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COMMITMENTS AND CONTINGENCIES
 6 Months Ended
Jun. 30, 2013
COMMITMENTS AND CONTINGENCIES  
COMMITMENTS AND CONTINGENCIES

10. COMMITMENTS AND CONTINGENCIES

 

In July 2013, the Company amended its uranium supply contract with Itochu Corporation (“Itochu”) to include a new sales pricing structure, new delivery dates and quantity levels. Pursuant to the amended agreement, Itochu would purchase one-half of all production from the Company’s Vasquez, Rosita or Kingsville properties up to three million pounds of U3O8. Any new production outside of those areas is not subject to the agreement. The purchase price will be based on published market prices at the time of delivery subject to a five percent discount when the market price is $56.50 per pound of U3O8 or less, or seven percent when greater than $56.50 per pound.

 

The Company’s mining operations are subject to federal and state regulations for the protection of the environment, including water quality. These laws are constantly changing and generally becoming more restrictive. The ongoing costs of complying with such regulations have not been significant to the Company’s annual operating costs. Future mine closure and reclamation costs are provided for as each pound of uranium is produced on a unit-of-production basis. The Company reviews its reclamation obligations each year and determines the appropriate unit charge. The Company also evaluates the status of current environmental laws and their potential impact on their accrual for costs. The Company believes its operations are in compliance with current environmental regulations.

 

The Company is from time to time involved in various legal proceedings of a character normally incident to its business. Management believes it has meritorious defenses in all such proceedings and is not aware of any material adverse effect on the Company’s financial condition or results of operations from such proceedings.

 

Registration Statement

 

In connection with our May 2008 private placement and the March 2012 investment agreement with RCF, the Company executed a registration rights agreement pursuant to which the shares issued in the private placement and under the investment agreement were registered. The registration rights agreement provides for penalties in the event the registration statement fails to remain effective. At June 30, 2013, the Company’s registration statements were and remain effective.

 

Employment Agreements

 

The Company has entered into employment agreements with the certain of the Executive Officers of the Company, that provide that, in the event of a change in control, such officers will have certain rights and benefits for a period of twenty-four months following such change in control. The employment agreements provide that the executive’s base salary payments shall be made on a monthly basis for the duration of the term and any incentive payments shall be paid annually until the obligation to make such payments expires.

 

In March 2013, the Company entered into a Employment Agreement with the Company’s new President and Chief Executive Officer with a one-year term. In the event his employment is terminated following a change in control, he would be entitled to two year’s base salary payable in a lump sum within 30 days after his termination date. In the event the Company terminates the Employment Agreement during its term, other than for cause or elects not to renew the Employment Agreement at the conclusion of its term, he would be entitled to one year’s base salary payable in a lump sum within 30 days after his termination date.

 

In June 2013, the Company entered into a Employment Agreement with the Company’s new Vice President — Finance and Chief Financial Officer with a one-year term.  In the event his employment is terminated following a change in control, he would be entitled to one year’s base salary payable in a lump sum within 30 days after his termination date. In the event the Company terminates the Employment Agreement during its term, other than for cause or elects not to renew the Employment Agreement at the conclusion of its terms, he would be entitled to six month’s base salary payable in a lump sum within 30 days after his termination date.