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United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

 

 

 

 

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

 

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2019

 

 

 

 

 

 

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

 

FOR THE TRANSITION PERIOD OF _________ TO _________.

 

Commission File Number: 001-33905

 

UR-ENERGY INC.

(Exact name of registrant as specified in its charter)

 

 

 

Canada

Not Applicable

State or other jurisdiction of incorporation or organization

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

 

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

 

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

 

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 ☐                     Accelerated filer ☑               Non-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 October 31, 2019,  there were 160,053,021 shares of the registrant’s no par value Common Shares (“Common Shares”), the registrant’s only outstanding class of voting securities, outstanding.

 



 

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UR-ENERGY INC.

 

TABLE OF CONTENTS

 

25

37

37

39

 

 

 

 

Page

 

 

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

Item 1. 

Financial Statements

3

Item 2. 

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

23

Item 3. 

Quantitative and Qualitative Disclosures about Market Risk

39

Item 4. 

Controls and Procedures

40

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

Item 1. 

Legal Proceedings

40

Item 1A. 

Risk Factors

40

Item 2. 

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3. 

Defaults Upon Senior Securities

40

Item 4. 

Mine Safety Disclosures

40

Item 5. 

Other Information

41

Item 6. 

Exhibits

42

 

 

 

SIGNATURES 

43

 

 

 

 

 

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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 controlled, steady-state operations at Lost Creek; (ii) the outcome of our forecasts and production projections, including the anticipated production of Lost Creek for 2019; (iii) the timing and outcome of permitting and regulatory approvals of the amendment 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 production inventory is available; (v) the timing and outcome of applications for regulatory approval to build and operate an in situ recovery mine at Shirley Basin; (vi) resolution of the continuing challenges within the uranium market, including supply and demand projections;  (vii) the impact of the President’s announcement to not take any action to adjust trade to preserve the domestic uranium mining industry; (viii) what recommendations will be made by the United States Nuclear Fuel Working Group for the revival and expansion of domestic nuclear fuel production and the impact of those recommendations, if any; (ix) whether the cost-savings measures which have been and will be implemented will be sufficient; and (x) the ability and timing to ramp up when market conditions warrant. Additional factors include, among others, the following: future estimates for production; capital expenditures; operating costs; mineral resources; recovery rates; grades; 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; challenges presented by current inventories and largely unrestricted imports of uranium products into the U.S.; 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; compliance with environmental laws and regulations; uncertainty regarding the pricing and collection of accounts; the possibility for adverse results in potential litigation; uncertainties associated with changes in 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; adverse changes in general business conditions in any of the countries in which we do business; changes in size and structure; the effectiveness of management and our strategic relationships; ability to attract and retain key personnel; 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 March 1, 2019.

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

 

NI 43-101 Review of Technical Information: Michael Mellin, Ur-Energy / Lost Creek Mine Geologist, P.Geo. and Qualified Person as defined by NI 43-101, reviewed and approved the technical information contained in this Form 10-Q.

 

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PART I

Item 1. FINANCIAL STATEMENTS

 

Ur-Energy Inc.

Unaudited Interim Consolidated Balance Sheets

(expressed in thousands of U.S. dollars)

 

 

 

 

 

 

September 30,

 

December 31,

 

2019

 

2018

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents (note 4)

3,360

 

6,372

Accounts receivable (note 5)

1,142

 

31

Inventory (note 6)

 -

 

1,840

Prepaid expenses

1,102

 

847

 

5,604

 

9,090

Long-term inventory (note 6)

7,357

 

12,852

Restricted cash (note 7)

7,463

 

7,458

Mineral properties (note 8)

43,791

 

45,805

Capital assets (note 9)

24,018

 

25,158

 

82,629

 

91,273

 

88,233

 

100,363

Liabilities and shareholders' equity

 

 

 

Current liabilities

 

 

 

Accounts payable and accrued liabilities (note 10)

2,475

 

2,343

Current portion of long term debt (note 11)

5,216

 

5,062

Environmental remediation accrual

77

 

77

 

7,768

 

7,482

Notes payable (note 11)

6,987

 

9,600

Lease liability (note 9)

 9

 

 -

Asset retirement obligations (note 12)

30,756

 

30,384

Other liabilities - warrants (note 13)

744

 

1,050

 

38,496

 

41,034

 

46,264

 

48,516

Shareholders' equity (note 14)

 

 

 

Share Capital

 

 

 

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

 -

 

 -

Common shares, without par value, unlimited shares authorized; shares issued and outstanding: 159,947,625 at September 30, 2019 and 159,729,403 at December 31, 2018

185,424

 

185,221

Contributed surplus

20,390

 

19,930

Accumulated other comprehensive income

3,662

 

3,670

Deficit

(167,507)

 

(156,974)

 

41,969

 

51,847

 

88,233

 

100,363

 

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

 Approved by the Board of Directors

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

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Ur-Energy Inc.

Unaudited Interim Consolidated Statements of Operations and Comprehensive Income

 

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

 

 

 

 

 

 

 

 

 

Three months ended  September 30,

 

Nine months ended September 30,

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

Sales (note 15)

5,115

 

 3

 

21,406

 

23,482

Cost of sales

(7,515)

 

(170)

 

(23,824)

 

(12,153)

Gross profit (loss)

(2,400)

 

(167)

 

(2,418)

 

11,329

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

Exploration and evaluation

(822)

 

(588)

 

(2,084)

 

(1,959)

Development

(372)

 

(522)

 

(831)

 

(1,394)

General and administrative

(1,282)

 

(1,169)

 

(4,574)

 

(4,190)

Accretion of asset retirement obligations (note 12)

(144)

 

(128)

 

(431)

 

(380)

Write-off of mineral properties (note 8)

(11)

 

 -

 

(11)

 

 -

Income (loss) from operations

(5,031)

 

(2,574)

 

(10,349)

 

3,406

 

 

 

 

 

 

 

 

Net interest expense

(153)

 

(241)

 

(517)

 

(790)

Warrant mark to market adjustment

981

 

11

 

343

 

11

Loss on equity investment

 -

 

 -

 

 -

 

(5)

Foreign exchange gain (loss)

 4

 

(5)

 

(24)

 

 5

Other income

(1)

 

 -

 

14

 

3,573

 

 

 

 

 

 

 

 

Net income (loss) for the period

(4,200)

 

(2,809)

 

(10,533)

 

6,200

 

 

 

 

 

 

 

 

Income (loss) per common share

 

 

 

 

 

 

 

Basic

(0.03)

 

(0.02)

 

(0.07)

 

0.04

Diluted

(0.03)

 

(0.02)

 

(0.07)

 

0.04

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

Basic

159,946,969

 

147,483,434

 

159,833,116

 

146,920,559

Diluted

159,946,969

 

147,483,434

 

159,833,116

 

149,836,937

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

Net income (loss) for the period

(4,200)

 

(2,809)

 

(10,533)

 

6,200

Other Comprehensive income (loss), net of tax

 

 

 

 

 

 

 

Translation adjustment on foreign operations

15

 

11

 

(8)

 

(22)

Comprehensive income (loss) for the period

(4,185)

 

(2,798)

 

(10,541)

 

6,178

 

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

 

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Ur-Energy Inc.

Unaudited Interim Consolidated Statement of Shareholders’ Equity

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Capital Stock

 

Contributed

 

Comprehensive

 

 

 

Shareholders'

 

Shares

 

Amount

 

Surplus

 

Income

 

Deficit

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

#

 

$

 

$

 

$

 

$

 

$

Balance, December 31, 2018

159,729,403

 

185,221

 

19,930

 

3,670

 

(156,974)

 

51,847

 

 

 

 

 

 

 

 

 

 

 

 

Redemption of vested RSUs

 -

 

 -

 

(6)

 

 -

 

 -

 

(6)

Non-cash stock compensation

 -

 

 -

 

188

 

 -

 

 -

 

188

Net income and comprehensive income

 -

 

 -

 

 -

 

 1

 

(4,302)

 

(4,301)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2019

159,729,403

 

185,221

 

20,112

 

3,671

 

(161,276)

 

47,728

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

206,160

 

190

 

(56)

 

 -

 

 -

 

134

Redemption of vested RSUs

 -

 

 -

 

(1)

 

 -

 

 -

 

(1)

Non-cash stock compensation

 -

 

 -

 

182

 

 -

 

 -

 

182

Net income and comprehensive income

 -

 

 -

 

 -

 

(24)

 -

(2,031)

 

(2,055)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2019

159,935,563

 

185,411

 

20,237

 

3,647

 

(163,307)

 

45,988

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

12,062

 

13

 

(4)

 

 -

 

 -

 

 9

Redemption of vested RSUs

 -

 

 -

 

(27)

 

 -

 

 -

 

(27)

Non-cash stock compensation

 -

 

 -

 

184

 

 -

 

 -

 

184

Net income and comprehensive income

 -

 

 -

 

 -

 

15

 

(4,200)

 

(4,185)

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2019

159,947,625

 

185,424

 

20,390

 

3,662

 

(167,507)

 

41,969

 

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Ur-Energy Inc.

Unaudited Interim Consolidated Statement of Shareholders’ Equity

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

Capital Stock

 

 

 

Contributed

 

Comprehensive

 

 

 

Shareholders'

 

Shares

 

Amount

 

Warrants

 

Surplus

 

Income

 

Deficit

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

#

 

$

 

$

 

$

 

$

 

$

 

$

Balance, December 31, 2017

146,531,933

 

177,063

 

4,109

 

15,454

 

3,663

 

(161,508)

 

38,781

Exercise of stock options

67,719

 

59

 

 -

 

(17)

 

 -

 

 -

 

42

Redemption of vested RSUs

 

 

 

 

 -

 

(13)

 

 -

 

 -

 

(13)

Non-cash stock compensation

 -

 

 -

 

 -

 

330

 

 -

 

 -

 

330

Net income and comprehensive income

 -

 

 -

 

 -

 

 -

 

(21)

 

6,418

 

6,397

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, March 31, 2018

146,599,652

 

177,122

 

4,109

 

15,754

 

3,642

 

(155,090)

 

45,537

Exercise of stock options

116,172

 

103

 

 -

 

(32)

 

 -

 

 -

 

71

Common shares issued for

 

 

 

 

 

 

 

 

 

 

 

 

 -

  cash, net of $4 ATM renewal costs

 -

 

(4)

 

 -

 

 -

 

 -

 

 -

 

(4)

Expiry of warrants

 -

 

 -

 

(3,103)

 

3,103

 

 -

 

 -

 

 -

Non-cash stock compensation

 -

 

 -

 

 -

 

236

 

 -

 

 -

 

236

Net income and comprehensive income

 -

 

 -

 

 -

 

 -

 

(12)

 

2,591

 

2,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, June 30, 2018

146,715,824

 

177,221

 

1,006

 

19,061

 

3,630

 

(152,499)

 

48,419

Exercise of stock options

236,453

 

191

 

 -

 

(56)

 

 -

 

 -

 

135

Common shares issued for

 

 

 

 

 

 

 

 

 

 

 

 

 -

  cash, net of $857 of costs

12,195,122

 

7,447

 

 -

 

 -

 

 -

 

 -

 

7,447

Expiry of warrants

 -

 

 -

 

(1,006)

 

1,006

 

 -

 

 -

 

 -

Non-cash stock compensation

 -

 

 -

 

 -

 

161

 

 -

 

 -

 

161

Net income and comprehensive income

 -

 

 -

 

 -

 

 -

 

11

 

(2,809)

 

(2,798)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, September 30, 2018

159,147,399

 

184,859

 

 -

 

20,172

 

3,641

 

(155,308)

 

53,364

 

 

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

 

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Ur-Energy Inc.

Unaudited Interim Consolidated Statements of Cash Flow

 

(expressed in thousands of U.S. dollars)

 

 

 

 

 

 

Nine months ended September 30,

 

2019

 

2018

Cash provided by

 

 

 

Operating activities

 

 

 

Net income (loss) for the period

(10,533)

 

6,200

Items not affecting cash:

 

 

 

Stock based expense

554

 

727

Loss from net realizable value adjustments

8,189

 

268

Depreciation and amortization

3,306

 

2,701

Accretion of asset retirement obligations

431

 

380

Amortization of deferred loan costs

91

 

91

Write-off of mineral properties

11

 

 -

Warrants mark to market gain

(343)

 

(11)

Gain on assignment of contract

 -

 

(3,540)

Gain on disposition of assets

 -

 

(2)

Gain on foreign exchange

(23)

 

(6)

Other loss

 -

 

 5

Change in non-cash working capital items:

 

 

 

Accounts receivable

(1,111)

 

(11)

Inventory

(854)

 

(7,921)

Prepaid expenses

(58)

 

(117)

Accounts payable and accrued liabilities

(110)

 

(401)

 

(450)

 

(1,637)

 

 

 

 

Investing activities

 

 

 

Mineral property costs

(8)

 

(31)

Decrease (increase) in other deposits

19

 

(19)

Proceeds from assignment of contract

 -

 

3,540

Funding of equity investment

 -

 

(5)

Purchase of capital assets

(175)

 

(49)

 

(164)

 

3,436

 

 

 

 

Financing activities

 

 

 

Issuance of common shares for cash

 -

 

10,000

Share issue costs

 -

 

(731)

Proceeds from exercise of stock options

143

 

247

RSUs redeemed to pay withholding or paid in cash

(34)

 

(12)

Repayment of debt

(2,555)

 

(3,645)

 

(2,446)

 

5,859

 

 

 

 

Effects of foreign exchange rate changes on cash

53

 

(17)

 

 

 

 

Net change in cash, cash equivalents and restricted cash

(3,007)

 

7,641

Beginning cash, cash equivalents and restricted cash

13,830

 

11,437

Ending cash, cash equivalents and restricted cash (note 16)

10,823

 

19,078

 

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

 

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

1.Nature of Operations

 

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

 

Due to the nature of the uranium mining methods used by the Company on the Lost Creek Property, and the definition of “mineral reserves” under National Instrument 43-101 (“NI 43-101”), which uses the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) Definition Standards, the Company has not determined whether the property contains 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.   Liquidity Risk

 

Our operations are based on a small number of large sales.  As a result, our cash flow and therefore our current assets and working capital may vary widely during the year based on the timing of those sales.  Virtually all of our sales are under contracts which specify delivery quantities, sales prices and payment dates. The only exceptions are spot sales which we are currently only making when advantageous. As a result, we are able to perform cash management functions over the course of an entire year and are less reliant on current commodity prices and market conditions. We monitor our cash projections on a weekly basis and have used various techniques to manage our cash flows including the assignment of deliveries, negotiating changes in delivery dates, purchasing inventory at favorable prices and raising capital.

 

As at September 30, 2019, the Company’s financial liabilities consisted of trade accounts payable and accrued trade and payroll liabilities of $0.7 million which are due within normal trade terms of generally 30 to 60 days, a note payable of $12.4 million, and asset retirement obligations with estimated completion dates until 2033. The payment schedule for the note was modified on October 1, 2019 to defer principal payments for eighteen months (see note 18).

 

In addition, most of our current assets except for prepaid expenses are immediately realizable, if necessary, while our current liabilities include a substantial portion that is not due for three months or more which, given the existence of our contracts and set prices, allows us to plan for those payments well in advance and address shortfalls, if any.

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

3.Summary of Significant Accounting Policies

 

Basis of presentation

 

These unaudited interim 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. The unaudited interim 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 interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2018.  We apply the same accounting policies as in the prior year other than as noted below.  The year-end balance sheet data were derived from the audited financial statements and certain information and footnote disclosures required by US GAAP have been condensed or omitted.

 

New accounting pronouncements which were implemented this year

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize all leases on the balance sheet, including operating leases, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 became effective for the Company as of January 1, 2019.    At January 1, 2019, we had two office equipment leases, and the office lease in Casper which expired in July 2019 and was renewed for only six months.  As a result of adoption of ASC 2016-02, we recognized a liability of $83.9 with a corresponding Right-Of-Use (“ROU”) assets of the same amount based on present value of the minimum rental payments of the leases which are included in non-current assets, current portion of long-term liabilities and long-term liabilities in the consolidated balance sheet. The discount rates used for leases are based on either the Company’s borrowing rate or the imputed interest rate based on the price of the equipment and the lease terms.

 

4.Cash and Cash Equivalents

 

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

 

 

 

 

 

 

 

As at

 

September 30, 2019

 

December 31, 2018

 

$

 

$

Cash on deposit at banks

884

 

1,936

Money market funds

2,476

 

4,436

 

 

 

 

 

3,360

 

6,372

 

 

 

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

5.  Accounts Receivable

 

The Company’s accounts receivable consists of the following:

 

 

 

 

 

 

As at

 

September 30, 2019

 

December 31, 2018

 

$

 

$

Trade accounts receivable

 

 

 

Company A

1,119

 

 -

Other Companies

 -

 

11

Total trade receivables

1,119

 

11

Other receivables

23

 

20

 

 

 

 

Total accounts receivable

1,142

 

31

 

 

6.  Inventory

 

The Company’s inventory consists of the following:

 

 

 

 

 

 

 

As at

 

September 30, 2019

 

December 31, 2018

 

$

 

$

In-process inventory

 -

 

160

Plant inventory

384

 

345

Conversion facility inventory

6,973

 

14,187

 

7,357

 

14,692

Inventory to be sold within 12 months

 -

 

1,840

Long term inventory

7,357

 

12,852

 

In conjunction with our lower of cost or net realizable value (“NRV”) calculations, the Company reduced the inventory valuation by $4,087 and $8,189 for the three and nine months ended September 30, 2019, respectively. 

 

7.    Restricted Cash

 

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 agreed to by the Wyoming Department of Environmental Quality (“WDEQ”), 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 are used to secure the potential costs of reclamation related to those properties. Surety bonds providing $29.9 million of coverage towards

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

specific reclamation obligations are collateralized by $7.4 million of the restricted cash at September 30, 2019.  

 

8Mineral Properties

 

The Company’s mineral properties consist of the following:

 

 

 

 

 

 

 

 

 

 

 

Lost Creek

 

Pathfinder

 

Other U.S.

 

 

 

Property

 

Mines

 

Properties

 

Total

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

Balance, December 31, 2018

12,644

 

19,964

 

13,197

 

45,805

 

 

 

 

 

 

 

 

Acquisition costs

 -

 

 -

 

 8

 

 8

Change in estimated reclamation costs

 -

 

(59)

 

 -

 

(59)

Property write-offs

16

 

 -

 

(27)

 

(11)

Amortization

(1,952)

 

 -

 

 -

 

(1,952)

 

 

 

 

 

 

 

 

Balance, September 30, 2019

10,708

 

19,905

 

13,178

 

43,791

 

 

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 additional property purchases and leases. 

 

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

 

Pathfinder Mines

 

The Company acquired additional Wyoming properties when Ur-Energy USA Inc. closed a Share Purchase Agreement (“SPA”) with an AREVA Mining affiliate in December 2013. Under the terms of the SPA, the Company purchased Pathfinder Mines Corporation (“Pathfinder”) to acquire additional mineral properties. Assets acquired in this transaction include the Shirley Basin mine, portions of the Lucky Mc mine, machinery and equipment, vehicles, office equipment and development databases. Pathfinder was acquired

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

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

 

During the third quarter of 2019, the Company elected not to renew the claims included in the Red Rider acquisition. Accordingly, the Company wrote off a mineral asset of $27 and the related accumulated amortization of $16 for a net write off of $11.

 

9.Capital Assets

 

The Company’s capital assets consist of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

As of

 

September 30, 2019

 

December 31, 2018

 

 

 

Accumulated

 

Net Book

 

 

 

Accumulated

 

Net Book

 

Cost

 

Depreciation

 

Value

 

Cost

 

Depreciation

 

Value

 

$

 

$

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

Rolling stock

3,439

 

3,328

 

111

 

3,432

 

3,290

 

142

Enclosures

32,991

 

9,767

 

23,224

 

32,991

 

8,530

 

24,461

Machinery and equipment

1,417

 

787

 

630

 

1,237

 

728

 

509

Furniture, fixtures and leasehold improvements

119

 

113

 

 6

 

119

 

110

 

 9

Information technology

1,100

 

1,066

 

34

 

1,127

 

1,090

 

37

ROU Assets

83

 

70

 

13

 

 -

 

 -

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

39,149

 

15,131

 

24,018

 

38,906

 

13,748

 

25,158

 

 

 

 

 

 

 

 

As disclosed in note 3, the Company applied ASU 2016-02 to our existing leases. As of September 30, 2019, we currently include equipment leases of $13 in assets and liabilities. Of the $13 liability, $9 is included in long-term liabilities and the balance in the current portion of long term liabilities. 

 

 

 

 

 

 

 

 

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

10.Accounts Payable and Accrued Liabilities

 

Accounts payable and accrued liabilities consist of the following:

 

 

 

 

 

 

 

 

 

 

As at

 

September 30, 2019

 

December 31, 2018

 

$

 

$

Accounts payable

646

 

620

Payroll and other taxes

1,523

 

1,218

Severance and ad valorem tax payable

306

 

505

 

 

 

 

 

2,475

 

2,343

 

 

 

 

 

11.Notes Payable

 

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

 

On October 1, 2019, the Sweetwater County Commissioners and the State of Wyoming approved a six-quarter deferral of principal payments beginning October 1, 2019. The next principal payment is therefore due April 1, 2021 and the last payment will be due in April 2023.

 

Deferred loan fees include legal fees, commissions, commitment fees and other costs associated with obtaining the financing.

 

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

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

 

 

 

 

 

 

 

As at

 

September 30, 2019

 

December 31, 2018

 

$

 

$

Current debt

 

 

 

Lease liabilities (note 9)

 4

 

 -

Sweetwater County Loan

5,333

 

5,183

Less deferred financing costs

(121)

 

(121)

 

5,216

 

5,062

 

 

 

 

Long term debt

 

 

 

Sweetwater County Loan

7,108

 

9,813

Less deferred financing costs

(121)

 

(213)

 

6,987

 

9,600

 

Schedule of payments on outstanding debt as of October 1, 2019 after amendment of loan payment schedule:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

Total

 

2019

 

2020

 

2021

 

2022

 

2023

 

Final payment

 

$

 

$

 

$

 

$

 

$

 

$

 

 

Sweetwater County Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal

12,441

 

 -

 

 -

 

5,333

 

5,646

 

1,462

 

01-Apr-23

Interest

1,805

 

178

 

716

 

602

 

288

 

21

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

14,246

 

178

 

716

 

5,935

 

5,934

 

1,483

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12.Asset Retirement and Reclamation Obligations

 

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

 

At September 30, 2019, the total undiscounted amount of the future cash needs was estimated to be $29.7 million. The schedule of payments required to settle the ARO liability extends through 2033.

 

The restricted cash discussed in note 7 is related to the surety bonds which provide security to the governmental agencies on these obligations.

 

 

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

 

 

 

 

 

For the period ended

 

September 30, 2019

 

December 31, 2018

 

 

 

 

 

$

 

$

Beginning of period

30,384

 

27,036

Change in estimated liability

(59)

 

2,840

Accretion expense

431

 

508

 

 

 

 

End of period

30,756

 

30,384

 

 

 

 

 

 

13.Other Liabilities

 

As a part of the September 2018 public offering, we sold 13,062,878 warrants priced at $0.01 per warrant. Two warrants are redeemable for one Common Share of the Company’s stock at a price of $1.00 per full share. As the warrants are priced in US$ and the functional currency of Ur-Energy Inc. is Cdn$, this created a derivative financial liability. The liability created and adjusted quarterly is a calculated fair value using the Black-Scholes technique described below as there is no active market for the warrants. Any income or loss is reflected in net income for the period. The revaluation as of September 30, 2019 resulted in gains of  $981 and $343 for the three and nine month periods ended September 30, 2019 which are reflected on the statement of operations.

 

14.Shareholders’ Equity and Capital Stock

 

Stock options

 

In 2005, the Company’s Board of Directors approved the adoption of the Company's stock option plan (the “Option Plan”). The Option Plan was most recently approved by the shareholders on May 18, 2017. 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 options is five years.

 

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Ur-Energy Inc.

Condensed Notes to Unaudited Interim Consolidated Financial Statements

September 30, 2019

 

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

 

Activity with respect to stock options is summarized as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

average

 

 

 

Options

 

exercise price

 

 

 

#

 

$

 

 

 

 

 

 

Balance, December 31, 2018

 

 

9,731,612

 

0.64

 

 

 

 

 

 

Exercised

 

 

(218,222)

 

0.66

Forfeited

 

 

(311,982)

 

0.70

Expired

 

 

(100,000)

 

1.26

 

 

 

 

 

 

Outstanding, September 30, 2019

 

 

9,101,408

 

0.65

 

The exercise price of a new grant is set at the closing price for the shares on the Toronto Stock Exchange (TSX) on the trading day immediately preceding the grant date so there is no intrinsic value as of the date of grant. The fair value of options vested during the nine months ended September 30, 2019 was less than  $0.1 million.

 

As of September 30, 2019, 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

$

 

 

 

 

 

$

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.75

 

712,212

 

0.2

 

 -

 

712,212

 

0.2

 

 -

 

12-Dec-19

0.84

 

200,000

 

0.7

 

 -

 

200,000

 

0.7

 

 -

 

29-May-20

0.63

 

538,912

 

0.9

 

 -

 

538,912

 

0.9

 

 -

 

17-Aug-20

0.59

 

928,408

 

1.2

 

16

 

928,408

 

1.2

 

16

 

11-Dec-20

0.54

 

2,411,930

 

2.2

 

145

 

2,411,930

 

2.2

 

145