Attached files

file filename
EX-31.2 - EX-31.2 - UR-ENERGY INCurg-20160930ex312372cd2.htm
EX-32.2 - EX-32.2 - UR-ENERGY INCurg-20160930ex3227bc457.htm
EX-32.1 - EX-32.1 - UR-ENERGY INCurg-20160930ex3216c0a99.htm
EX-31.1 - EX-31.1 - UR-ENERGY INCurg-20160930ex3112620db.htm


United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2016

 

 

 

 

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION PERIOD OF _________ TO _________.

 

Commission File Number: 001-33905

 

UR-ENERGY INC.

(Exact name of registrant as specified in its charter)

 

 

 

Canada

Not Applicable

State or other jurisdiction of incorporation or organization

(I.R.S. Employer Identification No.)

 

10758 West Centennial Road, Suite 200
Littleton, Colorado 80127
(Address of principal executive offices, including zip code)

 

Registrant’s telephone number, including area code: 720-981-4588

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☑   No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company:

 

Large accelerated filer ☐                     Accelerated filer ☑               Non-accelerated filer ☐             Smaller reporting company ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐No ☑

 

As of October 26, 2016, there were 143,605,552 shares of the registrant’s no par value Common Shares (“Common Shares”), the registrant’s only outstanding class of voting securities, outstanding.

 



 


 

2


 

 

When we use the terms “Ur-Energy,” “we,” “us,” or “our,” or the “Company” we are referring to Ur-Energy Inc. and its subsidiaries, unless the context otherwise requires. Throughout this document we make statements that are classified as “forward-looking.” Please refer to the “Cautionary Statement Regarding Forward-Looking Statements” section of this document for an explanation of these types of assertions.

Cautionary Statement Regarding Forward-Looking Information

 

This report on Form 10-Q contains "forward-looking statements" within the meaning of applicable United States and Canadian securities laws, and these forward-looking statements can be identified by the use of words such as "expect," "anticipate,” "estimate," "believe," "may," "potential," "intends," "plans" and other similar expressions or statements that an action, event or result "may," "could" or "should" be taken, occur or be achieved, or the negative thereof or other similar statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Such statements include, but are not limited to: (i) the maintainance of steady state operations at Lost Creek while maintaining low-cost production; (ii) the technical and economic viability of Lost Creek; (iii) the timing and outcome of permitting and regulatory approvals of the amendment for recovery from LC East and the KM horizon; (iv) the timing of commencement of use of the Class V water disposal system, and results of operation; (v) the outcome and impact of ongoing regulatory rulemaking and other changes in regulation and/or legislation; (vi) the ability to complete additional favorable uranium sales agreements including spot sales if production is available and the market warrants; (vii) the production rates and life of the Lost Creek Project and subsequent production from adjoining properties, including LC East; (viii) the technical and economic viability of Shirley Basin and the timing and outcome of applications for regulatory approval to build and operate an ISR mine at Shirley Basin; (ix) the outcome of our forecasts and production projections; and (x) the continuing and long-term effects on the uranium market of supply and demand changes and projections. These other factors include, among others, the following: future estimates for production, capital expenditures, operating costs, mineral resources, recovery rates, grades and market prices; business strategies and measures to implement such strategies; competitive strengths; estimates of goals for expansion and growth of the business and operations; plans and references to our future successes; our history of operating losses and uncertainty of future profitability; status as an exploration stage company; our lack of mineral reserves; risks associated with obtaining permits and other authorizations in the United States; risks associated with current variable economic conditions; our ability to service our debt and maintain compliance with all restrictive covenants related to the debt facilities and security documents; the possible impact of future financings; the hazards associated with mining production; compliance with environmental laws and regulations; uncertainty regarding the pricing and collection of accounts; the possibility for adverse results in potential litigation; uncertainties associated with changes in government policy and regulation; uncertainties associated with a Canada Revenue Agency or U.S. Internal Revenue Service audit of any of our cross border transactions; adverse changes in general business conditions in any of the countries in which we do business; changes in size and structure; effectiveness of management and our strategic relationships; ability to attract and retain key personnel; uncertainties regarding the need for additional capital; uncertainty regarding the fluctuations of quarterly results; foreign currency exchange risks; ability to enforce civil liabilities under U.S. securities laws outside the United States; ability to maintain our listing on the NYSE MKT LLC (“NYSE MKT”) and Toronto Stock Exchange (“TSX”); risks associated with the expected classification as a "passive foreign investment company" under the applicable provisions of the U.S. Internal Revenue Code of 1986, as amended; risks associated with our investments and other risks and uncertainties described under the heading “Risk Factors” in our Annual Report on Form 10-K, dated February 26, 2016.

 

1


 

Cautionary Note to U.S. Investors Concerning Disclosure of Mineral Resources

 

Unless otherwise indicated, all resource estimates included in this Form 10-Q have been prepared in accordance with Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards for Mineral Resources and Mineral Reserves (“CIM Definition Standards”). NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. NI 43-101 permits the reporting of an historical estimate made prior to the adoption of NI 43-101 that does not comply with NI 43-101 to be disclosed using the historical terminology if the disclosure: (a) identifies the source and date of the historical estimate; (b) comments on the relevance and reliability of the historical estimate; (c) to the extent known, provides the key assumptions, parameters and methods used to prepare the historical estimate; (d) states whether the historical estimate uses categories other than those prescribed by NI 43-101; and (e) includes any more recent estimates or data available. 

 

Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (“SEC”), and resource information contained in this Form 10-K may not be comparable to similar information disclosed by U.S. companies. In particular, the term “resource” does not equate to the term “‘reserves,”.  Under SEC Industry Guide 7, mineralization may not be classified as a “reserve” unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. SEC Industry Guide 7 does not define and the SEC’s disclosure standards normally do not permit the inclusion of information concerning “measured mineral resources,” “indicated mineral resources” or “inferred mineral resources” or other descriptions of the amount of mineralization in mineral deposits that do not constitute “reserves” by U.S. standards in documents filed with the SEC. U.S. investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. Under Canadian rules, estimated “inferred mineral resources” may not form the basis of feasibility or pre-feasibility studies except in rare cases. Investors are cautioned not to assume that all or any part of an “inferred mineral resource” exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC standards as in-place tonnage and grade without reference to unit measures. Accordingly, information concerning mineral deposits set forth herein may not be comparable to information made public by companies that report in accordance with U. S. standards.

 

NI 43-101 Review of Technical Information: James A. Bonner, Ur-Energy Vice President Geology, P.Geo. and Qualified Person as defined by NI 43-101, reviewed and approved the technical information contained in this Form 10-Q.

 

2


 

PART I

Item 1. FINANCIAL STATEMENTS

 

Ur-Energy Inc.

Unaudited Interim Consolidated Balance Sheets

 

(expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

September 30,

 

December 31,

 

2016

 

2015

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents (note 3)

2,961

 

1,443

Accounts receivable (note 4)

3,298

 

9

Inventory (note 5)

3,405

 

3,345

Prepaid expenses

866

 

916

 

10,530

 

5,713

Restricted cash (note 6)

7,557

 

7,557

Mineral properties (note 7)

48,472

 

50,610

Capital assets (note 8)

29,366

 

30,788

Equity investment (note 9)

 -

 

1,089

 

95,925

 

95,757

Liabilities and shareholders' equity

 

 

 

Current liabilities

 

 

 

Accounts payable and accrued liabilities (note 10)

4,753

 

4,567

Current portion of notes payable (note 11)

5,508

 

8,527

Accrued federal income tax

 -

 

43

Deferred revenue (note 12)

2,498

 

 -

Environmental remediation accrual

85

 

86

 

12,844

 

13,223

Notes payable (note 11)

20,585

 

23,937

Asset retirement obligations (note 13)

26,610

 

26,061

Other liabilities - warrants

 -

 

35

 

60,039

 

63,256

Shareholders' equity (note 14)

 

 

 

Share Capital

 

 

 

Class A preferred shares, without par value, unlimited shares authorized; no shares issued and outstanding

 -

 

 -

Common shares, without par value, unlimited shares authorized; shares issued and outstanding: 143,605,552 at September 30, 2016 and 130,188,775 at December 31, 2015

174,866

 

168,911

Warrants

4,109

 

4,175

Contributed surplus

14,991

 

14,632

Accumulated other comprehensive income

3,608

 

3,357

Deficit

(161,688)

 

(158,574)

 

35,886

 

32,501

 

95,925

 

95,757

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

Approved by the Board of Directors

 

/s/ Jeffrey T. Klenda, Chairman of the Board/s/ Thomas Parker, Director

3


 

Ur-Energy Inc.

Unaudited Interim Consolidated Statements of Operations and Comprehensive Loss

 

(expressed in thousands of U.S. dollars except for share data)

 

 

 

 

 

 

 

 

 

 

 

Three months ended  September 30,

 

Nine months ended September 30,

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

Sales (note 15)

12,068

 

8,491

 

21,529

 

34,091

 

 

 

 

 

 

 

 

Cost of sales

(5,818)

 

(4,180)

 

(12,767)

 

(23,361)

 

 

 

 

 

 

 

 

Gross profit

6,250

 

4,311

 

8,762

 

10,730

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Exploration and evaluation

(828)

 

(981)

 

(2,370)

 

(2,216)

Development

(1,108)

 

(1,930)

 

(2,384)

 

(3,516)

General and administrative

(972)

 

(1,081)

 

(3,796)

 

(4,341)

Accretion of asset retirement obligations (note 13)

(134)

 

(129)

 

(399)

 

(383)

Write-off of mineral properties (note 7)

 -

 

 -

 

(62)

 

 -

 

 

 

 

 

 

 

 

Income (loss) from operations

3,208

 

190

 

(249)

 

274

 

 

 

 

 

 

 

 

Interest expense (net)

(474)

 

(624)

 

(1,543)

 

(1,970)

Warrant mark to market adjustment

5

 

140

 

36

 

311

Loss on equity investment (note 9)

(3)

 

 -

 

(5)

 

(5)

Write-off of equity investments (note 9)

(900)

 

 -

 

(1,089)

 

 -

Foreign exchange gain (loss)

(6)

 

7

 

(279)

 

(1)

Other income (loss)

(27)

 

5

 

15

 

5

Net income (loss) for the period

1,803

 

(282)

 

(3,114)

 

(1,386)

 

 

 

 

 

 

 

 

Income (loss) per common share

 

 

 

 

 

 

 

Basic and diluted

0.01

 

 -

 

(0.02)

 

(0.01)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

Basic and diluted

143,605,552

 

130,187,127

 

141,324,039

 

130,012,501

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

Net income (loss) for the period

1,803

 

(282)

 

(3,114)

 

(1,386)

Other Comprehensive loss, net of tax

 

 

 

 

 

 

 

Translation adjustment on foreign operations

2

 

254

 

251

 

272

Comprehensive income (loss) for the period

1,805

 

(28)

 

(2,863)

 

(1,114)

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

4


 

 

Ur-Energy Inc.

Unaudited Interim Consolidated Statement of Shareholders’ Equity

 

(expressed in thousands of U.S. dollars except for share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Capital Stock

 

 

 

Contributed

 

Comprehensive

 

 

 

Shareholders'

 

Shares

 

Amount

 

Warrants

 

Surplus

 

Income

 

Deficit

 

Equity

 

#

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2015

130,188,775

 

168,911

 

4,175

 

14,632

 

3,357

 

(158,574)

 

32,501

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

16,620

 

13

 

 -

 

(4)

 

 -

 

 -

 

9

Common shares issued for cash, net

 

 

 

 

 

 

 

 

 

 

 

 

 

  of $883 of issue costs

13,085,979

 

5,686

 

 -

 

 -

 

 -

 

 -

 

5,686

Redemption of vested RSUs

314,178

 

256

 

 -

 

(306)

 

 -

 

 -

 

(50)

Expiry of warrants

 -

 

 -

 

(66)

 

66

 

 -

 

 -

 

 -

Non-cash stock compensation

 -

 

 -

 

 -

 

603

 

 -

 

 -

 

603

Net loss and comprehensive income

 -

 

 -

 

 -

 

 -

 

251

 

(3,114)

 

(2,863)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2016

143,605,552

 

174,866

 

4,109

 

14,991

 

3,608

 

(161,688)

 

35,886

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

5


 

Ur-Energy Inc.

Unaudited Interim Consolidated Statements of Cash Flow

 

(expressed in thousands of U.S. dollars)

 

 

 

 

 

 

Nine months ended September 30,

 

2016

 

2015

Cash provided by (used in)

 

 

 

Operating activities

 

 

 

Net loss for the period

(3,114)

 

(1,386)

Items not affecting cash:

 

 

 

Stock based expense

603

 

675

Depreciation and amortization

3,852

 

5,354

Accretion of asset retirement obligations

399

 

383

Amortization of deferred loan costs

114

 

138

Provision for reclamation

(1)

 

 -

Write off of investments

1,089

 

 -

Write-off of mineral properties

62

 

 -

Warrants mark to market gain

(36)

 

(311)

Gain on disposition of assets

(14)

 

(6)

Loss on foreign exchange

281

 

 -

Deferred revenue recognized

(2,588)

 

 -

Other loss

5

 

5

RSUs redeemed to pay withholding

(9)

 

(142)

Proceeds from assignment of sales contract

5,085

 

 -

Change in non-cash working capital items:

 

 

 

Accounts receivable

(3,289)

 

22

Inventory

(60)

 

310

Prepaid expenses

(86)

 

(6)

Accounts payable and accrued liabilities

243

 

617

Accrued income taxes

30

 

 -

 

2,566

 

5,653

Investing activities

 

 

 

Funding of equity investment

(5)

 

(4)

Proceeds from sale of property and equipment

91

 

17

Purchase of capital assets

(281)

 

(45)

 

(195)

 

(32)

Financing activities

 

 

 

Issuance of common shares and warrants for cash

6,568

 

 -

Share issue costs

(880)

 

 -

Proceeds from exercise of stock options

9

 

410

Repayment of debt

(6,486)

 

(5,509)

 

(789)

 

(5,099)

Effects of foreign exchange rate changes on cash

(64)

 

1

Net change in cash and cash equivalents

1,518

 

523

Beginning cash and cash equivalents

1,443

 

3,104

   Ending cash and cash equivalents

2,961

 

3,627

 

The accompanying notes are an integral part of these interim consolidated financial statements.

 

6


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

1.Nature of Operations

 

Ur-Energy Inc. (the “Company”) was incorporated on March 22, 2004 under the laws of the Province of Ontario. The Company was continued under the Canada Business Corporations Act on August 8, 2006. The Company is an exploration stage mining company, as defined by U. S. Securities and Exchange Commission (“SEC”) Industry Guide 7, headquartered in Littleton, Colorado.  The Company is engaged in uranium mining and recovery operations, with activities including the acquisition, exploration, development and production of uranium mineral resources located in Wyoming. As of August 2013, the Company commenced uranium production at its Lost Creek Project in Wyoming.

 

Due to the nature of the uranium mining methods used by the Company on the Lost Creek Property, and the definition of “mineral reserves” under National Instrument 43-101 (“NI 43-101”), which uses the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards, the Company has not determined whether the properties contain mineral reserves. However, the Company’s “Amended Preliminary Economic Assessment of the Lost Creek Property, Sweetwater County, Wyoming,” February 8, 2016 (“Lost Creek PEA”) outlines the potential viability of the Lost Creek Property. The recoverability of amounts recorded for mineral properties is dependent upon the discovery of economic resources, the ability of the Company to obtain the necessary financing to develop the properties and upon attaining future profitable production from the properties or sufficient proceeds from disposition of the properties.

 

 

2.Summary of Significant Accounting Policies

 

Basis of presentation

 

These unaudited interim consolidated financial statements do not conform in all respects to the requirements of generally accepted accounting principles for annual financial statements. The unaudited interim financial statements reflect all normal adjustments which in the opinion of management are necessary for a fair statement of the results for the periods presented. These unaudited interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2015. The year-end balance sheet data was derived from the audited financial statements and certain information and footnote disclosures required by United States generally accepted accounting principles (US GAAP) have been condensed or omitted.

 

New accounting pronouncements

 

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606).”  The amendments in ASU 2014-09 affect any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards (e.g., insurance contracts or lease contracts). This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance, and creates a Topic 606 Revenue from Contracts with Customers.  The core principle of the guidance is that an entity should recognize revenue to depict the transfer of the promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.  The amendments are effective for annual reporting periods beginning after December 15, 2017.  Early application is not permitted.  We are assessing the impact this pronouncement may have on our financial reporting.

 

7


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

In January 2016, the FASB issued ASU 2016-1, Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825). The amendments in this ASU supersede the guidance to classify equity securities with readily determinable fair values into different categories (that is, trading or available-for-sale) and require equity securities (including other ownership interests, such as partnerships, unincorporated joint ventures, and limited liability companies) to be measured at fair value with changes in the fair value recognized through net income. The amendments allow equity investments that do not have readily determinable fair values to be remeasured at fair value either upon the occurrence of an observable price change or upon identification of an impairment. The amendments also require enhanced disclosures about those investments. The amendments improve financial reporting by providing relevant information about an entity’s equity investments and reducing the number of items that are recognized in other comprehensive income. This guidance is effective for annual reporting beginning after December 15, 2017, including interim periods within the year of adoption, and calls for prospective application, with early application permitted. Accordingly, the standard is effective for us beginning in the first quarter of fiscal 2019. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize all leases, including operating leases, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. We are currently evaluating the impact that this standard update will have on our consolidated financial statements.

 

In March 2016, the FASB issued ASU No. 2016-09,  Compensation-Stock Compensation- Improvements to Employee Share-Based Payment Accounting (Topic 718), which involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows.  Under the new standard, income tax benefits and deficiencies are to be recognized as income tax expense or benefit in the income statement and the tax effects of exercised or vested awards should be treated as discrete items in the reporting period in which they occur.  An entity should also recognize excess tax benefits regardless of whether the benefit reduces taxes payable in the current period.  Excess tax benefits should be classified along with other income tax cash flows as an operating activity.  In regard to forfeitures, the entity may make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. This ASU is effective for fiscal years beginning after December 15, 2016 including interim periods within that reporting period, however early adoption is permitted.  We are currently evaluating the guidance to determine the Company's adoption method and the effect it will have on the Company's Consolidated Financial Statements.  

8


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

3.Cash and Cash Equivalents

 

The Company’s cash and cash equivalents consist of the following:

 

 

 

 

 

 

 

As at

 

September 30, 2016

 

December 31, 2015

 

$

 

$

Cash on deposit at banks

1,340

 

1,202

Money market funds

1,621

 

241

 

 

 

 

 

2,961

 

1,443

 

4.Accounts Receivable

 

The Company’s accounts receivable consist of the following:

 

 

 

 

 

 

 

As at

 

September 30, 2016

 

December 31, 2015

 

$

 

$

Trade accounts receivable

 

 

 

Company A

3,270

 

 -

Other Companies

21

 

 -

Total trade receivables

3,291

 

 -

Other receivables

7

 

9

 

 

 

 

Total accounts receivable

3,298

 

9

 

The names of the individual companies have not been disclosed for reasons of confidentiality.

 

5.Inventory

 

The Company’s inventory consists of the following:

 

 

 

 

 

 

 

As at

 

September 30, 2016

 

December 31, 2015

 

$

 

$

In-process inventory

866

 

994

Plant inventory

 -

 

742

Conversion facility inventory

2,539

 

1,609

 

 

 

 

 

3,405

 

3,345

 

As of September 30, 2016, there was no inventory on hand with costs in excess of net realizable value.

9


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

6.    Restricted Cash

 

The Company’s restricted cash consists of the following:

 

 

 

 

 

 

 

As at

 

September 30, 2016

 

December 31, 2015

 

$

 

$

 

 

 

 

Money market account

7,457

 

7,457

Certificates of deposit

100

 

100

 

 

 

 

 

7,557

 

7,557

 

The bonding requirements for reclamation obligations on various properties have been agreed to by the Wyoming Department of Environmental Quality (“WDEQ”), the Bureau of Land Management (“BLM”) and the Nuclear Regulatory Commission (“NRC”) as applicable.  The restricted money market accounts are pledged as collateral against performance surety bonds which are used to secure the potential costs of reclamation related to those properties. Surety bonds providing $27.4 million of coverage towards specific reclamation obligations are collateralized by $7.5 million of the restricted cash at September 30, 2016. 

 

7Mineral Properties

 

The Company’s mineral properties consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

Lost Creek

 

Pathfinder

 

Other US

 

 

 

Property

 

Mines

 

Properties

 

Total

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

Balance, December 31, 2015

16,662

 

20,738

 

13,210

 

50,610

 

 

 

 

 

 

 

 

Change in estimated reclamation costs (Note 13)

338

 

(188)

 

 -

 

150

Property write-offs

 -

 

 -

 

(62)

 

(62)

Amortization

(2,226)

 

 -

 

 -

 

(2,226)

 

 

 

 

 

 

 

 

Balance, September 30, 2016

14,774

 

20,550

 

13,148

 

48,472

 

Lost Creek Property

 

The Company acquired certain Wyoming properties in 2005 when Ur-Energy USA Inc. purchased 100% of NFU Wyoming, LLC. Assets acquired in this transaction include the Lost Creek Project, other Wyoming properties and development databases.  NFU Wyoming, LLC was acquired for aggregate consideration of $20 million plus interest.

10


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

Since 2005, the Company has increased its holdings adjacent to the initial Lost Creek acquisition through staking additional claims and additional property purchases and leases. 

 

There is a royalty on each of the State of Wyoming sections under lease at the Lost Creek, LC West and EN Projects, as required by law. Other royalties exist on certain mining claims at the LC South, LC East and EN Projects. Currently, there are no royalties on the mining claims in the Lost Creek, LC North or LC West Projects.

 

Pathfinder Mines

 

The Company acquired additional Wyoming properties when Ur-Energy USA Inc. closed a Share Purchase Agreement (“SPA”) with an AREVA Mining affiliate in December 2013. Under the terms of the SPA, the Company purchased Pathfinder Mines Corporation (“Pathfinder”) to acquire additional mineral properties. Assets acquired in this transaction include the Shirley Basin mine, portions of the Lucky Mc mine, machinery and equipment, vehicles, office equipment and development databases. Pathfinder was acquired for aggregate consideration of $6.7 million, a 5% production royalty under certain circumstances and the assumption of $5.7 million in estimated asset reclamation obligations.   At June 30, 2016, the royalty expired and has been terminated.

 

Other U.S. properties

 

In June 2016, the Company decided to abandon its claims in the Hauber project and wrote off $62 thousand being the carrying value of the investment in that project. No impairment indicators were identified or recorded for any properties other than the investment in Bootheel described below.

 

8.Capital Assets

 

The Company’s capital assets consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

September 30, 2016

 

December 31, 2015

 

 

 

Accumulated

 

Net Book

 

 

 

Accumulated

 

Net Book

 

Cost

 

Depreciation

 

Value

 

Cost

 

Depreciation

 

Value

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Rolling stock

3,236

 

2,894

 

342

 

3,819

 

3,179

 

640

Enclosures

32,991

 

4,816

 

28,175

 

32,987

 

3,578

 

29,409

Machinery and equipment

1,262

 

574

 

688

 

1,031

 

507

 

524

Furniture, fixtures and leasehold improvements

119

 

97

 

22

 

119

 

92

 

27

Information technology

1,152

 

1,013

 

139

 

1,111

 

923

 

188

 

 

 

 

 

 

 

 

 

 

 

 

 

38,760

 

9,394

 

29,366

 

39,067

 

8,279

 

30,788

 

 

 

 

 

 

11


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

9.Equity Investment

 

Following its earn-in to the Bootheel Project in 2009, Jet Metals Corp. was required to fund 75% of the project’s expenditures and the Company the remaining 25%. The project has been accounted for using the equity accounting method with the Company’s pro rata share of the project’s loss included in the Statement of Operations since the date of earn-in and the Company’s net investment reflected on the Balance Sheet. Under the terms of the operating agreement, the Company elected not to participate financially for the year ended March 31, 2012 which reduced the Company’s ownership percentage to approximately 19%. The equity accounting method has been continued because the Company has an equal number of members on the management committee as the other member and can directly influence the budget, expenditures and operations of the project.

 

In 2016, the Company performed quarterly impairment analyses based on the mineralization at the Bootheel property and the then current spot price.  It determined that impairments reflecting the then current spot price were warranted.  Upon further analysis, it was determined that the deteriorating market conditions have made the investment not currently economically viable.  Therefore, while the ownership interest will continue to be carried by the Company and the related resources retained, the Company has elected to write off the remaining basis in the investment as of September 30, 2016 resulting in a charge of $889 for the quarter and $1,089 for the year.

 

10.Accounts Payable and Accrued Liabilities

 

Accounts payable and accrued liabilities consist of the following:

 

 

 

 

 

 

 

 

 

 

As at

 

September 30, 2016

 

December 31, 2015

 

$

 

$

Accounts payable

1,188

 

1,402

Severance and ad valorem tax payable

2,166

 

1,992

Payroll and other taxes

1,399

 

1,173

 

 

 

 

 

4,753

 

4,567

 

 

 

 

 

11.Notes Payable

 

On October 15, 2013, the Sweetwater County Commissioners approved the issuance of a $34.0 million Sweetwater County, State of Wyoming, Taxable Industrial Development Revenue Bond (Lost Creek Project), Series 2013 (the “Sweetwater IDR Bond”) to the State of Wyoming, acting by and through the Wyoming State Treasurer, as purchaser. On October 23, 2013, the Sweetwater IDR Bond was issued and the proceeds were in turn loaned by Sweetwater County to Lost Creek ISR, LLC pursuant to a financing agreement dated October 23, 2013 (the “State Bond Loan”). The State Bond Loan calls for payments of interest at a fixed rate of 5.75% per annum on a quarterly basis commencing January 1, 2014. The principal is payable in 28 quarterly installments commencing January 1, 2015 and continuing through October 1, 2021.

 

12


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

On March 14, 2014, the Company modified a loan facility with RMB to include a $3.5 million line of credit. On October 15, 2015, the loan was amended to extend the maturity date of the $3.5 million line of credit to December 31, 2016 and spread the $3.5 million balance originally due March 31, 2016 over four quarterly payments commencing March 31, 2016 and concluding December 31, 2016, plus interest at a rate of approximately 9.13%.  This was considered a modification for accounting purposes.

 

Deferred loan fees include legal fees, commissions, commitment fees and other costs associated with obtaining the various financings. Those fees amortizable within 12 months of September 30, 2016 are considered current.

 

The following table lists the current (within 12 months) and long term portion of each of the Company’s debt instruments:

 

 

 

 

 

 

 

As at

 

September 30, 2016

 

December 31, 2015

 

$

 

$

Current debt

 

 

 

Sweetwater County Loan

4,558

 

4,367

RMB First Loan Facility

1,078

 

4,312

 

5,636

 

8,679

 

 

 

 

Less deferred financing costs

(128)

 

(152)

 

5,508

 

8,527

 

 

 

 

Long term debt

 

 

 

Sweetwater County Loan

21,071

 

24,514

Less deferred financing costs

(486)

 

(577)

 

20,585

 

23,937

 

Schedule of payments on outstanding debt as of September 30, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

Total

 

2016

 

2017

 

2018

 

2019

 

2020

 

Subsequent

 

Maturity

 

$

 

$

 

$

 

$

 

$

 

$

 

$

 

 

Sweetwater County Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal

25,629

 

1,115

 

4,623

 

4,895

 

5,183

 

5,487

 

4,326

 

October 1, 2021

Interest

4,042

 

368

 

1,311

 

1,039

 

752

 

447

 

125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RMB First Loan Facility

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal

1,078

 

1,078

 

 -

 

 -

 

 -

 

 -

 

 -

 

December 31, 2016

Interest

25

 

25

 

 -

 

 -

 

 -

 

 -

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

30,774

 

2,586

 

5,934

 

5,934

 

5,935

 

5,934

 

4,451

 

 

 

 

 

 

 

13


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

12.Deferred Revenue

In March 2016, the Company assigned its 2016 contractual delivery obligations under two of its sales contracts to a natural resources trading company in exchange for a cash payment of $5.1 million. The first delivery occurred in July 2016 while the second is scheduled for the fourth quarter.  The Company reflects payments as revenue when the related deliveries under the contracts are settled.  Accordingly, the Company recognized $2.6 million of revenue in the current quarter as a result of the July delivery.

13.Asset Retirement and Reclamation Obligations

 

Asset retirement obligations ("ARO") relate to the Lost Creek mine and Pathfinder projects and are equal to the present value of all estimated future costs required to remediate any environmental disturbances that exist as of the end of the period discounted at a risk-free rate. Included in this liability are the costs of closure, reclamation, demolition and stabilization of the mines, processing plants, infrastructure, aquifer restoration, waste dumps and ongoing post-closure environmental monitoring and maintenance costs.

 

At September 30, 2016, the total undiscounted amount of the future cash needs was estimated to be $27.2 million. The schedule of payments required to settle the ARO liability extends through 2033.

 

The restricted cash as discussed in note 6 is related to the surety bonds which provide security to the governmental agencies on these obligations.

 

 

 

 

 

 

 

For the period ended

 

September 30, 2016

 

December 31, 2015

 

 

 

 

 

$

 

$

Beginning of period

26,061

 

23,445

Change in estimated liability

150

 

2,101

Accretion expense

399

 

515

 

 

 

 

End of period

26,610

 

26,061

 

 

 

 

 

 

14.Shareholders’ Equity and Capital Stock

 

Stock options

 

In 2005, the Company’s Board of Directors approved the adoption of the Company's stock option plan (the “Option Plan”). The plan was most recently approved by the shareholders on April 29, 2014.  Eligible participants under the Option Plan include directors, officers, employees and consultants of the Company. Under the terms of the Option Plan, stock options generally vest with Option Plan participants as follows: 10% at the date of grant; 22% four and one-half months after grant; 22% nine months after grant; 22% thirteen and one-half months after grant; and the balance of 24% eighteen months after the date of grant.

 

14


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

Activity with respect to stock options is summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

average

 

 

 

Options

 

exercise price

 

 

 

#

 

US$

 

 

 

 

 

 

Balance, December 31, 2015

 

 

9,974,407

 

0.88

 

 

 

 

 

 

Exercised

 

 

(16,620)

 

0.59

Forfeited

 

 

(777,042)

 

0.71

Expired

 

 

(2,282,512)

 

1.63

 

 

 

 

 

 

Outstanding, September 30, 2016

 

 

6,898,233

 

0.69

 

The exercise price of a new grant is set at the closing price for the shares on the Toronto Stock Exchange (TSX) on the trading day immediately preceding the grant date so there is no intrinsic value as of the date of grant. The fair value of options vested during the nine months ended September 30, 2016 was $0.5 million.

 

15


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

As of September 30, 2016, outstanding stock options are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options outstanding

 

Options exercisable

 

 

 

 

 

 

Weighted-

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

average

 

 

 

 

 

average

 

 

 

 

 

 

 

 

remaining

 

Aggregate

 

 

 

remaining

 

Aggregate

 

 

Exercise

 

Number

 

contractual

 

Intrinsic

 

Number

 

contractual

 

Intrinsic

 

 

price

 

of options

 

life (years)

 

Value

 

of options

 

life (years)

 

Value

 

Expiry

US$

 

 

 

 

 

US$

 

 

 

 

 

US$

 

 

 

 

 

 

 

 

(thousands)

 

 

 

 

 

(thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.88

 

200,000

 

0.1

 

 -

 

200,000

 

0.1

 

 -

 

October 24, 2016

0.69

 

826,143

 

0.3

 

 -

 

826,143

 

0.3

 

 -

 

January 12, 2017

1.06

 

200,000

 

0.3

 

 -

 

200,000

 

0.3

 

 -

 

February 1, 2017

0.90

 

100,000

 

0.4

 

 -

 

100,000

 

0.4

 

 -

 

March 1, 2017

0.58

 

1,137,805

 

1.2

 

 -

 

1,137,805

 

1.2

 

 -

 

December 7, 2017

0.59

 

510,324

 

1.6

 

 -

 

510,324

 

1.6

 

 -

 

April 25, 2018

0.95

 

100,000

 

1.8

 

 -

 

100,000

 

1.8

 

 -

 

August 1, 2018

0.91

 

794,443

 

2.2

 

 -

 

794,443

 

2.2

 

 -

 

December 27, 2018

1.28

 

100,000

 

2.5

 

 -

 

100,000

 

2.5

 

 -

 

March 31, 2019

0.78

 

837,228

 

3.2

 

 -

 

837,228

 

3.2

 

 -

 

December 12, 2019

0.87

 

200,000

 

3.7

 

 -

 

152,000

 

3.7

 

 -

 

May 29, 2020

0.66

 

709,262

 

3.9

 

 -

 

383,002

 

3.9

 

 -

 

August 17, 2020

0.61

 

1,183,028

 

4.2

 

 -

 

638,837

 

4.2

 

 -

 

December 11, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.69

 

6,898,233

 

2.2

 

 -

 

5,979,782

 

1.9

 

 -

 

 

 

The aggregate intrinsic value of the options in the preceding table represents the total pre-tax intrinsic value for stock options with an exercise price less than the Company’s TSX closing stock price of Cdn$0.64 as of the last trading day in the period ended September 30, 2016, that would have been received by the option holders had they exercised their options as of that date.  No options were in-the-money as of September 30, 2016.

 

Restricted share units

 

On June 24, 2010, the Company’s shareholders approved the adoption of the Company’s restricted share unit plan (the “RSU Plan”).  The RSU Plan was approved by our shareholders most recently on May 5, 2016.

 

Eligible participants under the RSU Plan include directors and employees of the Company. Under the terms of the original RSU Plan, RSUs vested with participants as follows: 50% on the first anniversary of the date of the grant and 50% on the second anniversary of the date of the grant.  In March 2015, the Board approved amendments to the plan that (a) extend the redemption period so that, going forward, all RSUs in a grant are not redeemed until the second anniversary of the grant; (b) provide for redemption, instead of cancellation, of outstanding RSUs at the date of redemption for retiring directors and executive officers, which is defined as a threshold of combined service and age of 65 years, and a minimum of five years of service to the Company; and (c) update the RSU Plan for compliance with applicable laws. The amendments were approved and ratified by shareholder vote on May 28, 2015. Grants made subsequent to May 28, 2015 have been made pursuant to the amendments described.

16


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

 

Activity with respect to RSUs is summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

Number

 

Weighted

 

 

 

of

 

average grant

 

 

 

RSUs

 

date fair value

 

 

 

 

 

US$

Unvested, December 31, 2015

 

 

860,095

 

0.82

 

 

 

 

 

 

Vested

 

 

(186,733)

 

0.84

Forfeited

 

 

(20,401)

 

0.66

 

 

 

 

 

 

Unvested, September 30, 2016

 

 

652,961

 

0.70

 

As of September 30, 2016, outstanding RSUs are as follows:

 

 

 

 

 

 

 

 

 

 

 

Number of

 

Remaining

 

Aggregate

 

 

unvested

 

life

 

Intrinsic

Grant date

 

RSUs

 

(years)

 

Value

 

 

 

 

 

 

US$

 

 

 

 

 

 

(thousands)

December 12, 2014

 

94,609

 

0.20

 

46

March 13, 2015

 

110,278

 

0.45

 

54

August 17, 2015

 

177,314

 

0.88

 

87

December 11, 2015

 

270,760

 

1.20

 

133

 

 

 

 

 

 

 

 

 

652,961

 

0.84

 

320

 

Upon RSU vesting, the holder of an RSU will receive one common share, for no additional consideration, for each RSU held.

 

Warrants

 

The following represents warrant activity during the period ended September 30, 2016.

 

17


 

Table of Contents

Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2016

 

(expressed in thousands of U.S. dollars unless otherwise indicated)

 

 

 

 

 

 

 

 

 

 

Number

 

Weighted-

 

 

 

of

 

average

 

 

 

Warrants

 

exercise price