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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 12 Months Ended
Dec. 31, 2012
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  
Principles of Consolidation

Principles of Consolidation

 

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of URI and its wholly-owned subsidiaries (collectively “the Company”). All significant intercompany transactions have been eliminated in consolidation.
Reverse Stock Split

Reverse Stock Split

 

Immediately following the close of trading on January 22, 2013 the Company affected a 1 for 10 reverse stock split for its common stock. With the reverse stock split, every ten shares of the Company’s issued and outstanding common stock were combined into one issued and outstanding share of common stock. The reverse stock split had no effect on the par value of the shares or the authorized number of shares of the Company. The reverse split reduced the number of URI’s outstanding common stock from approximately 161.1 million shares to approximately 16.1 million shares. All share data herein has been retroactively adjusted for the reverse stock split.

 
Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company maintains cash deposits in excess of federally insured limits. The Company monitors the soundness of the financial institution and believes the Company’s risk is negligible.

 
Uranium Properties

Uranium Properties

 

Expenditures related to acquisition of mineral rights are capitalized as incurred.  Exploration costs related to locating areas of potential mineralization are expensed as incurred. Commercial feasibility is established in compliance with the U.S. Securities and Exchange Commission Industry Guide 7, and consists of identifying that part of a mineral deposit that can be economically and legally extracted or produced at the time of the reserve determination. After declaring proven or probable reserves for an area of interest in accordance with Industry Guide7, expenditures specific to the area of interest for further development are capitalized. All properties with significant acquisition or incurred costs are evaluated for their realizability on a property-by-property basis. Any impairment of such costs is recognized through a reduction in the net carrying value of the asset. (See Note 6—“PROPERTY, PLANT AND EQUIPMENT - Uranium Properties”).

 

Included in mineral rights and properties are costs in the amount of $20,274,000 for what management classifies as value beyond proven and probable reserves (VBPP), primarily resulting from the Neutron acquisition. VBPP is attributable to (i) mineralized material, which includes measured and indicated amounts, that the Company believes could be brought into production with the establishment or modification of required permits and should market conditions and technical assessments warrant, (ii) inferred mineral resources and (iii) exploration potential.

 

Carrying amounts assigned to VBPP are not charged to expense until the VBPP becomes associated with additional proven and probable reserves and the reserves are produced or the VBPP is determined to be impaired. Additions to proven and probable reserves for properties with VBPP will carry with them the value assigned to VBPP at the date acquired, less any impairment amounts.

 

Depreciation and Depletion. During the periods that our facilities are not in production, depletion on our mineral interests, permits, licenses and development properties are suspended. Depreciation and depletion of our plant facilities, machinery and equipment continues in accordance with the level of stand-by activity being conducted at each site.

 

Other ancillary plant equipment and vehicles are depreciated using a straight line method based upon the estimated useful lives of the assets.

 
Other Property, Plant and Equipment

Other Property, Plant and Equipment

 

Other property, plant and equipment consists of corporate office equipment, furniture and fixtures and transportation equipment. Depreciation on other property is computed based upon the estimated useful lives of the assets. Repairs and maintenance costs are expensed as incurred. Gain or loss on disposal of such assets is recorded as other income or expense as such assets are disposed.

 
Restricted Cash

Restricted Cash

 

At December 31, 2012 and 2011, the Company had pledged certificates of deposit and money market accounts of $9,492,000 and $9,380,000, respectively, in order to collateralize letters of credit required for future restoration and reclamation obligations related to the Company’s South Texas production and development properties. These funds are not readily available to the Company and are not included in cash equivalents.

 
Restoration and Remediation Costs (Asset Retirement Obligations)

Restoration and Remediation Costs (Asset Retirement Obligations)

 

Various federal and state mining laws and regulations require the Company to reclaim the surface areas and restore underground water quality for its mine projects to the pre-existing mine area average quality after the completion of mining. The Company records the estimated present value of reclamation liabilities and increases the carrying amount of the related asset. Reclamation costs are allocated to expense over the life of the related assets and are periodically adjusted to reflect changes in the estimated present value resulting from the passage of time and revisions to the estimates of either the timing or amount of the reclamation and remediation costs.

 

Future reclamation and remediation costs are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at each project. Such estimates are determined by the Company’s engineering studies calculating the cost of future surface and groundwater activities.

 

The following table shows the change in the balance of the restoration and reclamation liability (Asset Retirement Obligation) during the years ended December 31, 2012 and 2011:

 

 

 

December 31,

 

 

 

2012

 

2011

 

Reserve for future restoration and reclamation costs at January 1,

 

$

4,735,759

 

$

5,043,645

 

Changes in cash flow estimates

 

1,444,406

 

1,101,234

 

Costs incurred

 

(1,767,289

)

(1,530,303

)

Accretion expense

 

85,181

 

121,183

 

Reserve for future restoration and reclamation costs at December 31,

 

$

4,498,057

 

$

4,735,759

 

 
Contingent Liabilities-Off Balance Sheet Arrangements

Contingent Liabilities—Off Balance Sheet Arrangements

 

The Company has obtained financial surety relating to certain of its future restoration and reclamation obligations as required by the State of Texas regulatory agencies. The Company has bank Letters of Credit (the “L/Cs”) and performance bonds totaling $8,707,000 issued for the benefit of the Company to satisfy such regulatory requirements. The L/Cs were issued by Bank of America and the performance bonds have been issued by United States Fidelity and Guaranty Company (“USF&G”). Such L/Cs are collateralized in their entirety by certificates of deposit and money market deposits.

 
Earnings Per Share

Earnings Per Share

 

All per share data herein has been retroactively adjusted for the 1 for 10 reverse stock split that occurred following the close of trading on January 22, 2013.

 

Net earnings (loss) per common share—basic has been calculated based on the weighted average shares outstanding during the year and net earnings (loss) per common share—diluted has been calculated assuming the exercise or conversion of all dilutive securities. Due to net losses incurred for 2012, 2011 and 2010 there were no dilutive securities included in these years as their inclusion would be anti-dilutive.

 

The potential dilutive Common Stock that was excluded from the calculation of diluted earnings per share was 403,274 in 2012, 454,885 in 2011, and 594,714 in 2010.

 
Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions. Such estimates and assumptions may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The more significant areas requiring the use of management estimates include mineral reserve estimation; useful asset lives for depreciation, depletion and amortization; environmental obligations; future restoration and reclamation costs; share based compensation expense; and asset impairment, including estimates used to derive future cash flows associated with those assets.

 

Specifically regarding uranium properties, significant estimates were utilized in determining the carrying value of these assets. These assets have been recorded at their estimated net realizable value for impairment purposes, which is less than cost. The actual value realized from these assets may vary significantly from these estimates based upon market conditions, financing availability and other factors.  Future market conditions in particular can be difficult to predict and measure because of the impact of events that affect public acceptance of nuclear energy, the limited size of the market for the use of uranium, changes in the prices of alternative energy sources, development of new low-cost alternative energy sources and other factors.

 

Regarding the reserve for future restoration and reclamation costs, significant estimates were utilized in determining the future costs to complete the groundwater restoration and surface reclamation at our mine sites. Estimating future costs can be difficult and unpredictable because they are based principally on current legal and regulatory requirements and mine closure plans that may change materially.  The laws and regulations governing mine closure and remediation in a particular jurisdiction are subject to review at any time and may be amended to impose additional requirements and conditions which may cause our provisions for environmental liabilities to be underestimated and could materially affect the Company’s financial position or results of operations. Estimates of future restoration and reclamation costs are also subject to operational risks such as acceptance of treatment techniques or other operational changes.

 

Also, the calculation of reserves, other mineralized material and grading are estimates and depend upon geological interpretation and statistical inferences or assumptions drawn from drilling and sampling analysis, which may prove to be unpredictable. There is a degree of uncertainty attributable to the calculation of reserves, mineralized material and corresponding grades. Until reserves and other mineralized materials are actually mined and processed, the quantity of ore and grades must be considered as an estimate only. In addition, the quantity of reserves and other mineralized materials and ore may vary depending on the price of uranium. Any material change in the quantity of reserves, other mineralized materials, mineralization or grade may affect the economic viability of our properties.

 
Risks and Uncertainties

Risks and Uncertainties

 

Historically, the market for uranium has experienced significant price fluctuations. Prices are significantly impacted by global supply and demand, which is affected by the demand for nuclear power, political, and economic conditions, governmental legislation in uranium producing and consuming countries, and production levels and costs of production of other producing companies. Increases or decreases in prices received could have a significant impact on the Company’s future results of operations.

 
Reclassifications

Reclassifications

 

Certain reclassifications have been made to the prior years’ financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or retained earnings.

 
Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

 

In January 2013, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2013-01, “Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities.” ASU 2013-01 states the intended scope of disclosures required by ASU No. 2011-11 “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” apply to derivatives and hedging transactions. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after January 1, 2013. The adoption of this guidance is not anticipated to have an effect on the Company’s consolidated financial position, results of operations, or cash flows.