LITTLETON, Colo.,
May 4, 2018
/PRNewswire/ -- Ur-Energy Inc. (NYSE American:URG
TSX:URE) ("Ur-Energy" or the "Company") has filed the
Company's Form 10-Q for the quarter ended March 31, 2018, with the U.S. Securities and
Exchange Commission at www.sec.gov/edgar.shtml and with
Canadian securities authorities on SEDAR at
www.sedar.com.
Chairman of Ur-Energy, Jeff
Klenda said, "Delivering purchased pounds into our 2018 term
contracts has permitted us to grow our inventory while also having
strong cash flow. In the first quarter, we purchased 370,000 pounds
at an average cost of $25.00 per
pound, which allowed us to increase our ending inventory by 74,000
pounds and led to gross profits $9.9
million, or gross profit margins of approximately 50%. Our
strategy has allowed us to retain our most experienced operators,
build inventory, and preserve our resources. In what we are
convinced is a changing uranium market, this will position us to be
able to quickly ramp up production to respond to improved market
conditions at a time where operational and production leverage will
have primary importance.
Lost Creek Uranium Production and
Sales
During the three months ended
March 31, 2018, a total of 84,047
pounds of U3O8 were captured within the Lost
Creek plant. 79,961 pounds were packaged in drums and 73,515 pounds
of the drummed inventory were shipped to the conversion facility.
We sold 380,000 pounds of U3O8 during the
period of which 370,000 pounds were purchased. Inventory,
production and sales figures for the Lost Creek Project are
presented in the following tables.
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Production and Production Costs
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Unit
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2018 Q1
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2017 Q4
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2017 Q3
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2017 Q2
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Pounds
captured
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lb
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84,047
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67,982
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52,812
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65,257
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Ad valorem and
severance tax
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$000
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$
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179
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$
|
160
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$
|
119
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$
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227
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Wellfield cash cost
(1)
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$000
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$
|
671
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$
|
686
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$
|
743
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$
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599
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Wellfield non-cash
cost (2)
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$000
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$
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403
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$
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575
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$
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730
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$
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780
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Ad valorem and
severance tax per pound captured
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$/lb
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$
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2.13
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$
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2.35
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$
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2.25
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$
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3.48
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Cash cost per pound
captured
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$/lb
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$
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7.98
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$
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10.09
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$
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14.07
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$
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9.18
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Non-cash cost per
pound captured
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$/lb
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$
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4.79
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$
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8.44
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$
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13.82
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$
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11.95
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Pounds
drummed
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lb
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79,961
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60,461
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48,336
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70,833
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Plant cash cost
(3)
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$000
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$
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1,226
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$
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1,210
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$
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1,120
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$
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1,267
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Plant non-cash cost
(2)
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$000
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$
|
492
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$
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493
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$
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494
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$
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491
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Cash cost per pound
drummed
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$/lb
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$
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15.33
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$
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20.01
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$
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23.17
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$
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17.93
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Non-cash cost per
pound drummed
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$/lb
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$
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6.15
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$
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8.15
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$
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10.20
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$
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6.93
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Pounds shipped to
conversion facility
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lb
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73,515
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73,367
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36,797
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74,406
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Distribution cash cost
(4)
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$000
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$
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19
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$
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48
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$
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24
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$
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26
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Cash cost per pound
shipped
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$/lb
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$
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0.26
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$
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0.65
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$
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0.65
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$
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0.35
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Pounds
purchased
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lb
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370,000
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-
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109,000
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210,000
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Purchase
costs
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$000
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$
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9,251
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$
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-
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$
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2,196
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$
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4,870
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Cash cost per pound
purchased
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$/lb
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$
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25.00
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$
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-
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$
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20.15
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$
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23.19
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Notes:
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1
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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.
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2
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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.
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3
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Plant cash costs
include all plant operating costs and site overhead
costs.
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4
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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.
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Sales and cost of sales
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Unit
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2018 Q1
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2017 Q4
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2017 Q3
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2017 Q2
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Pounds
sold
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lb
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380,000
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-
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289,000
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241,000
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U3O8 sales
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$000
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$
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19,663
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$
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-
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$
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11,674
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$
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11,797
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Average contract
price
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$/lb
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$
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52.50
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$
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-
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$
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40.39
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$
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48.95
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Average spot
price
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$/lb
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$
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23.75
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$
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-
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$
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-
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$
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-
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Average price per
pound sold
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$/lb
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$
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51.74
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$
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-
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$
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40.39
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$
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48.95
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U3O8 cost of sales
(1)
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$000
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$
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9,758
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$
|
376
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$
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11,157
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$
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6,573
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Ad valorem and
severance tax cost per pound sold
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$/lb
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$
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2.30
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$
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-
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$
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3.15
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$
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4.26
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Cash cost per pound
sold
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$/lb
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$
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31.20
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$
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-
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$
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29.11
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$
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31.54
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Non-cash cost per
pound sold
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$/lb
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$
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17.20
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$
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-
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$
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17.52
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$
|
19.13
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Cost per pound sold -
produced
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$/lb
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$
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50.70
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$
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-
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$
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49.78
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$
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54.93
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Cost per pound sold -
purchased
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$/lb
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$
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25.00
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$
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-
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$
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20.15
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$
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23.19
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Average cost per pound
sold
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$/lb
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$
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25.68
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$
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-
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$
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38.61
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$
|
27.26
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U3O8 gross
profit
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$000
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$
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9,905
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$
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(376)
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$
|
517
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$
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5,224
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Gross profit per pound
sold
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$/lb
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$
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26.06
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$
|
-
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$
|
1.78
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$
|
21.68
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Gross profit
margin
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%
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50.4%
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|
0.0%
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|
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4.4%
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44.3%
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Ending Inventory
Balances
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Pounds
|
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In-process
inventory
|
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|
lb
|
|
|
28,937
|
|
|
26,796
|
|
|
22,306
|
|
|
19,010
|
|
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Plant
inventory
|
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|
lb
|
|
|
15,504
|
|
|
9,043
|
|
|
21,948
|
|
|
10,446
|
|
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Conversion facility
inventory
|
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|
lb
|
|
|
159,296
|
|
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94,077
|
|
|
17,813
|
|
|
160,094
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Total
inventory
|
|
|
lb
|
|
|
203,737
|
|
|
129,916
|
|
|
62,067
|
|
|
189,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process
inventory
|
|
|
$000
|
|
$
|
416
|
|
$
|
315
|
|
$
|
221
|
|
$
|
352
|
|
|
Plant
inventory
|
|
|
$000
|
|
$
|
538
|
|
$
|
369
|
|
$
|
824
|
|
$
|
479
|
|
|
Conversion facility
inventory
|
|
|
$000
|
|
$
|
6,044
|
|
$
|
3,831
|
|
$
|
675
|
|
$
|
6,620
|
|
|
Total
inventory
|
|
|
$000
|
|
$
|
6,998
|
|
$
|
4,515
|
|
$
|
1,720
|
|
$
|
7,451
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost per pound
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process
inventory
|
|
|
$/lb
|
|
$
|
14.38
|
|
$
|
11.76
|
|
$
|
9.92
|
|
$
|
18.46
|
|
|
Plant
inventory
|
|
|
$/lb
|
|
$
|
34.70
|
|
$
|
40.81
|
|
$
|
37.53
|
|
$
|
45.85
|
|
|
Conversion facility
inventory
|
|
|
$/lb
|
|
$
|
37.94
|
|
$
|
40.72
|
|
$
|
37.89
|
|
$
|
41.35
|
|
|
|
Notes:
|
1
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Cost of sales include
all production costs (notes 1, 2, 3 and 4 in the previous
Production and Production Cost table) adjusted for changes in
inventory values.
|
U3O8 sales of $19.7 million for
2018 Q1 were based on selling 380,000 pounds at an average price of
$51.74. We made one spot sale during
the quarter for 10,000 pounds at $23.75 to establish our taxation basis for
calculating severance and ad valorem taxes. The 370,000 pounds sold
under term contracts were purchased for an average price of
$25.00 per pound. For the quarter,
our cost of sales totaled $9.8
million at an average cost of $25.68 per pound.
On a cash basis, the average cost per pound sold was
$25.16, which yielded average cash
margins of $26.58 per pound and
generated cash gross profits of $10.1
million during the quarter. The average cash cost per
pound sold was composed of produced and purchased pounds. The
cash cost per produced pound sold was $31.20 and the cash cost per purchased pound sold
was $25.00. Total gross profit was
$9.9 million, or a gross profit
margin of approximately 50%.
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|
|
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Total
Cost Per Pound Sold
Reconciliation
|
|
Unit
|
|
2018 Q1
|
|
2017 Q4
|
|
2017 Q3
|
|
2017 Q2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ad valorem &
severance taxes
|
|
$000
|
|
$
|
179
|
|
$
|
160
|
|
$
|
119
|
|
$
|
227
|
Wellfield
costs
|
|
$000
|
|
$
|
1,074
|
|
$
|
1,260
|
|
$
|
1,473
|
|
$
|
1,379
|
Plant and site
costs
|
|
$000
|
|
$
|
1,718
|
|
$
|
1,703
|
|
$
|
1,614
|
|
$
|
1,761
|
Distribution
costs
|
|
$000
|
|
$
|
19
|
|
$
|
48
|
|
$
|
24
|
|
$
|
26
|
Inventory
change
|
|
$000
|
|
$
|
(2,483)
|
|
$
|
(2,795)
|
|
$
|
5,731
|
|
$
|
(1,690)
|
Cost of sales -
produced
|
|
$000
|
|
$
|
507
|
|
$
|
376
|
|
$
|
8,961
|
|
$
|
1,703
|
Cost of sales -
purchased
|
|
$000
|
|
$
|
9,251
|
|
$
|
—
|
|
$
|
2,196
|
|
$
|
4,870
|
Total cost of
sales
|
|
$000
|
|
$
|
9,758
|
|
$
|
376
|
|
$
|
11,157
|
|
$
|
6,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds sold
produced
|
|
lb
|
|
|
10,000
|
|
|
-
|
|
|
180,000
|
|
|
31,000
|
Pounds sold
purchased
|
|
lb
|
|
|
370,000
|
|
|
-
|
|
|
109,000
|
|
|
210,000
|
Total pounds
sold
|
|
lb
|
|
|
380,000
|
|
|
-
|
|
|
289,000
|
|
|
241,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average cost per pound
sold - produced (1)
|
|
$/lb
|
|
$
|
50.70
|
|
$
|
-
|
|
$
|
49.78
|
|
$
|
54.93
|
Average cost per pound
sold - purchased
|
|
$/lb
|
|
$
|
25.00
|
|
$
|
-
|
|
$
|
20.15
|
|
$
|
23.19
|
Total average cost per
pound sold
|
|
$/lb
|
|
$
|
25.68
|
|
$
|
-
|
|
$
|
38.61
|
|
$
|
27.27
|
|
|
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 inventory, production and sales 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.
Continuing Guidance for 2018
At the
end of the first quarter of 2018, the average spot price of
U3O8, as reported by Ux Consulting Company,
LLC and TradeTech, LLC, was approximately $21.05 per pound. Market fundamentals have not
changed sufficiently to warrant the accelerated development of MU2.
We anticipate completing the third planned header house in MU2 in
early May 2018, which will allow us
to meet our projected production level of 250,000 to 300,000 pounds
drummed for the year.
Through March 31, 2018, we
sold 370,000 pounds of U3O8 under term
contracts at an average price of approximately $52.50 per pound and 10,000 pounds of
U3O8 under a spot sale for $23.75 per pound. We purchased 370,000 pounds at
an average cost of $25.00 per pound.
The remaining 10,000 pounds were delivered from our produced
inventory. We have one final term contract sale for 100,000 pounds
at $37.90 scheduled to take place in
early June 2018 for which we have a
U3O8 purchase contract for 90,000 pounds at
$22.25 per pound.
We expect to bring the third MU2 header house on line in
Q2 2018 and the production target for that same period is between
85,000 and 95,000 pounds U3O8 dried and
drummed. Full year 2018 guidance, similar to 2017, estimates
production of between 250,000 and 300,000 pounds, but our
production rate may be adjusted based on operational matters and
other indicators in the market.
As at May 2, 2018, our
unrestricted cash position was $6.3 million.
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 construct and 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 located 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 and 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 production; ability to deliver
into existing contractual obligations; whether the
Company's long term contracts adequately protect against market
volatility; and whether our overall strategy will permit ramp up to
changing market conditions for greatest operational
leverage) 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.