FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of March 2002
International Uranium Corporation
(Translation of registrant's name into English)
Independence Plaza, Suite 950, 1050 Seventeenth Street, Denver, CO 80265
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-_____________
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
International Uranium Corporation
---------------------------------
(Registrant)
Date: February 28, 2002 By: /s/ Ron F. Hochstein
-----------------------------------
Ron F. Hochstein, President
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
1 1st Quarter 2002 Report
2 Financial Statements
3 Notes to Financial Statements
REPORT TO SHAREHOLDERS
1ST QUARTER 2002
(U.S. DOLLARS)
Over the past quarter, International Uranium Corporation ("IUC" or the
"Company") received its thirteenth license amendment, permitting IUC to receive
alternate feed material from Molycorp, Inc. This uranium-bearing lead sulfide
sludge material, which is a waste stream from Molycorp's Mountain Pass,
California lanthanide processing operation, grades approximately 0.15% uranium.
The Company anticipates receiving up to 17,750 tons of this material during the
second and third quarter of fiscal 2002. With the Molycorp material, the Company
will have built a processing backlog of approximately 255,000 tons.
The Company and the Washington Group, IUC's teaming partner on the Moab
tailings project, continue to proceed with the development of a proposal for the
relocation of the Moab tailings to the White Mesa Mill. A number of
presentations were made to Department of Energy ("DOE"), federal, state, county
and city governmental representatives and several interested stakeholders. The
Company's proposal has been well received, and work is progressing on securing
funding for the project's short-term activities.
In addition the Company continues to hold a 70% interest in the Gurvan
Saihan Joint Venture uranium project in Mongolia. This project was placed on
stand-by in fiscal 2000, due to the continued depressed uranium commodity
markets. However, through its previous work on the project the Company, along
with its joint venture partners, has developed a large land position, totaling
over 12,100 square kilometers, as well as extensive experience in the country.
As a result of this experience and its current existing base within Mongolia,
the Company has decided to initiate a preliminary geological field program to
investigate other opportunities within Mongolia. The program is planned for the
summer of 2002 with a focus on gold and base metal targets.
IUC recorded a net loss of $1,133,535 ($0.02 per share) for the first
quarter of fiscal 2002, as compared with a net loss of $709,424 ($0.01 per
share) for the first quarter of fiscal 2001. The losses for both periods were
due to the fact that the Company's White Mesa Mill was on stand-by and did not
generate revenues from the processing of alternate feed materials. The primary
reasons for the larger loss for the first quarter of fiscal 2002 as compared to
2001 are the decrease in interest income due to the significant decline in
interest rates and an increase in general and administrative expenses due to
increased activity on the Moab Tailings Project. During the quarter the Company
increased the restricted investments that collateralize the Company's
reclamation and other obligations by $1,680,000 to bring its collateral to
approximately 100% of the bonded amounts. With the increase in restricted
investments, the Company's cash and short-term investment position was reduced
but remains strong at $12,387,858 as of December 31, 2001, as compared to
$14,052,552 at September 30, 2001.
Management's Discussion and Analysis
The following discussion and analysis of the financial condition and
results of operations for the Company for the period ended December 31, 2001
should be read in conjunction with the consolidated financial statements and
accompanying notes. The consolidated financial statements are prepared in
accordance with generally accepted accounting principles in Canada.
Overview
IUC is incorporated under the Business Corporations Act (Ontario). The
Company is primarily engaged in the business of recycling uranium-bearing waste
products, referred to as "alternate feed materials," for the recovery of
uranium, alone or in combination with other metals, as an environmentally
preferable alternative to the direct disposal of these waste products. Alternate
feed materials are generally ores or residues from other processing facilities
that contain uranium in quantities or forms that can be
recovered at the Mill. The Company also owns several uranium and
uranium/vanadium mines and exploration properties that have been shut down
pending significant improvement in uranium and vanadium prices. In addition, the
Company is engaged in the selling of uranium recovered from these operations in
the international nuclear fuel market and also sells vanadium and other metals
that can be produced as a co-product with uranium.
Revenues
The Company receives a recycling fee for a majority of the alternate feed
materials once they are delivered to the Mill. A portion of the fees, equal to
the costs that are incurred receiving materials, is recognized as revenue, while
the remaining recycling fees are recorded as deferred revenue until the material
is processed. In addition to the recycling fees, the Company will retain the
uranium recovered from these materials.
Revenues for the first quarter of fiscal 2002 consisted of process milling
fees generated under the Company's alternate feed processing agreements.
Revenues for the first quarter of fiscal 2002 were $114,987, a decrease of
$208,803 or 64%, as compared to $323,790 for the first quarter of fiscal 2001.
The decrease was primarily due to a lower volume of material received at the
Mill as compared to the first quarter of fiscal 2001. During the first quarter
of fiscal 2002 the Company received 20,130 tons of Ashland 1, Linde and Heritage
materials as compared to 26,232 during the first quarter of fiscal 2001. The
decrease of 6,102 tons or 23% was due to the decline in Ashland 1 material as
this project is nearly complete.
Due to the continued weak markets for vanadium, the Company elected not to
sell any of its vanadium inventories. The Company continues to hold
approximately 424,000 pounds of vanadium, as black flake, that it intends to
sell as vanadium prices strengthen, and approximately 144,000 pounds of
vanadium, as vanadium pregnant liquor. Vanadium prices continue to be in the
lower range of their historical values, and are currently trading in the $1.15
to $1.30 per pound V2O5 range
Cost of Products and Services Sold
Alternate feed processing activities for the first quarter of 2002
consisted of the receipt, sampling and analysis of the Ashland 1, Linde and
Heritage materials. Process milling expenditures for the first quarter of fiscal
2002 were $114,230 compared to $182,599 for the first quarter of fiscal 2001, a
decrease of $68,369 or 37%. The decrease was due to the lower volume of
materials received during the first quarter of fiscal 2002 as compared to fiscal
2001. Costs incurred during the quarter consisted primarily of payroll and
related expenses for personnel, parts and supplies, contract services and other
overhead expenditures required to receive alternate feed materials. Processing
of the Ashland 1, Linde and Heritage material is currently scheduled to begin
during the third quarter of fiscal 2002.
In addition to FUSRAP (Formerly Utilized Sites Remedial Action Program)
materials, the Company continues to receive deliveries of alternate feeds from
another uranium producer under a long-term arrangement. While the Company will
not receive a processing fee for this particular alternate feed it will produce
uranium from these materials, which will then be sold. These materials will not
be processed until the price of uranium strengthens above current levels. As of
December 31, 2001, there were approximately 4,200 tons of these materials at the
Mill. Materials received from other uranium producers or private industry
sources tend to be relatively high in uranium content but relatively small in
volume as compared to FUSRAP materials.
Mill Stand-by
Mill stand-by expenses consist primarily of payroll and related expenses
for personnel, parts and supplies, contract services and other overhead
expenditures required to maintain the Mill on stand-by status until a sufficient
stockpile of alternate feed material has been accumulated to justify an
efficient mill run. The Mill has been on stand-by since the second quarter of
fiscal 2000, when the conventional ore mill run was completed. The Mill is
maintained in good operating condition and is capable of commencing a mill run
at any time, without the need for regulatory approvals or any significant
capital expenditures. Mill stand-by expenses for the first quarter of fiscal
2002 were $659,473, an increase of $11,147 or 2%, as compared to $648,326 for
the first quarter of fiscal 2001.
Selling, General and Administrative
Selling, general and administrative expenses consist primarily of payroll
and related expenses for personnel, legal, contract services and other overhead
expenditures. Selling, general and administrative expenses for the first quarter
of fiscal 2002, of $584,177, increased $150,880 or 34% as compared to selling,
general and administrative expenses of $433,297 for the first quarter of fiscal
2001. The increase resulted primarily from increased expenditures for labor and
professional services, and other related costs associated with the Company's
involvement in the Moab tailings project and continuing efforts to expand its
alternate feed, uranium-bearing waste recycling business.
Other Income and Expense
Net interest and other income was $129,374 for the first quarter of fiscal
2002 as compared to $341,826 for the first quarter of fiscal 2001. The decrease
of $212,452 was primarily the result of significantly lower interest rates paid
on short-term investments.
Liquidity and Capital Resources
The Company has a strong cash position. At December 31, 2001, the Company
had cash and short-term investments of $12,387,858 and working capital of
$1,064,567 as compared to cash and short-term investments of $14,052,552 and
working capital of $5,073,981 at September 30, 2001. The decrease of $4,009,414
in working capital was partially due to the Company's current plan to begin
processing alternate feed material beginning in the third quarter of fiscal
2002. As a result of this plan, deferred revenue of $14,799,168 was accounted
for as a current liability.
Net cash used in operating activities was $1,184,694 for the first three
months of fiscal 2002 and consisted primarily of the loss from continuing
operations of $1,133,535 and increases in trade receivables of $237,857 offset
by non-cash items of depreciation and amortization of $205,671.
Net cash provided by investment activities was $6,083,011 for the three
months ended December 31, 2001 and consisted primarily of proceeds from the sale
of short-term investments of $7,904,885 offset by increases in restricted
investments of $1,800,172. The majority of the increase in restricted
investments was due to the Company depositing an additional $680,000 on December
31, 2001 to secure its reclamation bonds and $1,000,000 to secure the financial
surety behind the uranium concentrates sale and put option agreement entered
into on September 13, 1999. The transaction was accounted for as a deferred
credit and the value of the inventory that could be put to the Company upon
exercise of the put option was reclassified as an other asset.
Net cash provided by financing activities for the three months ended
December 31, 2001 totaled $1,341,874 and consisted primarily of an increase in
deferred revenues of $1,345,879. Deferred revenues represent processing proceeds
received or receivable on delivery of alternate feed materials but in advance of
the required processing activity. As the Ashland 1, Linde and Heritage materials
are processed in future
periods, the deferred revenue will be reclassified as revenue. The cost of
processing these materials will be recorded as process milling expenditures and
the Company's cash position will decrease by the cost of processing.
Environmental Responsibility
The Company reviews the anticipated costs of decommissioning and reclaiming
its mill and mine sites as part of its environmental planning process. The
Company also formally reviews costs when it submits license renewal applications
to regulatory authorities. Based on this review it was determined that the
Company's estimated reclamation obligation of $12,350,157 is currently
sufficient to cover these projected future costs. However, there can be no
assurance that the ultimate cost of such reclamation obligations will not exceed
the estimated liability contained in the Company's financial statements.
The Company has posted bonds as security for these liabilities and has
deposited cash, cash equivalents and fixed income securities on account of these
obligations. At December 31, 2001, the amount of these restricted investments
collateralizing the Company's reclamation obligations was $11,325,245. The
increase of $800,172, as compared to September 30, 2001, was primarily due to
accrued interest of $120,172 and the Company depositing an additional $680,000.
This brings the collateral to approximately 100% of the bonded amounts as
required by the bonding company.
The Company has detected some chloroform contamination at the Mill site
that appears to have resulted from the operation of a temporary laboratory
facility that was located at the site prior to and during the construction of
the Mill facility. The source and extent of this contamination are currently
under investigation, and a corrective action plan, if necessary, is yet to be
devised. Although the investigations to date indicate that this contamination
appears to be contained in a manageable area, the scope and costs of remediation
have not yet been determined and could be significant.
Research and Development
The Company does not have a research and development program per se.
Process development efforts expended in connection with the processing of
alternate feeds are included as a cost of processing. Process development
efforts expended in the evaluation of potential alternate feed materials that
are not ultimately processed at the Mill are included in Mill overhead costs.
The Company does not rely on patents or technological licenses in any
significant way in the conduct of its business.
Trend Information
During the period 1997 through 2000, the Company saw a deterioration in
both uranium and vanadium prices, from $11.00 per pound of U3O8 and $4.10 per
pound of V2O5 in October 1997 to $7.40 per pound of U3O8 and $1.70 per pound of
V2O5 at the end of September, 2000. As a result of these decreases in commodity
prices, the Company decided to cease its mining and exploration activities in
1999, and has shutdown all of its mines and its Mongolian joint venture. Also as
a result of these market events, the Company marshaled its resources to
concentrate its operations on the continuing development of the alternate feed,
uranium-bearing waste recycling business. Although uranium prices have increased
to $9.75 per pound U3O8 as of February 20, 2002, the vanadium price has fallen
even further to approximately $1.25 per pound V2O5.
Although the Mill's tailings system currently has capacity to process all
of the alternate feed materials under contract with the Company, this capacity
is expected to run out within the next one to three years, depending on the
level of success of the Company in entering into contracts for the processing of
additional feed materials. In order to provide additional tailings capacity, the
Company will have to repair existing tailings Cell No. 4A, at an estimated cost
of $1.5-$3.0 million. In addition, if Cell No. 4A is put into use the
reclamation obligation for the Mill would increase by approximately $1.0
million, which would require an increase in the Mill's reclamation bond by that
amount. The repair of Cell No. 4A will provide the Company
with approximately 2 million tons of additional tailings capacity, which should
be ample capacity for the foreseeable future.
Outlook for 2002
Historically, the Company's operations were significantly dependent upon
uranium and vanadium prices. Due to the low spot price for vanadium and the
continued depressed market for uranium, the Company suspended all U.S. mining
activities in 1999. The Company intends to keep those properties in a shutdown
status indefinitely, pending further improvements in commodity prices, and will
continue to evaluate potential options for the sale of its mining properties and
mining equipment, as they may arise.
As a result of this reduction in exploration and mining activities, the
Company has focused its resources on the continuing development of the alternate
feed, uranium-bearing waste recycling business. While the Company has had some
success to date in the development of its alternate feed business, the Company
has not to date developed a sufficient backlog of alternate feed material to
result in sustained profitable operations for the Company. The Company will
continue to pursue opportunities in both the private and government sectors for
sources of alternate feeds and also evaluate other opportunities unrelated to
its mining and alternative feed activities, in an effort to develop this
backlog, as they may arise.
The Company's decision to focus its resources and attention primarily on
the development of its alternate feed, uranium-bearing waste recycling business
means that the Company is less susceptible to variations in uranium and vanadium
market prices. Due to the decision to sell all of the uranium inventory and
sales contracts, the Company is relying primarily on revenue from alternate feed
processing fees and the uranium produced from these feeds.
Based on current projections, processing of alternate feed material at the
Mill is scheduled to begin in the third quarter of fiscal 2002 and continue
through the end of the fiscal year. The current backlog of material allows for
approximately nine months of processing. The timing and duration of the mill run
will depend in large part on the schedule for deliveries of materials to the
Mill under the Company's existing alternate feed contracts.
On January 16, 2002 the prime contractor, IT Corporation ("IT"), for the
Ashland 1 and Linde projects filed for protection under Chapter 11 of the United
States Bankruptcy Code. IUC's contracts for both of these projects are with IT,
which has contracts with the U.S. Army Corps of Engineers (the "Corps"). As of
January 31, 2002 the Company has outstanding receivables from IT of $1,419,621.
The contracts that IT has with the Corps that impact IUC are included as part of
a purchase agreement that is currently being negotiated between IT and a
prospective purchaser of certain of IT's assets. It is the Company's
understanding that, as part of this agreement, all outstanding amounts owing to
IUC by IT will be paid in full upon completion of the sale. In addition, IT has
received some interim financing from which IUC has received some monies to pay
for outstanding receivables. Based on the foregoing, IUC has not set up an
allowance for the IT outstanding receivables.
Risks and Uncertainties
Under the NRC's Alternate Feed Guidance, the Mill is required to obtain a
specific license amendment allowing for the processing of each new alternate
feed material. Various third parties have challenged certain of the Mill's
license amendments, including the recent Molycorp license amendment, which
challenge is currently ongoing, although none of such challenges have been
successful to date. The Company intends to continue to defend its positions and
the validity of its license amendments and proposed license amendments. If the
Company does not ultimately prevail in any such actions and any appeals
therefrom, the Company's ability to process certain types of alternate feeds, in
certain circumstances, may be adversely affected, which could have a significant
impact on the Company.
Cautionary Note Regarding Forward-Looking Statements
Certain statements contained in the foregoing Management's Discussion and
Analysis and elsewhere in this Annual Report to Shareholders constitute
forward-looking statements. Such forward-looking statements involve a number of
known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date the statements were made and readers are advised to consider such
forward-looking statements in light of the risks set forth below.
Risk factors that could affect the Company's future results include, but
are not limited to, competition, environmental regulations, reliance on
alternate feed income, the ability to develop the alternate feed business,
changes to reclamation requirements, dependence on a limited number of
customers, volatility and sensitivity to market prices for uranium and vanadium,
the impact of changes in foreign currencies' exchange rates, political risk
arising from operating in Mongolia, changes in government regulation and
policies including trade laws and policies, demand for nuclear power,
replacement of reserves and production, receipt of permits and approvals from
governmental authorities (including amendments for each alternate feed
transaction) and other operating and development risks.
INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNITED STATES DOLLARS) (UNAUDITED)
December 31, 2001 September 30, 2001
----------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 8,605,535 $ 2,365,344
Short-term investments 3,782,323 11,687,208
Trade and other receivables 1,788,095 1,550,238
Inventories 1,882,805 1,886,556
Prepaid expenses and other 147,429 205,910
-------------------------------------
16,206,187 17,695,256
Plant and equipment, net 3,813,156 3,997,126
Notes receivable 200,000 200,000
Restricted investments (Note 2) 12,325,245 10,525,073
Other asset (Note 3) 3,600,000 3,600,000
-------------------------------------
$ 36,144,588 $ 36,017,455
=====================================
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities $ 326,184 $ 407,390
Notes payable 16,268 16,584
Deferred revenue 14,799,168 12,197,301
-------------------------------------
15,141,620 12,621,275
Notes payable, net of current portion 33,485 37,174
Reclamation obligations (Note 4) 12,350,157 12,350,157
Deferred revenue 1,612,827 2,868,815
Deferred credit 4,220,000 4,220,000
-------------------------------------
33,358,089 32,097,421
-------------------------------------
SHAREHOLDERS' EQUITY
Share capital (65,600,066 shares
issued and outstanding) 37,449,213 37,449,213
Deficit (34,662,714) (33,529,179)
-------------------------------------
2,786,499 3,920,034
-------------------------------------
$ 36,144,588 $ 36,017,455
=====================================
INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(UNITED STATES DOLLARS) (UNAUDITED)
Three Months Ended December 31
2001 2000
------------- -------------
OPERATIONS
Revenue
Vanadium sales $ - $ 47,533
Process milling 114,987 276,257
-------------------------------------
Total revenue 114,987 323,790
-------------------------------------
Costs and expenses
Vanadium cost of sales - 22,108
Process milling expenditures 114,230 182,599
Mill stand-by expenditures 659,473 648,326
Selling, general and administrative 584,177 433,297
Depreciation 20,016 88,710
-------------------------------------
1,377,896 1,375,040
-------------------------------------
Operating loss (1,262,909) (1,051,250)
Net interest and other income 129,374 341,826
-------------------------------------
Loss for the period $ (1,133,535) $ (709,424)
=====================================
Basic/diluted loss per common share $ (0.02) $ (0.01)
=====================================
DEFICIT
Deficit, beginning of period (33,529,179) (30,706,303)
Loss for the period (1,133,535) (709,424)
-------------------------------------
Deficit, end of period $(34,662,714) $(31,415,727)
=====================================
INTERNATIONAL URANIUM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNITED STATES DOLLARS) (UNAUDITED)
Three Months Ended December 31
2001 2000
---------------------------------------
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
Loss for the period $ (1,133,535) $ (709,424)
Items not affecting cash
Depreciation and amortization 205,671 287,052
Changes in non-cash working capital items
Increase in trade and other receivables (237,857) (41,476)
Decrease in inventories 3,751 13,476
Decrease in other current assets 58,482 115,493
Decrease in other accounts payable and accrued liabilities (81,206) (396,759)
---------------------------------------
Net cash used in operations (1,184,694) (731,638)
---------------------------------------
INVESTING ACTIVITIES
Purchase of properties, plant and equipment (21,702) (18,471)
Proceeds from sale of short-term investments 7,904,885 -
Increase in restricted investments (1,800,172) (144,404)
---------------------------------------
Net cash provided by (used in) investment activities 6,083,011 (162,875)
---------------------------------------
FINANCING ACTIVITIES
Decrease in notes payable (4,005) (4,405)
Increase in deferred revenue 1,345,879 1,759,653
---------------------------------------
Net cash provided by financing activities 1,341,874 1,755,248
---------------------------------------
Increase in cash and cash equivalents 6,240,191 860,735
Cash and cash equivalents, beginning of period 2,365,344 11,650,600
---------------------------------------
Cash and cash equivalents, end of period $ 8,605,535 $ 12,511,335
=======================================
SUPPLEMENTARY CASH FLOW INFORMATION
Cash interest paid $ 1,302 $ 5,746
Cash interest received $ 260,872 $ 330,599
INTERNATIONAL URANIUM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNITED STATES DOLLARS) (UNAUDITED)
1. Basis of Preparation of Financial Statements
These unaudited interim consolidated financial statements of the Company
and its subsidiaries have been prepared in accordance with accounting
principals generally accepted in Canada on a basis consistent with the
consolidated financial statements of the Company included in its 2001
annual report.
2. Restricted Investments
Amounts represent cash and fixed income securities the Company has placed
on deposit to secure its reclamation and performance bonds. During the
quarter ended December 31, 2001, the Company increased amounts placed on
deposit to bring its collateral to approximately 100% as required by the
bonding company (Notes 3 and 4).
December 31, 2001 September 30, 2001
-------------------------------------------
Cash and cash equivalents $ 6,647,582 $ 4,653,849
Fixed income securities 5,677,663 5,871,224
-------------------------------------------
$12,325,245 $10,525,073
===========================================
3. Other Asset
On September 13, 1999 the Company entered into a uranium concentrates sale
and put option agreement with a third party. The Company transferred
400,000 pounds U3O8 at a purchase price of $10.80 per pound U3O8 under this
agreement giving the third party the option to put up to an equivalent
quantity to the Company at $10.55 per pound U3O8 at any one time within the
period beginning October 1, 2001 and ending March 1, 2003. The transaction
was accounted for as a deferred credit and the value of the inventory that
could be put to the Company upon exercise of the put option was
reclassified as an other asset. A $1,000,000 bond (Note 2) secures a
portion of the transaction.
4. Provisions for Reclamation
Estimated future decommissioning and reclamation costs of the Mill and
mining properties are based principally on legal and regulatory
requirements. At December 31, 2001 and September 30, 2001, $12,350,157 was
accrued for reclamation costs. The Company has posted bonds in the amount
of $11,488,175 in favor of the United States Nuclear Regulatory Commission
and the applicable state regulatory agencies as partial security for these
liabilities and has deposited marketable securities on account of these
obligations (Note 2).
Elements of uncertainty in estimating reclamation and decommissioning costs
include potential changes in regulatory requirements, decommissioning and
reclamation alternatives. Actual costs will differ from those estimated and
such differences may be material.