Greetings and welcome to the Uranium Resources, Incorporated second quarter 2011 quarterly update conference call. At this time, all participants are in a listen-only mode. The question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Uranium Resources, Incorporated. Thank you. You may begin.

Thank you, [Diego], and good morning, everyone. We appreciate your time today and your interest in Uranium Resources. On the call with me today, I have President and CEO, Don Ewigleben, who will discuss the quarter and recent events as well as our strategy and outlook as we move forward. We also have Tom Ehrlich, Chief Financial Officer; Rick Van Horn, Senior Vice President of Operations and Exploration; as well as Mark Pelizza, Senior Vice President of Environmental Safety and Public Affairs I will conclude the call with an opportunity for questions and answers. If you don't have today's release, it can be found on our website at uraniumresources.com. As you are aware, we may make some forward-looking statements during the formal presentation and the Q&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 news release as well as the documents filed by the company with the Securities and Exchange Commission. You can find those on our website where we regularly post information about the company as well as on the SEC's website at sec.gov. So please review our forward-looking statements in conjunction with these cautionary factors. With that, let me turn the call over to Don to begin the discussion. Don?

Thanks, Debbie, and thanks to all of you participating this morning. I guess it's an understatement to say that we live in very interesting times. These past few weeks have been more [pointive] than usual. Let me start with a review of the current environment and particularly what the state of the industry is like and then I'll update you on our progress in Texas and in Mexico. There's no question that we have continued uncertainty resulting from Fukushima and the general events and perceptions that ultimately translate into a reality of inventory buildup for now. In the near term, we see that the typical slow to purchasing activity in the summer months -- as you all know, spring's the heaviest purchasing period for Uranium historically -- combined with the resulting inventory buildup from the shutdowns in Japan and Germany and maintenance safety reviews around the globe as well as the continued effort by the Department of Energy to sell its inventories, has continued to weigh on the price of uranium. Current spot price is down to about $51.50 and has been fluctuating in the lower 50s since our last call when prices had been in the range of the upper 50s. Long-term contract price has dropped somewhat to about $68 as of August 8 but there could be pressure there as well as buyers are like short-term markets for purchasing activity with the current price differential. An interesting scenario that could help repair prices would be if Kazakhstan were to choose to limit production. None of us know if that will come to fruition. It's not a typical behavior to be expected from them but they do appear to be holding at their original production goal of 52 billion pounds rather than exceeding it as they had been in…

Thank you, Don. In talking a little bit about our cash position at the end of the quarter and our liquidity for the quarter, we had about $8.2 million in cash at the end of June 2011. That compares to $11.1 million at the end of the previous quarter. Our cash reduction was about $2.9 million. $0.5 million of that was related to the continuing funding of our financial security obligations to collateralize the bond agreement that we have in place. Taking that into consideration, the remaining $2.4 million that was a reduction in cash works out to be about $800,000 a month in a monthly burn rate. The cash expenditures were utilized for a number of different reasons that Don just mentioned: the ongoing reclamation activities, the costs associated with the feasibility study, costs associated with the various strategic initiatives associated with the consolidation Don mentioned. During the third quarter, we will continue to have payments related to the exploration -- the Los Finados exploration program joint venture but those costs will be offset by reimbursements of the program from our joint venture partner. Given the plans that Don mentioned to accelerate our engineering activities for the Church Rock project and our existing cash requirements for the valuation of the various strategic initiatives, we're currently exploring various financing alternatives that may be available and are also evaluating the timing associated with the need to raise the capital in 2011 or early 2012.

Thanks, Tom. Although we expect the price of uranium to begin to recover this fall, we aren't anticipating any great strength unless the most bullish scenarios for price improvement play themselves out. We continue to progress our plans given our long-term perspective of nuclear power and uranium and the value of our US-based assets. As noted, we will continue to pursue our strategy to grow the asset base in New Mexico and Texas and could expand this effort beyond our base geographically. Given our outlook on the future of uranium, we don't see that as such a bad thing. We continue to remain focused in our efforts being a small company with limited resources, albeit absolutely significant potential. We'd rather be disciplined in our approach to growth than to haphazardly waste our energy. But whatever we do with regard to our strategic acquisition plans, it will be on a very rifle-oriented basis and not be a shotgun approach. Let me open it up for questions at this time.

(Operator Instructions). Your first question comes from the line of David Snow - Energy Equities.

I've got some random questions that came up during the call. You mentioned that you were having difficult ground conditions in Texas. I visualize that as being sandy soil. Is it clay or granite or something? What's going on there?

I'm going to ask Rick Van Horn to respond to that. He's been on the site daily and watching to try to describe those ground conditions. Rick?

Our ground condition problems at Los Finads are, as you said, David, mostly sand related. We're losing circulation very early in the hole. We're having to sand the [inaudible] actually cement the casing in place down to a depth of about 250 feet. This takes a lot of time. You have to let the cement cure and that's basically the only problem we're having is at surface. Drilling rates are a little bit slower than we had anticipated but basically it all turns around the loss of circulation at the top of the hole.

So that doesn't affect the potential for the sand to hold uranium, I guess.

No, this is all loose alluvial sand up on top of the surface.

Is that likely to be the case throughout this project do you think?

It's certainly the case where we are drilling now. We're stepping out drilling right now and we'll have to see if that continues through the rest of the property or not.

Has that been your experience anywhere else in Texas or anyone else's experience?

It has not but, again, this is the first time we've really been in this kind of an environment.

Then I think I heard you say that you've got to do the whole plan for three years to identify the well fronts and then after that there's an 18 to as much as 36 month period to get it to production and to well field production.

That's correct.

I'm trying to move to New Mexico and I'm wondering -- you mentioned you have costs for strategic -- looking at your various financing alternatives. What kind of costs could you be incurring at this point in that whole effort?

Sorry, David. I need you to repeat that last part of the question. Costs related to what?

Well, you mentioned that there were extra costs for I guess looking at your strategic alternatives.

Because there's two basic thoughts here; one is with regard to the existing feasibility study, we're on target. We're on plan. We're not having any additional costs there but we are looking at accelerating some of our engineering studies that would have been completed in 2012 in 2011 to determine if there's an opportunity for some accelerated production and/or accelerated restoration because you know the way that permit works for us. We can increase from 1 million to 3 million pounds the amount of production in future years if we prove commercial restoration. So we're looking at a variety of scenarios that would improve our opportunity to produce sooner but also to produce at a greater volume sooner. Now, with regard to other acquisition opportunities from a strategic standpoint, as you might know, with the precipitous drop in the market in recent times, particularly after Fukushima, the recent setting of values on all uranium assets has taken place. While it's an unfortunate aspect for the industry in general, for companies that are looking to do limited acquisition, such as URI, we could enhance a particular asset by increasing the recoverable resource amount and improving the overall economics of a project, either through some acquisition, though some joint ventures, some other arrangement. It's actually an opportunity for us. Those activities require studies and we have had some expenditures this year and we'll continue to do this throughout the third and fourth quarter to try to determine as part of our feasibility study at our general business development plans what of those assets in our two existing districts in Texas and New Mexico could give us that enhanced ability to produce at a greater rate of return and overall improvement in the asset base. That's the kind of cost we're talking about.

So these are in-house studies, pretty much?

Yes, yes. There are limited external studies that would be contemplated after we've done our preliminary analysis in-house. But Tom mentioned the increased cost per month of our burn rate. A portion of that is related to additional staff persons that we brought on to conduct the feasibility study but fortunately for us have been able to assist us in some of these looks at other assets. So most of this is in-house. If we get to a point where we need a third party authentication of those resources, of course, we'll step outside and get that third party.

Then it sounds -- what you were talking about was that you were going to not really consummate any royalty issues or opportunities until the feasibility study is finalized. Is that still the case or are you likely to consummate something in the meantime?

There is a possibility. I would not rule out that we would look towards doing something before construction occurs. Could it happen before the feasibility is completed? The answer is yes it could because, as you know, we're conducting the feasibility study in multiple phases. So as we have absolutely definition of our position on Church Rock Section 8, which is where those royalties come into play, we will then determine the best approach to dealing with those in either a buy down or a buyout fashion. Of course, there could be some joint relationships that might improve that royalty position. At this stage of the game, we believe the project is economic with the royalties but our purpose is to improve the rate of return for our shareholders, so we will, of course, look at whether or not yet in this year there might be an opportunity for a buy down or a buyout. In terms of where we stand, remember that [that's] a production royalty, so we actually have time to do so before this project goes into production.

Is there anything new with [Itachi] or is this just an ongoing open dialogue?

You mean Itochu and it's a continuing dialogue. You have to look at it from the perspective that -- and I know you personally are aware -- the historical contracts that we have with Itochu on the spot price and UG on the long-term price have been there for many years. They are contracts in which we have no obligation to deliver resources into the contract. But if we do produce from certain of our properties, not Los Finados particularly, but from certain of our properties in Texas that a -- I'm confusing New Mexico -- the discount does apply under those contracts. They're not getting any material with this done. So it's to their benefit to find a discussion that makes sense for us. It's to our benefit to try to take advantage of two fully permitted operating facilities, processing facilities in Texas. So there is a mutual meeting of the minds here that for them to get additional resources under those contracts we need to have a revised discussion. So they recognize that and have been open to that discussion on both fronts.

Wouldn't that be a little bit contradictory relative to the current inventory buildup going on that you referred to in the market?

It would be but for the fact that these two entities, as you well know, are entities that look at a global demand scale. Itochu has continued its purchasing, has gotten in other projects throughout the world. I know their expectation is to continue in this business for a long time. So what we've been seeing is their willingness to discuss our position is because of their desire to have future resources come out of Texas.

Are you giving them any new input on what you would be willing to do or is it just pretty much -- ?

Well, it's the same that we've previously discussed with many others and this has been discussed in public forums. That is there are some properties near our existing asset base that we do not have permitting for but we might have land control. There are some that we might have land control but we don't have fully permitted. So there are opportunities to have from our existing asset base as some -- as other areas that we would bring in for production an opportunity to put material into those contracts. But in order to do so, I mentioned earlier, we want to ensure to our shareholders that we're not going to open just for the purpose of opening those facilities. We want to know that we can do it on a sustainable basis with a decent rate of return. That means a revised -- a set of contractual obligations and the knowledge that we could produce within an approximately 500,000 pound per year production rate. So that's the thinking about how we'll get back into production in Texas whether we revise these contracts or not.

Are they also still considering anything in New Mexico with you?

At this stage of the game it would be premature for me to speak to that.

You mentioned you're pursuing other talks in the area that everybody thinks they're undervalued. What else is new? Is there anything else new?

Yes, that's always the case.

I mean, in terms of the talks, is anything else new, in terms of what you can expect to be hearing?

Well, the only thing I can tell you is we initiated discussions with everybody in our respective districts early on when we produced our strategic plan in the beginning of Q1 of 2010 discussing this idea of how to deal with the conventional issues in New Mexico, particularly because of the need for a mill there and whether or not one entity or multiple entities were going to build new. I can only tell you at this point everyone has been willing to have a discussion on that topic and that typically leads to a variety of other similar discussions about other joint venture possibilities and ways to make respective assets more economic for production purposes.

Nothing has really come out of that is what I can gather from your tone of voice.

I'm not in a position to describe anything specific at this point.

Would a consolidation be more likely when the market is weak like this or when it recovers?

Well, I can tell you from personal experience rather than from a URI experience that in the 30 plus years that I've been dong this it is certainly more like that the consolidation occurs when there are weak pricing scenarios because they're preparing for what is an expected improvement in pricing. Since we all expect the production to increase after the HEU agreement goes away and pricing accordingly rises, I would expect between now and the end of 2013 to be an interesting time in the uranium industry for consolidation.

Just going back to the New Mexico -- I'm just trying to catch what you said. Water permits will be suspended again until they review this -- or until this case goes through the court or what?

No, they are no suspended. They sit in timely renewal at this time. As you know, because we're not going into construction or production at this time, this is more about a litigation strategy and procedural issues than it is about practical impacts on the ground. So there is no practical impact today on the ground as a result of the action filed by ENDAUM.

I thought that ENDAUM -- because of that the permit was going to have to be done over again, the one that was just issued or something.

No, that's not the case, David. Let me, just for clarity because it is a question on the minds of many people -- let me ask Mark Pelizza, our Senior Vice President, to speak to the existing status of that permit.

Yes, the NMED has approved our timely renewal status or ratified our timely renewal status for the discharge plan. We can now use that permit. Regardless of any type of litigation that's been filed, there would still be a renewal of our existing permit and the technical information has been filed for that renewal. But in the meantime, we are positioned to use the existing discharge plan or UIC permit as a permit which is in timely renewal. It's the exact same status that our NRC license is in. It can be used in the interim while the agencies renew the permit for future use.

So the interim would cover a startup in your 2013 timeframe?

Or earlier, yes.

But you're not able to get into production earlier I guess in New Mexico

No, but in the event that the renewal process is underway, which it is, the existing permit can be used as a timely renewal permit.

Have they got any impact on the renewal process itself [this end all]?

It would be expected that they would be local in the renewal process, yes.

So does that suggest your renewal timing will be stretched out?

It could but that's the beauty of a permit and timely renewal that in the interim you can use your existing permit.

(Operator Instructions). Your next question comes from the line of [Kurt Georgioti]. [Kurt Georgioti]: Yes, I'm a stockholder living out of Denver, Colorado. Do you see -- have you had anybody approach you as an acquisition at this point or is that something that doesn't happen at this point? Are they waiting for some other -- the dust to settle of the future drilling you're doing?

Let me answer the question directly. We have no ongoing discussions about being acquired. That said, we do have one of the top 10 resource bases in the entire world and the largest collective deposit in the United States, so, of course, we do believe that we are in a target position. We have as an objective to ensure that long before this companies gets acquired by some other entity that we have brought appropriate value back to the shareholders from the long-waited production of Church Rock and Crownpoint and for the production in Texas. Meaning -- I mentioned earlier that we believe we're undervalued, as does everyone else. But from practical purpose, we are significantly undervalued and any acquisition at this time would have to be able to recognize that value to our shareholders. Of course, we have a fiduciary responsibility to take anything to our board and our shareholders that comes to us that is of a reasonable offer. But at this time, there is no ongoing discussion. [Kurt Georgioti]: Do you also feel that -- for me, as a small investor, we've ran through these ups and downs, of course, in the last couple weeks, as you talked about earlier and of course I'm sure that scared a lot of people out. Me, as I hear the reports that there's not even enough uranium now to satisfy the need of the world, what can you tell me to make me hang in there with you rather than going and looking for another investment?

That's a very good question. It's a question that every shareholder of URI must ask every single day. The answer has been for some time and will continue to be that uranium is a long-term play and the best opportunity to realize your investment potential from uranium is to hang in there until we see this HEU agreement fully out of the marketplace, when DOE is no longer putting its material into the marketplace and the prices recover driven by that expected demand. While we do mention that there will be a lesser demand over the next 30 years than expected, as just one year ago, call it the Fukushima affect, it still doesn't lessen the possibility or probability that the demand will be far greater than the production rate. So when you have a company with 100 million pounds plus that can produce into that timeframe in 2013, as we will be doing, as a low-cost producer of ISR pounds, then you have a positive investment vehicle for a long term play on uranium and the nuclear energy industry. We sit at the top of the list, in my opinion, of course prejudiced by what we hold. But when you have such a large asset, we sit at the top of the list for brining back a very strong potential to your investment over the long term. [Kurt Georgioti]: But at this point right now, are we producing any uranium that is being sold on the market?

No, we are not. Our last production was mid-2009. It was not production from the best of our asset base, that having been a 9 million pound asset base in Texas that we had exploited. We have about 600,000 or 700,000 pounds recoverable left of that particular resource. That's pre Los Finados. As a result, our rate of return was not appropriate to continue. So we decided to stop that production until prices return. That's why the discussion of when would we reopen Texas and the answer is not until we have looked at those contract provisions, try to determine if there is a way to improve that position and price recovers to a point that gives us a responsible rate of return for that asset base. [Kurt Georgioti]: Well, I'm far from a rocket scientist, however, don't you have to have revenue in order to continue to function?

The fact of the matter is, this company is at this time a development company without production. Despite our having had a 34-year history, 20 plus years of that in production, we are not a producing company today. We are a development company, so we live by the existing asset base that we have and do so by very, very limited capital raised opportunities and/or, in the case of Texas, we determined it was best to go for a joint venture so that the funding for that exploration was paid by our joint venture partner for them to earn an interest. So we have to look at other methodology since we don't have funding coming in from actual sales at this time. [Kurt Georgioti]: Well, the other thing that is somewhat of a concern -- at some point I think you touched this. I didn't read the full report. But at some point you've got to come back to the stockholders to raise more capital. Is that correct?

That would be correct. There are other opportunities other than doing so but that is one of the scenarios. Would we seek additional funding from the shareholders to, for example, build the Church Rock Crownpoint project, of which we publicly said it's somewhere between $30 million and $50 million to build that project? Now, there are other opportunities for financing other than doing so. But as you know, last year, we did have two successful capital raises to maintain our development activities and move towards our strategic plan to be able to produce in 2013 and have that income. [Kurt Georgioti]: Well, I appreciate you answering my questions. I guess as a stockholder I'm looking for some material information to come out soon or, as you know, 30 years is a long time. I'm somewhat of a young guy but I'm sure a lot of the investors aren't and I need -- hopefully we're going to see some positive information, not that we haven't seen that but something in concrete that would allow us to have in there and enjoy the fruit when it's done.

Understood and that is the point taken from every one of our shareholders, many of which have been with us for 15 plus years. They've been waiting for this production at Church Rock Crownpoint and it is our job to get on with it.

Your next question comes from the line of [Wanmei Shay - Platts]. [Wanmei Shay: I just want to clarify what you mean when you say timely renewal in New Mexico in [inaudible] renewal has been confirmed. That doesn't mean the renewal has been approved.

Again, let me ask Mark to respond to that question.

This is specifically New Mexico but it's the same answer for our NRC license as well. Typical in the regulatory world is a license or a permit, an operating license or permit if a operator requests that the license or permit be placed in timely renewal at a certain point before expiration, it is place in timely renewal and can be used until the renewal permit has been issued. That is the case with both our NRC license and our Church Rock discharge plan or UIC permit. They are in timely renewal. They can be used until the renewal process runs its course and the new permit is renewed for the new term. [Wanmei Shay: First, when do the current permits expire for the [inaudible]?

The current permits have expired according to their term but they have been placed in timely renewal, which means they are in timely renewal. They will continue to be effective until the new permits have been issued. [Wanmei Shay: As well as the [inaudible] [government] financially are considering the applications. The current permits are valid.

That's exactly right. [Wanmei Shay: Have the indicated or can you estimate when are they going to make a decision?

They wouldn't do that. They wouldn't give you an exact time on that.

Your next question comes from the line of David Snow - Energy Equities.

Just to follow up, would you need a contract to get into production? You mentioned $68 long term but it could see some pressure. Is it possible to take such a price and would you need that to get into production?

David, let's differentiate that question into the two regions. Within Texas, I believe the answer is yes we would maintain a contractual relationship likely with Itochu and UG for our existing production if we come back from our existing asset base. For Los Finados, not the case, there is no contractual obligation. We would look to see that the joint venture how best to deal with that understanding right now we don't know what the percentage ownership of that production would be. If Cameco, as our joint venture partner invests the full extent, they could own 70% of that production. We could own 30%. They could do with their 70% what they care to do. We can do with our 30% what we care to do. In the case of New Mexico, we have resisted opportunities wherein persons are looking for off-take agreements on that asset base. The main reason for resisting that at this time is just what you stated. The long-term setting at $68 is not ideal. Would it make money? Yes, but it is not ideal. Our believe if the price will be significantly higher after the HEU agreement goes away in 2013 when we're up in production. So it would not make sense to lock in that long-term price and would, in fact, not be beneficial to our shareholders to do so at this time. That could change is the prices go up. Let's recall that pre Fukushima long-term pricing was somewhere in the neighborhood of $75, so it could easily happen before the end of this year as things improve. But it still would not be beneficial for us to look at off-take agreements until we're certain that that is the best vehicle for moving a portion of that production. Now, is it one of the opportunities from a financing consideration for building the project? Of course it is but we're looking at an array of ideas how to deal with that and I will likely continue to resist off-take agreements unless it is a very beneficial contractual relationship that brings assurance to our shareholders of a reasonable rate of return.

Would you be able to do the $30 million to $50 million financing without such a contract?

We believe at this time there are opportunities to do so, yes sir.

$800,000 a month or $9.6 mill a year will put you out of cash by I guess year-end. Are you going to do a small placement again in the near-term to tide you over?

We have a number of opportunities for short-term issues as opposed to the capital expenditures necessary for construction of Church Rock Crownpoint. So we would look to have some form of additional funding source prior to larger need for the capital to build Church Rock. But I must emphasize that does not necessarily mean a financing. There are other opportunities but we are going to look at all opportunities, including financing it.

How else could you raise money? Advance downpayment or something like that?

Well, we've discussed for many, many years that we are not averse to joint venture relationships, to some other construction arrangement -- constructed arrangement, if you will -- in the way of partnerships and you know that this particular property that previously had an interest expressed by Itochu, our contractual participant in Texas, so there are opportunities other than financing. But, like I said, we're going to look at every opportunity and do what we believe is best for the shareholders.

Ladies and gentlemen, there are no further questions at this time. I will turn the conference back to management for closing remarks. Thank you.

Thank you, [Diego]. Once again, thanks to all for your participation today. Your time and interest in URI is extremely important to us. We are listening. As we've discussed, we continue to believe in the long-term future of the nuclear industry. The need for the development of more uranium projects exists. We plan to fully capitalize the large resource space we have in New Mexico as these market-driving factors converge. It will improve price, it will improve demand and, therefore, we need to be timing ourselves with production as we are in 2013 and to take full advantage of full production in 2014 when the HEU agreement is gone and the prices return. At any time, if you have questions about URI, you can contact Debbie Pawlowski with Key Advisors, who assists us, but you can certainly contact any one of us and you'll note that there is no particular note of hierarchy in our company. You can get your questions answered from people like Mark, Rick, Tom and others at any given time. Simply submit a question through our website or call. You'll see our numbers are there. We appreciate your feedback at all times and thanks for your participation this morning. Thank you.

Ladies and gentlemen, this does conclude today's conference. You may disconnect your line at this time. Thank you all for your participation.