LITTLETON, Colo., March 2, 2018 /CNW/ -- Ur-Energy Inc.
(NYSE American:URG TSX:URE) ("Ur-Energy" or the "Company")
has filed the Company's Annual Report on Form 10-K, Consolidated
Financial Statements, and Management's Discussion & Analysis,
all for the year ended December 31,
2017, with the U.S. Securities and Exchange Commission on
EDGAR at www.sec.gov/edgar.shtml and with Canadian securities
authorities on SEDAR at www.sedar.com. These filings also may be
accessed on the Company's website at www.ur-energy.com.
Shareholders of the Company may receive a hard copy of the
consolidated financial statements, free of charge, upon request to
the Company.
Ur-Energy CEO, Jeff Klenda
provided the following on the Company's 2017 performance: "Despite
difficult market conditions, which persisted throughout the year, I
am very pleased to report that we generated $14.0 million in gross profits and $5.4 million in free cash flows, while at the
same time improving our safety performance and not subjecting our
shareholders to unwanted dilution. Our people made this
possible through their hard work, initiative, and innovative
approaches to the operation of this Company. I would like to
express my deep gratitude for their many contributions.
"Still, uneven trade practices continue to put pressure on an
already weakened market, forcing additional production cuts, cost
reductions and unfortunately, the loss of valuable,
highly-experienced employees, who either leave due to the vagaries
of the situation, or are forced to leave as more and more cut backs
are announced. The situation is not simply a matter of
project economics, for as you know, our Lost Creek project is a
very economical project, but one of far greater importance:
the national security of our very own country. It is for
this, and many other reasons, that we participated in the filing
under Section 232 of the Trade Expansion Act of 1962. Rest
assured, we will do what we can to protect our employees, our
shareholders, our Company and our nation from this growing
dependence on foreign uranium products, which is contrary to U.S.
national security."
Financial Results
The Company ended the year with a
cash and cash equivalents balance of $3.9
million. We recognized a gross profit of $14.0 million on sales of $38.4 million during 2017. The gross profit from
uranium sales was $13.9 million in
2017, which represents a gross profit margin of approximately
36%. The Company realized an average price per pound sold of
$49.09, as compared to $39.49 in 2016. The increase was primarily due to
higher average contract prices in 2017 as compared to 2016. Also,
there were no spot sales in 2017, while 2016 included spot sales
that lowered the average price for that year. Our cash cost per
pound sold for the year was $24.08
while our total cost per pound sold was $31.28. Respectively, this compares to
$17.15 and $28.20 in 2016.
We recorded $1.4 million income
from operations after deducting total operating expenses of
$12.6 million, which includes
exploration and evaluation expenses, development expenses and
general and administrative expenses. After recording interest and
other expenses, the net earnings before income taxes for the year
was $0.1 million, as compared to a
net loss before incomes taxes of $3.0
million in 2016. As at February 28,
2018, our unrestricted cash position was $7.5 million.
Lost Creek Operations
During 2017, 265,391 pounds of
U3O8 were captured within the Lost Creek
plant. A total of 254,012 pounds were packaged in drums and 257,213
pounds of the drummed inventory were shipped to the conversion
facility where 261,000 produced pounds were sold to utility
customers. The cash cost per pound and non-cash cost per pound for
produced uranium presented in the following Production Costs and
U3O8 Sales and Cost of Sales tables are
non-US GAAP measures. These measures 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.
Production figures for the Lost Creek Project are as
follows:
Production and
Production Costs
|
Unit
|
|
2017
Q4
|
|
2017
Q3
|
|
2017
Q2
|
|
2017
Q1
|
|
2017
YTD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
captured
|
lb
|
|
|
67,982
|
|
|
52,812
|
|
|
65,257
|
|
|
79,340
|
|
|
265,391
|
Ad valorem and
severance tax
|
$000
|
|
$
|
160
|
|
$
|
119
|
|
$
|
227
|
|
$
|
241
|
|
$
|
747
|
Wellfield cash cost
(1)
|
$000
|
|
$
|
686
|
|
$
|
743
|
|
$
|
599
|
|
$
|
889
|
|
$
|
2,917
|
Wellfield non-cash
cost (2)
|
$000
|
|
$
|
574
|
|
$
|
730
|
|
$
|
780
|
|
$
|
776
|
|
$
|
2,860
|
Ad valorem and
severance tax per pound captured
|
$/lb
|
|
$
|
2.35
|
|
$
|
2.25
|
|
$
|
3.48
|
|
$
|
3.04
|
|
$
|
2.81
|
Cash cost per pound
captured
|
$/lb
|
|
$
|
10.09
|
|
$
|
14.07
|
|
$
|
9.18
|
|
$
|
11.20
|
|
$
|
10.99
|
Non-cash cost per
pound captured
|
$/lb
|
|
$
|
8.44
|
|
$
|
13.82
|
|
$
|
11.95
|
|
$
|
9.78
|
|
$
|
10.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
drummed
|
lb
|
|
|
60,461
|
|
|
48,336
|
|
|
70,833
|
|
|
74,382
|
|
|
254,012
|
Plant cash cost
(3)
|
$000
|
|
$
|
1,210
|
|
$
|
1,120
|
|
$
|
1,267
|
|
$
|
1,488
|
|
$
|
5,085
|
Plant non-cash cost
(2)
|
$000
|
|
$
|
493
|
|
$
|
494
|
|
$
|
491
|
|
$
|
491
|
|
$
|
1,969
|
Cash cost per pound
drummed
|
$/lb
|
|
$
|
20.01
|
|
$
|
23.17
|
|
$
|
17.93
|
|
$
|
20.00
|
|
$
|
20.02
|
Non-cash cost per
pound drummed
|
$/lb
|
|
$
|
8.15
|
|
$
|
10.20
|
|
$
|
6.93
|
|
$
|
6.61
|
|
$
|
7.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds shipped to
conversion facility
|
lb
|
|
|
73,367
|
|
|
36,797
|
|
|
74,406
|
|
|
72,643
|
|
|
257,213
|
Distribution cash cost
(4)
|
$000
|
|
$
|
48
|
|
$
|
24
|
|
$
|
26
|
|
$
|
47
|
|
$
|
145
|
Cash cost per pound
shipped
|
$/lb
|
|
$
|
0.65
|
|
$
|
0.65
|
|
$
|
0.35
|
|
$
|
0.65
|
|
$
|
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
purchased
|
lb
|
|
|
-
|
|
|
109,000
|
|
|
210,000
|
|
|
200,000
|
|
|
519,000
|
Purchase
costs
|
$000
|
|
$
|
-
|
|
$
|
2,196
|
|
$
|
4,870
|
|
$
|
4,015
|
|
$
|
11,081
|
Cash cost per pound
purchased
|
$/lb
|
|
$
|
-
|
|
$
|
20.15
|
|
$
|
23.19
|
|
$
|
20.08
|
|
$
|
21.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes:
|
1
|
Wellfield cash costs
include all wellfield operating costs. Wellfield construction and
development costs, which include wellfield drilling, header houses,
pipelines, power lines, roads, fences and disposal wells, are
treated as development expense and are not included in wellfield
operating costs.
|
2
|
Non-cash costs
include the amortization of the investment in the mineral property
acquisition costs and the depreciation of plant equipment, and the
depreciation of their related asset retirement obligation costs.
The expenses are calculated on a straight line basis so the
expenses are typically constant for each quarter. The cost per
pound from these costs will therefore typically vary based on
production levels only.
|
3
|
Plant cash costs
include all plant operating costs and site overhead
costs.
|
4
|
Distribution cash
costs include all shipping costs and costs charged by the
conversion facility for weighing, sampling, assaying and storing
the U3O8 prior to sale.
|
In total, wellfield, plant and distribution cash costs were very
consistent quarter on quarter during 2017. The respective cash
costs per pound increased overall during the year primarily driven
by decreasing levels of production.
U3O8 Sales and Cost of
Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and cost of
sales
|
|
Unit
|
|
2017
Q4
|
|
2017
Q3
|
|
2017
Q2
|
|
2017
Q1
|
|
2017
YTD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
sold
|
|
lb
|
|
|
-
|
|
|
289,000
|
|
|
241,000
|
|
|
250,000
|
|
|
780,000
|
U3O8 sales
|
|
$000
|
|
$
|
-
|
|
$
|
11,674
|
|
$
|
11,797
|
|
$
|
14,819
|
|
$
|
38,290
|
Average contract
price
|
|
$/lb
|
|
$
|
-
|
|
$
|
40.39
|
|
$
|
48.95
|
|
$
|
59.28
|
|
$
|
49.09
|
Average price per
pound sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
40.39
|
|
$
|
48.95
|
|
$
|
59.28
|
|
$
|
49.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 cost of sales
(1)
|
|
$000
|
|
$
|
376
|
|
$
|
11,157
|
|
$
|
6,573
|
|
$
|
6,295
|
|
$
|
24,401
|
Ad valorem and
severance tax cost per pound sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
3.15
|
|
$
|
4.26
|
|
$
|
4.00
|
|
$
|
3.60
|
Cash cost per pound
sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
29.11
|
|
$
|
31.54
|
|
$
|
26.12
|
|
$
|
29.51
|
Non-cash cost per
pound sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
17.52
|
|
$
|
19.13
|
|
$
|
15.48
|
|
$
|
17.92
|
Cost per pound sold -
produced
|
|
$/lb
|
|
$
|
-
|
|
$
|
49.78
|
|
$
|
54.93
|
|
$
|
45.60
|
|
$
|
51.03
|
Cost per pound sold -
purchased
|
|
$/lb
|
|
$
|
-
|
|
$
|
20.15
|
|
$
|
23.19
|
|
$
|
20.08
|
|
$
|
21.35
|
Average cost per pound
sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
38.61
|
|
$
|
27.26
|
|
$
|
25.18
|
|
$
|
31.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 gross
profit
|
|
$000
|
|
$
|
(376)
|
|
$
|
517
|
|
$
|
5,224
|
|
$
|
8,524
|
|
$
|
13,889
|
Gross profit per pound
sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
1.78
|
|
$
|
21.68
|
|
$
|
34.10
|
|
$
|
17.81
|
Gross profit
margin
|
|
%
|
|
|
0.0%
|
|
|
4.4%
|
|
|
44.3%
|
|
|
57.5%
|
|
|
36.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Inventory
Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process
inventory
|
|
lb
|
|
|
26,796
|
|
|
22,306
|
|
|
19,010
|
|
|
28,164
|
|
|
|
Plant
inventory
|
|
lb
|
|
|
9,043
|
|
|
21,948
|
|
|
10,446
|
|
|
14,019
|
|
|
|
Conversion facility
inventory
|
|
lb
|
|
|
94,077
|
|
|
17,813
|
|
|
160,094
|
|
|
113,528
|
|
|
|
Total
inventory
|
|
lb
|
|
|
129,916
|
|
|
62,067
|
|
|
189,550
|
|
|
155,711
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process
inventory
|
|
$000
|
|
$
|
315
|
|
$
|
221
|
|
$
|
352
|
|
$
|
712
|
|
|
|
Plant
inventory
|
|
$000
|
|
$
|
369
|
|
$
|
824
|
|
$
|
479
|
|
$
|
670
|
|
|
|
Conversion facility
inventory
|
|
$000
|
|
$
|
3,831
|
|
$
|
675
|
|
$
|
6,620
|
|
$
|
4,379
|
|
|
|
Total
inventory
|
|
$000
|
|
$
|
4,515
|
|
$
|
1,720
|
|
$
|
7,451
|
|
$
|
5,761
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost per
pound
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process
inventory
|
|
$/lb
|
|
$
|
11.76
|
|
$
|
9.92
|
|
$
|
18.46
|
|
$
|
25.28
|
|
|
|
Plant
inventory
|
|
$/lb
|
|
$
|
40.81
|
|
$
|
37.53
|
|
$
|
45.85
|
|
$
|
47.79
|
|
|
|
Conversion facility
inventory
|
|
$/lb
|
|
$
|
40.72
|
|
$
|
37.89
|
|
$
|
41.35
|
|
$
|
38.57
|
|
|
|
|
Note:
|
1.
|
Costs of sales
include all production costs (notes 1, 2, 3 and 4 in the previous
Production and Production Costs table) adjusted for changes in
inventory values.
|
There were no U3O8 sales in Q4. For
the year, we sold 780,000 pounds all of which were under contract
at an average price per pound of $49.09 for total uranium sales of $38.3 million. There were no spot sales
during the year. A total of 261,000 pounds were sold from
Lost Creek production. Additionally, we sold 519,000
purchased pounds into our contractual obligations.
In 2017 Q4, our cost of sales totaled $0.3 million. This is the result of lower
of cost or net realizable value inventory adjustments which are
included in our cost of sales, recorded during the quarter.
For the year, our average cost per pound sold was $31.28, as compared to $28.20 in 2016. In 2017, we purchased
519,000 pounds at an average price of $21.35 per pound. The average cost of the 261,000
pounds we sold from production was $51.03 per pound. As previously discussed, our
produced costs per pound were substantially higher than in 2016 due
to lower volumes. This, combined with the write down of
$2.6 million from lower of cost or
net realizable value adjustments, increased our cost of produced
product sold by $10.34 per pound.
On a combined basis, the total average cost per pound sold of
$31.28 was composed of $1.20 per pound for ad valorem and severance
taxes, $24.08 per pound of cash costs
from production and purchases, and $6.00 per pound of non-cast costs related to
production.
At the end of the year, we had approximately 94,077 pounds of
U3O8 at the conversion facility at an average
cost per pound of $40.72. The
following table shows the average cost per pound of the conversion
facility pounds.
Ending Conversion
Facility Inventory Cost
Per Pound Summary
|
Unit
|
31-Dec-17
|
|
30-Sep-17
|
|
30-Jun-17
|
31-Mar-17
|
Ad valorem and
severance tax cost per pound
|
$/lb
|
$
|
1.65
|
|
$
|
2.41
|
$
|
2.82
|
$
|
2.74
|
Cash cost per
pound
|
$/lb
|
$
|
25.31
|
|
$
|
22.47
|
$
|
24.62
|
$
|
23.48
|
Non-cash cost per
pound
|
$/lb
|
$
|
13.76
|
|
$
|
13.01
|
$
|
13.91
|
$
|
12.35
|
Total cost per
pound
|
$/lb
|
$
|
40.72
|
|
$
|
37.89
|
$
|
41.35
|
$
|
38.57
|
Generally, the cost per pound in ending inventory at the
conversion facility increased during the year. The increase was
directly related to the lower production figures as production
costs were relatively consistent, or decreasing slightly, during
the year.
US GAAP Reconciliations
The cash costs,
non-cash costs and per pound calculations are non-US GAAP measures
we use to assess business performance. To facilitate a better
understanding of these measures, the tables below present a
reconciliation of these measures to the financial results as
presented in our financial statements.
Average Price Per
Pound Sold Reconciliation
|
Unit
|
|
2017
Q4
|
|
2017
Q3
|
|
2017
Q2
|
|
2017
Q1
|
|
2017
YTD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales per financial
statements
|
$000
|
|
$
|
26
|
|
$
|
11,693
|
|
$
|
11,821
|
|
$
|
14,828
|
|
$
|
38,368
|
Less disposal
fees
|
$000
|
|
$
|
(26)
|
|
$
|
(18)
|
|
$
|
(24)
|
|
$
|
(9)
|
|
$
|
(77)
|
U3O8 sales
|
$000
|
|
$
|
-
|
|
$
|
11,675
|
|
$
|
11,797
|
|
$
|
14,819
|
|
$
|
38,291
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds sold -
produced
|
lb
|
|
|
-
|
|
|
180,000
|
|
|
31,000
|
|
|
50,000
|
|
|
261,000
|
Pounds sold -
purchased
|
lb
|
|
|
-
|
|
|
109,000
|
|
|
210,000
|
|
|
200,000
|
|
|
519,000
|
Total pounds
sold
|
lb
|
|
|
-
|
|
|
289,000
|
|
|
241,000
|
|
|
250,000
|
|
|
780,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average price per
pound sold
|
$/lb
|
|
$
|
-
|
|
$
|
40.40
|
|
$
|
48.95
|
|
$
|
59.28
|
|
$
|
49.09
|
Total Cost Per
Pound Sold Reconciliation
1
|
Unit
|
|
2017
Q4
|
|
2017
Q3
|
|
2017
Q2
|
|
2017
Q1
|
|
2017
YTD
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ad valorem &
severance taxes
|
$000
|
|
$
|
160
|
|
$
|
119
|
|
$
|
227
|
|
$
|
241
|
|
$
|
747
|
Wellfield
costs
|
$000
|
|
$
|
1,260
|
|
$
|
1,473
|
|
$
|
1,379
|
|
$
|
1,665
|
|
$
|
5,777
|
Plant and site
costs
|
$000
|
|
$
|
1,703
|
|
$
|
1,614
|
|
$
|
1,761
|
|
$
|
1,979
|
|
$
|
7,057
|
Distribution
costs
|
$000
|
|
$
|
48
|
|
$
|
24
|
|
$
|
26
|
|
$
|
47
|
|
$
|
145
|
Inventory
change
|
$000
|
|
$
|
(2,795)
|
|
$
|
5,731
|
|
$
|
(1,690)
|
|
$
|
(1,652)
|
|
$
|
(406)
|
Cost of sales -
produced
|
$000
|
|
$
|
376
|
|
$
|
8,961
|
|
$
|
1,703
|
|
$
|
2,280
|
|
$
|
13,320
|
Cost of sales -
purchased
|
$000
|
|
$
|
—
|
|
$
|
2,196
|
|
$
|
4,870
|
|
$
|
4,015
|
|
$
|
11,081
|
Total cost of
sales
|
$000
|
|
$
|
376
|
|
$
|
11,157
|
|
$
|
6,573
|
|
$
|
6,295
|
|
$
|
24,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds sold
produced
|
lb
|
|
|
—
|
|
|
180,000
|
|
|
31,000
|
|
|
50,000
|
|
|
261,000
|
Pounds sold
purchased
|
lb
|
|
|
—
|
|
|
109,000
|
|
|
210,000
|
|
|
200,000
|
|
|
519,000
|
Total pounds
sold
|
lb
|
|
|
—
|
|
|
289,000
|
|
|
241,000
|
|
|
250,000
|
|
|
780,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average cost per pound
sold - produced (1)
|
$/lb
|
|
$
|
-
|
|
$
|
49.78
|
|
$
|
54.93
|
|
$
|
45.60
|
|
$
|
51.03
|
Average cost per pound
sold - purchased
|
$/lb
|
|
$
|
-
|
|
$
|
20.15
|
|
$
|
23.19
|
|
$
|
20.08
|
|
$
|
21.35
|
Total average cost per
pound sold
|
$/lb
|
|
$
|
-
|
|
$
|
38.61
|
|
$
|
27.27
|
|
$
|
25.18
|
|
$
|
31.28
|
|
Note:
|
1.
|
The cost per pound
sold reflects both cash and non-cash costs, which are combined as
cost of sales in the statement of operations included in this
filing. The cash and non-cash cost components are identified in the
above production cost table.
|
The cost of sales includes ad valorem and severance taxes
related to the extraction of uranium, all costs of wellfield, plant
and site 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 and the resulting inventoried cost per
pound is compared to the estimated sales prices based on the
contracts or spot sales anticipated for the distribution of the
product. Any costs in excess of the calculated market value are
charged to cost of sales.
Year Ended December 31, 2017
Compared to Year Ended December 31,
2016
The following table summarizes the results of
operations for the years ended December 31,
2017 and 2016 (in thousands of U.S. dollars):
|
Year ended
December 31,
|
|
2017
|
|
2016
|
|
$
|
|
$
|
|
|
|
|
Sales
|
38,368
|
|
27,305
|
Cost of
sales
|
(24,401)
|
|
(15,848)
|
Gross
profit
|
13,967
|
|
11,457
|
Exploration and
evaluation expense
|
(2,623)
|
|
(2,964)
|
Development
expense
|
(4,340)
|
|
(2,886)
|
General and
administrative expense
|
(5,090)
|
|
(4,740)
|
Accretion
expense
|
(527)
|
|
(534)
|
Write-off of mineral
properties
|
-
|
|
(62)
|
Net profit (loss) from
operations
|
1,387
|
|
271
|
Interest expense
(net)
|
(1,377)
|
|
(1,977)
|
Warrant mark to
market gain
|
-
|
|
36
|
Loss from equity
investment
|
(5)
|
|
(5)
|
Write-off of equity
investments
|
-
|
|
(1,089)
|
Foreign exchange
loss
|
(50)
|
|
(278)
|
Other
income
|
121
|
|
15
|
Income (loss)
before income taxes
|
76
|
|
(3,027)
|
Income tax recovery
(net)
|
-
|
|
17
|
Net income
(loss)
|
76
|
|
(3,010)
|
|
|
|
|
Income (loss) per
share – basic
|
0.00
|
|
(0.02)
|
|
|
|
|
Income (loss) per
share – diluted
|
0.00
|
|
(0.02)
|
|
|
|
|
Revenue per pound
sold
|
49.09
|
|
39.49
|
|
|
|
|
Total cost per pound
sold
|
31.28
|
|
28.20
|
|
|
|
|
Gross profit per
pound sold
|
17.81
|
|
11.29
|
Guidance for 2018
In 2017, the average spot price per
pound of U3O8, as reported by Ux Consulting
Company, LLC and TradeTech, LLC, increased approximately 17% from
$20.25 in December 2016 to about $23.75 per pound in December 2017. In early 2017, spot pricing moved
higher on news of supply-side reductions, only to retreat to the
$20 level, where it remained until
November 2017. In November, spot
prices again increased following several new supply-side
announcements. Thus far in 2018, the average spot price per pound
of U3O8 has decreased to $21.63 as of February
28, indicating the fundamentals of market pricing have not
changed sufficiently to warrant further development of MU2.
In response to this persistently weak uranium market, we took
aggressive measures in 2016 and 2017, and will again do so in
2018. In 2016, we deliberately slowed development activities
at MU2, reduced costs, and focused on enhancing production
efficiencies from our operating MU1 header houses. In 2017,
we continued to employ this limited-development strategy,
implemented further cost reductions, and supplemented existing mine
production with favorably priced uranium purchases to meet our 2017
contractual commitments. For 2018, we have suspended further
MU2 development activities, implemented further cost reductions,
and secured purchase contracts for nearly 100% of our 2018 delivery
obligations.
For 2018, we expect to sell 470,000 pounds under term contracts
at an average price of approximately $49 per pound. We have entered into purchase
contracts to cover 460,000 pounds at an average price of
approximately $24 per pound.
Production from our operating MU1 and MU2 header houses, expected
to be between 250,000 and 350,000 pounds, will be used to build an
inventory position of finished, ready-to-sell, product at the
conversion facility.
We recently implemented a limited reduction in force to further
streamline our operations and reduce costs. This is the third
reduction in force in force in two years; the layoffs since 2016
have affected personnel in all three company locations. The most
recent reduction was focused on those departments not directly
related to production and is expected to reduce our labor costs by
approximately $0.6 million per
year.
Together, these actions will give the Company the additional
flexibility necessary to quickly react to changing market
conditions and easily re-start development activities in MU2 when
warranted. With future development and construction in mind, the
staff who were retained had the greatest level of experience
and adaptability allowing for an easier transition back to
full operations.
Although we made a small (10,000 pound) spot sale in January, we
are not forecasting any further spot sales for 2018 at this time;
we may, however, choose to do so if market conditions improve. We
expect our average gross profit in 2018 to be between $10 and $12
million, which represents a cash-basis gross profit margin
of between 45% and 50%.
Operating costs in 2018 are expected to be lower than 2017
because of the suspended MU2 development activities. Other costs
including capital expenditures and loan repayments will be similar
to 2017.
As at February 28, 2018, our
unrestricted cash position was $7.5
million. Given our current cash resources, contracted sales
positions, and expected margins, we do not anticipate the need for
additional funding in the near term unless it is advantageous to do
so.
The Company has contractual sales commitments of 470,000 pounds
during 2018, at an average price of approximately $49 per pound. We have established the schedule
for those commitments and determined that an effective model for
dealing with the current pricing environment is to continue
production from our fully operational header houses in MU1 and MU2,
and purchase uranium at favorable low-prices in order to meet our
sales commitments. This operating strategy for Lost Creek
will allow us to control production costs, minimize development
expenditures, maximize cash flows and maintain the flexibility to
respond to market conditions.
About Ur-Energy
Ur-Energy is a uranium mining company
operating the Lost Creek in-situ recovery uranium facility
in south-central Wyoming. We have
produced, packaged and shipped more than two million pounds from
Lost Creek since the commencement of operations. Applications are
under review by various agencies to incorporate our LC East project
area into the Lost Creek permits, and we have begun to submit
applications for permits and licenses to operate at our Shirley
Basin Project. Ur-Energy is engaged in uranium mining, recovery and
processing activities, including the acquisition, exploration,
development and operation of uranium mineral properties in
the United States. Shares of
Ur‑Energy trade on the NYSE American under the symbol "URG" and on
the Toronto Stock Exchange under the symbol "URE." Ur-Energy's
corporate office is in Littleton,
Colorado; its registered office is in Ottawa, Ontario. Ur-Energy's website is
www.ur-energy.com.
FOR FURTHER INFORMATION, PLEASE CONTACT
Jeffrey Klenda, Chair &
CEO
866-981-4588
Jeff.Klenda@Ur-Energy.com
Cautionary Note Regarding Forward-Looking
Information
This release may contain "forward-looking
statements" within the meaning of applicable securities laws
regarding events or conditions that may occur in the future
(e.g., results of 2018 production and the ability to meet
production targets; ability to easily restart development
activities and otherwise quickly react to changing market
conditions; whether additional funding will be required in the near
term; the outcome of the Department of Commerce Section 232
investigation, including whether the Secretary of Commerce will
make a recommendation to the President and the nature of the
recommendation, whether the President will act on the
recommendation and, if so, the nature of the action and remedy; the
expected benefits of the proposed remedies in the trade action,
including: restoring a sustainable U.S. uranium mining industry and
the benefits of a sustainable domestic uranium mining industry to
U.S. national security, bolstering national defense, and supporting
energy security; and the expected impacts on U.S. production and
the U.S. uranium mining industry) and are based on current
expectations that, while considered reasonable by management at
this time, inherently involve a number of significant business,
economic and competitive risks, uncertainties and contingencies.
Factors that could cause actual results to differ materially from
any forward-looking statements include, but are not limited to,
capital and other costs varying significantly from estimates;
failure to establish estimated resources and reserves; the grade
and recovery of ore which is mined varying from estimates;
production rates, methods and amounts varying from estimates;
delays in obtaining or failures to obtain required governmental,
environmental or other project approvals; inflation; changes in
exchange rates; fluctuations in commodity prices; delays in
development and other factors described in the public filings made
by the Company at www.sedar.com and www.sec.gov. Readers should not
place undue reliance on forward-looking statements. The
forward-looking statements contained herein are based on the
beliefs, expectations and opinions of management as of the date
hereof and Ur-Energy disclaims any intent or obligation to update
them or revise them to reflect any change in circumstances or in
management's beliefs, expectations or opinions that occur in the
future.
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SOURCE Ur-Energy Inc.