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8-K - CURRENT REPORT - UR-ENERGY INC | urg-20201231.htm |
Exhibit 99.1
Ur-Energy Releases 2020 Q3 Results
Littleton, Colorado (ACCESSWIRE – October 30, 2020)
Ur-Energy Inc. (NYSE
American:URG)(TSX:URE) (the “Company” or
“Ur-Energy”) has filed the Company’s Form 10-Q
for the quarter ended September 30, 2020, with the U.S. Securities
and Exchange Commission at www.sec.gov/edgar.shtml
and with Canadian securities authorities at www.sedar.com.
Ur-Energy CEO, Jeff Klenda said,
“We are pleased that the U.S. Nuclear Fuel Working Group, as
well as bipartisan Congressional support, remains focused on
securing the future of our industry and our nation. As we await
additional positive developments, like the recent amendment and
20-year extension of the Russian Suspension Agreement, we continue
our efforts to support the uranium production industry and to
safeguard America’s national and energy security through the
reinvigoration of the front end of our nuclear fuel
cycle.
“After
making further, market-appropriate adjustments to our Lost Creek
operations, we anticipate substantial savings in 2021 and 2022,
which are greatly enhanced by the recent agreement to defer
principal payments on our State Bond Loan until October 2022. We
remain grateful to the State of Wyoming and Sweetwater County for
their continuing support. With $5.9 million of cash and
approximately 270,000 pounds of finished, ready-to-sell product at
the conversion facility, we now have ample runway to support
operations into 2022.”
Results of Operations
For the
three months ended September 30, 2020, 2,503 pounds of
U3O8
were captured within the Lost Creek plant and 4,926 pounds of
U3O8 were packaged in
drums. Our inventory at the converter totaled approximately 268,485
pounds of U3O8 at September 30,
2020.
During
the quarter, we took steps to further reduce production operations
at Lost Creek and adjust to the continued depressed state of the
uranium markets while we await the recommended relief from the
Working Group and further positive developments in the uranium
markets. The reduced production levels allowed us to make further
operating cost reductions at Lost Creek and related support cost
reductions at the corporate office in Littleton. The cost
reductions include savings from additional reductions in force at
both locations as well as other cost containment measures.
Together with the further deferral of
principal payments on the State Bond Loan, these measures will
result in substantial savings to the Company, estimated to exceed
$7 million and $4 million in calendar years 2021 and 2022,
respectively.
The
following tables provide detailed financial information on our
sales and cost of sales as they relate to U3O8 pounds.
The
U3O8
and cost per
pound measures included in the following tables do not have a
standardized meaning within US GAAP or a defined basis of
calculation. These measures are used by management to assess
business performance and determine production and pricing
strategies. They may also be used by certain investors to evaluate
performance. Where applicable, reconciliation of these measures to
US GAAP financial statement presentation are included within the
respective table.
Sales
|
|
Unit
|
|
|
2020 Q3
|
|
|
2020 Q2
|
|
|
2020 Q1
|
|
|
2019 Q4
|
|
|
2020 YTD
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U3O8
Sales Reconciliation (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
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|
||||||
Sales
per financial statements
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
6,934
|
|
|
$
|
1,370
|
|
|
$
|
10,849
|
|
|
$
|
8,304
|
|
|
Disposal
fees
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
(4
|
)
|
|
$
|
-
|
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
U3O8
sales
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
6,930
|
|
|
$
|
1,370
|
|
|
$
|
10,848
|
|
|
$
|
8,300
|
|
|
U3O8 pounds
sold
|
|
lb
|
|
|
|
-
|
|
|
|
167,000
|
|
|
|
33,000
|
|
|
|
180,000
|
|
|
|
200,000
|
|
|
U3O8 price per pound
sold
|
|
$/lb
|
|
|
$
|
-
|
|
|
$
|
41.50
|
|
|
$
|
41.52
|
|
|
$
|
60.26
|
|
|
$
|
41.50
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8
Sales by Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Produced
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Purchased
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
6,930
|
|
|
$
|
1,370
|
|
|
$
|
10,848
|
|
|
$
|
8,300
|
|
|
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
6,930
|
|
|
$
|
1,370
|
|
|
$
|
10,848
|
|
|
$
|
8,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 Pounds
Sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Produced
|
|
lb
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Purchased
|
|
lb
|
|
|
|
-
|
|
|
|
167,000
|
|
|
|
33,000
|
|
|
|
180,000
|
|
|
|
200,000
|
|
|
|
|
lb
|
|
|
|
-
|
|
|
|
167,000
|
|
|
|
33,000
|
|
|
|
180,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 Price per Pounds
Sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Produced
|
|
$/lb
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Purchased
|
|
$/lb
|
|
|
$
|
-
|
|
|
$
|
41.50
|
|
|
$
|
41.52
|
|
|
$
|
60.26
|
|
|
$
|
41.50
|
|
|
|
|
$/lb
|
|
|
$
|
-
|
|
|
$
|
41.50
|
|
|
$
|
41.52
|
|
|
$
|
60.26
|
|
|
$
|
41.50
|
|
Note:
1.
Sales per the
financial statements include revenues from disposal fees received
at Shirley Basin. The disposal fees do not relate to U3O8 pounds sold and
are excluded from the U3O8 sales and
U3O8 price per pound
sold figures.
There
were no sales in the third quarter, and we do not anticipate making
any sales in the fourth quarter.
Cost of Sales
|
|
Unit
|
|
|
2020 Q3
|
|
|
2020 Q2
|
|
|
2020 Q1
|
|
|
2019 Q4
|
|
|
2020 YTD
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
U3O8
Cost of Sales Reconciliation (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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||||||
|
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|
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|
||||||
Cost of
sales per financial statements
|
|
$000
|
|
|
$
|
1,840
|
|
|
$
|
6,517
|
|
|
$
|
3,105
|
|
|
$
|
6,451
|
|
|
$
|
11,462
|
|
|
Lower
of cost or NRV adjustment
|
|
$000
|
|
|
$
|
(1,840
|
)
|
|
$
|
(2,174
|
)
|
|
$
|
(2,282
|
)
|
|
$
|
(2,074
|
)
|
|
$
|
(6,296
|
)
|
|
U3O8 cost of
sales
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
4,343
|
|
|
$
|
823
|
|
|
$
|
4,377
|
|
|
$
|
5,166
|
|
|
U3O8 pounds
sold
|
|
lb
|
|
|
|
-
|
|
|
|
167,000
|
|
|
|
33,000
|
|
|
|
180,000
|
|
|
|
200,000
|
|
|
U3O8 cost per pound
sold
|
|
$/lb
|
|
|
$
|
-
|
|
|
$
|
26.01
|
|
|
$
|
24.94
|
|
|
$
|
24.31
|
|
|
$
|
25.83
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8
Cost of Sales by Product
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 Cost of
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ad
valorem and severance taxes
|
|
$000
|
|
|
$
|
9
|
|
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
22
|
|
|
$
|
18
|
|
|
Wellfield cash
costs
|
|
$000
|
|
|
$
|
107
|
|
|
$
|
154
|
|
|
$
|
128
|
|
|
$
|
158
|
|
|
$
|
389
|
|
|
Wellfield non-cash
costs
|
|
$000
|
|
|
$
|
557
|
|
|
$
|
557
|
|
|
$
|
618
|
|
|
$
|
611
|
|
|
$
|
1,732
|
|
|
Plant
cash costs
|
|
$000
|
|
|
$
|
807
|
|
|
$
|
1,064
|
|
|
$
|
910
|
|
|
$
|
898
|
|
|
$
|
2,781
|
|
|
Plant
non-cash costs
|
|
$000
|
|
|
$
|
490
|
|
|
$
|
490
|
|
|
$
|
490
|
|
|
$
|
494
|
|
|
$
|
1,470
|
|
|
Distribution
costs
|
|
$000
|
|
|
$
|
4
|
|
|
$
|
(3
|
)
|
|
$
|
-
|
|
|
$
|
26
|
|
|
$
|
1
|
|
|
Inventory
change
|
|
$000
|
|
|
$
|
(1,974
|
)
|
|
$
|
(2,268
|
)
|
|
$
|
(2,149
|
)
|
|
$
|
(2,209
|
)
|
|
$
|
(6,391
|
)
|
|
Produced
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Purchased
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
4,343
|
|
|
$
|
823
|
|
|
$
|
4,377
|
|
|
$
|
5,166
|
|
|
|
|
$000
|
|
|
$
|
-
|
|
|
$
|
4,343
|
|
|
$
|
823
|
|
|
$
|
4,377
|
|
|
$
|
5,166
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 Pounds
Sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Produced
|
|
lb
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Purchased
|
|
lb
|
|
|
|
-
|
|
|
|
167,000
|
|
|
|
33,000
|
|
|
|
180,000
|
|
|
|
200,000
|
|
|
|
|
lb
|
|
|
|
-
|
|
|
|
167,000
|
|
|
|
33,000
|
|
|
|
180,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 Cost per Pound
Sold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Produced
|
|
$/lb
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Purchased
|
|
$/lb
|
|
|
$
|
-
|
|
|
$
|
26.01
|
|
|
$
|
24.94
|
|
|
$
|
24.31
|
|
|
$
|
25.83
|
|
|
|
|
$/lb
|
|
|
$
|
-
|
|
|
$
|
26.01
|
|
|
$
|
24.94
|
|
|
$
|
24.31
|
|
|
$
|
25.83
|
|
Note:
1.
Cost of sales per
the financial statements include lower of cost or net realizable
value (“NRV”) adjustments. The NRV adjustments do not
relate to U3O8 pounds sold and
are excluded from the U3O8 cost of sales and
U3O8 cost per pound
sold figures.
Cost of
sales per the financial statements includes ad valorem and
severance taxes related to the extraction of uranium, all costs of
wellfield and plant operations including the related depreciation
and amortization of capitalized assets, reclamation and mineral
property costs, plus product distribution costs. These costs are
also used to value inventory. The resulting inventoried cost per
pound is compared to the NRV of the product, which is based on the
estimated sales price of the product, net of any necessary costs to
finish the product. Any inventory value in excess of the NRV is
charged to cost of sales per the financial statements. These NRV
adjustments are excluded from the U3O8 cost of sales and
U3O8 cost per pound
sold figures because they relate to the pounds of U3O8 in ending
inventory and do not relate to the pounds of U3O8 sold during the
period.
Continuing Guidance for 2020
Following
multiple announcements of industry production suspensions and
reductions earlier this year, U3O8 spot prices
increased to $33 per pound in June. U3O8 spot prices have
decreased to just under $30 per pound since then. While the
production cuts may amount to as much as 46 million pounds of
primary production on an annualized basis, positive impacts on
long-term U3O8 prices have not
materialized.
The
Working Group report makes several strong recommendations to
revitalize domestic uranium mining, most relevant among which is
that the U.S. government should make direct purchases of 17 to 19
million total pounds of U3O8 to replenish the
American Assured Fuel Supply uranium reserve. Additionally, the
report recommends the establishment of a national uranium reserve,
which is included in the President’s Fiscal Year 2021 Budget
Request; during the first year, it is expected that the reserve
would directly support the operation of at least two U.S. uranium
mines. The budget item is for $150 million per year from FY2021 to
FY2030. However, in July the U.S. House Committee on Appropriations
decided not to fund the budget item without further information
from DOE, for which they directed DOE to submit a plan for the
proposed establishment of a uranium reserve within six months of
the appropriation bill’s enactment.
The
amendment and extension of the RSA, completed in early October,
continues caps on Russian imports of nuclear fuel to the U.S. for
an additional 20 years, through 2040. The amendment reduces the
current cap of 20% of demand to an average of 17% of demand over
the 20-year period, with reductions starting in 2028 and continuing
through 2040. These provisions in the RSA are positive developments
in the long term. Notably, Senator Barrasso has introduced
legislation to codify the recent extension of the RSA.
Still,
no specific action or remedies have resulted from the Working
Group’s plan at this time and, while the report is strong in
its recommendations, there can be no certainty of the final outcome
of the Working Group’s findings and recommendations, or the
timing and impact of any actions taken in response to those
findings and recommendations. This includes both the Congressional
budget appropriations process and proposed legislation related to
the national uranium reserves. The outcome of these continuing
processes and its effects on the U.S. uranium market, therefore,
remains uncertain.
In
addition to the restructuring of the State Bond Loan, we have
continued to implement other Company-wide cost-saving measures as
we await the recommended relief from the Working Group report and
further positive developments in the uranium markets. Recently, we
further reduced production operations at Lost Creek to
market-appropriate levels. The reduced production levels allowed us
to make further operating cost reductions at Lost Creek and related
support cost reductions at the corporate office. The cost
reductions include savings from additional reductions in force at
both locations as well as other cost containment measures. Together
with the further deferral of principal payments on the State Bond
Loan, these measures will result in substantial savings to the
Company, estimated to exceed $7 million and $4 million in calendar
years 2021 and 2022, respectively.
With
our remaining highly experienced technical and operation staff, we
will continue to maintain operational readiness at our fully
permitted Lost Creek mine and plant. Ur-Energy is prepared to
expand uranium production at Lost Creek to an annualized run rate
of one million pounds.
The
Lost Creek facility has the constructed and licensed capacity to
process up to two million pounds of U3O8 per year and
previously reported mineral resources to feed the processing plant
for many years to come. A ramp-up of production at Lost Creek will
advance further development in the first two mine units, followed
by the ten additional mining areas as defined in the Lost Creek
Property Preliminary Economic Assessment, as amended. With future
development and construction in mind, our current staff members
were retained as having the greatest level of experience and
adaptability allowing for an easier transition back to full
operations. Lost Creek operations can increase to full production
rates in as little as six months following a go decision, simply by
developing additional header houses within the fully permitted MU2.
Development expenses during this six-month ramp up period are
estimated to be approximately $14 million and are almost entirely
related to MU2 drilling and header house construction
costs.
We will
continue to closely monitor the uranium market and any actions or
remedies resulting from the Working Group’s report,
DOE’s and DOC’s efforts, or legislative actions, which
may positively impact the uranium production industry. Until such
time, we will continue to minimize costs and maximize
‘runway’ to maintain current operations and avoid
unnecessary dilution while maintaining the operational readiness
needed to ramp-up production when called upon.
About Ur-Energy
Ur-Energy
is a uranium mining company operating the Lost Creek in-situ recovery uranium facility in
south-central Wyoming. We have produced, packaged and shipped more
than 2.6 million pounds from Lost Creek since the commencement of
operations. Applications are under review by various agencies to
incorporate our LC East project area into the Lost Creek permits
and to operate at our Shirley Basin Project. Ur-Energy is engaged
in uranium mining, recovery and processing activities, including
the acquisition, exploration, development and operation of uranium
mineral properties in the United States. Shares of Ur-Energy trade
on the NYSE American under the symbol “URG” and on the
Toronto Stock Exchange under the symbol “URE.”
Ur-Energy’s corporate office is in Littleton, Colorado; its
registered office is in Ottawa, Ontario. Ur-Energy’s website
is www.ur-energy.com.
FOR FURTHER INFORMATION, PLEASE CONTACT
Jeffrey
Klenda, Chair & CEO
866-981-4588
Jeff.Klenda@Ur-Energy.com
Cautionary Note Regarding Forward-Looking Information
This
release may contain “forward-looking statements” within
the meaning of applicable securities laws regarding events or
conditions that may occur in the future (e.g., our ability to maintain safe and
compliant, reduced-level production operations at Lost Creek; the
ability to readily and cost-effectively ramp-up production
operations when market and other conditions warrant; the viability
of the additional mining areas at Lost Creek; the impact of ongoing
changes in global uranium production and other impacts related to
COVID-19; timing and results of implementation of the
recommendations from the U.S. Nuclear Fuel Working Group and
pending legislation, including the budget appropriations process
related to the establishment of the national uranium reserve; the
effects on the uranium markets of the extension and amendment of
the Russian Suspension Agreement and whether the pending
legislation to codify the amendment is enacted; whether
cost-savings measures which have been and will be implemented will
be sufficient to support our operations and avoid unnecessary
dilution to our shareholders) and are based on current expectations
that, while considered reasonable by management at this time,
inherently involve a number of significant business, economic and
competitive risks, uncertainties and contingencies. Factors that
could cause actual results to differ materially from any
forward-looking statements include, but are not limited to, capital
and other costs varying significantly from estimates; failure to
establish estimated resources and reserves; the grade and recovery
of ore which is mined varying from estimates; production rates,
methods and amounts varying from estimates; delays in obtaining or
failures to obtain required governmental, environmental or other
project approvals; inflation; changes in exchange rates;
fluctuations in commodity prices; delays in development and other
factors described in the public filings made by the Company at
www.sedar.com
and www.sec.gov.
Readers should not place undue reliance on forward-looking
statements. The forward-looking statements contained herein are
based on the beliefs, expectations and opinions of management as of
the date hereof and Ur-Energy disclaims any intent or obligation to
update them or revise them to reflect any change in circumstances
or in management’s beliefs, expectations or opinions that
occur in the future.