URI axes deal to buy Rio Algom

By Helen Davis
Cibola County Bureau

GRANTS — Uranium Resources, Inc. announced Thursday that the company has decided to terminate the nonbinding agreement to purchase Rio Algom Mining made last October.

Richard Van Horn, executive vice president and chief operating officer of URI said the decision was made in the past few days and is not in anyway related to regulatory issues. The company’s decision was motivated by market and equity conditions, he said.

Uranium Resources Inc. agreed last Oct. 12 to buy Rio Algom Mining LLC, based in Oklahoma City, from Australian mining company BHP Billiton Ltd.

At the time URI entered into the agreement, the price of uranium was $120 per pound of yellow cake but today the price is closer to $57 per pound. URI has incurred $1.2 million in costs associated with the transaction.
In a news release, David N. Clark, president and CEO of URI, said, “We believe this is the best decision for the Company and our shareholders given current market conditions that have prevented us from securing the $180 million needed to finance the acquisition.”

The 2007 deal to purchase the Ambrosia Lake site would have provided URI a uranium mill, water rights and 14,000 of land and mineral interests. The site sits on the Grants mineral belt, containing world-class uranium ore, Van Horn said.

Because Rio Algom has a “brown field,” or already mined site, URI would have been able to get the mine and mill up and running in approximately five years by taking advantage of permits already in place. A “green field,” or a new mine started on land never before mined, can take up to 10 years from inception to actual production because of the permitting and review processes involved.

Star Gonzales, director of the Cibola Communities Economic Development Foundation, said, “We are disappointed in the announcement.” She added that the loss of the sale has set back the time frame of redeveloping uranium mining in the area. “We support all extractive industries.”

Van Horn said URI won the right to purchase Rio Algom in a bidding process. The company can bid again for the property in the future, but will lose the option to buy outright. He added that the company has other options in uranium-rich New Mexico.

Clark expanded in the news release, saying, “For now, we will concentrate our efforts on rebuilding our low cost production potential in Texas while continuing to develop our resources in New Mexico where we have over 101 million pounds of in-place uranium mineralized material.”

URI is developing mines, where feasible, using in situ recovery techniques. Clark said an ISR project provides new jobs to an area and contributes to economic development using a proven, environmentally safe technology. He added that now the company will continue community outreach and education programs to overcome misperceptions about the industry.

No one in authority at Rio Algom could be reached for comment. All inquiries are being directed to URI, a receptionist said.