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LIQUIDITY AND GOING CONCERN | 9 Months Ended
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Sep. 30, 2013
LIQUIDITY AND GOING CONCERN |
LIQUIDITY AND GOING CONCERN | 3. LIQUIDITY AND GOING CONCERN The Company had negative cash flow from operations of $10.8 million for the nine months ended September 30, 2013. Our cash position was $2.0 million at September 30, 2013. The Company is not currently commercially producing uranium and, as such, does not anticipate generating any significant sales revenues in 2013. In March 2013, the Company completed a Shareholder Rights Offering (“Rights Offering”) in the amount of $8.6 million, whereby the Company received $3.6 million in cash, net of expenses and $5.0 million was used to repay the short term financing from its largest shareholder, Resource Capital Fund V L.P. (“RCF”). RCF owns approximately 32.3% of the Company’s common stock. In February 2013, the Company secured a new source to satisfy its financial surety obligations for the Texas regulatory agencies. Previously, the Company had met its financial surety obligations through a combination of bank issued letters of credit (the “L/Cs”) and bonds issued for the benefit of the Company. These financial surety arrangements required the Company to fully collateralize the face amount of the L/C’s and the bonds with short term investment vehicles. This requirement resulted in the Company posting $9.3 million in cash that was restricted for the purpose of collateralizing these obligations. The Company’s new financial surety arrangements are provided by Lexon Insurance Company (“Lexon”) in the form of bonds issued for the benefit of the Company. The amount of the bonds written by Lexon total approximately $9.0 million and the collateral requirements of these bonds requires the Company to maintain 40% of the value of the bonds in the form of restricted cash. This change in collateral requirement occurred in April 2013 and reduced the amount of restricted cash required by the Company to $3.6 million and resulted in a corresponding increase in cash to the Company of $5.4 million. In the fourth quarter of 2011, the Company entered into an At-The-Market Sales Agreement with BTIG, LLC, allowing the Company to sell from time to time its common shares having an aggregate offering price of up to $15.0 million, through an “at-the-market” equity offering program (“ATM Sales Agreement”). The Company did not make any sales under the ATM Sales Agreement in the third quarter of 2013 and has a total of $9.0 million available for future sales under the ATM Sales Agreement. After careful consideration of a variety of financing options, on October 14, 2013, the Company and RCF entered into a non-binding letter agreement (the “Letter Agreement”) whereby RCF agreed, subject to the terms and conditions set forth in the Letter Agreement, to provide a secured convertible loan facility of up to $15.0 million to the Company (the “Facility”). RCF’s investment committee approved the Facility on October 17, 2013, subject to a number of conditions precedent and the terms and conditions in the Letter Agreement. The Facility would provide the Company with $3.0 million upon closing, which is expected on or before November 15, 2013, another $2 million would be available upon stockholder approval, which is expected to occur on or before January 31, 2014, and two additional tranches of $5.0 million each would be available in 2014 at the election of the Company. There can be no assurance that the Facility will be available on or before November 15, 2013 or that the Facility will be completed on the terms contemplated or on other terms. As of October 21, 2013, the Company had a cash balance of approximately $1.3 million. On average, the Company has been expending approximately $1.3 million of cash per month during the first nine months of 2013 and expects to spend $1.1 million per month during the balance of 2013. If adequate funds are not available through the Facility, the Company will need to seek alternative sources of debt or equity capital and to the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in substantial dilution to existing stockholders. There can be no assurance that the Company will be able to obtain additional capital if the Facility does not close, that the terms of alternative capital would not be less favorable to the Company or that such additional capital could be obtained on a timely basis, if at all. If additional capital is not available in sufficient amounts or on a timely basis, the Company will experience liquidity problems in the near future, and the Company could face the need to significantly curtail current operations, change planned business strategies and pursue other remedial measures. The Company’s condensed consolidated interim financial statements have been prepared assuming that the Company will continue as a going concern; however, should the Company be unsuccessful in closing the financing transaction with RCF discussed above, it would raise substantial doubt about the Company’s ability to do so. The condensed consolidated interim financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

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- Definition This element represents liquidity of the company during the reporting period. It also includes an entity's ability to continue as a going concern for a reasonable period of time (generally a year from the balance sheet date). + References No definition available. + Details
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