13.

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 169,667,672 shares and 160,478,059 shares were issued and outstanding as of September 30, 2020 and December 31, 2019, respectively.

On August 4, 2020, the Company closed a $4.68 million registered direct offering of 9,000,000 common shares and accompanying one-half common share warrants to purchase up to 4,500,000 common shares, at a combined public offering price of $0.52 per common share and accompanying warrant, with gross proceeds to the Company of $4.68 million. After fees and expenses of $0.4 million, net proceeds to the Company were $4.3 million. The common share warrants will expire two years from the date of issuance and will allow the holders to purchase our common shares at an exercise price of $0.75 per whole common share.

As the warrants are priced in US$ and the functional currency of Ur-Energy Inc. is Cdn$, this will create a derivative financial liability. The fair value of the liability will be recorded and adjusted quarterly using the Black-Scholes technique described herein as there is no active market for the warrants. Any gain or loss will be reflected in net income for the period. We anticipate that the public offering proceeds will be used to sustain operations, and for working capital and general corporate purposes.

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, December 31, 2019

Forfeited

Expired

Outstanding, September 30, 2020

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. The fair value of options vested during the nine months ended September 30, 2020 was less than $0.1 million.

As of September 30, 2020, outstanding stock options are as follows:

 Exercise

 price

$

0.60

11-Dec-20

0.55

16-Dec-21

0.76

02-Mar-22

0.55

07-Sep-22

0.67

15-Dec-22

0.58

30-Mar-23

0.70

20-Aug-23

0.68

14-Dec-23

0.59

05-Nov-24

0.62

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.

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:

Released

Forfeited

As of September 30, 2020, outstanding RSUs are as follows:

RSUs outstanding

Number

of RSUs

#

204,636

14-Dec-20

667,409

05-Nov-21

872,045

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 (see note 12).

The following represents warrant activity during the period ended September 30, 2020:

Outstanding, December 31, 2019

Granted

Expired

Outstanding, September 30, 2020

As of September 30, 2020, outstanding warrants are as follows:

 Exercise

 price

$

1.00

25-Sep-21

0.75

04-Aug-22

0.90

Share-based compensation expense

Share-based compensation expense was $0.2 and $0.5 million for the three and nine months ended September 30, 2020 and $0.2 and $0.6 million for the three and nine months ended September 30, 2019.

As of September 30, 2020, there was approximately $0.6 million of total unamortized compensation expense related to unvested share-based compensation arrangements granted under the Option Plan and $0.2 million under the RSU Plan. The expenses are expected to be recognized over a weighted-average remaining life of 2.4 years and 0.9 years under the Option Plan and RSU Plan, respectively.

No cash was received from the exercise of stock options for the nine months ended September 30, 2020. We received $0.1 million of cash from options exercised in the nine months ended September 30, 2019.

Fair value calculations

The initial fair value of options and RSUs granted is determined using the Black-Scholes option pricing model for options and the intrinsic pricing model for RSUs. There were no options or RSUs granted during the nine months ended September 30, 2020 and September 30, 2019.

The Company estimates expected volatility using daily historical trading data of the Company’s Common Shares, because this is recognized as a valid method used to predict future volatility. The risk-free interest rates are determined by reference to Canadian Treasury Notes with maturities that approximate the expected option term. 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 recognition of expense on options that are ultimately expected to vest over the expected option term. Forfeitures were estimated using actual historical forfeiture experience.