LITTLETON, Colo., March 1, 2019 /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,
2018, 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 said
of the Company's 2018 performance: "I am pleased to advise that,
during 2018, we generated $11.3
million in gross profits, reported positive earnings of
$0.03 per share, and built our
inventory position to over 375,000 pounds of finished, ready to
sell, product. We achieved these results while at the same time
maintaining a perfect safety record of no lost-time accidents at
Lost Creek. Our people made this all possible through their
dedication and hard work, and I would like to express my thanks for
their many contributions.
"These accomplishments are even more notable in the current
uranium market. Our Company has distinguished itself
throughout these challenging times by focusing on the often
forgotten, but true measures of business performance, such as
receiving the highest value from our contractual commitments while
keeping our cash operating costs as low as reasonably possible. All
the while, we have maintained our Lost Creek assets and retained
our core technical and management staff. With initial development
costs of approximately $14 million
and no significant capital expenditures, these measures also
provide us with the operational leverage for an efficient and
low-cost ramp-up at Lost Creek when market conditions improve or
there is a successful outcome to the Section 232 trade action."
Financial Results
The Company ended the year with a cash and cash equivalents balance
of $6.4 million. We recognized a
gross profit of $11.3 million on
sales of $23.5 million during 2018,
which represents a gross profit margin of approximately 48%. The
Company realized an average price per pound sold of $48.86, as compared to $49.09 in 2017. The decrease was primarily due to
one small, tax-driven, spot sale made in early 2018. Our average
cost per pound sold for the year was $24.76, as compared to $27.95 in 2017.
We recorded $1.3 million of
income from operations after deducting total operating expenses of
$10.0 million, which included
exploration and evaluation expenses, development expenses and
general and administrative expenses. After recording other income
and expenses, the net income before income taxes for the year was
$4.5 million, as compared to net
income before incomes taxes of $0.1
million in 2017. As at February 27,
2018, our unrestricted cash position was $6.4 million.
Lost Creek Operations
During 2018, 302,164 pounds of U3O8 were
captured within the Lost Creek plant. A total of 286,358 pounds
were packaged in drums and 287,873 pounds of the drummed inventory
were shipped to the conversion facility where 10,000 produced
pounds were sold on the spot market. The cash cost per pound and
non-cash cost per pound for produced uranium presented in the
following Production and Production Costs and 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. We have restated the cost of uranium sales in 2017 and
the related costs per pound to exclude the lower of cost or net
realizable value ("NRV") adjustments made during that year to
provide better comparisons to the current year. There were no
changes to the financial statements for 2017. Please see the tables
below for reconciliations of these measures to the US GAAP
compliant financial measures.
Production and sales figures for the Lost Creek Project are as
follows:
Production and
Production Costs
|
|
Unit
|
|
2018
Q4
|
|
2018
Q3
|
|
2018
Q2
|
|
2018
Q1
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
captured
|
|
lb
|
|
|
48,304
|
|
|
80,604
|
|
|
89,209
|
|
|
84,047
|
|
|
302,164
|
|
Ad valorem and
severance tax
|
|
$000
|
|
$
|
30
|
|
$
|
81
|
|
$
|
133
|
|
$
|
179
|
|
$
|
423
|
|
Wellfield cash cost
(1)
|
|
$000
|
|
$
|
459
|
|
$
|
422
|
|
$
|
516
|
|
$
|
671
|
|
$
|
2,068
|
|
Wellfield non-cash
cost (2)
|
|
$000
|
|
$
|
400
|
|
$
|
400
|
|
$
|
400
|
|
$
|
403
|
|
$
|
1,603
|
|
Ad valorem and
severance tax per pound captured
|
|
$/lb
|
|
$
|
0.62
|
|
$
|
1.00
|
|
$
|
1.49
|
|
$
|
2.13
|
|
$
|
1.40
|
|
Cash cost per pound
captured
|
|
$/lb
|
|
$
|
9.50
|
|
$
|
5.24
|
|
$
|
5.78
|
|
$
|
7.98
|
|
$
|
6.84
|
|
Non-cash cost per
pound captured
|
|
$/lb
|
|
$
|
8.28
|
|
$
|
4.96
|
|
$
|
4.48
|
|
$
|
4.79
|
|
$
|
5.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
drummed
|
|
lb
|
|
|
53,654
|
|
|
78,441
|
|
|
74,302
|
|
|
79,961
|
|
|
286,358
|
|
Plant cash cost
(3)
|
|
$000
|
|
$
|
1,154
|
|
$
|
1,109
|
|
$
|
1,230
|
|
$
|
1,226
|
|
$
|
4,719
|
|
Plant non-cash cost
(2)
|
|
$000
|
|
$
|
484
|
|
$
|
485
|
|
$
|
493
|
|
$
|
492
|
|
$
|
1,954
|
|
Cash cost per pound
drummed
|
|
$/lb
|
|
$
|
21.51
|
|
$
|
14.14
|
|
$
|
16.57
|
|
$
|
15.33
|
|
$
|
16.48
|
|
Non-cash cost per
pound drummed
|
|
$/lb
|
|
$
|
9.02
|
|
$
|
6.18
|
|
$
|
6.64
|
|
$
|
6.15
|
|
$
|
6.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds shipped to
conversion facility
|
|
lb
|
|
|
67,040
|
|
|
72,902
|
|
|
74,416
|
|
|
73,515
|
|
|
287,873
|
|
Distribution cash cost
(4)
|
|
$000
|
|
$
|
47
|
|
$
|
36
|
|
$
|
34
|
|
$
|
19
|
|
$
|
136
|
|
Cash cost per pound
shipped
|
|
$/lb
|
|
$
|
0.70
|
|
$
|
0.49
|
|
$
|
0.46
|
|
$
|
0.26
|
|
$
|
0.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
purchased
|
|
lb
|
|
|
-
|
|
|
-
|
|
|
100,000
|
|
|
370,000
|
|
|
470,000
|
|
Purchase
costs
|
|
$000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2,225
|
|
$
|
9,251
|
|
$
|
11,476
|
|
Cash cost per pound
purchased
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
22.25
|
|
$
|
25.00
|
|
$
|
24.42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 pounds prior to sale.
|
In total, wellfield, plant and distribution cash costs were very
consistent quarter on quarter during 2018. The respective
cash costs per pound increased overall during the year primarily
driven by decreasing levels of production. The more
significant increase in cash and non-cash costs per pound in Q4 was
driven by lower quarterly production, which is a typical result as
a mine matures and older operating patterns, particularly in MU1,
remain in the flow regime.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and cost of
sales
|
|
Unit
|
|
2018
Q4
|
|
2018
Q3
|
|
2018
Q2
|
|
2018
Q1
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
sold
|
|
lb
|
|
|
-
|
|
|
-
|
|
|
100,000
|
|
|
380,000
|
|
|
480,000
|
|
U3O8 sales
|
|
$000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
3,790
|
|
$
|
19,663
|
|
$
|
23,453
|
|
Average contract
price
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
37.90
|
|
$
|
52.50
|
|
$
|
49.39
|
|
Average spot
price
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
23.75
|
|
$
|
23.75
|
|
Average price per
pound sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
37.90
|
|
$
|
51.74
|
|
$
|
48.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 cost of sales
(1)
|
|
$000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2,225
|
|
$
|
9,659
|
|
$
|
11,884
|
|
Ad valorem and
severance tax cost per pound sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1.66
|
|
$
|
1.66
|
|
Cash cost per pound
sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
25.37
|
|
$
|
25.37
|
|
Non-cash cost per
pound sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
13.77
|
|
$
|
13.77
|
|
Cost per pound sold -
produced
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
40.80
|
|
$
|
40.80
|
|
Cost per pound sold -
purchased
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
22.25
|
|
$
|
25.00
|
|
$
|
24.42
|
|
Average cost per pound
sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
22.25
|
|
$
|
25.42
|
|
$
|
24.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U3O8 gross
profit
|
|
$000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
1,565
|
|
$
|
10,004
|
|
$
|
11,569
|
|
Gross profit per pound
sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
15.65
|
|
$
|
26.33
|
|
$
|
24.10
|
|
Gross profit
margin
|
|
%
|
|
|
0.0%
|
|
|
0.0%
|
|
|
41.3%
|
|
|
50.9%
|
|
|
49.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Inventory
Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process
inventory
|
|
lb
|
|
|
9,134
|
|
|
14,588
|
|
|
43,733
|
|
|
28,937
|
|
|
|
|
Plant
inventory
|
|
lb
|
|
|
7,559
|
|
|
20,944
|
|
|
15,391
|
|
|
15,504
|
|
|
|
|
Conversion facility
inventory
|
|
lb
|
|
|
375,803
|
|
|
308,762
|
|
|
233,712
|
|
|
159,296
|
|
|
|
|
Total
inventory
|
|
lb
|
|
|
392,496
|
|
|
344,294
|
|
|
292,836
|
|
|
203,737
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process
inventory
|
|
$000
|
|
$
|
160
|
|
$
|
359
|
|
$
|
518
|
|
$
|
416
|
|
|
|
|
Plant
inventory
|
|
$000
|
|
$
|
345
|
|
$
|
665
|
|
$
|
548
|
|
$
|
538
|
|
|
|
|
Conversion facility
inventory
|
|
$000
|
|
$
|
14,187
|
|
$
|
11,143
|
|
$
|
8,738
|
|
$
|
6,044
|
|
|
|
|
Total
inventory
|
|
$000
|
|
$
|
14,692
|
|
$
|
12,167
|
|
$
|
9,804
|
|
$
|
6,998
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost per
pound
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-process
inventory
|
|
$/lb
|
|
$
|
17.52
|
|
$
|
24.61
|
|
$
|
11.84
|
|
$
|
14.38
|
|
|
|
|
Plant
inventory
|
|
$/lb
|
|
$
|
45.64
|
|
$
|
31.75
|
|
$
|
35.61
|
|
$
|
34.70
|
|
|
|
|
Conversion facility
inventory
|
|
$/lb
|
|
$
|
37.75
|
|
$
|
36.09
|
|
$
|
37.39
|
|
$
|
37.94
|
|
|
|
|
|
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 but excludes the lower of cost or NRV adjustments
as the adjustments do not correspond with the timing of the sales
of produced inventory.
|
There were no pounds sold in Q4. For the year, we sold
480,000 pounds, of which 470,000 were sold under term contracts at
an average price per pound of $49.39
and 10,000 pounds were sold at a spot price of $23.75 per pound. Total uranium sales were
$23.5 million at an average price per
pound of $48.86. The 10,000 pounds
sold at the spot rate were the only sales from produced inventory
for the year.
For the year, our uranium cost of sales totaled $11.9 million and was comprised of $11.5 million of purchase costs and $0.4 million of production costs. In 2018, we
purchased 470,000 pounds at an average price of $24.42 per pound, which were all sold into our
term contracts. In 2018, we sold 10,000 pounds from
production. The average cost per pound sold from production
was $40.80, as compared to
$41.08 in 2017.
The gross profit from uranium sales for 2018 was $11.6 million, which represents a gross profit
margin of approximately 49%. This compares to a gross margin of
$16.5 million or 43% in
2017.
At the end of the year, we had approximately 375,803 pounds of
U3O8 at the conversion facility at an average
cost per pound of $37.75. The
following table shows the average cost per pound of the conversion
facility inventory.
Ending Conversion
Facility Inventory
Cost Per
Pound Summary
|
|
Unit
|
31-Dec-18
|
|
30-Sep-18
|
|
30-Jun-18
|
31-Mar-18
|
Ad valorem and
severance tax cost per pound
|
|
$/lb
|
|
$
|
1.52
|
|
$
|
1.60
|
|
$
|
1.73
|
|
$
|
1.66
|
Cash cost per
pound
|
|
$/lb
|
|
$
|
23.85
|
|
$
|
22.83
|
|
$
|
23.66
|
|
$
|
23.88
|
Non-cash cost per
pound
|
|
$/lb
|
|
$
|
12.38
|
|
$
|
11.66
|
|
$
|
12.00
|
|
$
|
12.40
|
Total cost per
pound
|
|
$/lb
|
|
$
|
37.75
|
|
$
|
36.09
|
|
$
|
37.39
|
|
$
|
37.94
|
Generally, the cost per pound in ending inventory at the
conversion facility decreased during the year as compared to the
ending cost per pound in 2017. The decrease was directly related to
the higher production figures and lower production costs in 2018 in
combination with the lower of cost or net realizable value
adjustments recorded during the year.
Reconciliation of Non-GAAP sales and inventory presentation
with US GAAP statement presentation
As discussed above, 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
|
|
2018
Q4
|
|
2018
Q3
|
|
2018
Q2
|
|
2018
Q1
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales per financial
statements
|
|
$000
|
|
$
|
14
|
|
$
|
3
|
|
$
|
3,807
|
|
$
|
19,672
|
|
$
|
23,496
|
Less disposal
fees
|
|
$000
|
|
$
|
(14)
|
|
$
|
(3)
|
|
$
|
(17)
|
|
$
|
(9)
|
|
$
|
(43)
|
U3O8 sales
|
|
$000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
3,790
|
|
$
|
19,663
|
|
$
|
23,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds sold -
produced
|
|
lb
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
10,000
|
|
|
10,000
|
Pounds sold -
purchased
|
|
lb
|
|
|
-
|
|
|
-
|
|
|
100,000
|
|
|
370,000
|
|
|
470,000
|
Total pounds
sold
|
|
lb
|
|
|
-
|
|
|
-
|
|
|
100,000
|
|
|
380,000
|
|
|
480,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average price per
pound sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
37.90
|
|
$
|
51.74
|
|
$
|
48.86
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Cost Per Pound Sold
Reconciliation1
|
|
Unit
|
|
2018
Q4
|
|
2018
Q3
|
|
2018
Q2
|
|
2018
Q1
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales per
financial statements
|
|
|
|
$
|
50
|
|
$
|
170
|
|
$
|
2,225
|
|
$
|
9,758
|
|
$
|
12,203
|
Less adjustments
reflecting the lower of cost or NRV
|
|
|
|
$
|
(50)
|
|
$
|
(170)
|
|
$
|
-
|
|
$
|
(99)
|
|
$
|
(319)
|
U3O8 cost of sales
|
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
2,225
|
|
$
|
9,659
|
|
$
|
11,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ad valorem &
severance taxes
|
|
$000
|
|
$
|
30
|
|
$
|
81
|
|
$
|
133
|
|
$
|
179
|
|
$
|
423
|
Wellfield
costs
|
|
$000
|
|
$
|
859
|
|
$
|
823
|
|
$
|
916
|
|
$
|
1,074
|
|
$
|
3,672
|
Plant and site
costs
|
|
$000
|
|
$
|
1,638
|
|
$
|
1,594
|
|
$
|
1,723
|
|
$
|
1,718
|
|
$
|
6,673
|
Distribution
costs
|
|
$000
|
|
$
|
47
|
|
$
|
36
|
|
$
|
34
|
|
$
|
19
|
|
$
|
136
|
Inventory
change
|
|
$000
|
|
$
|
(2,574)
|
|
$
|
(2,534)
|
|
$
|
(2,806)
|
|
$
|
(2,582)
|
|
$
|
(10,496)
|
Cost of sales -
produced
|
|
$000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
408
|
|
$
|
408
|
Cost of sales -
purchased
|
|
$000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,225
|
|
$
|
9,251
|
|
$
|
11,476
|
Total cost of
sales
|
|
$000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,225
|
|
$
|
9,659
|
|
$
|
11,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pounds sold
produced
|
|
lb
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,000
|
|
|
10,000
|
Pounds sold
purchased
|
|
lb
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
|
370,000
|
|
|
470,000
|
Total pounds
sold
|
|
lb
|
|
|
—
|
|
|
—
|
|
|
100,000
|
|
|
380,000
|
|
|
480,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average cost per pound
sold - produced
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
40.80
|
|
$
|
40.80
|
Average cost per pound
sold - purchased
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
22.25
|
|
$
|
25.00
|
|
$
|
24.42
|
Total average cost per
pound sold
|
|
$/lb
|
|
$
|
-
|
|
$
|
-
|
|
$
|
22.25
|
|
$
|
25.42
|
|
$
|
24.76
|
|
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 our
filing. The cash and non-cash cost components are identified in the
above production cost table. It excludes the lower of cost or NRV
adjustments as the adjustments do not correspond with the timing of
the sales of produced inventory.
|
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, 2018
Compared to Year Ended December 31,
2017
The following table summarizes the results of
operations for the years ended December 31,
2018 and 2017 (in thousands of U.S. dollars):
|
|
|
|
|
Year ended
December 31,
|
|
2018
|
|
2017
|
|
$
|
|
$
|
|
|
|
|
Sales
|
23,496
|
|
38,368
|
Cost of
sales
|
(12,203)
|
|
(24,401)
|
Gross
profit
|
11,293
|
|
13,967
|
Exploration and
evaluation expense
|
(2,431)
|
|
(2,623)
|
Development
expense
|
(1,654)
|
|
(4,340)
|
General and
administrative expense
|
(5,393)
|
|
(5,090)
|
Accretion
expense
|
(508)
|
|
(527)
|
Net profit from
operations
|
1,307
|
|
1,387
|
Net interest
expense
|
(1,002)
|
|
(1,377)
|
Warrant mark to
market gain
|
581
|
|
-
|
Loss from equity
investment
|
(5)
|
|
(5)
|
Foreign exchange gain
(loss)
|
43
|
|
(50)
|
Other
income
|
3,610
|
|
121
|
Net income
|
4,534
|
|
76
|
|
|
|
|
Income per share –
basic
|
0.03
|
|
-
|
|
|
|
|
Income per share
– diluted
|
0.03
|
|
-
|
|
|
|
|
Revenue per pound
sold
|
48.86
|
|
49.09
|
|
|
|
|
Total cost per pound
sold
|
24.76
|
|
27.95
|
|
|
|
|
Gross profit per
pound sold
|
24.10
|
|
21.14
|
Guidance for 2019
Although the average spot price per
pound of U3O8, as reported by UxC, LLC and
TradeTech, LLC, increased approximately 17% from $23.75 in December
2017 to about $27.75 per pound
in December 2018, market fundamentals
have not changed sufficiently to warrant further development of
MU2.
In response to this persistently weak uranium market, we took
aggressive measures in 2017 and 2018, and will again do so in 2019.
In 2017, we deliberately slowed development activities at MU2,
reduced costs, focused on enhancing production efficiencies from
our operating MU1 HHs and complemented our production with cost
effective purchases of uranium. In 2018, we implemented further
cost reductions, purchased 100% of the uranium necessary to meet
our 2018 contractual commitments, and increased our ending
inventory position from 130 thousand pounds to 392 thousand pounds.
For 2019, we have suspended further MU2 development activities,
implemented further cost reductions, and secured purchase contracts
for 100% of our 2019 delivery obligations.
We expect to sell 500,000 pounds under term contracts at an
average price of approximately $49
per pound in 2019. We have corresponding purchase contracts in
place for all 500,000 pounds at an average cost of approximately
$26 per pound. We expect our gross
profit in 2019 to be approximately $11.5
million from the sale of purchased product, which represents
a cash-basis gross profit margin of between 45% and 50%. We are not
currently forecasting any spot sales in 2019 at this time; we may,
however, choose to sell additional produced product depending on
market conditions.
We currently have over 375,000 pounds of finished,
ready-to-sell, product inventory in storage at the conversion
facility. The value of the product at today's $27.85 average spot price is approximately
$10.4 million. Production from our
operating MU1 and MU2 HHs, expected to be between 75,000 and
100,000 pounds, will be used to further build our inventory
position of finished, ready-to-sell, product at the conversion
facility. We intend to hold this inventory to satisfy our remaining
contractual sales obligations of 415,000 pounds at an average sales
price of $47 per pound, the majority
of which are scheduled to be sold in 2020. The inventoried pounds,
or the in-the-money contracts themselves, can readily be converted
to cash on an as-needed basis.
Operating costs in 2019 are expected to be lower than 2018
because of the suspended MU2 development activities. Other costs
including capital expenditures and loan repayments will be similar
to 2018.
As at February 27, 2019, our
unrestricted cash position was $6.4
million. Given our current cash resources, inventory
position, 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 actions we have taken, together with our current cash,
inventory, and sales contract positions, 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. Lost Creek operations could increase production rates
in as little as six months following a go decision simply by
developing additional header houses within the fully-permitted MU2.
Development expenses during this time are estimated to be
approximately $14 million and are
almost entirely related to MU2 drilling and header house
construction costs. Lost Creek does not require any significant
capital expenditures in order to increase production. The Lost
Creek plant has been very well maintained and is fully ready to
receive additional flows for increased production when
warranted.
As discussed above, the Company has contractual sales
commitments of 500,000 pounds during 2019, at an average price of
approximately $49 per pound. We have
established the delivery 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, build inventory, and
purchase uranium at favorable cost-effective 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 operational
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 2.5 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 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 2019 production and the ability to meet
our production targets; ability to readily restart development
activities and otherwise quickly react to changing market
conditions and at what cost; whether and when additional funding
will be required; whether we reach our projected profit margins;
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) 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.