Peter Homans - Parkman David Snow - Energy Equities Jimmy Gilbert - Rice Voelker

Welcome to the Uranium Resources, Inc. second quarter 2008 earnings conference call. (Operator Instructions). It is now my pleasure to introduce your host Deborah Pawlowski, Investor Relations for Uranium Resources.

We certainly appreciate your time today and your interest in Uranium Resources. On today’s call we have President and CEO, Dave Clark; Rick Van Horn, Executive Vice President and Chief Operating Officer; Tom Ehrlich, Chief Financial Officer. Dave is going to cover some comments regarding the release, Tom will do a brief review of the financials and then we will open it up it for Q-and-A. If you don’t have the release, it can be found at our website uraniumresources.com As you are aware, we may make some forward-looking statements during the formal presentation and the Q-and-A portion of this teleconference. Those statements apply to future events which are subject to risks and uncertainties as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in the release as well as in documents filed by the company with the Securities and Exchange Commission. You can find those at our website where we regularly post information and at the SEC’s website, sec.gov. So please review our forward-looking statements in conjunction with these precautionary factors. With that, let me turn it over to Dave to begin the discussion.

I hope everybody’s got a chance to read the release. My intention here is really to add color and put this all in perspective for you. It’s been a challenging three months, to say the least. We started the quarter at $13,000, went down $11,000. Uranium’s spot prices made a round trip, started at $65, went down to $57 and rebounded to $64.50 lately. The long-term prices dropped from $90 to $80. So it has been a poor investing environment to begin with and not an easy time for UR either. On May 14, we announced that we raised $14 million in pipe transactions, which was for Texas, to increase our exploration and reserve acquisition program there. I think it’s put us in a solid position to rebuild our Texas operations, though it certainly wasn’t a popular move at that time. On June 9, we announced that Rosita was having startup problems and then on June 26, we announced the termination of the agreement to acquire Rio Algom. These last two are not entirely unrelated. As the declining markets made the Rio Algom acquisition increasingly more difficult, it took a lot of time and energy to continue that effort and that took away from our focus on Texas operations, including Rosita. The equity markets remain volatile; investors are skittish. The uranium market, as far as I see it has found a bottom for now. Despite its long-term fundamentals, we are still in that period of seasonal weakness. You can see additional weakness from our URI planning purpose, which is my only interest at this point. We project forward that we will remain at current prices or possibly lower. We are not going to make a decision to move forward on a prayer that the uranium prices are going to recover…

I’m going to be highlighting our production revenue and cost information for the second quarter of ‘08. Beginning with production, we produced just over 113,500 pounds in the second quarter. The majority of which or 94,000 pounds were from our Kingsville Dome project, with the remaining production being sourced from Vasquez. Our production costs for the quarter were around $40 a pound. Operating costs made up about $17 a pound of that cost and our depreciation and depletion contributed just under $23 a pound. At the end of the quarter we had 37,200 pounds of inventory at an average per pound cost of $33.81. Moving on to sales our revenues for the second quarter were at $6.6 million or 99,400 pounds being sold. We realized an average sales price of $66.41 a pound. So far this quarter we’ve made one sale of just over 33,200 pounds and the average price on that is just under $62. Looking at the cost of uranium sales for the second quarter, our direct costs of uranium sold during Q2 ’08; this costs were comprised of operating expenses and depreciation and depletion, totaling just under $42 a pound, $18.23 of which were operating and $23.29 a pound were depreciation and depletion. Our royalties and commissions expense for the quarter were $576,000 or $5.80 a pound, making up about or comprising approximately 8.7% of sales. Moving down to our corporate expenses, we had total corporate expenses including our general and administrative costs in the second quarter totaling almost $4.6 million. The major categories for these expenditures in the quarter were the write-off of costs associated with our proposed Rio Algom acquisition; we wrote those costs up which were $1.437 million. Our non-cash stock compensation expense for the quarter was $896,000. Other major categories were personnel of $821,000, consulting and professional services were $439,000; legal, accounting and other public company expenses of $484,000. Moving on to the cash flow, our sources and uses of cash or cash balance at the end of the quarter was about $16 million. Again as Dave said, the big piece of that was a result of the pipe we closed in May. Our second quarter capital expenditures on uranium property plant and equipment totaled about $3.7 million. The biggest chunk of those were related or development evaluation at Kingsville of $1 million and development costs at our Rosita properties were up about $2 million during the quarter. Additionally as part of our investing activities, we increased our restricted cash by about $100,000 during the quarter to support our financial surety obligations for our Texas projects; Dave.

We are ready for questions.

(Operator Instructions) Your first question comes from Peter Homans - Parkman.

I was sort of curious if you could handicap the probability of success of your activities at Rosita, because my understanding was that Rosita was from a geological standpoint thought to be able to produce wellfields with greater rates than Kingsville, is that still (a) a fact in which you believe? And are the efforts that you’re making to extract the uranium from the material simply a matter of going through the normal procedures than you’ll arrive at the correct solution or is it more vague than that and more ambivalent than that?

I missed the comparison between Rosita and Kingsville, but with Kingsville you’re talking about 800 feet depth. Rosita, Wellfield 8, you’re talking less than 200 square feet. So, it’s close to the surface, so the deeper you go the more oxygen you can get in the solution. The more oxygen you get in the solution, the easier it is to extract the uranium and that is what brings the uranium out of that.

So, deeper is better?

Deeper is better and again the problem having it is we are close to the surface, so the water when we inject it will not hold as much oxygen. So, we’re not contacting the uranium with oxygen, so we’re going to use other oxidants besides oxygen, which will stay in the solution and contact and that’s what we’re in the process of doing now. We’ve had some success with that. We are trying different oxidants in different parts of the wellfields, just to see which one works right. We are not having circulation problems at this point in time, so it’s just finding the right mix to get the job done.

And what I had asked about Rosita and Kingsville was that it was my understanding that Rosita from a geologic standpoint had the ability to produce more per wellfield than Kingsville; did I misapprehend that or is that the case?

Well each wellfield is on its own. It depends on how many pounds are in there. The Wellfield 8 at Rosita is adjacent to previous wellfields that produced well. We expect it to produce well as far as percent recovery on the wellfield, but there is no rule of thumb that shows that the Rosita wellfields are any better or any worse than Kingsville wellfields.

In what timeframe can you conservatively imagine being able to come upon the correct method for extraction?

We normally use oxygen as Dave pointed out because of the low water head over the ore at Rosita. We believe that we’re not getting as much oxygen in, so we are looking at three other oxidants. First one is hydrogen peroxide; 50% hydrogen peroxide, the same stuff you buy in the grocery store only a lot stronger. Second one is sodium hypochloride, which is bleach and the third other oxidant is sodium chloride. All of these are purchased in liquid form and the advantage of the last two, bleach and sodium chloride is that they don't release their oxygen as easily as obviously gaseous oxygen and hydrogen peroxide. They have more oxygen per mole, but it's not released as easy in a low-pressure environment, that’s why we’re looking at this. We believe as Dave said it’s going to take one to two months before we see any kind of breakthrough on any of these tests and these are being tested on individual laterals and then compared to the laterals that are still running on oxygen. So, we have four tests that we’re running; obviously the production test with oxygen and then the three oxidant tests at the same time and we are not going to see breakthrough on these until probably five or six weeks after we start the injection.

I know that mining is not an exact science, but as geologists and producers, how would you handicap the probability of one of them bearing fruit and allowing you to begin reasonable production at Rosita?

We are pretty confident that one of these are going to work. All of these have been used at one time or another in carbonate bleaching and in the in-situ history. Obviously, oxygen is the cheapest and as you go further up it gets a little more expensive and that’s why we’ve always gone back to oxygen when we can, but we are seeing breakthrough in some of the oxygen wells. It’s just that it is not occurring as fast or as complete as we wanted to see it, so that’s why we are going with the alternative oxidants.

Within the entirety of Rosita, are all the reserves 200 or less feet from the surface or do you have any reserves which are at the higher probability depth of 600 feet to 800 feet?

No, most of the reserves at Rosita are 200 feet to 250 feet deep. The controlling factor is how much water or how much head do you have over the ore zone?

Your next question comes from David Snow - Energy Equities.

I’m wondering how the progress is going in acquisition of additional properties and in particular, there were some larger tracts held by oil companies and I thought you were going to try to get in this weaker market?

There is large tracts held by ranchers, some of those have leases on them from the oil companies. Yes, we are moving on all fronts there. There are several bidders that are in the process of evaluating, that’s all I can say. It is a competitive environment, but what we have targeted we are confident we can get.

Do you have any idea when you might land or fish?

Whenever it’s possible; we don’t dictate the timeframe. All we can do is respond to the process.

And was it my understanding that you’re not going to do additional wellfields in Texas until you get results and cash flow from what you have going?

No, we are bringing on two new wellfields at the Kingsville Dome. There will be additional at Rosita. I’m just laying out the parameters on how we’re bringing on wellfields. Instead of trying to meet a production forecast, it's an investment decision on how much cash can we get out of a new investment.

In terms of where do we go from here in New Mexico, do you just wait for court and permit issues or is there any other initiatives for a regional mill that could be considered?

As I said at the time of the Rio Algom termination I think that remains the best site; there’s other efforts. Strathmore has their effort on their project; GA has a mill site. So there are other sites out there. I think given all the parameters we were interested in, Rio Algom is still the best site and it’s still available. So, it’s as much a matter of investment environment conditions as anything else.

Your next question comes from Jimmy Gilbert - Rice Voelker.

It’s certainly encouraging that the company is cash flow positive; how do you see that playing out for the rest of the year; do you anticipate being cash flow positive in the next two quarters?

We are generating cash flow from operations and our intent is to simply focus on making wise investment decisions, cutting costs as rapidly and as deeply as we can not all essential spending out the door. I think given current plans, we expect to have a very comfortable cash position by the end of next year, so I really can’t say anything more than that. As you bring on wellfields you are making investments; as those wellfields come on, you get the cash back. That’s just how the business operates.

But also I guess you’d call them extraction issues at Rosita, you’ve encountered these types of problems before; is this a fairly common problem in in-situ uranium mine?

The wellfield we are working on now is wellfield 8. It is close to the outcrop, so it is a different part of the deposit versus other wellfields we’ve mined at Rosita. Because it is close to the outcrop, it is shallow and we have as Rick said the head conditions. Wellfield 7 which was mined I believe in the late 1990s, it kind of interweaves between wellfield 8 and wellfield 7, so it is also close to the outcrop. They had startup problems which Rick can discuss. So if the company had shallow deposits this is where they’ve used these oxidants in the past. Do you want to expand on that Rick?

Well the Wellfield 8 at Rosita as you said is close to surface. The problem again is not necessarily the depth, but the amount of water that you have over your ore zone, the head and at wellfield 8 we have anywhere from 15 to 50 feet over it. The amount of oxygen you can get dissolved in the water is directly proportional to the head and so the wells that have 15 foot or 30 foot head over it, you can’t get as much oxygen in it as you might at a well in Kingsville. Have we seen this kind of problems before? Yes. Are they exactly like this? No. Again, all of these oxidants that we are testing have been used at one time or another in South Texas in the 30 year history of in-situ down here and they all work; it’s just a matter of cost and in our case a matter of how much oxygen you can get in there to contact the uranium. I don’t know if that answered the question or not Jimmy.

Also Rick or Dave, either of you’ll may be able to answer this. I mean obviously you’re involved at Rosita; it’s taken some of your attention away from other things possibly, but has it slowed down the progress towards opening up the in-situ opportunities in New Mexico, maybe like at Ambrosia Lake and could you talk a little bit about that timeline?

I would say it has not slowed that up, but we are proceeding as fast as we can with the state in getting permits and we’re having good success in approaching this.

Your next question comes from Peter Homans - Parkman.

A question on the market demand; I may have these numbers wrong, but I think that something like 250 million pounds was contracted in the U.S. last year and usage was something in the order of 180 to 190 million pounds and if I understand it correctly, one of the reasons why spot has been still under contract is because for the moment the utilities have sufficient, but there will come a time and say with the lead-time of around nine months when they have to begin preparing for another ramp-up of supply. Can you talk about that cycle and how that's likely to affect pricing over the next nine to 18 months?

Given the price run up last year, what generally happens in utilities make up the majority demand. They were fairly well covered for 2008 and 2009 and once you got to 2010, particularly in the U.S., the uncovered demand rose sharply. A couple of things are going to affect that; (a) as prices came down, utilities weighted, so that's why you have this uncovered demand. You also have the prices coming down and some production problems around the world or changes in production plans, some pounds that were thought to be covered which may have to come back to the market either from the producer of the utility. So with the drop off in prices you have that point working as well, but generally speaking, the demand that came and formed a bottom over the last couple of months was some of the utility demand anticipation of prices going to the bottom at some point in time. They were waiting for that; when they saw a bottom, everybody stepped in at the same time. From what I see in the market place that matters, you have long periods of time in this market where nothing happened and we have not had that for a couple years. So, you might even have just a gestation period where not much happens and that would be my guess at this point in time. You are just reloading the spring again as you said for that uncovered demand to get closer. Generally, utilities will cover that ahead of time, but a lot of that is going to be dependent on what the future price expectations are. If you look forward, the long-term fundamentals of this market remains strong and are probably getting stronger, but when you’re dealing with contracting lead times, it’s much of psychology as it is actual fundamentals.

Do you have any sense from talking to your contacts at utilities as to how they’re thinking? Do they feel complacent about the marketplace and therefore might let the lead times shorten or do they feel that given the long-term fundamentals they should be conservative and ensure that they make plans in time?

From a utility standpoint they get no reward for being late and they get punishment for being wrong, so it shouldn’t be that way, but unfortunately that’s kind of the way it is. They want to make the best decision they can, but if they lock in something lower then they don’t really get rewarded for it; if they price something high then they get punished for it. So, that will affect how long they go forward, whether it’s going to be base escalated or market related; they just got to make it the best deal over the life of the contract for them.

And has the recent increase in spot been accompanied by any increase in volumes?

I think it did in the spot market because you saw some people back off the spot markets. You had Nufcor come in and buy $75 million or something like 1.3 million pounds. My understanding was that basically swept the aggressive pounds off the market. So there were some people that needed to place pounds and that’s why you had increase in demand and certainly your follow-up question is probably going to be about the increase in spot backing towards $65. I think it takes some of the pressure off the downward pressure on the long-term price.

Your next question comes from David Snow - Energy Equities.

You mentioned there was another wellfield adjacent to wellfield 8 that was producing in the 90s; did it use other oxidants or did it have enough water head above it to just use oxygen?

No, it was oxygen only.

And I'm surprised you don't show that table that you did in the first quarter because it would have shown a nice progression quarter-to-quarter in your production costs and you’re being modest in the way you’ve presented it in the current quarter. Actually you had a pretty significant increase in your results relative to the first quarter’s margins; is that right, in costs?

Yes.

You didn’t want to show it because you don’t think it will continue in the third quarter or what happened here that you got so modest?

As we said in the first quarter, it is very volume sensitive, so if volume increases the cost goes down. There is a fixed cost element and we are not forecasting anything. If we missed something, I’m not sure it was modesty as much as an oversight and we’ll consult with you the next time.

Is it the expectation that you’ll be showing a lower volume in the third quarter in Texas?

Again we’re focused on and a lot of it’s going to be dependent on what happened with Rosita.

And I’m wondering what’s your fully diluted shares at the June 30 quarter’s end?

Again it’s the same as it was at year-end; it's about $55.6 million, fully diluted.

You did a pipe, I thought.

Right, and that’s included in the information that’s in there; our outstanding shares were $55.6 million.

There are no further questions at this time.

Once again thank you for your time and interest in the company and we’ll talk to you again in three months. Thank you.