ALBUQUERQUE, N.M. (AP) - A Texas mining company - blaming sliding uranium prices and the difficulty of getting financing - on Thursday backed out of a deal that could have led to the first uranium mill in the Grants area in two decades.

Uranium Resources Inc. agreed last Oct. 12 to buy Rio Algom Mining LLC, based in Oklahoma City, from Australian mining company BHP Billiton Ltd.

"The problem is that the market has changed since the time we signed this," Rick Van Horn, executive vice president and chief operating officer of Uranium Resources, said Thursday.

But he described the decision by both companies to terminate the deal as "a temporary setback, a chuckhole in the road. The car's still running and we're going forward."

Uranium is down to $57 per pound on the spot market, about half the $120 per-pound price when Uranium Resources and BHP signed their first agreement last July, Van Horn said.

"It's really tanked on us," he said.

The low spot price "defies description," Van Horn said. The long-term price is $90, but utilities - the ultimate purchasers of uranium - zero in on the spot price, he said.

One of Rio Algom's main assets is a uranium mine mill site in northwestern New Mexico's Ambrosia Lake District, about 20 miles north of Grants, a town once known as "the Uranium Capital of the World."

Uranium Resources planned to use the site to build a milling facility - what could have become the largest uranium mill in the United States. The old Kerr McGee mill there was torn down in 2003 when uranium prices hit rock bottom at $7 per pound.

The Grants area once had five uranium mills, but the last closed in 1989, said Star Gonzales, director of the Cibola Communities Economic Development Foundation.

Gonzales said Thursday's announcement was a disappointment.

"I think that certainly we were moving forward with the industry, and this is a setback," said Gonzales, who also is director of the Grants Chamber of Commerce and curator of the community's Mining Museum. "But it is not insurmountable. We have the reserves here so eventually we will mine uranium here again."

The community had expected a potential 1,200 high-paying jobs from a Uranium Resources mill, she said. But, she said, "that's not to say other industry partners that were looking to developing this area aren't going to go ahead."

Van Horn said the decision "doesn't preclude us from going back and talking to BHP again, or attacking from other avenues."

The president of Rio Algom Mining did not immediately return a call Thursday from The Associated Press.

While Van Horn believes Rio Algom had the best site, it's possible other locations could be developed, he said. Those would take longer because Uranium Resources would have to acquire water rights and a license from the Nuclear Regulatory Commission - things Rio Algom had.

Changes in the equities market and the sluggish economy also played a part in terminating the deal, Van Horn said.

"Going out and raising $180 million (to finance the acquisition) ... would have been next to impossible," he said.

Under the deal, Uranium Resources was to pay BHP $110 million in cash as well as assume certain liabilities and pay BHP $16.5 million contingent on getting a federal license to build and run a conventional uranium mill.

Lewisville, Texas-based Uranium Resources owns 183,000 acres of uranium mineral holdings in the Grants region. About half could be mined with newer, in-situ recovery technology, while the rest could be recovered with underground mines and a conventional mill such as the proposal at Rio Algom, Van Horn said.

"The need is still there, the long-term fundamentals in the market are still there with the state and U.S. needs for uranium and the world needs for uranium," he said. "And there is no production to meet those needs."

Gonzales said there are 600 million pounds of quality-grade uranium in the Grants uranium mineral belt, which stretches from McKinley County into Cibola County.

Van Horn said Uranium Resources won't disappear from Grants.

"We're still going to be in the community, we're still going to be advancing uranium mining" and trying to educate people about the industry, including the tougher worker safety and environmental regulations that uranium mining today has to follow, he said.