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Final Results and Notice of AGM
Uranium Resources plc, the AIM-listed uranium exploration and development company, has announced its results for the year ended 30 June 2014 and gives notice of its Annual General Meeting – to be held at the offices of SGH Martineau LLP, 5th Floor, One America Square, Crosswall, London EC3N 2SG on 19 December 2014 at 11:00AM.
The Company also confirms that its annual report and financial statements for the year ended 30 June 2014 will be posted to shareholders on 25 November 2014, together with the Notice of AGM and will be available on the Company’s website at the same time.
Overview:
· Exploration company focused on the Mtonya uranium project in the United Republic of Tanzania
· Mtonya deposit hosts roll-front uranium mineralisation and is expected to be amenable to in-situ recovery, the most cost-effective and environmentally acceptable method of uranium extraction
· Continued to evaluate exploration/development strategy, including corporate transactions, in order to advance and develop the value of Mtonya
· Entered into a loan agreement with Estes Limited for US$300,000 bridge funding to explore opportunities to finance an expansion drilling campaign
· Refining extensive in-fill and step-out drilling programme to test the deeper redox tiers and extend the known uranium mineralisation along strike – planned programme will include both diamond and reverse-circulation drilling and pump and metallurgical testwork on the Mtonya sandstone
· Continue to identify and assess new resource opportunities which complement our investment criteria.
MANAGING DIRECTOR’S STATEMENT (Complete and unedited):
The Company is an explorer with its principal focus on the Mtonya project in the United Republic of Tanzania. The Mtonya deposit hosts roll-front uranium mineralisation and is expected to be amenable to in-situ recovery (‘ISR’), the most cost-effective and environmentally acceptable method of uranium extraction.
In May 2013, the Company announced a maiden uranium resource for its flagship Mtonya project. The Project achieved its major milestone in one of the most challenging times for the uranium industry as uncertainty continues to enwrap some of the developed nations’ nuclear power industry. The Board continues to be enthusiastic about the potential of Mtonya because of the strong nuclear fuel market fundamentals, continued growth in Asian power generation, and finite supplies of secondary uranium and economically viable resources.
In the reporting period, the Company continued to evaluate its exploration/development strategy, including corporate transactions in order to advance and develop the value of Mtonya.
Along with the evaluation process on how best to build shareholder value at Mtonya, the Board has implemented a review of its overall tenement strategy in Tanzania and has accordingly relinquished its licences in the Ruhuhu Basin. These were located some 150 km from Mtonya and were not central to the Company’s future growth potential.
Further to developing a maiden resource at Mtonya, the Company entered into a loan agreement with Estes Limited, its cornerstone investor and strong supporter of the project. This agreement provides the Company with a US$300 thousand bridge funding as we explore the opportunities to finance an expansion drilling campaign. The previous US$1 million loan from Estes, which was payable on 15 September 2014, has been extended until July 2015.
In line with our strategy to build a leading uranium exploration and development company focussed on projects which are amendable to in-situ recovery, we continue to identify and assess new resource opportunities which complement our investment criteria.
Mtonya:
The Company’s 100%-owned flagship Mtonya project is located approximately 60km south of the world-class Mkuju River deposit, which is owned by ARMZ and operated by Uranium One, and has an indicated and measured resource of 93.3 Mlb U3O8 grading 257 ppm U308.
The Company’s exploration model is based on the well-substantiated premise that the neighbouring Mkuju River project is a small segment of a regional mineralised roll-front feature, most of which has no surface exposure.
We believe Mkuju River is part of a regional roll-front that was uplifted along a regional normal fault and eroded, forming narrow, thin, and disconnected pods and lenses of uranium ore that are dominated by secondary uranium minerals such as metaautunite and metauranocircite. The near-surface uranium mineralisation at Mtonya remains a valid exploration target, but its significance is viewed as less of a priority in comparison to the deep mineralisation that may yield a substantially larger world-class deposit, which is amenable to ISR.
The completion of the 26,485m resource-definition drilling programme in 2012 allowed the Company to delineate a maiden CIM-compliant Inferred Resource of 2.014 Mlb U3O8 grading 255 ppm U3O8. On a 250x50m grid the resource drilling remains fairly coarse and significant upside potential remains untested along strike of the roll-front feature and at depth. Volumetrically, only 1/6 of prospective lithologies have been systematically drilled at Mtonya.
The Company has been refining its extensive in-fill and step-out drilling programme for Mtonya to test the deeper redox tiers and extend the known uranium mineralisation along strike. The size of the drilling programme to be undertaken will be announced in due course. The planned programme includes both diamond and reverse-circulation (RC) drilling and pump and metallurgical testwork on the Mtonya sandstone.
The Board has decided to delay drilling at Mtonya until the uranium market fundamentals sufficiently improve and the true potential of the project can be recognised by the wider market.
Lukimwa:
The Lukimwa prospect is located approximately 28km southwest of Mtonya. This prospect forms a part of the 36-kilometre long Mtonya redox corridor and is thought to be the southwestern extension of the Mtonya roll-front. The exploration programme for Mtonya includes a limited number of prospecting drillholes at Lukimwa.
Other regional licenced areas:
The Company is establishing itself as a uranium-focused exploration company and we view Mtonya as our priority project. We are also confident that new exploration opportunities will be generated on our other licensed areas.
Financial Results:
Uranium Resources is at the exploration stage of its development. It is not producing revenue and as such I am reporting a pre-tax loss of $387,000 for the year ended 30 June 2014 (2013: loss $1,074,000) including an impairment charge of $18,000 (2013: $327,000).
During the latter part of the financial year the Company implemented a strategy to conserve its cash by reducing the Group’s overhead, whilst part of the effect of this reduction can be seen in the 2013 results, the majority of the benefit will be reported in 2014.
Funding and going concern:
In March 2013 and in March 2014 the company announced that it had entered into a US$1 million and US$300 thousand loan facility agreements (‘the Loans’) with its major shareholder and strategic investor Estes Limited (‘Estes’). The Loans, which are unsecured, available for a period of 18 months and bears interest at LIBOR, will be used to fund working capital requirements.
At 30 June 2014 the Company had drawn down $1,095,000 (excluding interest) against these facilities. Estes continues to show its support in providing this flexible funding option to the Company. The Group plans to continue its work programme in the next twelve months and beyond as it develops and evaluates its Uranium project pipeline. The undrawn funds available from the loan facility, in conjunction with the Group’s current cash resources, do not provide the Group with sufficient available resources to meet all of its commitments for the next twelve months; the Group will therefore need to raise additional funds.
The Directors remain confident that Mtonya’s potential, together with the Group’s historic track record of raising additional funds and the interest being shown from potential partners, will enable the Group to fully finance its obligations beyond a period of at least twelve months from the date of this report, including meeting future capital and working capital requirements and also settling the Estes loan facilities, which are due for repayment in full on or before 1 July 2015 and 17 September 2015 accordingly.
Outlook:
The Company’s ability to fund further exploration has been affected by adverse uranium market conditions. In order to finance the 2015 programme, the Company is reviewing a number of strategic alternatives including, but not limited to, joint ventures, strategic partnerships, and mergers or other corporate transactions to enhance shareholder value.
Major shareholder Estes continues to be supportive of the Company and, at this stage, has indicated it intends to invest alongside a suitable strategic investor. The Company will provide further updates in due course.
The Company has made great progress with its Mtonya project – advancing it from a grassroots exploration opportunity to a resource stage. This was made possible by applying solid geoscience and by the professionalism of our personnel. The Board believes that these factors will continue to play a crucial role in unlocking Mtonya’s potential and return value to our shareholders.
