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 MARCH 31, 2021

 

 

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, CO 80127
(Address of principal executive offices, including zip code)

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class:

 

Trading Symbol

 

Name of each exchange on which registered:

Common stock

 

URG (NYSE American); URE (TSX)

 

NYSE American; TSX

 

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 every Interactive Data File required to be submitted 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 such files). Yes ☑     No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer

Non-accelerated filer

Accelerated filer 

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

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 May 5, 2021, there were 189,389,100 shares of the registrant’s no par value Common Shares (“Common Shares”), the registrant’s only outstanding class of voting securities, outstanding.

 

 

 

 

UR-ENERGY INC.

 

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

 

 

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Financial Statements

 

5

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

23

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

34

 

Item 4.

Controls and Procedures

 

34

 

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

35

 

Item 1A.

Risk Factors

 

35

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

35

 

Item 3.

Defaults Upon Senior Securities

 

35

 

Item 4.

Mine Safety Disclosure

 

35

 

Item 5.

Other Information

 

35

 

Item 6.

Exhibits

 

36

 

 

 

 

 

 

SIGNATURES

 

37

 

 
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 below 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 (“U.S.”) 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 ability to maintain safe and compliant reduced-level production operations at Lost Creek; (ii) the timing to determine future development and construction priorities at Lost Creek and Shirley Basin, and the ability to readily and cost-effectively ramp-up production operations when market and other conditions warrant, and the life of mine and production results for each project; (iii) the timing and outcome of final regulatory approvals of the amendments for uranium recovery at the LC East Project; (iv) the ability to complete additional favorable uranium sales agreements including spot sales if the market warrants and as may be advantageous to the Company; (v) the impacts of COVID 19 on our business, operations, and financial liquidity, and the impacts of the pandemic directly and indirectly on the uranium market; (vi) resolution of the continuing challenges within the uranium market, including supply and demand projections; (vii) the timing and impact of implementation of the national uranium reserve program and the Company’s role in the program; (viii) timing for implementation of other recommendations made by the United States Nuclear Fuel Working Group for the revival and expansion of domestic nuclear fuel production, and whether the Biden Administration will incorporate nuclear energy and domestic production of uranium into its climate change initiatives; (ix) whether cost-savings measures which have been implemented will be sufficient to support our operations and avoid dilution to our shareholders; and (x) the level of loan forgiveness to be obtained for our loans under the Small Business Administration Paycheck Protection Program. Additional factors include, among others, the following: challenges presented by current inventories and largely unrestricted imports of uranium products into the U.S.; future estimates for production; capital expenditures; operating costs; mineral resources, grade estimates and recovery rates; 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; the lack of mineral reserves; risks associated with obtaining permits and other authorizations in the U.S.; risks associated with current variable economic conditions; our ability to service our debt and maintain compliance with all restrictive covenants related to the debt facility and security documents; the possible impact of future debt or equity financings; the hazards associated with mining production operations; compliance with environmental laws and regulations; wastewater management; the possibility for adverse results in potential litigation; uncertainties associated with changes in law, 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; changes in size and structure; the effectiveness of management and our strategic relationships; ability to attract and retain key personnel and management; uncertainties regarding the need for additional capital; sufficiency of insurance coverages; uncertainty regarding the fluctuations of quarterly results; foreign currency exchange risks; ability to enforce civil liabilities under U.S. securities laws outside the U.S.; ability to maintain our listing on the NYSE American 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, 2021.

 

 
3

Table of Contents

 

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.

 

Canadian standards, including NI 43-101, differ significantly from the requirements of the U.S. Securities and Exchange Commission (“SEC”), and resource information contained in this Form 10-Q may not be comparable to similar information disclosed by U.S. companies. In particular, the term “resources” 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: Michael Mellin, Ur-Energy / Lost Creek Mine Geologist, Certified P.Geo., and Qualified Person as defined by NI 43-101, reviewed and approved the technical information contained in this Form 10-Q.

 

 
4

Table of Contents

  

PART I

 

Item 1. FINANCIAL STATEMENTS

 

Ur-Energy Inc.

 

 

 

 

 

 

 

 

 

Unaudited Consolidated Balance Sheets

 

 

 

 

 

 

(expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

 

 

(the accompanying notes are an integral part of these consolidated finacial statements)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

3

 

 

 

17,595

 

 

 

4,268

 

Accounts receivable

 

 

 

 

 

 

2

 

 

 

-

 

Prepaid expenses

 

 

 

 

 

 

610

 

 

 

814

 

Total current assets

 

 

 

 

 

 

18,207

 

 

 

5,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

Non-current portion of inventory

 

 

4

 

 

 

7,860

 

 

 

7,814

 

Restricted cash

 

 

5

 

 

 

7,860

 

 

 

7,859

 

Mineral properties

 

 

6

 

 

 

38,675

 

 

 

39,184

 

Capital assets

 

 

7

 

 

 

21,428

 

 

 

21,891

 

Total non-current assets

 

 

 

 

 

 

75,823

 

 

 

76,748

 

Total assets

 

 

 

 

 

 

94,030

 

 

 

81,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

8

 

 

 

2,439

 

 

 

2,320

 

Current portion of notes payable

 

 

9

 

 

 

761

 

 

 

459

 

Current portion of warrant liability

 

 

11

 

 

 

1,979

 

 

 

729

 

Environmental remediation accrual

 

 

 

 

 

 

76

 

 

 

76

 

Total current liabilities

 

 

 

 

 

 

5,255

 

 

 

3,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable

 

 

9

 

 

 

12,430

 

 

 

12,720

 

Lease liability

 

 

 

 

 

 

33

 

 

 

50

 

Asset retirement obligations

 

 

10

 

 

 

30,088

 

 

 

29,965

 

Warrant liability

 

 

11

 

 

 

6,095

 

 

 

1,415

 

Total non-current liabilities

 

 

 

 

 

 

48,646

 

 

 

44,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

12

 

 

 

203,037

 

 

 

189,620

 

Contributed surplus

 

 

 

 

 

 

20,715

 

 

 

20,946

 

Accumulated other comprehensive income

 

 

 

 

 

 

3,926

 

 

 

3,707

 

Accumulated deficit

 

 

 

 

 

 

(187,549)

 

 

(180,177)

Total shareholders' equity

 

 

 

 

 

 

40,129

 

 

 

34,096

 

Total liabilities and shareholders' equity

 

 

 

 

 

 

94,030

 

 

 

81,830

 

    

 
5

Table of Contents

 

 

Ur-Energy Inc.

 

 

 

 

 

 

 

 

 

Unaudited Consolidated Statements of Operations and Comprehensive Loss

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

 

 

 

 

 

 

 

 

 

(the accompanying notes are an integral part of these consolidated finacial statements)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

March 31,

 

 

 

Note

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

13

 

 

 

-

 

 

 

1,370

 

Cost of sales

 

 

14

 

 

 

(1,673)

 

 

(3,105)

Gross profit (loss)

 

 

 

 

 

 

(1,673)

 

 

(1,735)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

15

 

 

 

(1,812)

 

 

(2,062)

Profit (loss) from operations

 

 

 

 

 

 

(3,485)

 

 

(3,797)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest expense

 

 

 

 

 

 

(189)

 

 

(132)

Warrant liability mark to market gain (loss)

 

 

11

 

 

 

(3,404)

 

 

273

 

Foreign exchange gain (loss)

 

 

 

 

 

 

(296)

 

 

15

 

Other income (expense)

 

 

 

 

 

 

2

 

 

 

-

 

Net income (loss)

 

 

 

 

 

 

(7,372)

 

 

(3,641)

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

219

 

 

 

27

 

Comprehensive income (loss)

 

 

 

 

 

 

(7,153)

 

 

(3,614)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

(0.04)

 

 

(0.02)

Diluted

 

 

 

 

 

 

(0.04)

 

 

(0.02)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

181,892,848

 

 

 

160,478,059

 

Diluted

 

 

 

 

 

 

181,892,848

 

 

 

160,478,059

 

    

 
6

Table of Contents

 

Ur-Energy Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited Consolidated Statements of Changes in Shareholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(the accompanying notes are an integral part of these consolidated finacial statements)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

March 31,

 

 

 

Share Capital

 

 

 

 

 

Contributed

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

2020

 

Note

 

Shares

 

 

Amount

 

 

Warrants

 

 

Surplus

 

 

Income

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

160,478,059

 

 

 

185,754

 

 

 

-

 

 

 

20,317

 

 

 

3,654

 

 

 

(165,392)

 

 

44,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

234

 

 

 

-

 

 

 

-

 

 

 

234

 

Comprehensive income (loss)

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

27

 

 

 

(3,641)

 

 

(3,614)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2020

 

 

 

 

160,478,059

 

 

 

185,754

 

 

 

-

 

 

 

20,551

 

 

 

3,681

 

 

 

(169,033)

 

 

40,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

March 31,

 

 

 

Share Capital

 

 

 

 

 

Contributed

 

 

Comprehensive

 

 

Accumulated

 

 

Shareholders'

 

2021

 

Note

 

Shares

 

 

Amount

 

 

Warrants

 

 

Surplus

 

 

Income

 

 

Deficit

 

 

Equity

 

December 31, 2020

 

 

 

 

170,253,752

 

 

 

189,620

 

 

 

-

 

 

 

20,946

 

 

 

3,707

 

 

 

(180,177)

 

 

34,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

12

 

 

1,723,818

 

 

 

1,540

 

 

 

-

 

 

 

(462)

 

 

-

 

 

 

-

 

 

 

1,078

 

Exercise of warrants

 

12

 

 

481,000

 

 

 

551

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

551

 

Shares issued for cash

 

12

 

 

16,930,530

 

 

 

15,068

 

 

 

169

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,237

 

Less amount assigned to warrant liablity

 

11 & 12

 

 

-

 

 

 

(2,435)

 

 

(169)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,604)

Less share issue costs

 

12

 

 

-

 

 

 

(1,307)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,307)

Stock compensation

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

231

 

 

 

-

 

 

 

-

 

 

 

231

 

Comprehensive income (loss)

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

219

 

 

 

(7,372)

 

 

(7,153)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

 

 

189,389,100

 

 

 

203,037

 

 

 

-

 

 

 

20,715

 

 

 

3,926

 

 

 

(187,549)

 

 

40,129

 

  

 
7

Table of Contents

 

Ur-Energy Inc.

 

 

 

 

 

 

 

 

 

Unaudited Consolidated Statements of Cash Flow

 

 

 

 

 

 

(expressed in thousands of U.S. dollars)

 

 

 

 

 

 

 

 

 

(the accompanying notes are an integral part of these consolidated finacial statements)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

 

 

March 31,

 

 

 

Note

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

Cash provided by (used for):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

Net income (loss) for the year

 

 

 

 

 

(7,372)

 

 

(3,641)

 

 

 

 

 

 

 

 

 

 

 

 

Items not affecting cash:

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

 

 

 

231

 

 

 

234

 

Net realizable value adjustments

 

 

 

 

 

1,673

 

 

 

2,282

 

Amortization of mineral properties

 

 

 

 

 

509

 

 

 

657

 

Depreciation of capital assets

 

 

 

 

 

446

 

 

 

454

 

Accretion expense

 

 

 

 

 

123

 

 

 

145

 

Amortization of deferred loan costs

 

 

 

 

 

12

 

 

 

17

 

Provision for reclamation

 

 

 

 

 

-

 

 

 

3

 

Mark to market loss (gain)

 

 

 

 

 

3,404

 

 

 

(273)

Unrealized foreign exchange loss (gain)

 

 

 

 

 

296

 

 

 

(15)

Accounts receivable

 

 

 

 

 

(2)

 

 

16

 

Inventory

 

 

 

 

 

(1,719)

 

 

(2,189)

Prepaid expenses

 

 

 

 

 

204

 

 

 

111

 

Accounts payable and accrued liabilities

 

 

 

 

 

119

 

 

 

74

 

 

 

 

 

 

 

(2,076)

 

 

(2,125)

 

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

 

 

Decrease (increase) in bonding and other deposits

 

 

 

 

 

-

 

 

 

(5)

Purchase of capital assets

 

 

 

 

 

-

 

 

 

(18)

 

 

 

 

 

 

-

 

 

 

(23)

 

 

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

 

 

Issuance of common shares and warrants for cash

 

 

12

 

 

 

15,237

 

 

 

-

 

Share issue costs

 

 

12

 

 

 

(1,307)

 

 

-

 

Proceeds from exercise of warrants and stock options

 

 

 

 

 

 

1,439

 

 

 

-

 

 

 

 

 

 

 

 

15,369

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effects of foreign exchange rate changes on cash

 

 

 

 

 

 

35

 

 

 

(10)

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

 

 

 

 

13,328

 

 

 

(2,158)

Beginning cash, cash equivalents, and restricted cash

 

 

 

 

 

 

12,127

 

 

 

15,215

 

Ending cash, cash equivalents, and restricted cash

 

 

16

 

 

 

25,455

 

 

 

13,057

 

  

 
8

Table of Contents

  

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

(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 continued under the Canada Business Corporations Act on August 8, 2006. The Company is an Exploration Stage mining company, as defined by United States Securities and Exchange Commission (“SEC”). The Company is engaged in uranium mining and recovery operations, with activities including the acquisition, exploration, development, and production of uranium mineral resources located primarily in Wyoming. The Company commenced uranium production at its Lost Creek Project in Wyoming in 2013.

 

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 consolidated financial statements do not conform in all respects to the requirements of U.S. generally accepted accounting principles (“US GAAP”) for annual financial statements. These unaudited consolidated financial statements reflect all normal adjustments which in the opinion of management are necessary for a fair presentation of the results for the periods presented. These unaudited consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2020. We applied the same accounting policies as in the prior year. Certain information and footnote disclosures required by US GAAP have been condensed or omitted in these unaudited consolidated financial statements.

 

3.

Cash and Cash Equivalents

 

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

 

Cash and cash equivalent

 

March 31,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Cash on deposit

 

 

16,406

 

 

 

852

 

Money market funds

 

 

1,189

 

 

 

3,416

 

 

 

 

17,595

 

 

 

4,268

 

   

 
9

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

  

4.

Inventory

  

The Company’s inventory consists of the following:

 

Inventory by Type

 

March 31,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Plant inventory

 

 

-

 

 

 

463

 

Conversion facility inventory

 

 

7,860

 

 

 

7,351

 

 

 

 

7,860

 

 

 

7,814

 

 

 

 

 

 

 

 

 

 

Inventory by Duration

 

March 31,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

 

 

Non-current portion of inventory

 

 

7,860

 

 

 

7,814

 

 

 

 

7,860

 

 

 

7,814

 

 

Using lower of cost or net realizable value (“NRV”) calculations, the Company reduced the inventory valuation by $1,673 and $2,282 for the three months ended March 31, 2021 and 2020, respectively.

 

5.

Restricted Cash

  

Restricted Cash

 

March 31,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Cash pledged for reclamation

 

 

7,860

 

 

 

7,859

 

 

 

 

7,860

 

 

 

7,859

 

 

The Company’s restricted cash consists of money market accounts and short-term government bonds.

 

The bonding requirements for reclamation obligations on various properties have been reviewed and approved by the Wyoming Department of Environmental Quality (“WDEQ”), including the Wyoming Uranium Recovery Program (“URP”), and the Bureau of Land Management (“BLM”) as applicable. The restricted money market accounts are pledged as collateral against performance surety bonds, which secure the estimated costs of reclamation related to the properties. Surety bonds providing $27.8 million of coverage towards reclamation obligations are collateralized by the restricted cash.

 

6.

Mineral Properties

 

The Company’s mineral properties consist of the following:

 

 

 

 Lost Creek

 

 

 Pathfinder

 

 

 Other U.S.

 

 

 

 

 Mineral Properties

 

 Property

 

 

 Mines

 

 

 Properties

 

 

 Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

6,276

 

 

 

19,730

 

 

 

13,178

 

 

 

39,184

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depletion and amortization

 

 

(509)

 

 

-

 

 

 

-

 

 

 

(509)

March 31, 2021

 

 

5,767

 

 

 

19,730

 

 

 

13,178

 

 

 

38,675

 

  

 
10

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

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. Since 2005, the Company has increased its holdings adjacent to the initial Lost Creek acquisition through staking additional claims and making 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. We are not recovering U3O8 within the State section under lease at Lost Creek and are therefore not subject to royalty payments currently. Other royalties exist on certain mining claims at the LC South, LC East and EN Projects. 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”). 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, the assumption of $5.7 million in estimated asset reclamation obligations, and other consideration.

 

Other U.S. properties

 

Other U.S. properties include the acquisition costs of several prospective mineralized properties, which the Company continues to maintain through claim payments, lease payments, insurance, and other holding costs in anticipation of future exploration efforts.

 

7.

Capital Assets

 

The Company’s capital assets consist of the following:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

 

 

Accumulated

 

 

Net Book

 

 

 

 

Accumulated

 

 

Net Book

 

Capital Assets

 

Cost

 

 

Depreciation

 

 

Value

 

 

Cost

 

 

Depreciation

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rolling stock

 

 

3,450

 

 

 

(3,381)

 

 

69

 

 

 

3,450

 

 

 

(3,369)

 

 

81

 

Enclosures

 

 

33,008

 

 

 

(12,248)

 

 

20,760

 

 

 

33,008

 

 

 

(11,834)

 

 

21,174

 

Machinery and equipment

 

 

1,446

 

 

 

(902)

 

 

544

 

 

 

1,446

 

 

 

(885)

 

 

561

 

Furniture and fixtures

 

 

119

 

 

 

(119)

 

 

-

 

 

 

119

 

 

 

(119)

 

 

-

 

Information technology

 

 

1,123

 

 

 

(1,102)

 

 

21

 

 

 

1,123

 

 

 

(1,098)

 

 

25

 

Right of use assets

 

 

109

 

 

 

(75)

 

 

34

 

 

 

165

 

 

 

(115)

 

 

50

 

 

 

 

39,255

 

 

 

(17,827)

 

 

21,428

 

 

 

39,311

 

 

 

(17,420)

 

 

21,891

 

 

 
11

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

8.

Accounts Payable and Accrued Liabilities

 

Accounts payable and accrued liabilities consist of the following:

 

Accounts Payable and Accrued Liabilities

 

March 31,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Accounts payable

 

 

376

 

 

 

396

 

Accrued payroll liabilities

 

 

1,743

 

 

 

1,767

 

Accrued severance, ad valorem, and other taxes payable

 

 

320

 

 

 

157

 

 

 

 

2,439

 

 

 

2,320

 

 

9.

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 was to be paid in 28 quarterly installments commencing January 1, 2015.

 

On October 1, 2019, the Sweetwater County Commissioners and the State of Wyoming approved an eighteen month deferral of principal payments beginning October 1, 2019. On October 6, 2020, the State Bond Loan was again modified to defer principal payments for an additional eighteen months. Quarterly principal payments are scheduled to resume on October 1, 2022 and the last payment will be due on October 1, 2024.

 

On April 16, 2020, we obtained two Small Business Administration ("SBA") Paycheck Protection Program ("PPP") loans (one for each of our subsidiaries with U.S. payroll obligations) through the Bank of Oklahoma Financial (“BOKF”). The program was a part of the CARES Act enacted by Congress March 27, 2020 in response to the COVID-19 (Coronavirus) pandemic. The combined loan amount was $0.9 million.

 

On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”) became law. The Flexibility Act changes key provisions of the PPP, including maturity of the loans, deferral of loan payments, and the forgiveness of the PPP loans, with revisions being retroactive to the date of the CARES Act.

 

Under the program, as modified by the Flexibility Act and SBA and Treasury rulemakings, the repayment of our loans, including interest, may be forgiven based on eligible payroll, payroll-related, and other allowable costs incurred in a twenty-four-week period following the funding of the loans. To have the full amount of the loans forgiven, the following requirements must be met within that period, and be sufficiently documented in the application for forgiveness:

 

(1) Spend not less than 60% of loan proceeds on eligible payroll costs.

(2) Spend the remaining loan proceeds on:

a. additional eligible payroll costs above 60%;

b. payments of interest on mortgage obligations incurred before February 15, 2020;

c. rent payments on leases dated before February 15, 2020; and/or  

d. utility payments under service agreements dated before February 15, 2020.

(3) Maintain employee compensation levels (subject to specific program requirements).

 

 
12

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

For any portion of the loans that is not forgiven, the program provides for an initial deferral of payments based upon the timing of a borrower’s application for forgiveness and SBA’s action on the application up to a maximum of ten months after the use and forgiveness covered period ends (July 30, 2021). Any remaining amount owing on the loans has a two-year maturity (April 16, 2022), unless renegotiated with the lender for up to a five-year term, with an interest rate of one percent per annum. We anticipate the loans will meet the requirements for forgiveness under this program. In December 2020, we applied for loan forgiveness with the BOKF. The BOKF, after reviewing the loan forgiveness applications, submitted them to the SBA for approval in March 2021. We have not yet received loan forgiveness approval and therefore continue to treat the PPP loans as debt.

 

The following table summarizes the Company’s current and long-term debts.

 

Current and Long-term Debt

 

March 31,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

Small Business Administration PPP Loans

 

 

804

 

 

 

502

 

State Bond Loan

 

 

-

 

 

 

-

 

Deferred financing costs

 

 

(43)

 

 

(43)

 

 

 

761

 

 

 

459

 

 

 

 

 

 

 

 

 

 

Long-term

 

 

 

 

 

 

 

 

Small Business Administration PPP Loans

 

 

98

 

 

 

398

 

State Bond Loan

 

 

12,441

 

 

 

12,441

 

Deferred financing costs

 

 

(109)

 

 

(119)

 

 

 

12,430

 

 

 

12,720

 

  

The schedule of remaining payments on outstanding debt as of March 31, 2021 is presented below.

 

Remaining Payments

 

Total

 

 

2021

 

 

2022

 

 

2023

 

 

2024

 

 

Final payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SBA PPP Loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal

 

 

902

 

 

 

499

 

 

 

403

 

 

 

-

 

 

 

-

 

 

Apr-2022

 

Interest

 

 

15

 

 

 

9

 

 

 

6

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State Bond Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal

 

 

12,441

 

 

 

-

 

 

 

2,628

 

 

 

5,487

 

 

 

4,326

 

 

Oct-2024

 

Interest

 

 

1,806

 

 

 

537

 

 

 

697

 

 

 

447

 

 

 

125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

15,164

 

 

 

1,045

 

 

 

3,734

 

 

 

5,934

 

 

 

4,451

 

 

 

 

 

10.

Asset Retirement Obligations

 

Asset retirement obligations ("ARO") relate to the Lost Creek mine and Pathfinder projects and are equal to the current estimated reclamation cost escalated at an inflation rate and then discounted at credit adjusted risk-free rates ranging from 0.33% to 7.25%. Current estimated reclamation costs include costs of closure, reclamation, demolition and stabilization of the well fields, processing plants, infrastructure, aquifer restoration, waste dumps, and ongoing post-closure environmental monitoring and maintenance costs. The schedule of payments required to settle the future reclamation extends through 2033.

 

 
13

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

The present value of the estimated future closure estimate is presented in the following table.

 

Asset Retirement Obligations

 

Total

 

 

 

 

 

December 31, 2020

 

 

29,965

 

 

 

 

 

 

Change in estimated reclamation costs

 

 

-

 

Accretion expense

 

 

123

 

 

 

 

 

 

March 31, 2021

 

 

30,088

 

 

The restricted cash discussed in note 5 relates to the surety bonds provided to the governmental agencies for these obligations.

 

11.

Warrant Liabilities

 

In September 2018, we issued 13,062,878 warrants as part of an underwritten public offering with two warrants redeemable for one Common Share of the Company’s stock at a price of $1.00 per full share. The warrants expire in September 2021.

 

In August 2020, we issued 9,000,000 warrants as part of a registered direct offering with two warrants redeemable for one Common Share of the Company’s stock at a price of $0.75 per full share. The warrants expire in August 2022.

 

In February 2021, we issued 16,930,530 warrants as part of an underwritten public offering with two warrants redeemable for one Common Share of the Company’s stock at a price of $1.35 per full share. The warrants expire in February 2024.

 

Because the warrants are priced in U.S. dollars and the functional currency of Ur-Energy Inc. is Canadian dollars, a derivative financial liability was created. The liability created, and adjusted quarterly, is calculated using the Black-Scholes technique described below as there is no active market for the warrants. Any gain or loss from the adjustment of the liability is reflected in net income for the period.

 

 
14

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

The Company’s warrant liabilities consist of the following:

 

 

 

Sep-2018

 

 

Aug-2020

 

 

Feb-2021

 

 

 

 

Warrant Liability Activity

 

Warrants

 

 

Warrants

 

 

Warrants

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

729

 

 

 

1,415

 

 

 

-

 

 

 

2,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants issued

 

 

-

 

 

 

-

 

 

 

2,604

 

 

 

2,604

 

Warrants exercised

 

 

-

 

 

 

(190)

 

 

-

 

 

 

(190)

Mark to market revaluation loss (gain)

 

 

1,228

 

 

 

926

 

 

 

1,250

 

 

 

3,404

 

Effects for foreign exchange rate changes

 

 

22

 

 

 

24

 

 

 

66

 

 

 

112

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

1,979

 

 

 

2,175

 

 

 

3,920

 

 

 

8,074

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sep-2018

 

 

Aug-2020

 

 

Feb-2021

 

 

 

 

 

Warrant Liability Duration

 

Warrants

 

 

Warrants

 

 

Warrants

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of warrant liability

 

 

1,979

 

 

 

-

 

 

 

-

 

 

 

1,979

 

Warrant liability

 

 

-

 

 

 

2,175

 

 

 

3,920

 

 

 

6,095

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

1,979

 

 

 

2,175

 

 

 

3,920

 

 

 

8,074

 

 

The fair value of the warrant liabilities at March 31, 2021 was determined using the Black-Scholes model with the following assumptions:

 

 

 

Sep-2018

 

 

Aug-2020

 

 

Feb-2021

 

Black-Scholes Assumptions at March 31, 2021

 

Warrants

 

 

Warrants

 

 

Warrants

 

 

 

 

 

 

 

 

 

 

 

Expected forfeiture rate

 

 

0.0%

 

 

0.0%

 

 

0.0%

Expected life (years)

 

 

0.5

 

 

 

1.3

 

 

 

2.8

 

Expected volatility

 

 

93.7%

 

 

83.7%

 

 

73.4%

Risk free rate

 

 

0.2%

 

 

0.2%

 

 

0.4%

Expected dividend rate

 

 

0.0%

 

 

0.0%

 

 

0.0%

Exercise price

 

$1.00

 

 

$0.75

 

 

$1.35

 

Market price

 

$1.10

 

 

$1.10

 

 

$1.10

 

 

12.

Shareholders’ Equity and Capital Stock

 

Common shares

 

The Company’s share capital consists of an unlimited amount of Class A preferred shares authorized, without par value, of which no shares are issued and outstanding; and an unlimited amount of common shares authorized, without par value, of which 189,389,100 shares and 170,253,752 shares were issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.

 

 
15

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

On February 4, 2021, the Company closed an underwritten public offering of 14,722,200 common shares and accompanying warrants to purchase up to 7,361,100 common shares, at a combined public offering price of $0.90 per common share and accompanying warrant. The warrants will have an exercise price of $1.35 per whole common share and will expire three years from the date of issuance. Ur-Energy also granted the underwriters a 30-day option to purchase up to an additional 2,208,330 common shares and warrants to purchase up to 1,104,165 common shares on the same terms. The option was exercised in full. Including the exercised option, Ur-Energy issued a total of 16,930,530 common shares and 16,930,530 warrants to purchase up to 8,465,265 common shares. The gross proceeds to Ur‑Energy from this offering were approximately $15.2 million. After fees and expenses of $1.3 million, net proceeds to the Company were approximately $13.9 million.

 

Stock options

 

In 2005, the Company’s Board of Directors approved the adoption of the Company's stock option plan (the “Option Plan”). The Option Plan was most recently approved by the shareholders on May 7, 2020. Eligible participants under the Option Plan include directors, officers, employees, and consultants of the Company. Under the terms of the Option Plan, grants of options will vest over a three-year period: 33.3% on the first anniversary, 33.3% on the second anniversary, and 33.4% on the third anniversary of the grant. The term of the options is five years.

 

Activity with respect to stock options is summarized as follows:

 

 

 

Outstanding

 

 

Weighted-average

 

Stock Option Activity

 

Options

 

 

exercise price

 

 

 

 

 

 

 

 

December 31, 2020

 

 

11,910,424

 

 

$0.61

 

 

 

 

 

 

 

 

 

 

Exercised

 

 

(1,723,818)

 

 

0.64

 

Forfeited

 

 

(219,055)

 

 

0.56

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

9,967,551

 

 

$0.62

 

 

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 and there is no intrinsic value as of the date of grant.

 

We received $1.1 million from options exercised in the three months ended March 31, 2021. No options were exercised in the three months ended March 31, 2020.

 

Stock-based compensation expense from stock options was $0.2 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively.

 

As of March 31, 2021, there was approximately $1.0 million unamortized stock-based compensation expense related to the Option Plan. The expenses are expected to be recognized over the remaining weighted-average vesting period of 2.1 years under the Option Plan.

 

 
16

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

As of March 31, 2021, 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

$

 

 

#

 

 

 

 

 

$

 

 

#

 

 

 

 

 

$

 

 

 

 

0.58

 

 

 

1,084,470

 

 

 

0.7

 

 

 

562,753

 

 

 

1,084,470

 

 

 

0.7

 

 

 

562,753

 

 

2021-12-16

 

0.58

 

 

 

200,000

 

 

 

1.4

 

 

 

103,784

 

 

 

200,000

 

 

 

1.4

 

 

 

103,784

 

 

2022-09-07

 

0.72

 

 

 

1,541,751

 

 

 

1.7

 

 

 

591,416

 

 

 

1,541,751

 

 

 

1.7

 

 

 

591,416

 

 

2022-12-15

 

0.61

 

 

 

200,000

 

 

 

2.0

 

 

 

97,416

 

 

 

200,000

 

 

 

2.0

 

 

 

97,416

 

 

2023-03-30

 

0.74

 

 

 

834,240

 

 

 

2.4

 

 

 

300,093

 

 

 

532,584

 

 

 

2.4

 

 

 

191,581

 

 

2023-08-20

 

0.72

 

 

 

726,674

 

 

 

2.7

 

 

 

272,968

 

 

 

477,562

 

 

 

2.7

 

 

 

179,391

 

 

2023-12-14

 

0.63

 

 

 

2,555,926

 

 

 

3.6

 

 

 

1,204,250

 

 

 

851,978

 

 

 

3.6

 

 

 

401,418

 

 

2024-11-05

 

0.50

 

 

 

2,824,490

 

 

 

4.6

 

 

 

1,690,514

 

 

 

-

 

 

 

-

 

 

 

-

 

 

2025-11-13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.62

 

 

 

9,967,551

 

 

 

3.0

 

 

 

4,823,194

 

 

 

4,888,345

 

 

 

2.0

 

 

 

2,127,759

 

 

 

 

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 as of the last trading day in the three months ended March 31, 2021 (approximately US$1.10), that would have been received by the option holders had they exercised their options on that date. There were 9,967,551 in-the-money stock options outstanding and 4,888,345 in-the-money stock options exercisable as of March 31, 2021.

 

The fair value of the stock options on their respective grant dates was determined using the Black-Scholes model with the following assumptions:

 

Stock Option Fair Value Assumptions

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected forfeiture rate

 

 

6.1%

 

 

6.2%

 

5.8% - 6.0%

 

 

5.3% - 6.0%

 

 

 

6.2%

Expected life (years)

 

 

3.9

 

 

 

3.7

 

 

3.7 - 3.8

 

 

 

3.7

 

 

 

3.7

 

Expected volatility

 

 

63.2%

 

 

58.6%

 

54.6% - 55.0%

 

 

56.0% - 57.0%

 

 

 

57.0%

Risk free rate

 

 

0.4%

 

 

1.6%

 

1.9% - 2.1%

 

 

1.0% - 1.6%

 

 

 

1.0%

Expected dividend rate

 

 

0.0%

 

 

0.0%

 

 

0.0%

 

 

0.0%

 

 

0.0%

Black-Scholes value (CAD$)

 

$0.30

 

 

$0.35

 

 

$0.33 - $0.39

 

 

$0.32 - $0.44

 

 

$0.31

 

 

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 2, 2019.

 

 
17

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

Eligible participants under the RSU Plan include directors and employees of the Company. Granted RSUs are redeemed on the second anniversary of the grant. Upon an RSU vesting, the holder of the RSU will receive one Common Share, for no additional consideration, for each RSU held.

 

Activity with respect to RSUs is summarized as follows:

 

 

 

 

 

 

Weighted average

 

 

 

Outstanding

 

 

grant date

 

Restricted Share Unit Activity

 

RSUs

 

 

fair value

 

 

 

 

 

 

 

 

December 31, 2020

 

 

1,404,962

 

 

$0.54

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(59,843)

 

$0.58

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

1,345,119

 

 

$0.56

 

 

Stock-based compensation expense from RSUs was $0.1 million and $0.1 million for the three months ended March 31, 2021 and 2020, respectively.

 

As of March 31, 2021, there was approximately $0.4 million unamortized stock-based compensation expense related to the RSU Plan. The expenses are expected to be recognized over the remaining weighted-average vesting perios of 1.1 years under the RSU Plan.

 

As of March 31, 2021, outstanding RSUs are as follows:

 

RSUs outstanding

 

 

 

 

 Weighted-

 

 

 

 

 

 

 

 

 

 

 average

 

 

 

 

 

 

 

 

 

 

 remaining

 

 

 Aggregate 

 

 

 

 

Number

 

 

 contractual

 

 

 intrinsic

 

 

 Redemption

 

of RSUs

 

 

 life (years)

 

 

 value

 

 

 Date

 

 

 

 

 

 

 

 

 

 

 

 

 

638,989

 

 

 

0.6

 

 

 

702,888

 

 

2021-11-05

 

 

706,130

 

 

 

1.6

 

 

 

776,743

 

 

2022-11-13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,345,119

 

 

 

1.1

 

 

 

1,479,631

 

 

 

 

 

The fair value of restricted share units on their respective grant dates was determined using the Black-Scholes model with the following assumptions:

 

Restricted Share Unit Fair Value Assumptions

 

2020

 

 

2019

 

 

 

 

 

 

 

 

Expected forfeiture rate

 

 

4.2%

 

 

4.8%

Grant date fair value (CAD$)

 

$0.63

 

 

$0.79

 

 

 
18

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

Warrants

 

In September 2018, the Company issued 13,062,878 warrants to purchase 6,531,439 of our Common Shares at $1.00 per full share. In August 2020, the Company issued 9,000,000 warrants to purchase 4,500,000 of our Common Shares at $0.75 per full share. In February 2021, the Company issued 16,930,530 warrants to purchase 8,465,265 of our Common Shares at $1.35 per full share.

 

The following represents warrant activity during the period ended March 31, 2021:

 

 

 

 

 

 

Number of

 

 

 

 

 

 

Outstanding

 

 

shares to be

issued

 

 

Per share

 

Warrant Activity

 

warrants

 

 

upon exercise

 

 

exercise price

 

 

 

#

 

 

#

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

22,062,878

 

 

 

11,031,439

 

 

 

0.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued

 

 

16,930,530

 

 

 

8,465,265

 

 

 

1.35

 

Exercised

 

 

(962,000)

 

 

(481,000)

 

 

0.75

 

Expired

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

38,031,408

 

 

 

19,015,704

 

 

 

1.10

 

 

We received $0.4 million from warrants exercised in the three months ended March 31, 2021. No warrants were exercised in the three months ended March 31, 2020.

 

As of March 31, 2021, outstanding warrants are as follows:

 

 

 

 

 

 

 Weighted-

 

 

 

 

 

 

 

 

 

 

 average

 

 

 

 

 

 

 

 

 

 

remaining

 

 

Aggregate

 

 

 

Exercise

 

 

Number

 

 

contractual

 

 

Intrinsic

 

 

 

price

 

 

of warrants

 

 

life (years)

 

 

Value

 

 

Expiry

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.00

 

 

 

13,062,878

 

 

 

0.5

 

 

 

653,144

 

 

2021-09-25

 

 

0.75

 

 

 

8,038,000

 

 

 

1.3

 

 

 

1,406,650

 

 

2022-08-04

 

 

1.35

 

 

 

16,930,530

 

 

 

2.8

 

 

 

-

 

 

2024-02-04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.10

 

 

 

38,031,408

 

 

 

1.7

 

 

 

2,059,794

 

 

 

 

 

 
19

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

The fair value of the warrants on their respective grant dates was determined using the Black-Scholes model with the following assumptions:

 

Warrant Fair Value Assumptions

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected forfeiture rate

 

 

0.0%

 

 

0.0%

 

 

-

 

 

 

0.0%

Expected life (years)

 

 

3.0

 

 

 

2.0

 

 

 

-

 

 

 

3.0

 

Expected volatility

 

 

69.3%

 

 

71.2%

 

 

-

 

 

 

55.2%

Risk free rate

 

 

0.2%

 

 

0.2%

 

 

-

 

 

 

2.2%

Expected dividend rate

 

 

0.0%

 

 

0.0%

 

 

-

 

 

 

0.0%

Black-Scholes value (CAD$)

 

$0.39

 

 

$0.26

 

 

$0.00

 

 

$0.34

 

 

Fair value calculations

 

The Company estimates expected future volatility based on daily historical trading data of the Company’s common shares. The risk-free interest rates are determined by reference to Canadian Treasury Note constant maturities that approximate the expected life. The Company has never paid dividends and currently has no plans to do so.

 

Share-based compensation expense is recognized net of estimated pre-vesting forfeitures, which results in expensing the awards that are ultimately expected to vest over the expected life. Forfeitures and expected lives were estimated based on actual historical experience.

 

13.

Sales

 

Revenue is primarily derived from the sale of U3O8 to domestic utilities under contracts or spot sales.

 

Revenue consists of:

 

 

 

 Three months ended

 

 

 

March 31,

 

 

 

 2021

 

 

 2020

 

Revenue Summary

 

 $

 

 

  %

 

 

 $

 

 

  %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of purchased inventory

 

 

 

 

 

 

 

 

 

 

 

 

 Company A

 

 

-

 

 

 

0.0%

 

 

1,370

 

 

 

100.0%

 

 

 

-

 

 

 

0.0%

 

 

1,370

 

 

 

100.0%

  

14.

Cost of Sales

 

Cost of sales 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.

 

 
20

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

Cost of sales consists of the following:

 

 

 

 Three months ended

 

 

 

March 31,

 

 Cost of Sales

 

             2021

 

 

             2020

 

 

 

 

 

 

 

 

Cost of product sales

 

 

-

 

 

 

823

 

Lower of cost or NRV adjustments

 

 

1,673

 

 

 

2,282

 

 

 

 

 

 

 

 

 

 

 

 

 

1,673

 

 

 

3,105

 

 

15.

Operating Costs

 

Operating expenses include exploration and evaluation expense, development expense, General and Administration (“G&A”) expense, and mineral property write-offs. Exploration and evaluation expense consists of labor and the associated costs of the exploration and evaluation departments as well as land holding and exploration costs including drilling and analysis on properties which have not reached the permitting or operations stage. Development expense relates to properties that have reached the permitting or operations stage and include costs associated with exploring, delineating, and permitting a property. Once permitted, development expense also includes the costs associated with the construction and development of the permitted property that are otherwise not eligible to be capitalized. G&A expense relates to the administration, finance, investor relations, land, and legal functions, and consists principally of personnel, facility, and support costs.

 

Operating costs consist of the following:

 

 

 

Three months ended

 

 

 

March 31,

 

Operating Costs

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Exploration and evaluation

 

 

463

 

 

 

391

 

Development

 

 

132

 

 

 

273

 

General and administration

 

 

1,094

 

 

 

1,253

 

Accretion

 

 

123

 

 

 

145

 

 

 

 

 

 

 

 

 

 

 

 

 

1,812

 

 

 

2,062

 

 

 
21

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

March 31, 2021

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

 

16.

Supplemental Information for Statement of Cash Flows

 

Cash and cash equivalents, and restricted cash per the Statement of Cash Flows consists of the following:

 

Cash and Cash Equivalents, and Restricted Cash

 

March 31,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

17,595

 

 

 

4,268

 

Restricted cash

 

 

7,860

 

 

 

7,859

 

 

 

 

 

 

 

 

 

 

 

 

 

25,455

 

 

 

12,127

 

 

Interest expense paid was $0.2 million and $0.2 million for the three months ended March 31, 2021 and 2020, respectively.

 

17.

Financial Instruments

  

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, and notes payable. The Company is exposed to risks related to changes in interest rates and management of cash and cash equivalents and short-term investments.

 

Credit risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, and restricted cash. These assets include Canadian dollar and U.S. dollar denominated certificates of deposit, money market accounts, and demand deposits. These instruments are maintained at financial institutions in Canada and the U.S. Of the amount held on deposit, approximately $0.5 million is covered by the Canada Deposit Insurance Corporation, the Securities Investor Protection Corporation, or the U.S. Federal Deposit Insurance Corporation, leaving approximately $25.0 million at risk on March 31, 2021 should the financial institutions with which these amounts are invested be rendered insolvent. The Company does not consider any of its financial assets to be impaired as of March 31, 2021.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due.

 

As of March 31, 2021, the current Company’s financial liabilities consisted of accounts payable and accrued liabilities of $2.4 million, and the current portion of notes payable of $0.8 million.

 

As of March 31, 2021, we had $17.6 million of cash and cash equivalents. In addition to our cash position, our finished, ready-to-sell, conversion facility inventory value is immediately realizable, if necessary. We do not anticipate selling our existing finished-product inventory in 2021, unless market conditions change sufficiently to warrant its sale.

 

Sensitivity analysis

 

The Company has completed a sensitivity analysis to estimate the impact that a change in interest rates would have on the net loss of the Company. This sensitivity analysis shows that a change of +/- 100 basis points in interest rate would have a negligible effect on the three months ended March 31, 2021. The financial position of the Company may vary at the time that a change in interest rates occurs causing the impact on the Company’s results to vary.

 

 
22

Table of Contents

 

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Business Overview

 

The following discussion is designed to provide information that we believe is necessary for an understanding of our financial condition, changes in financial condition, and results of our operations. The following discussion and analysis should be read in conjunction with the MD&A contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

 

Incorporated on March 22, 2004, Ur-Energy is an exploration stage mining company, as that term is defined by the SEC. We are engaged in uranium mining, recovery and processing activities, including the acquisition, exploration, development and operation of uranium mineral properties in the U.S. We are operating our first in situ recovery uranium mine at our Lost Creek Project in Wyoming. Ur-Energy is a corporation continued under the Canada Business Corporations Act on August 8, 2006. Our Common Shares are listed on the TSX under the symbol “URE” and on the NYSE American under the symbol “URG.”

 

Ur-Energy has one wholly-owned subsidiary, Ur-Energy USA Inc., incorporated under the laws of the State of Colorado. Ur-Energy USA Inc. has three wholly-owned subsidiaries: NFU Wyoming, LLC, a limited liability company formed under the laws of the State of Wyoming which acts as our land holding and exploration entity; Lost Creek ISR, LLC, a limited liability company formed under the laws of the State of Wyoming to operate our Lost Creek Project and hold our Lost Creek properties and assets; and Pathfinder Mines Corporation (“Pathfinder”), incorporated under the laws of the State of Delaware, which holds, among other assets, the Shirley Basin and Lucky Mc properties in Wyoming. Our material U.S. subsidiaries remain unchanged since the filing of our Annual Report on Form 10-K, dated February 26, 2021. 

   

We utilize in situ recovery (“ISR”) of the uranium at our flagship project, Lost Creek, and will do so at other projects where possible. The ISR technique is employed in uranium extraction because it allows for an effective recovery of roll front uranium mineralization at a lower cost. At Lost Creek, we extract and process uranium oxide (“U3O8”) for shipping to a third-party conversion facility to be weighed, assayed and stored until sold.

 

Our Lost Creek processing facility, which includes all circuits for the production, drying and packaging of U3O8 for delivery into sales transactions, is designed and anticipated under current licensing to process up to 1.2 million pounds of U3O8 annually from the Lost Creek mine. The processing facility has the physical design capacity and is licensed to process 2.2 million pounds of U3O8 annually, which provides additional capacity, of up to one million pounds U3O8, to process material from other sources. We expect that the Lost Creek processing facility may be utilized to process captured U3O8 from our Shirley Basin Project. However, the Shirley Basin permit and license allow for the the construction of a full processing facility, providing greater construction and operating flexibility as may be dictated by market conditions.

  

COVID-19 and SBA Paycheck Protection Program

 

During the quarter, physical gathering and other restrictions continued at various levels in Wyoming and Colorado. As COVID-19 restrictions have changed, we have adapted accordingly. We continue to monitor State, Federal and public health guidance as it evolves. Our staff experienced no further cases of COVID-19 during Q1.

 

In response to the COVID-19 pandemic, Congress enacted the CARES Act on March 27, 2020, which created the Paycheck Protection Program (“PPP”) through the Small Business Administration (“SBA”). As an eligible borrower under the program, we secured two loans, one for each of our subsidiaries with U.S. payroll obligations. The combined loan amount of $0.9 million was received on April 16, 2020. We have applied for forgiveness of the full amount of the loans under the current provisions of the program, and we anticipate the loans will meet the requirements for full forgiveness. See note 9 to the Unaudited Consolidated Financial Statements and discussion below under Liquidity and Capital Resources.

 

 
23

Table of Contents

 

Uranium Reserve and Uranium Market

 

Having persevered through many years of suppressed low pricing, including the threats to overall market stability created by foreign state-sponsored producers, U.S. uranium miners have seen signs in Q1 there may be increasing support in Washington for the industry. The Biden Administration is prioritizing climate change initiatives and its leaders have expressed an understanding that clean, carbon-free nuclear energy must be an integral part of those initiatives. The U.S. Department of Energy is working to implement the new national uranium reserve which was established in December 2020 with initial funding of $75 million for FY2021.

 

Supply-demand fundamentals continue to strengthen with projections for sustained growth of global nuclear power in coming years through traditional uses and the construction of advanced reactors of various types. Growing numbers of countries are making commitments to net-zero emissions, which will likely require nuclear energy to meet such objectives.

 

Equity Financing

 

On February 4, 2021, we closed an underwritten public offering of 14,722,200 common shares and accompanying one-half common share warrants to purchase up to 7,361,100 common shares, at a combined public offering price of $0.90 per common share and accompanying warrant. The warrants have an exercise price of $1.35 per whole common share and will expire three years from the date of issuance. We also granted the underwriters a 30-day option to purchase up to an additional 2,208,330 common shares and warrants to purchase up to 1,104,165 common shares on the same terms, which was exercised in full prior to closing. Including the exercised option, we issued a total of 16,930,530 common shares and 16,930,530 warrants to purchase up to 8,465,265 common shares. The gross proceeds to Ur Energy from this offering were approximately $15.2 million. After fees and expenses of $1.3 million, net proceeds to the Company were approximately $13.9 million. See note 12 to the Unaudited Consolidated Financial Statements and discussion below under Liquidity and Capital Resources.

 

Mineral Rights and Properties

 

We have 12 U.S. uranium properties. Ten of our uranium properties are located in the Great Divide Basin, Wyoming, including Lost Creek. Currently, we control nearly 1,800 unpatented mining claims and three State of Wyoming mineral leases for a total of approximately 36,000 acres in the area of the Lost Creek Property, including the Lost Creek permit area (the “Lost Creek Project” or “Project”), and certain adjoining properties referred to as LC East, LC West, LC North, LC South and EN Project areas (collectively, with the Lost Creek Project, the “Lost Creek Property”). Our Shirley Basin Project, also in Wyoming, comprises more than 3,700 Company-controlled acres. Our Lucky Mc Project holds 1,800 acres in the Gas Hills Mine District, Wyoming. Our Excel gold project holds approximately 2,400 acres of mining claims in the Excelsior Mountains of Mineral County, Nevada.

 

Lost Creek Property

 

During the quarter, we maintained reduced production operations at Lost Creek while we await the implementation of the national uranium reserve, further relief pursuant to the recommendations of the United States Nuclear Fuel Working Group (the “Working Group”) and further positive developments in the uranium markets. The reduced production levels have allowed us to make further operating cost reductions at Lost Creek, while continuing to conduct preventative maintenance and optimize processes in preparation for ramp up to full production rates. These preparations include advanced planning for anticipated drilling and production well installation in our fully permitted Mine Unit 2 ("MU2").

 

 
24

Table of Contents

 

Applications for amendment to the Lost Creek licenses and permits were submitted in 2014 in order to include recovery from the uranium resource in the LC East Project (HJ and KM horizons) immediately adjacent to the Lost Creek Project. During Q1, the Wyoming Uranium Recovery Program (“URP”) approved the amendment to the Lost Creek source material license to include recovery from these areas. This license approval grants the Company access to six planned mine units in addition to the already licensed three mine units at Lost Creek. The approval also increases the license limit for annual plant production to 2.2 million pounds U3O8 which includes wellfield production of up to 1.2 million pounds U3O8 and toll processing up to one million pounds U3O8.

 

The BLM previously completed its review and granted approval for this expansion at Lost Creek. The Wyoming Department of Environmental Quality, Land Quality Division, continues its review of the application for amendment to the permit to mine. We anticipate that the permit to mine amendment to recover uranium in the LC East Project will be complete in 2021 H2.

   

Shirley Basin Project

 

Subsequent to quarter-end, the State of Wyoming and the EPA completed their respective reviews of our Shirley Basin Project and issued the source material license, permit to mine, and aquifer exemption for the project. These three approvals represent the final major permits required to begin construction of the Shirley Basin project. We received BLM final approval of the project, following its NEPA review process, in April 2020.

 

The Company plans three relatively shallow mining units at the project, where we have the option to either build out a complete processing plant with drying facilities or a satellite plant with the ability to send loaded ion exchange resin to Lost Creek for processing. The Shirley Basin processing facility throughput shall not exceed an average daily flow rate equivalent to 6,000 gallons per minute or a maximum instantaneous flow rate of 6,500 gallons per minute, excluding restoration flow. The annual production of dried yellowcake (U3O8) from wellfield production and toll processing of loaded resin or yellowcake slurry shall not exceed 2M pounds equivalent of dried U3O8 product. Situated in an historic mining district, the project has existing access roads, power, waste disposal facility and shop buildings onsite. The project is construction ready, since delineation and exploration drilling were completed historically. Additionally, all wellfield, pipeline and header house layouts are finalized. We anticipate up to nine years production at the site.

   

 
25

Table of Contents

 

Results of Operations

 

The following table provides information on our production and ending inventory of U3O8 pounds.

 

Reconciliation of Non-GAAP measures with US GAAP financial statement presentation

 

The U3O8 and cost per pound measures included in the following table 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.

 

U3O8 Production and Ending Inventory

 

 

 

Unit

 

 

2020-Q1

 

 

2020-Q2

 

 

2020-Q3

 

 

2020-Q4

 

 

2021-Q1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 Production

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds captured

 

lb

 

 

 

4,113

 

 

 

4,119

 

 

 

2,503

 

 

 

54

 

 

 

49

 

Pounds drummed

 

lb

 

 

 

1,433

 

 

 

2,892

 

 

 

4,926

 

 

 

6,622

 

 

 

-

 

Pounds shipped

 

lb

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,873

 

Pounds purchased

 

lb

 

 

 

33,000

 

 

 

167,000

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 Ending Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

lb

 

 

 

8,304

 

 

 

9,267

 

 

 

6,901

 

 

 

303

 

 

 

318

 

Plant inventory

 

lb

 

 

 

1,433

 

 

 

4,326

 

 

 

9,251

 

 

 

15,873

 

 

 

-

 

Conversion inventory - produced

 

lb

 

 

 

219,802

 

 

 

219,802

 

 

 

219,735

 

 

 

219,735

 

 

 

235,608

 

Conversion inventory - purchased

 

lb

 

 

 

48,750

 

 

 

48,750

 

 

 

48,750

 

 

 

48,750

 

 

 

48,750

 

 

 

lb

 

 

 

278,289

 

 

 

282,145

 

 

 

284,637

 

 

 

284,661

 

 

 

284,676

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

$000

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Plant inventory

 

$000

 

 

$42

 

 

$138

 

 

$268

 

 

$463

 

 

$-

 

Conversion inventory - produced

 

$000

 

 

$6,082

 

 

$6,079

 

 

$6,083

 

 

$6,083

 

 

$6,592

 

Conversion inventory - purchased

 

$000

 

 

$1,209

 

 

$1,268

 

 

$1,268

 

 

$1,268

 

 

$1,268

 

 

 

$000

 

 

$7,333

 

 

$7,485

 

 

$7,619

 

 

$7,814

 

 

$7,860

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost per Pound

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

$/lb

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Plant inventory

 

$/lb

 

 

$29.31

 

 

$31.90

 

 

$28.97

 

 

$29.17

 

 

$-

 

Conversion inventory - produced

 

$/lb

 

 

$27.67

 

 

$27.66

 

 

$27.68

 

 

$27.68

 

 

$27.98

 

Conversion inventory - purchased

 

$/lb

 

 

$24.80

 

 

$26.01

 

 

$26.01

 

 

$26.01

 

 

$26.01

 

 

 

$/lb

 

 

$26.35

 

 

$26.53

 

 

$26.77

 

 

$27.45

 

 

$27.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Produced conversion inventory detail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ad valorem and severance tax

 

$/lb

 

 

$0.75

 

 

$0.75

 

 

$0.75

 

 

$0.75

 

 

$0.67

 

Cash cost

 

$/lb

 

 

$17.49

 

 

$17.48

 

 

$17.50

 

 

$17.50

 

 

$17.28

 

Non-cash cost

 

$/lb

 

 

$9.43

 

 

$9.43

 

 

$9.43

 

 

$9.43

 

 

$10.03

 

 

 

$/lb

 

 

$27.67

 

 

$27.66

 

 

$27.68

 

 

$27.68

 

 

$27.98

 

 

During 2020, we took steps to reduce production operations at Lost Creek and adjust to the continued depressed state of the uranium markets while we awaited the recommended relief from the Working Group and further positive developments in the uranium markets. As a result, production rates at Lost Creek declined significantly during the year. Pounds captured decreased nearly 80 percent during the year and will remain low until a decision to ramp up is made.

 

 
26

Table of Contents

 

As of March 31, 2021, we had approximately 284,358 pounds of U3O8 at the conversion facility including 235,608 produced pounds at an average cost per pound of $27.98, and 48,750 purchased pounds at an average cost of $26.01 per pound. In January 2021, we shipped approximately 15,873 pounds of U3O8 to the conversion facility.

 

Three months ended March 31, 2021 compared to the three months ended March 31, 2020

 

The following table summarizes the results of operations for the three months ended March 31, 2021 and 2020:

 

 

 

Three months ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

-

 

 

 

1,370

 

 

 

(1,370)

Cost of sales

 

 

(1,673)

 

 

(3,105)

 

 

1,432

 

Gross profit (loss)

 

 

(1,673)

 

 

(1,735)

 

 

62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

(1,812)

 

 

(2,062)

 

 

250

 

Profit (loss) from operations

 

 

(3,485)

 

 

(3,797)

 

 

312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest expense

 

 

(189)

 

 

(132)

 

 

(57)

Warrant mark to market gain

 

 

(3,404)

 

 

273

 

 

 

(3,677)

Foreign exchange gain (loss)

 

 

(296)

 

 

15

 

 

 

(311)

Other income (expense)

 

 

2

 

 

 

-

 

 

 

2

 

Net income (loss)

 

 

(7,372)

 

 

(3,641)

 

 

(3,731)

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

219

 

 

 

27

 

 

 

192

 

Comprehensive income (loss)

 

 

(7,153)

 

 

(3,614)

 

 

(3,539)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

(0.04)

 

 

(0.02)

 

 

(0.02)

Diluted

 

 

(0.04)

 

 

(0.02)

 

 

(0.02)

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 pounds sold

 

 

-

 

 

 

33,000

 

 

 

(33,000