Table of Contents

** **

 

** **

**SECURITIESAND EXCHANGE COMMISSION**

**WASHINGTON, D.C.  20549**

 

**FORM 10-Q**

 
| **x**                                                 | ** ** | **Quarterly report pursuant to  Section 13 or 15(d) of the Securities Exchange Act of 1934**  |
|-------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------|
|                                                  |       |                                                                                                    |
| **For the quarterly period ended June 30, 2008** |
|                                                  |       |                                                                                                    |
| **Or**                                                |
|                                                  |       |                                                                                                    |
| **o**                                                 | ** ** | **Transition report pursuant to  Section 13 or 15(d) of the Securities Exchange Act of 1934** |

** **

**For the transition periodfrom                  to**

 

**Commission file number 0-17171**

 

**URANIUMRESOURCES, INC.**

(ExactName of Issuer as Specified in Its Charter)

 

| **DELAWARE**              | ** ** | **75-2212772**                        |
|---------------------------|------------|---------------------------------------|
| (State  of Incorporation) |       | (I.R.S.  Employer Identification No.) |

 

**405 State Highway 121 Bypass, Building A, Suite 110,Lewisville, Texas 75067**

(Addressof Principal Executive Offices)

 

**(972) 219-3330**

(Issuer’sTelephone Number, Including Area Code)

 

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. x  Yes    o  No

 

Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer, a non-accelerated filer, or a smaller reporting company.See the definitions of “large accelerated filer,” “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

| Large  accelerated filer o                     |   | Accelerated  filer x         |
|------------------------------------------------|--------|-----------------------------------|
|                                           |   |                              |
| Non-accelerated  filer o                       |   | Smaller  reporting company o |
| (Do  not check if a smaller reporting company) |   |                              |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12-b2 of theExchange Act).

o  Yes    x  No

 

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.

 

| **Title of Each Class of Common Stock** | ** ** | **Number of Shares Outstanding** |
|-----------------------------------------------------------------------|------------|-------------------------------------------------|
| Common  Stock, $0.001 par value                                       |       | 55,835,549  as of August 6, 2008           |

 

 

 

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**URANIUM RESOURCES, INC.**

 

**2008 SECOND QUARTERLY REPORT ON FORM 10-Q**

 

**TABLE OF CONTENTS**

 
| **PART I—FINANCIAL  INFORMATION** |       |                                                                                                                      |
|---------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------------|
|                                        |       |                                                                                                                      |   |   |
| Item 1.                                     |       | Financial Statements                                                                                                      |   |   |
|                                        |       |                                                                                                                      |   |   |
|                                        |       | Condensed  Consolidated Balance Sheets–June 30, 2008 (Unaudited) and  December 31, 2007                    |   | 3 |
|                                        |       |                                                                                                                      |   |   |
|                                        |       | Condensed Consolidated Statements of Operations–three  and six months ended June 30,  2008 and 2007 (Unaudited) |   | 5 |
|                                        |       |                                                                                                                      |   |   |
|                                        |       | Condensed Consolidated Statements of Cash Flows–three  and six months ended June 30,  2008 and 2007 (Unaudited) |   | 6 |
|                                        |       |                                                                                                                      |   |   |
|                                        |       | Notes to Condensed Consolidated Financial Statements–June 30,  2008 (Unaudited)                                 |   | 7 |
|                                        |       |                                                                                                                      |   |   |
| Item  2.                                    |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                               |   | 12 |
|                                        |       |                                                                                                                      |   |   |
| Item  3.                                    |       | Quantitative  and Qualitative Disclosures About Market Risk                                                               |   | 16 |
|                                        |       |                                                                                                                      |   |   |
| Item  4.                                    |       | Controls and  Procedures                                                                                                  |   | 16 |
|                                        |       |                                                                                                                      |   |   |
| **PART II—OTHER  INFORMATION**    |       | 18                                                                                                                        |
| ** **                                  | ** ** | ** **                                                                                                                | ** ** | ** ** |
| Item 1.                                     |       | Legal Proceedings                                                                                                         |   | 18 |
|                                        |       |                                                                                                                      |   |   |
| Item 1A.                                    |       | Risk Factors                                                                                                              |   | 18 |
|                                        |       |                                                                                                                      |   |   |
| Item  2.                                    |       | Unregistered  Sales of Equity Securities and Use of Proceeds                                                              |   | 18 |
|                                        |       |                                                                                                                      |   |   |
| Item  3.                                    |       | Defaults  Upon Senior Securities                                                                                          |   | 18 |
|                                        |       |                                                                                                                      |   |   |
| Item  4.                                    |       | Submission  of Matters to a Vote of Security Holders                                                                      |   | 18 |
|                                        |       |                                                                                                                      |   |   |
| Item 5.                                     |       | Other Information                                                                                                         |   | 18 |
|                                        |       |                                                                                                                      |   |   |
| Item 6.                                     |       | Exhibits and Reports on  Form 8–K                                                                               |   | 18 |
|                                        |       |                                                                                                                      |   |   |
| **SIGNATURES**                              |       | 19                                                                                                                        |
| ** **                                  | ** ** | ** **                                                                                                                | ** ** | ** ** |
| **Index to  Exhibits**                      |       | E-1                                                                                                                       |

 

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**URANIUM RESOURCES, INC.**

**CONDENSED CONSOLIDATED BALANCESHEETS**

**ASSETS**

**(Unaudited)**

 
| ** **                                               | ** ** | **June 30,  2008** | ** ** | **December 31,  2007** | ** ** |
|----------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                               | ** ** | ** **              | ** ** | ** **                  | ** ** |
| Current assets:                                          |       |                    |       |                        |       |
| Cash and cash equivalents                                |       | $                       | 16,028,518 |                        | $          | 9,284,270 |   |
| Receivables, net                                         |       | 2,136,784               |       | 2,652,574                   |       |
| Uranium inventory                                        |       | 1,259,016               |       | 748,452                     |       |
| Prepaid and other current assets                         |       | 456,237                 |       | 720,357                     |       |
| Total current assets                                     |       | 19,880,555              |       | 13,405,653                  |       |
|                                                     |       |                    |       |                        |       |
| Property, plant and equipment, at cost:                  |       |                    |       |                        |       |
| Uranium properties                                       |       | 92,556,564              |       | 85,525,808                  |       |
| Other property, plant and equipment                      |       | 970,339                 |       | 821,811                     |       |
| Less-accumulated depreciation, depletion  and impairment |       | (60,739,968             | )          | (55,736,530                 | )          |
| Net property, plant and equipment                        |       | 32,786,935              |       | 30,611,089                  |       |
|                                                     |       |                    |       |                        |       |
| Other assets                                             |       | 3,084,541               |       | 2,837,064                   |       |
| Long-term investment:                                    |       |                    |       |                        |       |
| Certificates of deposit, restricted                      |       | 6,496,770               |       | 6,083,076                   |       |
|                                                     |       | $                       | 62,248,801 |                        | $          | 52,936,882 |   |

 

Theaccompanying notes to financial statements are an integral part of theseconsolidated statements.

 

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**URANIUM RESOURCES, INC.**

**CONDENSED CONSOLIDATED BALANCE SHEETS**

**LIABILITIES AND SHAREHOLDERS’ EQUITY**

**(Unaudited)**

 
| ** **                                                                                                                                                                                             | ** ** | **June 30,  2008** | ** ** | **December 31,  2007** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| ** **                                                                                                                                                                                             | ** ** | ** **              | ** ** | ** **                  | ** ** |
| Current liabilities:                                                                                                                                                                                   |       |                    |       |                        |       |
| Accounts and short term notes payable                                                                                                                                                                  |       | $                       | 1,917,855  |                        | $          | 2,157,475 |   |
| Current portion of restoration reserve                                                                                                                                                                 |       | 1,389,991               |       | 1,124,504                   |       |
| Royalties and commissions payable                                                                                                                                                                      |       | 1,076,907               |       | 1,131,636                   |       |
| Accrued interest and other accrued  liabilities                                                                                                                                                        |       | 708,004                 |       | 709,400                     |       |
| Current portion of long-term debt                                                                                                                                                                      |       | 155,354                 |       | 210,616                     |       |
| Total current liabilities                                                                                                                                                                              |       | 5,248,111               |       | 5,333,631                   |       |
|                                                                                                                                                                                                   |       |                    |       |                        |       |
| Other long-term liabilities and deferred  credits                                                                                                                                                      |       | 4,073,257               |       | 4,097,327                   |       |
|                                                                                                                                                                                                   |       |                    |       |                        |       |
| Long term capital leases, less current  portion                                                                                                                                                        |       | 136,820                 |       | 178,665                     |       |
| Long-term debt, less current portion                                                                                                                                                                   |       | 450,000                 |       | 450,000                     |       |
| Commitments and contingencies (Notes 1, 2,  5 and 14)                                                                                                                                                  |       |                    |       |                        |       |
| Shareholders’ equity:                                                                                                                                                                             |       |                    |       |                        |       |
| Common stock, $.001 par value, shares  authorized: 200,000,000; shares issued and outstanding  (net of treasury shares): 2008—55,601,049; 2007—52,305,129 |       | 55,639                  |       | 52,343                      |       |
| Paid-in capital                                                                                                                                                                                        |       | 145,689,540             |       | 131,282,687                 |       |
| Accumulated deficit                                                                                                                                                                                    |       | (93,395,148             | )          | (88,448,353                 | )          |
| Less: Treasury stock (38,125 shares), at  cost                                                                                                                                                         |       | (9,418                  | )          | (9,418                      | )          |
| Total shareholders’ equity                                                                                                                                                                        |       | 52,340,613              |       | 42,877,259                  |       |
|                                                                                                                                                                                                   |       | $                       | 62,248,801 |                        | $          | 52,936,882 |   |

 

Theaccompanying notes to financial statements are an integral part of theseconsolidated statements.

 

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**URANIUM RESOURCES, INC.**

**CONDENSED CONSOLIDATED STATEMENTSOF OPERATIONS**

**(Unaudited)**

 
| ** **                                                                   | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|------------------------------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                   | ** ** | **2008**                                        | ** ** | **2007**                                      | ** ** | **2008** | ** ** | **2007** | ** ** |
| Revenues:                                                                    |       |                                            |       |                                          |       |   |   |   |   |
| Uranium sales                                                                |       | $                                               | 6,598,401  |                                          | $          | 7,962,709 |   | $ | 12,329,939 |   | $ | 12,536,876 |   |
| Total revenue                                                                |       | 6,598,401                                       |       | 7,962,709                                     |       | 12,329,939 |   | 12,536,876 |   |
| Costs and expenses:                                                          |       |                                            |       |                                          |       |   |   |   |   |
| Cost of uranium sales                                                        |       |                                            |       |                                          |       |   |   |   |   |
| Royalties and commissions                                                    |       | 576,355                                         |       | 981,966                                       |       | 1,136,757 |   | 1,420,942 |   |
| Operating expenses                                                           |       | 1,810,893                                       |       | 1,556,011                                     |       | 3,938,032 |   | 3,343,074 |   |
| Accretion/amortization of restoration  reserve                               |       | 177,640                                         |       | 137,021                                       |       | 384,628 |   | 307,201 |   |
| Depreciation and depletion                                                   |       | 2,314,244                                       |       | 1,810,964                                     |       | 4,244,825 |   | 3,298,013 |   |
| Impairment of uranium properties                                             |       | 160,275                                         |       | —                                        |       | 296,117 |   | — |   |
| Exploration expenses                                                         |       | 249,792                                         |       | —                                        |       | 258,339 |   | — |   |
| Total cost of uranium sales                                                  |       | 5,289,199                                       |       | 4,485,962                                     |       | 10,258,698 |   | 8,369,230 |   |
| Earnings from operations before corporate  expenses                          |       | 1,309,202                                       |       | 3,476,747                                     |       | 2,071,241 |   | 4,167,646 |   |
|                                                                         |       |                                            |       |                                          |       |   |   |   |   |
| Corporate expenses—                                                     |       |                                            |       |                                          |       |   |   |   |   |
| General and administrative                                                   |       | 3,088,011                                       |       | 2,479,152                                     |       | 5,789,818 |   | 4,691,244 |   |
| Write-off of target acquisition costs (Note  12)                             |       | 1,437,410                                       |       | —                                        |       | 1,437,410 |   | — |   |
| Depreciation                                                                 |       | 36,834                                          |       | 25,022                                        |       | 71,047 |   | 46,184 |   |
| Total corporate expenses                                                     |       | 4,562,255                                       |       | 2,504,174                                     |       | 7,298,275 |   | 4,737,428 |   |
| Earnings (loss) from operations                                              |       | (3,253,053                                      | )          | 972,573                                       |       | (5,227,034 | ) | (569,782 | ) |
|                                                                         |       |                                            |       |                                          |       |   |   |   |   |
| Other income (expense):                                                      |       |                                            |       |                                          |       |   |   |   |   |
| Interest expense                                                             |       | (6,388                                          | )          | (4,500                                        | )          | (17,817 | ) | (12,366 | ) |
| Interest and other income, net                                               |       | 150,070                                         |       | 215,179                                       |       | 298,056 |   | 344,941 |   |
|                                                                         |       |                                            |       |                                          |       |   |   |   |   |
| Net earnings (loss)                                                          |       | $                                               | (3,109,371 | )                                             | $          | 1,183,252 |   | $ | (4,946,795 | ) | $ | (237,207 | ) |
|                                                                         |       |                                            |       |                                          |       |   |   |   |   |
| Net earnings (loss) per common share:                                        |       |                                            |       |                                          |       |   |   |   |   |
| Basic                                                                        |       | $                                               | (0.06      | )                                             | $          | 0.02 |   | $ | (0.09 | ) | $ | (0.00 | ) |
| Diluted                                                                      |       | $                                               | (0.06      | )                                             | $          | 0.02 |   | $ | (0.09 | ) | $ | (0.00 | ) |
|                                                                         |       |                                            |       |                                          |       |   |   |   |   |
| Weighted average common shares and common  equivalent shares per share data: |       |                                            |       |                                          |       |   |   |   |   |
| Basic                                                                        |       | 54,007,417                                      |       | 52,113,104                                    |       | 53,156,273 |   | 51,954,068 |   |
| Diluted                                                                      |       | 54,007,417                                      |       | 56,228,005                                    |       | 53,156,273 |   | 51,954,068 |   |

 

Theaccompanying notes to financial statements are an integral part of theseconsolidated statements.

 

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**URANIUM RESOURCES, INC.**

**CONDENSED CONSOLIDATED STATEMENTSOF CASH FLOWS**

**(Unaudited)**

 
| ** **                                                                 | ** ** | **Six Months Ended  June 30,** | ** ** |
|----------------------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                 | ** ** | **2008**                                      | ** ** | **2007** | ** ** |
| Net loss                                                                   |       | $                                             | (4,946,795 | ) | $ | (237,207 | ) |
| Reconciliation of net loss to cash provided  by operations—           |       |                                          |       |   |   |
| Accretion/amortization of restoration  reserve                             |       | 384,628                                       |       | 307,201 |   |
| Depreciation and depletion                                                 |       | 4,315,872                                     |       | 3,344,197 |   |
| Impairment of uranium properties                                           |       | 296,117                                       |       | — |   |
| Decrease in restoration and reclamation  accrual                           |       | (342,214                                      | )          | (655,542 | ) |
| Stock compensation expense                                                 |       | 1,550,304                                     |       | 1,555,941 |   |
| Write-off of target acquisition costs                                      |       | 1,437,410                                     |       | — |   |
| Other non-cash items, net                                                  |       | (9,733                                        | )          | 341,421 |   |
|                                                                       |       |                                          |       |   |   |
| Effect of changes in operating working  capital items—                |       |                                          |       |   |   |
| (Increase) decrease in receivables                                         |       | 515,790                                       |       | (454,601 | ) |
| Decrease in inventories                                                    |       | 88,270                                        |       | 46,274 |   |
| Increase in prepaid and other current  assets                              |       | (46,910                                       | )          | (486,875 | ) |
| Increase (decrease) in payables, accrued  liabilities and deferred credits |       | (295,745                                      | )          | 981,077 |   |
| Net cash provided by operations                                            |       | 2,946,994                                     |       | 4,741,886 |   |
|                                                                       |       |                                          |       |   |   |
| Investing activities:                                                      |       |                                          |       |   |   |
| Increase in certificates of deposit,  restricted                           |       | (413,694                                      | )          | (422,932 | ) |
| Additions to property, plant and equipment—                           |       |                                          |       |   |   |
| Kingsville Dome                                                            |       | (3,196,693                                    | )          | (3,827,251 | ) |
| Rosita                                                                     |       | (3,782,475                                    | )          | (1,877,161 | ) |
| Vasquez                                                                    |       | (167,090                                      | )          | (410,611 | ) |
| Rosita South                                                               |       | (156,330                                      | )          | (1,163,880 | ) |
| Churchrock                                                                 |       | (285,807                                      | )          | (417,681 | ) |
| Crownpoint                                                                 |       | (64,353                                       | )          | (48,548 | ) |
| Other property and other assets                                            |       | (849,290                                      | )          | (838,749 | ) |
| Net cash used in investing activities                                      |       | (8,915,732                                    | )          | (9,006,813 | ) |
|                                                                       |       |                                          |       |   |   |
| Financing activities:                                                      |       |                                          |       |   |   |
| Payments on borrowings                                                     |       | (146,859                                      | )          | (131,275 | ) |
| Issuance of common stock, net                                              |       | 12,859,845                                    |       | 714,754 |   |
| Net cash from financing activities                                         |       | 12,712,986                                    |       | 583,479 |   |
| Net increase (decrease) in cash and cash  equivalents                      |       | 6,744,248                                     |       | (3,681,448 | ) |
| Cash and cash equivalents, beginning of  period                            |       | 9,284,270                                     |       | 20,176,771 |   |
| Cash and cash equivalents, end of period                                   |       | $                                             | 16,028,518 |   | $ | 16,495,323 |   |

 

Theaccompanying notes to financial statements are an integral part of theseconsolidated statements.

 

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**Uranium Resources, Inc.**

**Notes to Condensed ConsolidatedFinancial Statements June 30, 2008 (Unaudited)**

 

**1.****                                     ****BASIS OF PRESENTATION**

 

Theaccompanying unaudited condensed consolidated financial statements have beenprepared in accordance with accounting principles generally accepted in theUnited States of America for interim financial information and with theinstructions to Form 10-Q and Item 310(b) of Regulation S-K. Accordingly, they do not include all of the information and footnotes requiredby accounting principles generally accepted in the United States of America forcomplete financial statements.  The accompanying statements should be readin conjunction with the audited financial statements included in the Company’s2007 Annual Report on Form 10-K/A.  In the opinion of management, alladjustments (consisting of normal recurring accruals) considered necessary fora fair presentation have been included.  Operating results for the threeand six months ended June 30, 2008 are not necessarily indicative of theresults that may be expected for the full calendar year ending December 31,2008.

 

**2.****                                     ****DESCRIPTION OF BUSINESS**

 

URIwas organized in 1977 to mine uranium in the United States using the in siturecovery (“ISR”) mining process. From 1988 through 1999 we produced about6.1 million pounds of uranium from two South Texas properties,3.5 million pounds from Kingsville Dome and 2.6 million pounds fromRosita.  In 1999, we shut-in ourproduction because of depressed uranium prices.  When uranium pricesreached a level where it was prudent to commence operations, the company beganproducing at its Vasquez property in South Texas in the fourth quarter of 2004. Production at Kingsville Dome began in the second quarter of 2006.  Our production since the fourth quarter of2004 has been 1,258,900 pounds of which 653,900 pounds were from Vasquez and605,000 were produced from Kingsville Dome. We began injecting oxygen into our production wells at Rosita at the endof June 2008.

 

Thefinancial statements of the Company have been prepared on the basis ofaccounting principles applicable to a going concern, which contemplates therealization of assets and the satisfaction of liabilities in the normal courseof business.  Management believes thatthe cash balance of $16.0 million at June 30, 2008 and the cash expectedto be provided through operations over the next year will be sufficient tomaintain its liquidity for the next year.

 

**3.****                                     ****DISCLOSURE OF NON-CASHTRANSACTIONS**

 

Duringthe first six months of 2007, the Company entered into capital leases toacquire property, plant and equipment items including logging trucks and officecomputers and equipment totaling $99,000. No additions to capital leases were made in the first half of2008.  The outstanding balance of the capital leases was $292,000 at June 30,2008.

 

**4.****                                     ****URANIUM PROPERTIES**

 

**KingsvilleDome Project**

 

Productionfrom Kingsville Dome for the first six months of 2008 and 2007 was 172,900 and180,300 pounds, respectively.  During thefirst half of 2008, wellfield delineation and development work was ongoing onadditional wellfields at Kingsville Dome, where $900,000 of wellfield capitalexpenditures were made for wellfields that began production during the quarterand for future wellfields not yet on-line. Total capital expenditures for Kingsville Dome for the first six monthsof 2008 were $3.2 million for wellfield development, the construction ofadditional satellite plants and for wellfield evaluation and delineation offuture wellfields.

 

**Rosita**

 

Capitalexpenditures for our Rosita project totaled $3.8 million in the first sixmonths of 2008.  These expenditures were made for wellfield delineationand development, upgrading the Rosita plant and elution circuit, the additionof another satellite plant and the construction of a drying facility atRosita.  At our Rosita project we began injecting oxygen into ourproduction wells in late June 2008.

 

**VasquezProject**

 

Inthe first six months of 2008 Vasquez production was 24,000 pounds compared with64,600 pounds produced from Vasquez in the first six months of 2007.  Inthe first half of 2008, we incurred wellfield development and other 

 

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expenditures of $167,000,primarily for development of new wellfields to bring on new production atVasquez.  Such new production commenced in March 2008.

 

Asproduction from depleted wellfields at Vasquez ceases, restoration activitiesin those wellfields are conducted.  At June30, 2008, we determined the carrying value of the Vasquez project assetsexceeded their fair value as provided in SFAS 144 “Accounting for theImpairment or Disposal of Long-Lived Assets”. Such determination resulted in animpairment provision of approximately $296,000 in the first half of 2008,$160,000 of which was recorded in the second quarter.

 

**5.****                                     ****CONTRACT COMMITMENTS**

 

**Amendmentto Uranium Sales Contracts**

 

InMarch 2006, we entered into a new contract with Itochu Corporation (“Itochu”)and a new contract with UG U.S.A., Inc. (“UG”) that superseded thepreviously existing contracts.  Each of the new contracts provides for deliveryof one-half of our actual production from our Vasquez property and otherproperties in Texas currently owned or hereafter acquired by the Company(excluding certain large potential exploration plays). The terms of suchcontracts are summarized below.

 

*The Itochu Contract*. Under the Itochu contract, all productionfrom the Vasquez property will be sold at a price equal to the average spotprice for the eight weeks prior to the date of delivery less $6.50 per pound,with a floor for the spot price of $37 and a ceiling of $46.50. Other Texasproduction will be sold at a price equal to the average spot price for theeight weeks prior to the date of delivery less $7.50 per pound, with a floorfor the spot price of $37 and a ceiling of $43. On non-Vasquez production theprice paid will be increased by 30% of the difference between actual spot priceand the $43 ceiling up to and including $50 per pound. If the spot price isover $50 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 ceilingapplies to 3.65 million pounds of deliveries, after which there is no floor orceiling. Itochu has the right to cancel any deliveries on six-month’snotice.  As of June 30, 2008, wehave delivered 410,000 pounds to Itochu since the effective date of thiscontract.

 

InDecember 2005, we entered into a joint venture with Itochu to develop ourChurchrock property in New Mexico.  Under the terms of the joint venture,both parties must make an investment decision after the completion of afeasibility study, which was completed at the end of 2006. The parties haveextended the preliminary investment decision until November 1, 2008.  If Itochu should terminate the venture atthat time, we would no longer receive the additional price of 30% of the excessbetween $43 and $50 per pound outlined above. If we should terminate theventure at that time, the original contract terms will be reinstated from thattime forward.

 

*The UG Contract*. Under the UG contract all production from the Vasquez property andother Texas production will be sold at a price equal to the month-end long-termcontract price for the second month prior to the month of delivery less $6 perpound until (i) 600,000 pounds have been sold in a particular deliveryyear 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 aprice equal to the average spot price for a period prior to the date ofdelivery less 4%. In consideration of UG’s agreement to restructure itspreviously existing contract, we paid UG $12 million in cash with fundsraised in our equity offering completed in April 2006.  As of June 30, 2008, we have delivered382,000 pounds to UG since the effective date of this contract.

 

**6.****                                     ****STOCK BASED COMPENSATION**

 

Our stock basedcompensation programs consist of stock options granted to employees anddirectors and restricted stock grants made employees.

 

***Stock Compensation Expense - SFAS 123(R)***

 

Stockcompensation expense for the three months ended June 30, 2008 and 2007 was$896,000 and $782,000, respectively. Stock compensation expense for the sixmonths ended June 30, 2008 and 2007 was $1,550,000 and $1,556,000,respectively.  Stock compensation expenseis recorded as a component of general and administrative expenses for eachperiod. The Company did not recognize a tax benefit from the stock compensationexpense because the Company considers it is more likely than not that therelated deferred tax assets, which have been reduced by a full valuationallowance, will not be realized.

 

TheBlack-Scholes option pricing model was used to estimate the stock option fairvalues. The option pricing model requires a number of assumptions, of which themost significant are, expected stock price volatility, the expected pre-vestingforfeiture rate and the expected option term (the amount of time from the grantdate until the option or restricted shares are 

 

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exercised, vest or expire).Expected volatility was calculated based upon actual historical stock pricemovements through the measurement date of the stock option grant. Expectedpre-vesting forfeitures were estimated based on actual historical pre-vestingforfeitures over the most recent periods ending June 30, 2008 for theexpected term. The expected term was estimated based on historical averagesover the most recent periods ending June 30, 2008.

 

Atthe June 2008 annual meeting of the stockholders, each of the non-employeedirectors of the Company was granted an option under the 2004 Directors’ Planto purchase 50,000 shares of the Company’s common stock at an exercise price of$4.10 per share.  The non-employeedirectors held options covering 806,250 shares under the 2004 Directors’ Planat June 30, 2008. At June 30, 2008, 400,000 shares were available forfuture grants under the 2004 Directors’ Plan.

 

Atotal of 70,000 shares of restricted stock were granted in the first quarter of2008.  Restricted share grants for 60,000shares were made to a total of three non-executive employees on March 6,2008. 30,000 of these shares vest ratably over five years and 30,000 sharesvest ratably over four years.  Another10,000 restricted share grant was made to an executive of the Company on March 24,2008, these shares vest ratably over 5 years.  Restricted stock grants are valued using thefair market value of the stock on the date of grant. The Company recognizedstock compensation cost for the restricted share grants of approximately$30,000 and $38,000 during the three and six months ended June 30, 2008,respectively.  The total estimatedunrecognized compensation cost from the unvested restricted shares wasapproximately $538,000 at June 30, 2008.

 

***Stock Options for the Six Months Ended June 30, 2008***

 

Thefollowing table summarizes stock options outstanding and changes during the sixmonth period ended June 30, 2008:

 
| ** **                                  | ** ** | **Outstanding Options** | ** ** |
|---------------------------------------------|------------|------------------------------|------------|
| ** **                                  | ** ** | **Number of  Shares**   | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Weighted  Average  Remaining  Contractual  Term** | ** ** | **Aggregate  Intrinsic  Value** | ** ** |
| ** **                                  | ** ** | ** **                   | ** ** | ** ** | ** ** | **(in years)** | ** ** | ** ** | ** ** |
| Options outstanding at January 1, 2008 |       | 4,452,844                    |       | $ | 2.88 |   |   |   |   |   |
| Granted                                     |       | 200,000                      |       | 4.10 |   |   |   |   |   |
| Exercised                                   |       | —                       |       | — |   |   |   |   |   |
| Canceled or forfeited                       |       | (46,500                      | )          | $ | 8.56 |   |   |   |   |   |
| Options outstanding at June 30, 2008   |       | 4,606,344                    |       | $ | 2.87 |   | 6.91 |   | $ | 6,619,000 |   |
|                                        |       |                         |       |   |   |   |   |   |   |
| Options exercisable at June 30, 2008   |       | 3,606,550                    |       | $ | 2.22 |   | 6.43 |   | $ | 6,064,000 |   |

 

Sharesavailable for grant under the Stock Option Plans as of June 30, 2008 were453,000.

 

Stockoptions outstanding and currently exercisable at June 30, 2008 are asfollows:

 
| ** **                        | ** ** | **Options Outstanding**             | ** ** | **Options Exercisable**                           | ** ** |
|-----------------------------------|------------|------------------------------------------|------------|--------------------------------------------------------|------------|
| **Stock Option Plan**   | ** ** | **Number of  Options  Outstanding** | ** ** | **Weighted Average  Remaining  Contractual Life** | ** ** | **Weighted Average  Exercise price** | ** ** | **Number of  Options  Exercisable** | ** ** | **Weighted Average  Exercise Price** | ** ** |
| ** **                        | ** ** | ** **                               | ** ** | **(in years)**                                    | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| 1995 Stock Incentive Plan         |       | 2,212,072                                |       | 5.81                                                   |       | $ | 1.37 |   | 2,096,445 |   | $ | 1.28 |   |
| 2004 Stock Incentive Plan         |       | 1,562,459                                |       | 7.69                                                   |       | 3.39 |   | 1,178,292 |   | 3.30 |   |
| Directors’ Stock Option Plan |       | 563                                      |       | 3.22                                                   |       | 0.53 |   | 563 |   | 0.53 |   |
| 2004 Directors’ Plan         |       | 806,250                                  |       | 8.56                                                   |       | 6.05 |   | 306,250 |   | 4.59 |   |
| Other                             |       | 25,000                                   |       | 3.00                                                   |       | 0.88 |   | 25,000 |   | 0.88 |   |
|                              |       | 4,606,344                                |       | 6.91                                                   |       | $ | 2.87 |   | 3,606,550 |   | $ | 2.22 |   |

 

Totalestimated unrecognized compensation cost from unvested stock options at June 30,2008 was approximately $2.925 million, which is expected to be recognized overa weighted average period of approximately 2-4 years.

 

Totalestimated unrecognized compensation cost from unvested restricted stock grantsat June 30, 2008 was approximately $508,000, which is expected to be recognizedover a weighted average period of approximately 4-5 years.

 

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**7.****                                     ****ASSET RETIREMENT OBLIGATIONS**

 

Thefollowing table shows the change in the balance of the restoration andreclamation liability during the six months ended June 30, 2008:

 
| Reserve for future restoration and  reclamation costs beginning of period |   | $        | 3,932,603 |   |
|---------------------------------------------------------------------------|--------|----------|-----------|--------|
| Additions and changes in cash flow  estimates                             |   | 594,913  |      |
| Costs incurred                                                            |   | (434,662 | )         |
| Accretion expense                                                         |   | 81,166   |      |
| Reserve for future restoration and  reclamation costs at end of period    |   | $        | 4,174,020 |   |

 

**8.****                                     ****SHAREHOLDERS’ EQUITY**

 

***EquityInfusion — Private Placement***

 

InMay 2008, the Company completed the sale of 3,295,920 shares of commonstock to accredited investors at a price of $4.34 per share, which representeda 10 percent discount to the last sale price on May 13, 2008; and warrantsto purchase 988,771 additional shares of common stock, at a price of $5.78,which represented a 20 percent premium to the last sale price of the Company’scommon stock on May 13, 2008.  Thesewarrants expire 60 months after issuance and are exercisable immediately.  In addition, ratchet warrants to purchase sharesof common stock at $0.01 per share were issued as part of the privateplacement.  The ratchet warrants aretriggered and become immediately exercisable in the event that the Companyshould issue shares of Common Stock at a price below $4.34 per share.  The number of shares that may be purchasedupon the exercise of the ratchet warrants is determined by a formula thatresults in the effective price paid by the investors in this offering beingequal to the price paid in a subsequent below $4.34 per share offering. Theratchet warrants expire on the earlier of 12 months following issuance, or tendays after the consummation of the sale of shares of the Company’s common stockwhich raises in one or more transactions at least $80 million in grossproceeds.

 

Thesale raised proceeds of approximately $12.9 million net of expenses of theoffering.  The Company has filed a registration statement under theSecurities Act of 1933, as amended, to register the resale of the shares. Such shares are subject to certain resale registration rights that includepenalties (1% per month) in the event registration statement failed to becomeeffective in a timely manner or if the registration statement fails to remaineffective.  On July 18, 2008, such registration statement was madeeffective and as a result the Company met its initial obligation with regard tothis registration requirement.  The placement agent in connection with theoffering received a cash fee equal to 5.5% of the gross proceeds.

 

Thefollowing table details the changes in shareholders equity for the quarterended June 30, 2008:

 
| ** **                       | ** ** | **Common Stock** | ** ** | **Paid-In** | ** ** | **Accumulated** | ** ** | ** **  | ** ** |
|----------------------------------|------------|-----------------------|------------|-------------|------------|-----------------|------------|-------------|------------|
| ** **                       | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **Capital**     | ** ** | **Deficit** | ** ** | **Treasury Stock** | ** ** |
| Balances, December 31, 2007 |       | 52,305,129            |       | $           | 52,343     |            | $          | 131,282,687 |       | $ | (88,448,353 | ) | $ | (9,418 | ) |
| Net loss                         |       | —                |       | —      |       | —          |       | (4,946,795  | )          | — |   |
| Common stock issuance            |       | 3,295,920             |       | 3,296       |       | 12,856,549      |       | —      |       | — |   |
| Stock compensation expense       |       | —                |       | —      |       | 1,550,304       |       | —      |       | — |   |
| Balances, June 30, 2008     |       | 55,601,049            |       | $           | 55,639     |            | $          | 145,689,540 |       | $ | (93,395,148 | ) | $ | (9,418 | ) |

 

**10.**                               **IMPACT OF RECENT ACCOUNTINGPRONOUNCEMENTS**

 

**Impact ofRecent Accounting Pronouncements**

 

***Fair Value Measurements.***    In September 2006,the FASB issued SFAS No. 157, “Fair Value Measurements,” which provides acommon definition for the measurement of fair value for use in applyinggenerally accepted accounting principles in the United States of America and inpreparing financial statement disclosures. SFAS No. 157 is effective forfiscal years beginning after November 15, 2007. We adopted SFAS No. 157,on January 1, 2008, and did not have a material impact on our financialcondition, results of operations or cash flows. On February 8, 2008, theFASB issued Staff Position 157-2, “Effective Date of FASB 157” (FSP 157-2)which partially deferred the provisions of FAS 157 to annual periods beginningafter November 15, 2008 for non-financial assets and liabilities.  Non-financial assets include fair valuemeasurements associated with business acquisitions and impairment testing oftangible and intangible assets.  We arecurrently evaluating the impact that the adoption of SFAS 157 will have on ournon-financial assets and liabilities in our consolidated financial statements.

 

***Fair Value Option for Financial Assets andLiabilities.***    InFebruary 2007, the FASB issued SFAS No. 159, “The Fair Value Optionfor Financial Assets and Financial Liabilities,” which permits entities tochoose to measure many financial instruments and certain other items at fairvalue. SFAS No. 159 is effective for fiscal years beginning after November 15,2007. We have adopted SFAS 159 and we do not plan to implement the fair valueoption provided in SFAS No. 159.

 

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***Business Combinations.***    InDecember 2007, the FASB issued SFAS No. 141R, “Business Combinations,”which changes how business acquisitions are accounted for. SFAS No. 141Rrequires the acquiring entity in a business combination to recognize all (andonly) the assets acquired and liabilities assumed in the transaction andestablishes the acquisition-date fair value as the measurement objective forall assets acquired and liabilities assumed in a business combination. Certainprovisions of this standard will, among other things, impact the determinationof acquisition-date fair value of consideration paid in a business combination(including contingent consideration); exclude transaction costs fromacquisition accounting; and change accounting practices for acquiredcontingencies, acquisition-related restructuring costs, in-process research anddevelopment, indemnification assets, and tax benefits. SFAS No. 141R iseffective for business combinations and adjustments to an acquired entity’sdeferred tax asset and liability balances occurring after December 31,2008.

 

***Noncontrolling Interests in ConsolidatedFinancial Statements.***    In December 2007, the FASB issued SFAS No. 160,“Noncontrolling Interests in Consolidated Financial Statements, an amendment ofARB No. 51,” which establishes new standards governing the accounting forand reporting of noncontrolling interests (NCIs) in partially ownedconsolidated subsidiaries and the loss of control of subsidiaries. Certainprovisions of this standard indicate, among other things, that NCIs (previouslyreferred to as minority interests) be treated as a separate component ofequity, not as a liability; that increases and decrease in the parent’sownership interest that leave control intact be treated as equity transactions,rather than as step acquisitions or dilution gains or losses; and that lossesof a partially owned consolidated subsidiary be allocated to the NCI even whensuch allocation might result in a deficit balance. This standard also requireschanges to certain presentation and disclosure requirements. SFAS No. 160is effective beginning January 1, 2009. The provisions of the standard areto be applied to all NCIs prospectively, except for the presentation anddisclosure requirements, which are to be applied retrospectively to all periodspresented. The Company is currently evaluating the future impacts anddisclosures of this standard.

 

***Derivative Instruments and Hedging Activities.***    In March 2008,the FASB issued SFAS No. 161 “Disclosures about Derivative Instruments andHedging Activities an amendment of FASB Statement No. 133”. The newstandard requires additional disclosures regarding a company’s derivativeinstruments and hedging activities by requiring disclosure of the fair valuesof derivative instruments and their gains and losses in a tabular format. Thestandard is effective for our fiscal year and interim periods within such year,beginning January 1, 2009, with early application encouraged. The impactfrom this standard is not expected to have a material impact on our currentdisclosures.

 

**11.****                              ****EARNINGS PER SHARE**

 

Basicearnings per share includes no dilution and is computed by dividing income orloss attributed to common stockholders by the weighted-average number of commonshares outstanding for the period. Diluted earnings per share reflects thepotential dilution that could occur if stock options were exercised orconverted into common stock.  Potentiallydilutive shares of 6,046,997 and 5,743,035 were excluded from the calculationof earnings per share for the three and six months ended June 30, 2008,respectively, because they were anti-dilutive due to our net loss position forthese periods.

 

**12.****                              ****TERMINATION OF AGREEMENT TOPURCHASE RIO ALGOM MINING LLC**

 

InJune 2008, we decided along with Billiton Investment 15 B.V. to terminate ouragreement to purchase Rio Algom Mining, LLC, which was entered into on October 12,2007.  In connection with the targetedacquisition, we incurred costs of $1.437 million dollars which were originallyrecorded as a pre-acquisition cost asset. Upon the termination of the agreement these pre-acquisition costs wereexpensed in the second quarter of 2008.

 

**13.****                              ****SUBSEQUENT EVENTS**

 

OnJuly 3, 2008, Mr. George R. Ireland resigned as a member of theCompany’s Board of Directors.  TheCompany has not named a replacement for Mr. Ireland since it continues tohave a majority of independent directors. Mr. Ireland was alsoChairman of the Nominating Committee, and a member of the Audit, Compensationand Strategic Planning Committees.  Mr. LelandO. Erdahl, a member of the Company’s Board of Directors was elected to theAudit Committee to replace Mr. Ireland.

 

**14.**                               **COMMITMENTS AND CONTINGENCIES**

 

In June, 2008 a suit for declaratory judgment titled, ***Saenz v. URI Inc.,*** was filed in the105th Judicial District Court, Kleberg County,Texas.  The plaintiffs are the lessorsand URI, Inc. the lessee an In-Situ Uranium Mining Lease dated February 26,1993, covering property in Kleberg County, Texas.  Plaintiffs seek a declaratory judgment thatthe lease is limited to one specific lot only and does not encompass otheradjacent lands, including lands from which we have produced uranium during 2007and 2008.  In addition to a declaratoryjudgment, Plaintiffs seek an award of attorney fees and costs.  URI, Inc. has entered a general denial of theclaims.  We also have a lease with thesame plaintiffs on the other lands from which we have produced uranium.  We believe that lease is valid should it bechallenged.  The Company does not expectthe resolution of this matter to have a material impact on our financialresults.

 

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**ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS**

 

**ForwardLooking Statements**

 

Thefollowing summary is qualified in its entirety by, and should be read inconjunction with, the more detailed information and any financial dataincorporated herein by reference to the Company’s reports filed with theSecurities and Exchange Commission under the Securities Exchange Act of 1934.Except for historical information contained in this report, the mattersdiscussed herein contain forward-looking statements, made pursuant to the “safeharbor” provisions of the Private Securities Litigation Reform Act of 1995,including management’s expectations regarding the Company’s reserves andmineralized uranium materials, timing of receipt of mining permits, productioncapacity of mining operations planned for properties in South Texas and NewMexico and planned dates for commencement of production at such properties.Such forward-looking statements are inherently uncertain, and investors mustrecognize that actual results may differ from management’s expectations. Keyfactors impacting current and future operations of the Company include the priceof uranium, weather conditions, operating conditions at the Company’s miningprojects, government regulation of the mining industry and the nuclear powerindustry, the world-wide supply and demand of uranium, availability of capital,timely receipt of mining and other permits from regulatory agencies and othermatters indicated in “Cautionary Statement,” found in the Company’s AnnualReport.

 

**FinancialCondition and Results of Operations**

 

**Comparisonof Three and Six Months Ended June 30, 2008 and 2007**

 

*Uranium Sales. *In the three months ended June 30, 2008,we sold 99,400 pounds generating revenue of $6.598 million ($66.41 per pound),compared with sales of 114,400 pounds in the same period of 2007 for revenue of$7.963 million ($69.63 per pound).  The decrease in sales revenue was theresult of both the decrease in pounds sold as well as the reduction in salesprices realized as a result of an overall decrease in uranium spot marketprices in 2008 compared with 2007.  Inthe first half of 2008, we sold 180,500 pounds generating revenue of $12.330million ($68.32 per pound), compared with sales of 194,000 pounds in the sameperiod of 2007 for revenue of $12.537 million ($64.62 per pound).  Thedecrease in sales revenue resulted from a decrease in the volume of poundssold, but was offset by a moderate increase in average sales price realized forour year to date 2008 sales.

 

*Production and production costs. *In the first six months of 2008, we produced 196,900pounds.  The Vasquez project produced 24,000 pounds and Kingsville Domeproduced 172,900 pounds.  This compares with production in the first halfof 2007 which was 244,900 pounds of which 64,600 pounds were from Vasquez and 180,300pounds were from Kingsville Dome. 

 

Atour Rosita project we began injecting oxygen into our production wells in lateJune 2008 and to date, the standard ISR production techniques that have beenemployed at Rosita have produced results that are below our initialexpectations.  We have reworked a numberof wells at Rosita to increase the flow rates in the wellfield.  While certain wells at Rosita havedemonstrated an increase in uranium production concentrations, the overallwellfield has shown uranium recoveries that are below projected amounts.  We have redirected our efforts at Rosita andbelieve alternative operational strategies will be needed in order toefficiently produce uranium from this wellfield; we are currently testing suchtechniques in an attempt to increase the production rates.  Production timing and projected quantitiesfrom Rosita is currently uncertain.

 

Dueto delays and production challenges in bringing new wellfields on-line, we donot expect to achieve our previously stated target of 400,000 pounds ofproduction in 2008.  The following tabledetails our production and production cost breakdown for the three and six monthsended June 30, 2008 and 2007.

 
| ** **                        | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|-----------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                        | ** ** | **2008**                                        | ** ** | **2007**                                      | ** ** | **2008** | ** ** | **2007** | ** ** |
| **Vasquez production**            |       | 19,800                                          |       | 20,400                                        |       | 24,000 |   | 64,600 |   |
|                              |       |                                            |       |                                          |       |   |   |   |   |
| **Kingsville Dome production**    |       | 93,700                                          |       | 115,400                                       |       | 172,900 |   | 180,300 |   |
|                              |       |                                            |       |                                          |       |   |   |   |   |
| **Total production**              |       | 113,500                                         |       | 135,800                                       |       | 196,900 |   | 244,900 |   |
|                              |       |                                            |       |                                          |       |   |   |   |   |
| Total operating costs             |       | $                                               | 1,938,000  |                                          | $          | 1,708,000 |   | $ | 3,850,000 |   | $ | 3,297,000 |   |
| Per pound operating costs         |       | $                                               | 17.07      |                                          | $          | 12.58 |   | $ | 19.56 |   | $ | 13.47 |   |
| Total deprec. and depletion costs |       | $                                               | 2,606,000  |                                          | $          | 2,065,000 |   | $ | 4,843,000 |   | $ | 4,232,000 |   |
| Per pound DD&A cost           |       | $                                               | 22.96      |                                          | $          | 15.20 |   | $ | 24.60 |   | $ | 17.28 |   |
| Total production cost             |       | $                                               | 4,544,000  |                                          | $          | 3,773,000 |   | $ | 8,693,000 |   | $ | 7,529,000 |   |
| Production cost per pound         |       | $                                               | 40.03      |                                          | $          | 27.78 |   | $ | 44.16 |   | $ | 30.75 |   |

 

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Total operating costs, total depreciation and depletion costs and totalproduction costs incurred for the periods presented above differ from the costof uranium sales recorded in consolidated statements of operations because ofchanges in the amounts recorded to inventory for the same periods.  Thecost of uranium sales includes the sales of uranium inventory on hand at thebeginning of the period and does not include certain uranium produced duringthe period that was not sold at period end.

 

Reconciliationof production costs to cost of uranium sales:

 
| ** **                                              | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|---------------------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                              | ** ** | **2008**                                        | ** ** | **2007**                                      | ** ** | **2008** | ** ** | **2007** | ** ** |
| Operating costs                                         |       | $                                               | 1,938,000  |                                          | $          | 1,708,000 |   | $ | 3,850,000 |   | $ | 3,297,000 |   |
| Change in uranium inventory                             |       | (127,000                                        | )          | (152,000                                      | )          | 88,000 |   | 46,000 |   |
| Operating expense for uranium production  sold          |       | $                                               | 1,811,000  |                                          | $          | 1,556,000 |   | $ | 3,938,000 |   | $ | 3,343,000 |   |
| Depreciation and depletion costs                        |       | $                                               | 2,606,000  |                                          | $          | 2,065,000 |   | $ | 4,843,000 |   | $ | 4,232,000 |   |
| Change in uranium inventory                             |       | (292,000                                        | )          | (254,000                                      | )          | (598,000 | ) | (934,000 | ) |
| Depreciation and depletion for uranium  production sold |       | $                                               | 2,314,000  |                                          | $          | 1,811,000 |   | $ | 4,245,000 |   | $ | 3,298,000 |   |
| Total production costs                                  |       | $                                               | 4,544,000  |                                          | $          | 3,773,000 |   | $ | 8,693,000 |   | $ | 7,529,000 |   |
| Change in uranium inventory                             |       | (419,000                                        | )          | (406,000                                      | )          | (510,000 | ) | (888,000 | ) |
| Direct cost of uranium production sold                  |       | $                                               | 4,125,000  |                                          | $          | 3,367,000 |   | $ | 8,183,000 |   | $ | 6,641,000 |   |

 

*Cost of Uranium Sales. *The total cost of uranium sales in the firstsix months of 2008 was $10.3 million compared with $8.4 million in the sameperiod of 2007.  Total cost of uranium sales includes royalties andcommissions related to our uranium sales, production costs, including operatingexpenses, depreciation and depletion expenses, amortization of our restorationand reclamation cost estimates, costs related to evaluation of therealizability of our uranium properties and exploration costs.

 

Thefollowing table details the direct cost of uranium sold and royalties andcommissions for the three and six months ended June 30, 2008 and 2007:

 
| ** **                             | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|----------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                             | ** ** | **2008**                                        | ** ** | **2007**                                      | ** ** | **2008** | ** ** | **2007** | ** ** |
| **Total pounds sold**                  |       | 99,400                                          |       | 114,400                                       |       | 180,500 |   | 194,000 |   |
| Total operating expenses               |       | $                                               | 1,811,000  |                                          | $          | 1,556,000 |   | $ | 3,938,000 |   | $ | 3,343,000 |   |
| Per pound operating expense            |       | $                                               | 18.23      |                                          | $          | 13.61 |   | $ | 21.82 |   | $ | 17.23 |   |
| Depreciation and depletion             |       | $                                               | 2,314,000  |                                          | $          | 1,811,000 |   | $ | 4,245,000 |   | $ | 3,298,000 |   |
| Per pound DD&A expense             |       | $                                               | 23.29      |                                          | $          | 15.84 |   | $ | 23.52 |   | $ | 17.00 |   |
| Direct cost of uranium production sold |       | $                                               | 4,125,000  |                                          | $          | 3,367,000 |   | $ | 8,183,000 |   | $ | 6,641,000 |   |
| Direct cost of sales per pound         |       | $                                               | 41.52      |                                          | $          | 29.44 |   | $ | 45.34 |   | $ | 34.23 |   |
|                                   |       |                                            |       |                                          |       |   |   |   |   |
| **Royalties and commissions**          |       | $                                               | 576,000    |                                          | $          | 982,000 |   | $ | 1,137,000 |   | $ | 1,421,000 |   |
| Royalties and commissions per pound    |       | $                                               | 5.80       |                                          | $          | 8.59 |   | $ | 6.30 |   | $ | 7.32 |   |

 

Wesaw an increase in our overall production costs and cost of sales in the secondquarter of 2008 compared with 2007.  Thisyear’s production was sourced from new, less prolific wellfields at KingsvilleDome that required a greater number of operating wells in comparison with ourproduction in 2007.  Our cost of salesfor the 2008 second quarter also included pre-production costs at Vasquez andRosita of approximately $111,000 ($1.11 per pound) associated with pre-operatingactivities and depreciation at these projects in advance of the start-up of newwellfields at each location.  

 

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Ouraverage cost of pounds sold in the first half of 2008 was $45.34 per pound withKingsville Dome production contributing approximately 89% of total pounds soldduring the quarter and Vasquez pounds totaling approximately 11%.  The higher costs in the first half of 2008compared with the same period in 2007 were for reasons similar to the increasesin the quarter.  

 

Asa result of higher costs being realized from less prolific wellfields, we haveimplemented an aggressive cost reduction plan and expect that overall operatingcosts in the second half of 2008 will be less than those incurred in the firsthalf.

 

*Royalties and Commissions.*    During the first sixmonths of 2008, royalties and commissions for Vasquez and Kingsville Domeproduction sold totaled $1.1 million, representing 9.2% of sales. During thesame period of 2007, royalties and commissions for Vasquez and Kingsville Domeproduction sold were $1.4 million, or 11.3% of sales.

 

*Operating Expenses.*    During the first six months of 2008, operatingexpenses for Vasquez and Kingsville Dome production sold was $3.9 million.This includes approximately $536,000 of pre-production costs related to ourVasquez and Rosita projects.  During thefirst half of 2007, operating expenses for Vasquez and Kingsville Domeproduction sold was $3.3 million which includes pre-production costs atthe Rosita project of $51,000.   Aspreviously mentioned, we have implemented a cost reduction plan that we expectwill result in lower overall operating costs in the second half of 2008.

 

*Depreciation and Depletion.*    During the first sixmonths of 2008, we incurred depreciation and depletion expense attributable toour Vasquez and Kingsville Dome production of $4.2 million. During thesame period in 2007, we incurred depreciation and depletion expenseattributable to our Vasquez and Kingsville Dome production of$3.3 million.

 

*Accretion and Amortization of Future Restoration Costs.*    Accretion andamortization of future restoration costs in the first half of 2008 and 2007 was$384,000 and $307,000, respectively.

 

*Impairment of Uranium Properties.*    During the first halfof 2008, we determined the carrying value of the Vasquez project assetsexceeded their fair value as provided in SFAS 144 “Accounting for the Impairmentor Disposal of Long-Lived Assets”. Such determination resulted in an impairmentprovision related to the Vasquez project assets of approximately $296,000.

 

*General and Administrative Charges.*  We incurred general and administrativecharges and corporate depreciation of $4.5 million and $2.5 million,respectively in the three months ended June 30, 2008 and 2007 and $7.2million and $4.7 million, respectively in the six months ended June 30,2008 and 2007.

 

Significantexpenditures for general and administrative expenses for the three and sixmonths ended June 30, 2008 and 2007 were:

 
| ** **                                 | ** ** | **Three Months Ended  June 30,** | ** ** | **Six Months Ended  June 30,** | ** ** |
|--------------------------------------------|------------|-------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                 | ** ** | **2008**                                        | ** ** | **2007**                                      | ** ** | **2008** | ** ** | **2007** | ** ** |
| Stock compensation expense                 |       | $                                               | 896,000    |                                          | $          | 782,000 |   | $ | 1,550,000 |   | $ | 1,556,000 |   |
| Salaries and payroll burden                |       | 821,000                                         |       | 573,000                                       |       | 1,661,000 |   | 1,122,000 |   |
| Legal, accounting, public company expenses |       | 484,000                                         |       | 485,000                                       |       | 767,000 |   | 837,000 |   |
| Insurance and bank fees                    |       | 145,000                                         |       | 159,000                                       |       | 288,000 |   | 271,000 |   |
| Consulting and professional services       |       | 439,000                                         |       | 276,000                                       |       | 940,000 |   | 525,000 |   |
| Office, travel and other expenses          |       | 303,000                                         |       | 204,000                                       |       | 584,000 |   | 380,000 |   |
|                                       |       |                                            |       |                                          |       |   |   |   |   |
| Total                                      |       | $                                               | 3,088,000  |                                          | $          | 2,479,000 |   | $ | 5,790,000 |   | $ | 4,691,000 |   |

 

Thenon-cash compensation expense recorded for the quarter and six months ended June 30,2008 and 2007 was from the recognition of expense related to the Company’sstock option and restricted stock grants.

 

Salaryand payroll costs increases for the six months presented resulted primarilyfrom additional salaried positions in South Texas and New Mexico in the firsthalf of 2008 compared with the same period in 2007.

 

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Thereduction in the Company’s legal, accounting and public company expenses in thefirst half of 2008 compared with 2007 resulted primarily from lower audit andconsulting fees related to Sarbanes-Oxley compliance for ongoing evaluationactivities incurred in 2008 compared to certain early 2007 costs for initialyear compliance implementation.

 

Insurancecosts increased slightly the first half of 2008 compared with 2007 from higherpremiums and increased coverage under our insurance policies for increases inpersonnel and vehicle additions when compared to the previous year.

 

Thecosts for consulting and professional services increased in the three and sixmonths ended June 30, 2008 compared with 2007 and resulted from workperformed in the review and assessment of our New Mexico property data bases toevaluate their potential as conventional mining projects and other costsrelated to community outreach and information campaigns designed to enhancepublic awareness of our planned New Mexico operations.  We also incurred increased costs forenvironmental, health and safety training, investor relations and mediarelations activities and for human resources and computer networkingconsultants.

 

Increasedoffice, travel and other expenses incurred in the three and six months ended June 30,2008 compared to 2007 resulted primarily from the opening of a corporate officelocation in Albuquerque, New Mexico in October 2007, the move of thecorporate headquarters to larger office space in September 2007 andincreases in the South Texas Kingsville Dome operations office resulting frompersonnel additions.

 

Wehave implemented an aggressive cost reduction plan in order to lower ouroverhead cost structure.  Cost reductionsincluded consolidation of our South Texas operations into Kingsville Domeresulting in the closure of our Corpus Christi office, reducing personnel,reducing legal fees and consulting and professional services and institutingtighter cost discipline throughout the organization.

 

*Write-off of Target Acquisition Costs. * InJune 2008, we decided along with Billiton Investment 15 B.V. to terminate ouragreement to purchase Rio Algom Mining, LLC, which was entered into on October 12,2007.  In connection with the targetedacquisition, we incurred costs of $1.437 million dollars which were originallyrecorded as a pre-acquisition cost asset. Upon the termination of the agreement these pre-acquisition costs wereexpensed in the second quarter of 2008.

 

*Net Losses.*For the three months ended June 30, 2008 we had a net loss of $3.1million compared to net income in 2007 of $1.2 million.  For first half of 2008 and 2007 we had netlosses of $4.9 million and $237,000, respectively.

 

*Cash Flow. *At of June 30, 2008 we had a cash balance of approximately $16.0million compared with $16.5 million at the same date in 2007.

 

Inthe first half of 2008, we had net cash flow provided by operations of $2.9million. We used $8.9 million in investing activities during the first sixmonths of 2008.  We increased the collateral supporting our South Texasfinancial surety requirements by $414,000 and also made significant additionsto our South Texas and New Mexico property, plant and equipment of $8.5 millionduring the period.  These expenditures were primarily for wellfield development,evaluation drilling and plant and dryer upgrades at Kingsville Dome of $3.2million and wellfield development, evaluation drilling and plant and dryerupgrades at Rosita of $3.8 million, additional wellfield development at Vasquezof $167,000, New Mexico property additions of $350,000 and other Texas propertyand other assets of $849,000.

 

Inthe first six months of 2007, we had positive cash flow provided by operationsof $4.7 million, resulting primarily from the higher volume of uranium sold andthe increase in sales prices received under our uranium sales contracts thatwere amended in March 2006.  We used $9.0 million in investingactivities during the first half of 2007.  These expenditures wereprimarily for wellfield development, evaluation drilling capital and plant anddryer upgrades at Kingsville Dome of $3.8 million, plant and equipmentexpenditures for restoration start-up at Vasquez of $411,000, Rosita and RositaSouth project expenditures for wellfield development, evaluation drilling capitaland plant and dryer upgrades of $3.0 million, other Texas property and otherassets of $839,000 and property additions in New Mexico of $467,000 primarilyfor license and permitting activities.

 

**Liquidity—CashSources and Uses for 2008**

 

AsofJune30,2008,theCompanyhad$16.0millionincash.AsignificantportionofthecashwehadatJune30,2008wasfromtheprivateplacementinMay2008whichraisedapproximately$12.9millioninnetproceeds.  Thisequityraisewascompletedinordertofundcostsfortheacquisition,exploration,permittinganddevelopmentofnewandexistingpropertiesinSouthTexastoincreaseourresourcebaseandallowfortheextensionofproductionatourTexasoperationsbeyond2009atapproximately400,000poundsperyear.  WearecurrentlyengagedinevaluationanddiscussionsfortherightstocertainpropertiesinSouthTexaswithknownquantitiesofuraniumandareconductingexplorationdrillingonpropertyacquiredin2007asapartofourplantocontinueproductionbeyond2009. Thereisnoassurancethatwewillbesuccessfulintheacquisitionofthepropertieswehavetargeted,orifacquired,thatthepropertieswillcontaincommerciallyviableuraniumdeposits. 

 

Capitalexpenditures for the second half of 2008 are expected to be in the range of$4.0 to $5.0 million, down from $8.9 million in the first half.  Investments will include wellfielddevelopment activities, exploration and potential land acquisitions.

 

Asa result of the Company’s aggressive cost reduction activities, changes inwellfield development plans and reduced capital spending, management believesthat the cash balance of $16.0 million at June 30, 2008 and the cashexpected to be provided through operations in 2008 and 2009 will be sufficientto maintain its liquidity through 2009 and beyond.  The cash generated from operations for theremainder of 2008 will be dependent on meeting our production targets bybringing on and efficiently producing new 

 

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wellfields at the KingsvilleDome, Vasquez and Rosita projects as well as the continuation of strong uraniummarket prices to allow the maintenance of, or increases to the price we receivefor the uranium we deliver under our long-term contracts.

 

**ContingentLiabilities—Off Balance Sheet Arrangements**

 

TheCompany has obtained financial surety relating to certain of its futurerestoration and reclamation obligations as required by the State of Texasregulatory agencies. The Company has bank Letters of Credit (the “L/C’s) andperformance bonds issued for the benefit of the Company to satisfy suchregulatory requirements. The L/C’s were issued by Bank of America and theperformance bonds have been issued by United States Fidelity and GuarantyCompany (“USF&G”). L/C’s for $6.1 million and $5.4 million were issued at June 30,2008 and December 31, 2007, respectively, such L/C’s are collateralized intheir entirety by certificates of deposit.

 

Performancebonds totaling $2.8 million were issued for the benefit of the Company at June 30,2008 and December 31, 2007. USF&G has required that the Companydeposit funds collateralizing a portion of the bonds. The amount of bondingissued by USF&G exceeded the amount of collateral by $2.5 million at June 30,2008 and December 31, 2007, respectively. In the event that USF&G isrequired to perform under its bonds or the bonds are called by the stateagencies, the Company would be obligated to pay any expenditure in excess ofthe collateral.

 

**CriticalAccounting Policies**

 

Oursignificant accounting policies are described in Note 2 to the consolidatedfinancial statements included in the Company’s 2007 Annual Report on Form 10-K/A. We believe our most critical accounting policies involve those requiring theuse of significant estimates and assumptions in determining values orprojecting future costs.

 

Specificallyregarding our uranium properties, significant estimates were utilized indetermining the carrying value of these assets. These assets have been recordedat their estimated net realizable value for impairment purposes on aliquidation basis, which is less than our cost. The actual value realized fromthese assets may vary significantly from these estimates based upon marketconditions, financing availability and other factors.

 

Regardingour reserve for future restoration and reclamation costs, significant estimateswere utilized in determining the future costs to complete the groundwaterrestoration and surface reclamation at our mine sites.  The actual cost toconduct these activities may vary significantly from these estimates.

 

Suchestimates and assumptions affect the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of thefinancial statements and the reported amounts of expenses during the reportingperiod.

 

**ITEM 3.****                                                    ****QUANTITATIVE AND QUALITATIVEDISCLOSURES ABOUT MARKET RISK**

 

**UraniumPrice Volatility**

 

TheCompany is subject to market risk related to the market price of uranium. TheCompany’s cash flow has historically been dependent on the price of uranium,which is determined primarily by global supply and demand, relative to theCompany’s costs of production. Historically, uranium prices have been subjectto fluctuation, and the price of uranium has been and will continue to beaffected by numerous factors beyond the Company’s control, including the demandfor nuclear power, political and economic conditions, and governmentallegislation in uranium producing and consuming countries and production levelsand costs of production of other producing companies.

 

Thespot 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$138.00 per pound in June 2007 and were $64.00-$65.00 per pound as of August 9,2008.

 

**ITEM 4.****                                                    ****CONTROLS AND PROCEDURES**

 

Duringthe year ended December 31, 2007 and the six months ended June 30,2008, the Company’s management, with the participation of the Chief ExecutiveOfficer and Chief Financial Officer of the Company, carried out an evaluationof the effectiveness of the design and operation of the Company’s disclosurecontrols and procedures (as defined in Rules 13a-15(e) and 15d-15(e) ofthe Securities Exchange Act of 1934, as amended (the “Exchange Act”)).

 

Basedon that evaluation, our Chief Executive Officer and Chief Financial Officerconcluded that our disclosure controls and procedures as of December 31,2007 and June 30, 2008 were effective.

 

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**Management’sReport on Internal Control over Financial Reporting**

 

TheCompany’s management assessed the effectiveness of the Company’s internalcontrol over financial reporting as of December 31, 2007.  In making this assessment, the Company’smanagement used the criteria set forth by the Committee of Sponsoring Organizationsof the Treadway Commission (COSO) in *InternalControl-Integrated Framework*.

 

Underthe supervision and with the participation of our management, including ourChief Executive Officer and Chief Financial Officer, we conducted an evaluationof the effectiveness of our internal control over financial reporting inconnection with preparation of the annual report on Form 10-K/A for theyear ended December 31, 2007. As a result of these assessments managementconcluded that our internal controls over financial reporting were effective asof December 31, 2007.

 

**Changes inInternal Controls**

 

Duringthe first half of 2008 no material changes have been made in our internalcontrol over financial reporting that may have materially affected, or arereasonably likely to materially affect, our internal control over financialreporting.

 

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**PART II - OTHER INFORMATION**

 

**ITEM 1.****                            ****LEGAL PROCEEDINGS**

 

InJune, 2008 a suit for declaratory judgment titled, ***Saenzv. URI Inc.,*** was filed in the 105th Judicial DistrictCourt, Kleberg County, Texas.  Theplaintiffs are the lessors and URI, Inc. the lessee an In-Situ UraniumMining Lease dated February 26, 1993, covering property in Kleberg County,Texas.  Plaintiffs seek a declaratoryjudgment that the lease is limited to one specific lot only and does notencompass other adjacent lands, including lands from which we have produceduranium during 2007 and 2008.  Inaddition to a declaratory judgment, Plaintiffs seek an award of attorney feesand costs.  URI, Inc. has entered ageneral denial of the claims.  We alsohave a lease with the same plaintiffs on the other lands from which we haveproduced uranium.  We believe that leaseis valid should it also be challenged. The Company does not expect theresolution of this matter to have a material impact on our financialstatements.

 

**ITEM 1A.****                   ****RISK FACTORS**

 

**Over 51.7%of our shares of Common Stock are controlled by Principal Stockholders andManagement.**

 

Approximately40.9% of our Common Stock is controlled by four stockholders of record. Inaddition, our directors and officers are the beneficial owners of about 10.8%of our Common Stock. This includes with respect to both groups shares that maybe purchased upon the exercise of outstanding options. Such ownership by the Company’sprincipal shareholders, executive officers and directors may have the effect ofdelaying, deferring, preventing or facilitating a sale of the Company or abusiness combination with a third party.

 

Theavailability for sale of a large amount of shares may depress the market pricefor our Common Stock.

 

**ITEM 2.****                            ****UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS**

 

Previouslyreported on Form 8-K dated May 19, 2008.

 

**ITEM 3.****                            ****DEFAULTS UPON SENIORSECURITIES.**

 

None

 

**ITEM 4.****                            ****SUBMISSION OF MATTERS TO AVOTE OF SECURITY HOLDERS.**

 

Atthe Company’s Annual Meeting of shareholders, held June 4, 2008, TheCompany’s shareholders re-elected its directors and also voted to approve therecommended proposal for ratification of the Company’s independent auditors.

 

Followingare the votes cast for and against each director.

 
| **Directors**     | ** ** | **For**    | ** ** | **Against** | ** ** |
|-------------------|------------|------------|------------|-------------|------------|
| Paul K Willmott   |       | 39,671,762 |       | 827,120     |       |
| Leland O. Erdahl  |       | 39,674,942 |       | 823,940     |       |
| George R. Ireland |       | 38,763,382 |       | 1,735,500   |       |
| David N. Clark    |       | 39,675,942 |       | 822,940     |       |
| Terence J. Cryan  |       | 39,685,076 |       | 813,806     |       |
| Marvin K. Kaiser  |       | 39,680,020 |       | 818,862     |       |

 

Voteson the proposal for ratification of the Company’s independent auditors asfollows:

 
| ** **                                                            | ** ** | **For**     | ** ** | **Against** | ** ** | **Abstentions** | ** ** |
|-----------------------------------------------------------------------|------------|-------------|------------|-------------|------------|-----------------|------------|
| Proposal for ratification of the Company’s  independent auditors |       | 40,3305,543 |       | 81,202      |       | 112,137         |       |

 

**ITEM 5.****                            ****OTHER INFORMATION.**

 

None

 

**ITEM 6.****                            ****EXHIBITS**

 

Seethe Index to Exhibits on Page E-1 for a listing of the exhibits that arefiled as part of this Quarterly Report.

 

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**SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the Registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 
|                                   | **URANIUM  RESOURCES, INC.** |
|-----------------------------------|------------------------------|
|                              |                         |   |
| Dated: August 11,  2008      | By:                          | /*s*/ David N. Clark |
|                              |                         | David N. Clark |
|                              |                         | Director and |
|                              |                         | Chief Executive Officer |
|                              |                         |   |
| Dated: August 11,  2008 | By:                          | /*s*/ Thomas H. Ehrlich |
|                              |                         | Thomas H. Ehrlich |
|                              |                         | Vice President - Finance  and |
|                              |                         | Chief Financial Officer |
|                              |                         | (Principal Financial  and Accounting Officer) |

 

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**EXHIBIT INDEX**

 
| **Exhibit  Number** | ** ** | **Description**                                                                                                                                                                                                                                                                                        |
|---------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1*                |       | 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).                                                                                                                |
|                |       |                                                                                                                                                                                                                                                                                                   |
| 3.2*                |       | Restated Bylaws of the  Company (filed with the Company’s Form 8-K on April 14, 2005).                                                                                                                                                                                                  |
|                |       |                                                                                                                                                                                                                                                                                                   |
| 10.1*               |       | Amended and Restated  Directors’ Stock Option Plan (filed with the Company’s Form S-8  Registration No. 333- 00349 on January 22, 1996).                                                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                                   |
| 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).                                                                                                                                                |
|                |       |                                                                                                                                                                                                                                                                                                   |
| 10.5*               |       | Non-Qualified Stock Option  Agreement dated June 19, 2001 between the Company and George R. Ireland  (filed with the Company’s 10-QSB dated August 13, 2001, SEC File Number  000-17171).                                                                                               |
|                |       |                                                                                                                                                                                                                                                                                                   |
| 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 10KSB 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 10KSB 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).                                                                                                      |
|                |       |                                                                                                                                                                                                                                                                                                   |
| 10.24*              |       | 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). |

 

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| 10.28* |   | Amended and Restated  Uranium Supply Contract with Itochu Corporation dated June 7, 2005  (filed with the Company’s Pre-Effective Amendment No. 2 to Registration  Statement on form SB-2 dated September 20, 2005, SEC File Number  333-125106). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                  |
| 10.33* |   | Uranium Supply Contract  with Itochu Corporation dated June 15, 2005 (filed with the Company’s  Pre-Effective Amendment No. 2 to Registration Statement on Form SB-2  dated September 20, 2005, SEC File Number 333-125106).                 |
|   |   |                                                                                                                                                                                                                                                                  |
| 10.34* |   | Stock Purchase Agreement  by and between Uranium Resources, Inc. and accredited investors (filed  with the Company’s Form 8-K dated August 12, 2005, SEC File No. 000-17171).                                                                |
|   |   |                                                                                                                                                                                                                                                                  |
| 10.35* |   | Uranium Resources, Inc.  2004 Stock Incentive Plan (filed with the Company’s Quarterly Report on Form 10QSB/A  dated November 18, 2005, SEC File No. 000-17171).                                                                             |
|   |   |                                                                                                                                                                                                                                                                  |
| 10.36* |   | Feasibility Study Funding  Agreement between Itochu Corporation, Uranium Resources, Inc. and Hydro  Resources, Inc. effective March 29, 2006. (filed with the Company’s  Form 10KSB dated March 31, 2006, SEC file Number 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 10KSB 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 10KSB dated March 31,  2006, SEC file Number 000-17171).                      |
|   |   |                                                                                                                                                                                                                                                                  |
| 10.39* |   | Stock Purchase Agreement  dated as of April 19, 2006, by and between Uranium Resources, Inc.  and accredited investors (filed with the Company’s Current Report on Form 8-K  dated April 19, 2006, SEC File No. 000-17171).             |
|   |   |                                                                                                                                                                                                                                                                  |
| 10.40* |   | Limited Liability Company  Agreement of Churchrock Venture LLC (filed with the Company’s Current Report  on Form 8-K dated December 5, 2006, SEC File No. 000-17171).                                                                             |
|   |   |                                                                                                                                                                                                                                                                  |
| 10.41* |   | Compensation Agreement  dated March 12, 2007 between the Company and Craig S. Bartels (filed  with the Company’s Form 8-K dated March 13, 2007, SEC File No. 000-17171).                                                                     |
|   |   |                                                                                                                                                                                                                                                                  |
| 10.42* |   | Compensation Agreement  dated March 12, 2007 between the Company and David N. Clark (filed with  the Company’s Form 8-K dated March 13, 2007, SEC File No. 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).      |
|   |   |                                                                                                                                                                                                                                                                  |
| 10.44* |   | Uranium Resources, Inc.  2007 Restricted Stock Plan (filed with the Company’s Form 10-Q dated May 10,  2007, SEC File No. 000-17171).                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                  |
| 14*    |   | Uranium Resources, Inc.  Code of Ethics for Senior Executives. Filed with the Company’s Annual Report  on  Form 10-KSB dated March 30, 2004, SEC File Number 000-17171).                                                                          |
|   |   |                                                                                                                                                                                                                                                                  |
| 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.                                                                                                                                                            |
|   |   |                                                                                                                                                                                                                                                                  |
| 32.1   |   | 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.                                                                                                                                                            |

 

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

 

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