLC dated October 1, 2010 (Filed with the Company's Form 8-K dated October 4, 2010, SEC File No. 001-33404).10.48

Uranium Mining Lease option Agreement dated December 1, 2010 between URI, Inc. and The John G. and Marie Stella Kenedy Memorial Foundation.14
*
Uranium Resources, Inc. Amended Code of Ethics for Senior Executives. (filed with the Company's Form 10-KSB dated March 30, 2004, SEC File No. 000-17171).21
*
Subsidiaries of the Registrant23.1

Consent of Independent Registered Public Accounting Firm23.2

Consent of Behre Dolbear & Company (USA)31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


E-2

---



Table of Contents

Exhibit
Number

Description32.1

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*Not
filed herewith. Incorporated by reference pursuant to Rule 12b-32 under the Securities Exchange Act of 1934.


E-3

---