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, 2021

 

 

☐

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

☐

Non-accelerated filer

☒

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 27, 2021, there were 210,820,732 shares of the registrant’s no par value Common Shares (“Common Shares”), the registrant’s only outstanding class of voting securities, outstanding.

 

 

 

  

UR-ENERGY INC.

 

TABLE OF CONTENTS

  

 

 

 

Page

 

 

 

 

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

 

Item 1.

Financial Statements

 

5

 

Item 2.

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

 

24

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

36

 

Item 4.

Controls and Procedures

 

37

 

 

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

Item 1.

Legal Proceedings

 

38

 

Item 1A.

Risk Factors

 

38

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

38

 

Item 3.

Defaults Upon Senior Securities

 

38

 

Item 4.

Mine Safety Disclosure

 

38

 

Item 5.

Other Information

 

38

 

Item 6.

Exhibits

 

39

 

 

 

 

 

 

SIGNATURES

 

40

 

 
2

Table of Contents

 

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 safe and compliant reduced-level production operations at Lost Creek; (ii) the timing for completion of ongoing development and to determine future development and construction priorities at Lost Creek and Shirley Basin; (iii) the ability to ramp-up and transition to full or other warranted production levels in a timely and cost-effective manner when market and other conditions warrant; (iv) life of mine, costs and production results for each project; (v) the timing and outcome of final regulatory approvals of the amendments for uranium recovery at the LC East Project; (vi) the ability to complete additional favorable uranium sales agreements including spot sales if the market warrants and as may be advantageous to the Company; (vii) the impacts of COVID‑19 on our business, operations, and financial liquidity, and the impacts of the pandemic directly and indirectly on the uranium market; (viii) resolution of the continuing challenges within the uranium market, including supply and demand projections; (ix) the size and sustainability of impacts on the uranium market of recent physical funds and other depositories for purchases of uranium inventories; (x) the timing and impact of implementation of the national uranium reserve program and the Company’s role in the program; (xi) timing for implementation of other recommendations made by the United States Nuclear Fuel Working Group for the revival and expansion of domestic nuclear fuel production, and whether the Biden Administration will incorporate nuclear energy and domestic production of uranium into its climate change initiatives; (xii) impacts on the global markets of climate change initiatives of nations and multi-national companies; (xiii) whether the proposed transaction of certain non-core assets will be completed, on what terms and timing; and (xiv) whether our financing activities and cost-savings measures which we have implemented will be sufficient to support our operations and for what period of time. Additional factors include, among others, the following: challenges presented by current inventories and largely unrestricted imports of uranium products into the U.S.; future estimates for production; capital expenditures; operating costs; mineral resources, grade estimates and recovery rates; 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; 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 operations; compliance with environmental laws and regulations; wastewater management; 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; changes in size and structure; the effectiveness of management and our strategic relationships; ability to attract and retain key personnel and management; 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 February 26, 2021.

 

 
3

Table of Contents

 

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 “resources” 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, Certified P.Geo., and Qualified Person as defined by NI 43-101, reviewed and approved the technical information contained in this Form 10-Q.

 

 
4

Table of Contents

 

PART I

Item 1. FINANCIAL STATEMENTS

 

Ur-Energy Inc.

Unaudited Consolidated Balance Sheets

(expressed in thousands of U.S. dollars)

(the accompanying notes are an integral part of these consolidated financial statements)

 

 

 

Note

 

 

September 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

3

 

 

 

33,413

 

 

 

4,268

 

Accounts receivable

 

 

 

 

 

 

15

 

 

 

-

 

Prepaid expenses

 

 

 

 

 

 

1,195

 

 

 

814

 

Assets held for sale

 

 

4

 

 

 

1,536

 

 

 

-

 

Total current assets

 

 

 

 

 

 

36,159

 

 

 

5,082

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

Non-current portion of inventory

 

 

5

 

 

 

7,921

 

 

 

7,814

 

Restricted cash

 

 

6

 

 

 

7,861

 

 

 

7,859

 

Mineral properties

 

 

7

 

 

 

35,193

 

 

 

39,184

 

Capital assets

 

 

8

 

 

 

20,590

 

 

 

21,891

 

Total non-current assets

 

 

 

 

 

 

71,565

 

 

 

76,748

 

Total assets

 

 

 

 

 

 

107,724

 

 

 

81,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

9

 

 

 

2,178

 

 

 

2,320

 

Current portion of notes payable

 

 

10

 

 

 

-

 

 

 

459

 

Current portion of warrant liability

 

 

12

 

 

 

4,175

 

 

 

729

 

Environmental remediation accrual

 

 

 

 

 

 

76

 

 

 

76

 

Total current liabilities

 

 

 

 

 

 

6,429

 

 

 

3,584

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Notes payable

 

 

10

 

 

 

12,311

 

 

 

12,720

 

Lease liability

 

 

 

 

 

 

22

 

 

 

50

 

Asset retirement obligations

 

 

11

 

 

 

29,400

 

 

 

29,965

 

Warrant liability

 

 

12

 

 

 

7,677

 

 

 

1,415

 

Total non-current liabilities

 

 

 

 

 

 

49,410

 

 

 

44,150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

13

 

 

 

230,024

 

 

 

189,620

 

Contributed surplus

 

 

 

 

 

 

21,218

 

 

 

20,946

 

Accumulated other comprehensive income

 

 

 

 

 

 

4,179

 

 

 

3,707

 

Accumulated deficit

 

 

 

 

 

 

(203,536 )

 

 

(180,177 )

Total shareholders’ equity

 

 

 

 

 

 

51,885

 

 

 

34,096

 

Total liabilities and shareholders’ equity

 

 

 

 

 

 

107,724

 

 

 

81,830

 

 

 
5

Table of Contents

 

Ur-Energy Inc.

Unaudited Consolidated Statements of Operations and Comprehensive Loss

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

(the accompanying notes are an integral part of these consolidated financial statements)

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

Note

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

14

 

 

 

9

 

 

 

-

 

 

 

16

 

 

 

8,304

 

Cost of sales

 

 

15

 

 

 

(1,703 )

 

 

(1,840 )

 

 

(5,211 )

 

 

(11,462 )

Gross profit (loss)

 

 

 

 

 

 

(1,694 )

 

 

(1,840 )

 

 

(5,195 )

 

 

(3,158 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

16

 

 

 

(2,189 )

 

 

(2,157 )

 

 

(6,778 )

 

 

(6,446 )

Profit (loss) from operations

 

 

 

 

 

 

(3,883 )

 

 

(3,997 )

 

 

(11,973 )

 

 

(9,604 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest expense

 

 

 

 

 

 

(182 )

 

 

(195 )

 

 

(558 )

 

 

(522 )

Warrant liability mark to market gain (loss)

 

 

12

 

 

 

(5,060 )

 

 

550

 

 

 

(11,384 )

 

 

592

 

Foreign exchange gain (loss)

 

 

 

 

 

 

15

 

 

 

(53 )

 

 

(352 )

 

 

(46 )

Other income (expense)

 

 

10

 

 

 

2

 

 

 

(1 )

 

 

908

 

 

 

16

 

Net income (loss)

 

 

 

 

 

 

(9,108 )

 

 

(3,696 )

 

 

(23,359 )

 

 

(9,564 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

219

 

 

 

36

 

 

 

472

 

 

 

67

 

Comprehensive income (loss)

 

 

 

 

 

 

(8,889 )

 

 

(3,660 )

 

 

(22,887 )

 

 

(9,497 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

(0.04 )

 

 

(0.02 )

 

 

(0.12 )

 

 

(0.06 )

Diluted

 

 

 

 

 

 

(0.04 )

 

 

(0.02 )

 

 

(0.12 )

 

 

(0.06 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

197,205,734

 

 

 

166,130,403

 

 

 

189,835,800

 

 

 

162,375,926

 

Diluted

 

 

 

 

 

 

197,205,734

 

 

 

166,130,403

 

 

 

189,835,800

 

 

 

162,375,926

 

 

 
6

Table of Contents

 

Ur-Energy Inc.

Unaudited Consolidated Statements of Changes in Shareholders’ Equity

 

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

(the accompanying notes are an integral part of these consolidated financial statements)

 

Nine months ended

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

September 30,

 

 

 

 Share Capital

 

 

 

 

 Contributed

 

 

 Comprehensive

 

 

 Accumulated

 

 

 Shareholders’

 

 2020

 

Note

 

 

 Shares

 

 

 Amount

 

 

 Warrants

 

 

 Surplus

 

 

 Income

 

 

 Deficit

 

 

 Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

 

 

 

160,478,059

 

 

 

185,754

 

 

 

-

 

 

 

20,317

 

 

 

3,654

 

 

 

(165,392 )

 

 

44,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

234

 

 

 

-

 

 

 

-

 

 

 

234

 

Comprehensive income (loss)

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

27

 

 

 

(3,641 )

 

 

(3,614 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2020

 

 

 

 

 

160,478,059

 

 

 

185,754

 

 

 

-

 

 

 

20,551

 

 

 

3,681

 

 

 

(169,033 )

 

 

40,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

230

 

 

 

-

 

 

 

-

 

 

 

230

 

Comprehensive income (loss)

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4

 

 

 

(2,227 )

 

 

(2,223 )

June 30, 2020

 

 

 

 

 

160,478,059

 

 

 

185,754

 

 

 

-

 

 

 

20,781

 

 

 

3,685

 

 

 

(171,260 )

 

 

38,960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

 

 

13

 

 

 

9,000,000

 

 

 

4,680

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,680

 

Less amount assigned to warrant liablity

 

 

 

 

 

 

 

 

 

 

(860 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(860 )

Less share issue costs

 

 

 

 

 

 

 

 

 

 

(428 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(428 )

Redemption of RSUs

 

 

 

 

 

 

189,613

 

 

 

104

 

 

 

-

 

 

 

(149 )

 

 

-

 

 

 

-

 

 

 

(45 )

Stock compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-

 

 

 

229

 

 

 

-

 

 

 

-

 

 

 

229

 

Comprehensive income (loss)

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

36

 

 

 

(3,696 )

 

 

(3,660 )

September 30, 2020

 

 

 

 

 

 

169,667,672

 

 

 

189,250

 

 

 

-

 

 

 

20,861

 

 

 

3,721

 

 

 

(174,956 )

 

 

38,876

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 Accumulated

 

 

 

 

 

 Nine months ended

 

 

 

 

 

 

 

 

 

 

 

 Other

 

 

 

 

 

September 30,

 

 

 

 Share Capital

 

 

 

 

 Contributed

 

 

 Comprehensive

 

 

 Accumulated

 

 

 Shareholders’

 

 2021

 

Note

 

 

 Shares

 

 

 Amount

 

 

 Warrants

 

 

 Surplus

 

 

 Income

 

 

 Deficit

 

 

 Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

 

 

 

170,253,752

 

 

 

189,620

 

 

 

-

 

 

 

20,946

 

 

 

3,707

 

 

 

(180,177 )

 

 

34,096

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

13

 

 

 

1,723,818

 

 

 

1,540

 

 

 

-

 

 

 

(462 )

 

 

-

 

 

 

-

 

 

 

1,078

 

Exercise of warrants

 

 

13

 

 

 

481,000

 

 

 

551

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

551

 

Shares issued for cash

 

 

13

 

 

 

16,930,530

 

 

 

15,068

 

 

 

169

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

15,237

 

Less amount assigned to warrant liablity

 

12 & 13

 

 

 

-

 

 

 

(2,435 )

 

 

(169 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,604 )

Less share issue costs

 

 

13

 

 

 

-

 

 

 

(1,307 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,307 )

Stock compensation

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

231

 

 

 

-

 

 

 

-

 

 

 

231

 

Comprehensive income (loss)

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

219

 

 

 

(7,372 )

 

 

(7,153 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

 

 

 

 

189,389,100

 

 

 

203,037

 

 

 

-

 

 

 

20,715

 

 

 

3,926

 

 

 

(187,549 )

 

 

40,129

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

13

 

 

 

160,000

 

 

 

134

 

 

 

-

 

 

 

(40 )

 

 

-

 

 

 

-

 

 

 

94

 

Exercise of warrants

 

 

13

 

 

 

825,637

 

 

 

1,245

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,245

 

Shares issued for cash

 

 

13

 

 

 

4,423,368

 

 

 

6,930

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

6,930

 

Less amount assigned to warrant liablity

 

11 & 12

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Less share issue costs

 

 

13

 

 

 

-

 

 

 

(218 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(218 )

Stock compensation

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

259

 

 

 

-

 

 

 

-

 

 

 

259

 

Comprehensive income (loss)

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

34

 

 

 

(6,879 )

 

 

(6,845 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

 

 

 

 

194,798,105

 

 

 

211,128

 

 

 

-

 

 

 

20,934

 

 

 

3,960

 

 

 

(194,428 )

 

 

41,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

13

 

 

 

17,548

 

 

 

16

 

 

 

-

 

 

 

(5 )

 

 

-

 

 

 

-

 

 

 

11

 

Shares issued for cash

 

 

13

 

 

 

6,026,499

 

 

 

10,112

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,112

 

Less amount assigned to warrant liablity

 

11 & 12

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Less share issue costs

 

 

13

 

 

 

-

 

 

 

(253 )

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(253 )

Stock compensation

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

289

 

 

 

-

 

 

 

-

 

 

 

289

 

Comprehensive income (loss)

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

219

 

 

 

(9,108 )

 

 

(8,889 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

 

 

 

 

206,285,975

 

 

 

230,024

 

 

 

-

 

 

 

21,218

 

 

 

4,179

 

 

 

(203,536 )

 

 

51,885

 

 

 
7

Table of Contents

 

Ur-Energy Inc.

Unaudited Consolidated Statements of Cash Flow

(expressed in thousands of U.S. dollars)

(the accompanying notes are an integral part of these consolidated financial statements)

 

 

 

 

 

 

Nine months ended

 

 

 

 

 

 

September 30,

 

 

 

Note

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

Cash provided by (used for):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

Net income (loss) for the year

 

 

 

 

 

(23,754 )

 

 

(9,564 )

 

 

 

 

 

 

 

 

 

 

 

 

Items not affecting cash:

 

 

 

 

 

 

 

 

 

 

 

Stock based compensation

 

 

 

 

 

779

 

 

 

693

 

Net realizable value adjustments

 

 

 

 

 

5,211

 

 

 

6,296

 

Amortization of mineral properties

 

 

 

 

 

1,525

 

 

 

1,850

 

Depreciation of capital assets

 

 

 

 

 

1,336

 

 

 

1,365

 

Accretion expense

 

 

 

 

 

365

 

 

 

433

 

Amortization of deferred loan costs

 

 

 

 

 

32

 

 

 

58

 

Gain on loan forgiveness

 

 

 

 

 

(900 )

 

 

-

 

Provision for reclamation

 

 

 

 

 

-

 

 

 

18

 

Mark to market loss (gain)

 

 

 

 

 

11,384

 

 

 

(592 )

Gain on sale of assets

 

 

 

 

 

-

 

 

 

(16 )

Unrealized foreign exchange loss (gain)

 

 

 

 

 

350

 

 

 

-

 

Accounts receivable

 

 

 

 

 

(15 )

 

 

8

 

Inventory

 

 

 

 

 

(5,318 )

 

 

(6,489 )

Prepaid expenses

 

 

 

 

 

(381 )

 

 

(58 )

Accounts payable and accrued liabilities

 

 

 

 

 

253

 

 

154

 

 

 

 

 

 

 

(9,133 )

 

 

(5,844 )

 

 

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sale of capital assets

 

 

 

 

 

-

 

 

 

18

 

Purchase of capital assets

 

 

 

 

 

(63 )

 

 

(38 )

 

 

 

 

 

 

(63 )

 

 

(20 )

 

 

 

 

 

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

 

 

 

 

 

 Issuance of common shares and warrants for cash

 

 

13

 

 

 

32,280

 

 

 

4,680

 

 Share issue costs

 

 

13

 

 

 

(1,778 )

 

 

(429 )

 Proceeds from exercise of warrants and stock options

 

 

 

 

 

 

7,822

 

 

 

-

 

RSU redeemed for cash

 

 

 

 

 

 

 -

 

 

 

 (45

)

 Proceeds from debt financing

 

 

10

 

 

 

-

 

 

 

893

 

 

 

 

 

 

 

 

38,324

 

 

 

5,099

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effects of foreign exchange rate changes on cash

 

 

 

 

 

 

19

 

 

 

50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

 

 

 

 

29,147

 

 

 

(715 )

Beginning cash, cash equivalents, and restricted cash

 

 

 

 

 

 

12,127

 

 

 

15,215

 

Ending cash, cash equivalents, and restricted cash

 

 

17

 

 

 

41,274

 

 

 

14,500

 

 

 
8

Table of Contents

 

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

(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 continued under the Canada Business Corporations Act on August 8, 2006. The Company is an Exploration Stage mining company, as defined by United States Securities and Exchange Commission (“SEC”). The Company is engaged in uranium mining and recovery operations, with activities including the acquisition, exploration, development, and production of uranium mineral resources located primarily in Wyoming. The Company commenced uranium production at its Lost Creek Project in Wyoming in 2013.

 

 

 

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 properties contain 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.

Summary of Significant Accounting Policies

 

 

 

Basis of presentation

 

 

 

These unaudited 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. These unaudited consolidated 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 consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2020. We applied the same accounting policies as in the prior year. Certain information and footnote disclosures required by US GAAP have been condensed or omitted in these unaudited consolidated financial statements.

 

3.

Cash and Cash Equivalents

 

 

 

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

 

 Cash and cash equivalent

 

September 30, 2021

 

 

December 31, 2020

 

 

 

 

 

 

 

 

Cash on deposit

 

 

22,127

 

 

 

852

 

Money market funds

 

 

11,286

 

 

 

3,416

 

 

 

 

33,413

 

 

 

4,268

 

    

 
9

Table of Contents

    

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

   

4.

Assets Held for Sale

 

 

 

A non-core, unpermitted, non-operating property held by Pathfinder Mines Corporation is presently considered to be an asset held for sale. The Company has a plan to sell the asset and is considering an offer consisting of cash and mineral properties. The asset’s mineral property cost as shown in the table below has been reclassified as assets held for sale as of September 30, 2021. There were no liabilities associated with the asset held for sale as of September 30, 2021.

  

Net assets held for sale

 

September 30, 2021

 

 

December 31, 2020

 

 

 

 

 

 

 

 

Assets held for sale

 

 

 

 

 

 

Mineral properties

 

 

1,536

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

1,536

 

 

 

-

 

           

5.

Inventory

 

 

 

The Company’s inventory consists of the following:

 

Inventory by Type

 

September 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Plant inventory

 

 

-

 

 

 

463

 

Conversion facility inventory

 

 

7,921

 

 

 

7,351

 

 

 

 

7,921

 

 

 

7,814

 

 

 

 

 

 

 

 

 

 

Inventory by Duration

 

September 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

 

 

Non-current portion of inventory

 

 

7,921

 

 

 

7,814

 

 

 

 

7,921

 

 

 

7,814

 

 

 

Using lower of cost or net realizable value (“NRV”) calculations, the Company reduced the inventory valuation by $5,211 and $7,802 for the nine months ended September 30, 2021, and the year ended December 31, 2020, respectively.

 

6.

Restricted Cash

 

 

 

The Company’s restricted cash consists of the following:

Restricted Cash

 

September 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Cash pledged for reclamation

 

 

7,861

 

 

 

7,859

 

 

 

 

7,861

 

 

 

7,859

 

 

 

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 reviewed and approved by the Wyoming Department of Environmental Quality (“WDEQ”), including 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 secure the estimated costs of reclamation related to the properties. Surety bonds providing $27.1 million of coverage towards reclamation obligations are collateralized by the restricted cash.

 

 

 
10

Table of Contents

   

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

       

7.

Mineral Properties

 

 

 

The Company’s mineral properties consist of the following:

 

 

 

Lost Creek

 

 

Pathfinder

 

 

Other U.S.

 

 

 

Mineral Properties

 

Property

 

 

Mines

 

 

Properties

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

6,276

 

 

 

19,730

 

 

 

13,178

 

 

 

39,184

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reclassify assets held for sale (note 4)

 

 

-

 

 

 

(1,536 )

 

 

-

 

 

 

(1,536 )

Change in estimated reclamation costs

 

 

-

 

 

 

(930 )

 

 

-

 

 

 

(930 )

Depletion and amortization

 

 

(1,525 )

 

 

-

 

 

 

-

 

 

 

(1,525 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

4,751

 

 

 

17,264

 

 

 

13,178

 

 

 

35,193

 

 

 

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 making 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. We are not recovering U3O8 within the State section under lease at Lost Creek and are therefore not subject to royalty payments currently. Other royalties exist on certain mining claims at the LC South, LC East and EN Projects. 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 2013. Under the terms of the SPA, the Company purchased Pathfinder Mines Corporation (“Pathfinder”). 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 for aggregate consideration of $6.7 million, the assumption of $5.7 million in estimated asset reclamation obligations, and other consideration. A non-core, unpermitted, non-operating property held by Pathfinder is presently considered to be an asset held for sale (see note 4).

 

 
11

Table of Contents

   

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

          

 

Other U.S. properties

 

Other U.S. properties include the acquisition costs of several prospective mineralized properties, which the Company continues to maintain through claim payments, lease payments, insurance, and other holding costs in anticipation of future exploration efforts.

  

8.

Capital Assets

 

 

 

The Company’s capital assets consist of the following:

 

 

 

September 30, 2021

 

 

December 31, 2020

 

 

 

 

 

 

 Accumulated

 

 

 Net Book

 

 

 

 

 

 Accumulated

 

 

 Net Book

 

Capital Assets

 

Cost

 

 

Depreciation

 

 

Value

 

 

Cost

 

 

Depreciation

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rolling stock

 

 

3,450

 

 

 

(3,403 )

 

 

47

 

 

 

3,450

 

 

 

(3,369 )

 

 

81

 

Enclosures

 

 

33,008

 

 

 

(13,074 )

 

 

19,934

 

 

 

33,008

 

 

 

(11,834 )

 

 

21,174

 

Machinery and equipment

 

 

1,469

 

 

 

(930 )

 

 

539

 

 

 

1,446

 

 

 

(885 )

 

 

561

 

Furniture and fixtures

 

 

119

 

 

 

(119 )

 

 

-

 

 

 

119

 

 

 

(119 )

 

 

-

 

Information technology

 

 

1,160

 

 

 

(1,113 )

 

 

47

 

 

 

1,123

 

 

 

(1,098 )

 

 

25

 

Right of use assets

 

 

36

 

 

 

(13 )

 

 

23

 

 

 

165

 

 

 

(115 )

 

 

50

 

 

 

 

39,242

 

 

 

(18,652 )

 

 

20,590

 

 

 

39,311

 

 

 

(17,420 )

 

 

21,891

 

 

9.

Accounts Payable and Accrued Liabilities

 

 

 

Accounts payable and accrued liabilities consist of the following:

 

Accounts Payable and Accrued Liabilities

 

September 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Accounts payable

 

 

195

 

 

 

396

 

Accrued payroll liabilities

 

 

1,818

 

 

 

1,767

 

Accrued severance, ad valorem, and other taxes payable

 

 

165

 

 

 

157

 

 

 

 

2,178

 

 

 

2,320

 

 

10.

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 was to be paid in 28 quarterly installments commencing January 1, 2015.

 

 
12

Table of Contents

    

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

  

 

On October 1, 2019, the Sweetwater County Commissioners and the State of Wyoming approved an eighteen-month deferral of principal payments beginning October 1, 2019. On October 6, 2020, the State Bond Loan was again modified to defer principal payments for an additional eighteen months. Quarterly principal payments are scheduled to resume on October 1, 2022, and the last payment will be due on October 1, 2024.

 

On April 16, 2020, we obtained two Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) loans (one for each of our subsidiaries with U.S. payroll obligations) through the Bank of Oklahoma Financial (“BOKF”). The program was a part of the CARES Act enacted by Congress March 27, 2020, in response to the COVID-19 (Coronavirus) pandemic. The combined loan amount was $0.9 million.

 

On June 5, 2020, the Paycheck Protection Program Flexibility Act of 2020 (the “Flexibility Act”) became law. The Flexibility Act changes key provisions of the PPP, including maturity of the loans, deferral of loan payments, and the forgiveness of the PPP loans, with revisions being retroactive to the date of the CARES Act.

 

Under the program, as modified by the Flexibility Act and SBA and Treasury rulemakings, the repayment of our loans, including interest, would be forgiven based on eligible payroll, payroll-related, and other allowable costs incurred in a twenty-four-week period following the funding of the loans. For any portion of the loans not forgiven, the program provided for an initial deferral of payments based upon the timing of a borrower’s application for forgiveness and SBA’s action on the application up to a maximum of ten months after the use and forgiveness covered period ends (July 30, 2021).

 

In December 2020, we applied for loan forgiveness with the BOKF. The BOKF, after reviewing the loan forgiveness applications, submitted them to the SBA for approval. The Company received notifications in Q2 that the principal amount of $893 thousand and accrued interest of approximately $10 thousand were forgiven under the terms of the PPP. This was treated as a forgiveness of debt on the Consolidated Statements of Operations for the nine-months ended September 30, 2021, and a $903 thousand gain on debt forgiveness was recognized in other income.

 

 
13

Table of Contents

     

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

  

 

The following table summarizes the Company’s current and long-term debts.

 

Current and Long-term Debt

 

September 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

Small Business Administration PPP Loans

 

 

-

 

 

 

502

 

Deferred financing costs

 

 

-

 

 

 

(43 )

 

 

 

-

 

 

 

459

 

 

 

 

 

 

 

 

 

 

Long-term

 

 

 

 

 

 

 

 

Small Business Administration PPP Loans

 

 

-

 

 

 

398

 

State Bond Loan

 

 

12,441

 

 

 

12,441

 

Deferred financing costs

 

 

(130 )

 

 

(119 )

 

 

 

12,311

 

 

 

12,720

 

 

 

The schedule of remaining payments on outstanding debt as of September 30, 2021, is presented below.

 

Remaining Payments

 

Total

 

 

2021

 

 

2022

 

 

2023

 

 

2024

 

 

Final payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State Bond Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Principal

 

 

12,441

 

 

 

-

 

 

 

2,628

 

 

 

5,487

 

 

 

4,326

 

 

Oct-2024

 

Interest

 

 

1,448

 

 

 

179

 

 

 

697

 

 

 

447

 

 

 

125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

13,889

 

 

 

179

 

 

 

3,325

 

 

 

5,934

 

 

 

4,451

 

 

 

 

 

11.

Asset Retirement Obligations

 

 

 

Asset retirement obligations (“ARO”) relate to the Lost Creek mine and Shirley Basin project and are equal to the current estimated reclamation cost escalated at inflation rates ranging from 0.74% to 2.44% and then discounted at credit adjusted risk-free rates ranging from 0.33% to 7.25%. Current estimated reclamation costs include costs of closure, reclamation, demolition and stabilization of the well fields, processing plants, infrastructure, aquifer restoration, waste dumps, and ongoing post-closure environmental monitoring and maintenance costs. The schedule of payments required to settle the future reclamation extends through 2033.

 

 
14

Table of Contents

     

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

  

 

The present value of the estimated future closure estimate is presented in the following table.

 

Asset Retirement Obligations

 

Total

 

December 31, 2020

 

 

29,965

 

 

 

 

 

 

Change in estimated reclamation costs

 

 

(930 )

Accretion expense

 

 

365

 

 

 

 

 

 

September 30, 2021

 

 

29,400

 

 

 

The restricted cash discussed in note 6 relates to the surety bonds provided to the governmental agencies for these and other reclamation obligations.

 

12.

Warrant Liability

 

 

 

In September 2018, we issued 13,062,878 warrants as part of an underwritten public offering with two warrants redeemable for one Common Share of the Company’s stock at a price of $1.00 per full share. The remaining, unexercised warrants expired in September 2021.

 

In August 2020, we issued 9,000,000 warrants as part of a registered direct offering with two warrants redeemable for one Common Share of the Company’s stock at a price of $0.75 per full share. Any remaining, unexercised warrants will expire in August 2022.

 

In February 2021, we issued 16,930,530 warrants as part of an underwritten public offering with two warrants redeemable for one Common Share of the Company’s stock at a price of $1.35 per full share. Any remaining, unexercised warrants will expire in February 2024.

 

Because the warrants are priced in U.S. dollars and the functional currency of Ur-Energy Inc. is Canadian dollars, a derivative financial liability was created. The liability created, and adjusted monthly, is calculated using the Black-Scholes model described below as there is no active market for the warrants. Any gain or loss from the adjustment of the liability is reflected in net income for the period.

 

The Company’s warrant liabilities consist of the following:

 

 

 

Sep-2018

 

 

Aug-2020

 

 

Feb-2021

 

 

 

 Warrant Liability Activity

 

 Warrants

 

 

 Warrants

 

 

 Warrants

 

 

 Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

729

 

 

 

1,415

 

 

 

-

 

 

 

2,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warrants issued

 

 

-

 

 

 

-

 

 

 

2,604

 

 

 

2,604

 

Warrants exercised

 

 

(3,961 )

 

 

(190 )

 

 

(26 )

 

 

(4,177 )

Mark to market revaluation loss (gain)

 

 

3,227

 

 

 

2,992

 

 

 

5,165

 

 

 

11,384

 

Effects for foreign exchange rate changes

 

 

5

 

 

 

(42 )

 

 

(66 )

 

 

(103 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

-

 

 

 

4,175

 

 

 

7,677

 

 

 

11,852

 

 

 
15

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Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

  

 

 

Aug-2020

 

 

Feb-2021

 

 

 

 

 Warrant Liability Duration

 

 Warrants

 

 

 Warrants

 

 

 Total

 

 

 

 

 

 

 

 

 

 

 

Current portion of warrant liability

 

 

4,175

 

 

 

-

 

 

 

4,175

 

Warrant liability

 

 

 

 

 

 

7,677

 

 

 

7,677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

4,175

 

 

 

7,677

 

 

 

11,852

 

 

 

The fair value of the warrant liabilities on September 30, 2021, was determined using the Black-Scholes model with the following assumptions:

 

 

 

Aug-2020

 

 

Feb-2021

 

Black-Scholes Assumptions at September 30, 2021

 

Warrants

 

 

Warrants

 

 

 

 

 

 

 

 

Expected forfeiture rate

 

 

0.0 %

 

 

0.0 %

Expected life (years)

 

 

0.8

 

 

 

2.3

 

Expected volatility

 

 

86.8 %

 

 

80.0 %

Risk free rate

 

 

0.5 %

 

 

0.6 %

Expected dividend rate

 

 

0.0 %

 

 

0.0 %

Exercise price

 

$ 0.75

 

 

$ 1.35

 

Market price

 

$ 1.72

 

 

$ 1.72

 

 

13.

Shareholders’ Equity and Capital Stock

 

 

 

Common shares

 

 

 

The Company’s share capital consists of an unlimited amount of Class A preferred shares authorized, without par value, of which no shares are issued and outstanding; and an unlimited amount of common shares authorized, without par value, of which 206,285,975 shares and 170,253,752 shares were issued and outstanding as of September 30, 2021, and December 31, 2020, respectively.

 

On February 4, 2021, the Company closed an underwritten public offering of 14,722,200 common shares and accompanying warrants to purchase up to 7,361,100common shares, at a combined public offering price of $0.90 per common share and accompanying warrant. The warrants will have an exercise price of $1.35 per whole common share and will expire three years from the date of issuance. Ur-Energy also granted the underwriters a 30-day option to purchase up to an additional 2,208,330 common shares and warrants to purchase up to 1,104,165 common shares on the same terms. The option was exercised in full. Including the exercised option, Ur-Energy issued a total of 16,930,530 common shares and 16,930,530 warrants to purchase up to 8,465,265 common shares. The gross proceeds to Ur‑Energy from this offering were approximately $15.2 million. After fees and expenses of $1.3 million, net proceeds to the Company were approximately $13.9 million.

 

 
16

Table of Contents

     

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

   

 

Stock options

 

In 2005, the Company’s Board of Directors approved the adoption of the Company’s stock option plan (the “Option Plan”). The Option Plan was most recently approved by the shareholders on May 7, 2020. Eligible participants under the Option Plan include directors, officers, employees, and consultants of the Company. Under the terms of the Option Plan, grants of options will vest over a three-year period: 33.3% on the first anniversary, 33.3% on the second anniversary, and 33.4% on the third anniversary of the grant. The term of the options is five years.

 

Activity with respect to stock options is summarized as follows:

 

 

 

 Outstanding

 

 

 Weighted-average

 

 Stock Option Activity

 

 Options

 

 

 exercise price

 

 

 

#

 

 

$

 

 

 

 

 

 

 

 

December 31, 2020

 

 

11,910,424

 

 

$ 0.61

 

 

 

 

 

 

 

 

 

 

Granted

 

 

1,322,164

 

 

 

1.14

 

Exercised

 

 

(1,901,366 )

 

 

0.63

 

Forfeited

 

 

(219,055 )

 

 

0.56

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

11,112,167

 

 

$ 0.67

 

 

 

The exercise price of a new grant is set at the closing price for the shares on the Toronto Stock Exchange (TSX) on the trading day immediately preceding the grant date and there is no intrinsic value as of the date of grant.

 

We received $1.2 million from options exercised in the nine months ended September 30, 2021. No options were exercised in the nine months ended September 30, 2020.

 

Stock-based compensation expense from stock options was $0.2 million and $0.5 million for the three and nine months ended September 30, 2021, respectively. Stock-based compensation expense from stock options was $0.1 million and $0.4 million for the three and nine months ended September 30, 2020, respectively.

  

As of September 30, 2021, there was approximately $1.3 million unamortized stock-based compensation expense related to the Option Plan. The expenses are expected to be recognized over the remaining weighted-average vesting period of 2.3 years under the Option Plan.

 

 
17

Table of Contents

     

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

   

 

As of September 30, 2021, 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

$

 

 

#

 

 

 

 

 

$

 

 

#

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.58

 

 

 

924,470

 

 

 

0.2

 

 

 

1,057,891

 

 

 

924,470

 

 

 

0.2

 

 

 

1,057,891

 

 

2021-12-16

 

0.58

 

 

 

200,000

 

 

 

0.9

 

 

 

228,864

 

 

 

200,000

 

 

 

0.9

 

 

 

228,864

 

 

2022-09-07

 

0.71

 

 

 

1,541,751

 

 

 

1.2

 

 

 

1,557,569

 

 

 

1,541,751

 

 

 

1.2

 

 

 

1,557,569

 

 

2022-12-15

 

0.61

 

 

 

200,000

 

 

 

1.5

 

 

 

222,556

 

 

 

200,000

 

 

 

1.5

 

 

 

222,556

 

 

2023-03-30

 

0.73

 

 

 

830,366

 

 

 

1.9

 

 

 

819,241

 

 

 

830,366

 

 

 

1.9

 

 

 

819,241

 

 

2023-08-20

 

0.72

 

 

 

726,674

 

 

 

2.2

 

 

 

728,399

 

 

 

477,562

 

 

 

2.2

 

 

 

478,696

 

 

2023-12-14

 

0.62

 

 

 

2,542,252

 

 

 

3.1

 

 

 

2,788,866

 

 

 

838,304

 

 

 

3.1

 

 

 

919,625

 

 

2024-11-05

 

0.50

 

 

 

2,824,490

 

 

 

4.1

 

 

 

3,454,865

 

 

 

-

 

 

 

-

 

 

 

-

 

 

2025-11-13

 

1.14

 

 

 

1,322,164

 

 

 

4.9

 

 

 

772,694

 

 

 

-

 

 

 

-

 

 

 

-

 

 

2026-08-27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.67

 

 

 

11,112,167

 

 

 

2.9

 

 

 

11,630,945

 

 

 

5,012,453

 

 

 

1.5

 

 

 

5,284,442

 

 

 

 

The aggregate intrinsic value of the options in the preceding table represents the total pre-tax intrinsic value for stock options, with an exercise price less than the Company’s TSX closing stock price as of the last trading day in the nine months ended September 30, 2021 (approximately US$1.72), that would have been received by the option holders had they exercised their options on that date. There were 11,112,167 in-the-money stock options outstanding and 5,012,453 in-the-money stock options exercisable as of September 30, 2021.

 

The fair value of the stock options on their respective grant dates was determined using the Black-Scholes model with the following assumptions:

 

Stock Option Fair Value Assumptions

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expected forfeiture rate

 

 

6.1 %

 

 

6.1 %

 

 

6.2 %

 

5.8% - 6.0

%

 

5.3% - 6.0

%

 

 

5.6 %

Expected life (years)

 

 

3.9

 

 

 

3.9

 

 

 

3.7

 

 

3.7 - 3.8

 

 

 

3.7

 

 

 

3.7

 

Expected volatility

 

 

69.5 %

 

 

63.2 %

 

 

58.6 %

 

53.8% - 55.0

%

 

56.0% - 57.5

%

 

 

56.8 %

Risk free rate

 

 

0.7 %

 

 

0.4 %

 

 

1.6 %

 

1.9% - 2.1

%

 

1.0% - 1.6

%

 

 

1.0 %

Expected dividend rate

 

 

0.0 %

 

 

0.0 %

 

 

0.0 %

 

 

0.0 %

 

 

0.0 %

 

 

0.0 %

Black-Scholes value (CAD$)

 

$ 0.74

 

 

$ 0.30

 

 

$ 0.35

 

 

$

0.33 - $0.39

 

 

$

0.32 - $0.44

 

 

$ 0.31

 

 

Restricted share units

 

On June 24, 2010, the Company’s shareholders approved the adoption of the Company’s restricted share unit plan (the “RSU Plan”), as subsequently amended. The RSU Plan was approved by our shareholders most recently on May 2, 2019. Amendments to the RSU Plan were approved by our shareholders on June 3, 2021, and the plan is now known as the Restricted Share Unit and Equity Incentive Plan (the “RSU&EI Plan”).

 

 
18

Table of Contents

     

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

   

 

Eligible participants under the RSU&EI Plan include directors and employees of the Company. Granted RSUs are redeemed on the second anniversary of the grant. Upon an RSU vesting, the holder of the RSU will receive one Common Share, for no additional consideration, for each RSU held.

 

Activity with respect to RSUs is summarized as follows: 

 

 

 

 

 

 

 Weighted average

 

 

 

 Outstanding

 

 

 grant date

 

 Restricted Share Unit Activity

 

 RSUs

 

 

 fair value

 

 

 

#

 

 

$

 

 

 

 

 

 

 

 

December 31, 2020

 

 

1,404,962

 

 

$ 0.54

 

 

 

 

 

 

 

 

 

 

Granted

 

 

305,530

 

 

$ 1.14

 

Forfeited

 

 

(59,843 )

 

$ 0.56

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

1,650,649

 

 

$ 0.66

 

 

 

Stock-based compensation expense from RSUs was $0.1 million and $0.3 million for the three and nine months ended September 30, 2021, respectively.  Stock-based compensation expense from RSUs was $0.1 million and $0.3 million for the three and nine months ended September 30, 2020, respectively.

 

As of September 30, 2021, there was approximately $0.5 million unamortized stock-based compensation expense related to the RSU&EI Plan. The expenses are expected to be recognized over the remaining weighted-average vesting periods of 1.5 years under the RSU&EI Plan.

 

As of September 30, 2021, outstanding RSUs are as follows: 

  

RSUs outstanding

 

 

 

 

 Weighted-

 

 

 

 

 

 

 

 

 

 

 average

 

 

 

 

 

 

 

 

 

 

 remaining

 

 

 Aggregate

 

 

 

 

 Number

 

 

 contractual

 

 

 intrinsic

 

 

 Redemption

 

 of RSUs

 

 

 life (years)

 

 

 value

 

 

 Date

 

#

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

638,989

 

 

 

0.1

 

 

 

1,099,061

 

 

2021-11-06

 

 

706,130

 

 

 

1.1

 

 

 

1,214,544

 

 

2022-11-13

 

 

305,530

 

 

 

1.9

 

 

 

525,512

 

 

2023-08-27

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,650,649

 

 

 

0.9

 

 

 

2,839,117

 

 

 

 

 

 
19

Table of Contents

    

Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

      

 

The fair value of restricted share units on their respective grant dates was determined using the Intrinsic Value Method with the following assumptions:

 

Restricted Share Unit Fair Value Assumptions

 

 2021

 

 

 2020

 

 

 2019

 

 

 

 

 

 

 

 

 

 

 

Expected forfeiture rate

 

 

4.4 %

 

 

4.2 %

 

 

4.8 %

Grant date fair value (CAD$)

 

$ 1.44

 

 

$ 0.63

 

 

$ 0.79

 

 

Warrants

 

In September 2018, the Company issued 13,062,878warrants to purchase 6,531,439 of our Common Shares at $1.00 per full share. In August 2020, the Company issued 9,000,000 warrants to purchase 4,500,000 of our Common Shares at $0.75 per full share. In February 2021, the Company issued 16,930,530 warrants to purchase 8,465,265of our Common Shares at $1.35 per full share.

 

The following represents warrant activity during the period ended September 30, 2021:

 

 

 

 

 

 Number of

 

 

 

 

 

 Outstanding

 

 

 shares to be issued

 

 

 Per share

 

 Warrant Activity

 

 warrants

 

 

 upon exercise

 

 

 exercise price

 

 

 

#

 

 

#

 

 

$

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

22,062,878

 

 

 

11,031,439

 

 

 

0.90

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issued

 

 

16,930,530

 

 

 

8,465,265

 

 

 

1.35

 

Exercised

 

 

(13,500,920 )

 

 

(6,750,460 )

 

 

0.98

 

Expired

 

 

(573,958 )

 

 

(286,979 )

 

 

1.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2021

 

 

24,918,530

 

 

 

12,459,265

 

 

 

1.16

 

 

 

We received $6.6 million from warrants exercised in the nine months ended September 30, 2021. No warrants were exercised in the nine months ended September 30, 2020.

 

 
20

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Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

   

 

As of September 30, 2021, outstanding warrants are as follows:

  

 

 

 

 

 

 

 Weighted-

 

 

 

 

 

 

 

 

 

 

 

 

 

 average

 

 

 

 

 

 

 

 

 

 

 

 

 

 remaining

 

 

 Aggregate

 

 

 

 

 Exercise

 

 

 Number

 

 

 contractual

 

 

 Intrinsic

 

 

 

 

 price

 

 

 of warrants

 

 

 life (years)

 

 

 Value

 

 

 Expiry

 

$

 

 

#

 

 

 

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.75

 

 

 

8,038,000

 

 

 

0.8

 

 

 

3,898,430

 

 

2022-08-04

 

 

1.35

 

 

 

16,880,530

 

 

 

2.3

 

 

 

3,122,898

 

 

2024-02-04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.16

 

 

 

24,918,530

 

 

 

1.9

 

 

 

7,021,328

 

 

 

 

 

 

The fair value of the warrants on their respective grant dates was determined using the Black-Scholes model with the following assumptions:

    

Warrant Fair Value Assumptions

 

2021

 

 

2020

 

 

 

 

 

 

 

 

Expected forfeiture rate

 

 

0.0 %

 

 

0.0 %

Expected life (years)

 

 

3.0

 

 

 

2.0

 

Expected volatility

 

 

69.3 %

 

 

71.2 %

Risk free rate

 

 

0.2 %

 

 

0.2 %

Expected dividend rate

 

 

0.0 %

 

 

0.0 %

Black-Scholes value (CAD$)

 

$ 0.39

 

 

$ 0.26

 

 

 

Fair value calculations

 

The Company estimates expected future volatility based on daily historical trading data of the Company’s common shares. The risk-free interest rates are determined by reference to Canadian Treasury Note constant maturities that approximate the expected life. The Company has never paid dividends and currently has no plans to do so.

 

Share-based compensation expense is recognized net of estimated pre-vesting forfeitures, which results in expensing the awards that are ultimately expected to vest over the expected life. Forfeitures and expected lives were estimated based on actual historical experience.

14.

Sales

 

 

 

Revenue is primarily derived from the sale of U3O8 to domestic utilities under contracts or spot sales.

   

 
21

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Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

  

 

Revenue consists of:

  

 

 

 Nine months ended

 

 

 

September 30,

 

 

 

 2021

 

 

 2020

 

 Revenue Summary

 

 $

 

 

  %

 

 

 $

 

 

  %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of purchased inventory

 

 

 

 

 

 

 

 

 

 

 

 

Company A

 

 

-

 

 

 

0.0 %

 

 

8,300

 

 

 

100.0 %

Total product sales

 

 

-

 

 

 

0.0 %

 

 

8,300

 

 

 

100.0 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Disposal fee income

 

 

16

 

 

 

100.0 %

 

 

4

 

 

 

0.0 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

100.0 %

 

 

8,304

 

 

 

100.0 %

 

15.

Cost of Sales

 

Cost of sales includes ad valorem and severance taxes related to the extraction of uranium, all costs of wellfield and plant 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. The resulting inventoried cost per pound is compared to the NRV of the product, which is based on the estimated sales price of the product, net of any necessary costs to finish the product. Any inventory value in excess of the NRV is charged to cost of sales.

 

Cost of sales consists of the following:

   

 

 

 Three months ended

 

 

 Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 Cost of Sales

 

 2021

 

 

 2020

 

 

 2021

 

 

 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Cost of product sales

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5,166

 

 Lower of cost or NRV adjustments

 

 

1,703

 

 

 

1,840

 

 

 

5,211

 

 

 

6,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,703

 

 

 

1,840

 

 

 

5,211

 

 

 

11,462

 

 

16.

Operating Costs

 

Operating expenses include exploration and evaluation expense, development expense, General and Administration (“G&A”) expense, and mineral property write-offs. Exploration and evaluation expense consists of labor and the associated costs of the exploration and evaluation departments as well as land holding and exploration costs including drilling and analysis on properties which have not reached the permitting or operations stage. Development expense relates to properties that have reached the permitting or operations stage and include costs associated with exploring, delineating, and permitting a property. Once permitted, development expense also includes the costs associated with the construction and development of the permitted property that are otherwise not eligible to be capitalized. G&A expense relates to the administration, finance, investor relations, land, and legal functions, and consists principally of personnel, facility, and support costs.

 

 
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Ur-Energy Inc.

Condensed Notes to Unaudited Consolidated Financial Statements

September 30, 2021

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

 

 

Operating costs consist of the following:

    

 

 

 Three months ended

 

 

 Nine months ended

 

 

 

September 30,

 

 

September 30,

 

 Operating Costs

 

 2021

 

 

 2020

 

 

 2021

 

 

 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration and evaluation

 

 

515

 

 

 

474

 

 

 

1,671

 

 

 

1,419

 

Development

 

 

187

 

 

 

284

 

 

 

652

 

 

 

900

 

General and administration

 

 

1,368

 

 

 

1,255

 

 

 

4,090

 

 

 

3,694

 

Accretion

 

 

119

 

 

 

144

 

 

 

365

 

 

 

433

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,189

 

 

 

2,157

 

 

 

6,778

 

 

 

6,446

 

 

17.

Supplemental Information for Statement of Cash Flows

 

Cash and cash equivalents, and restricted cash per the Statement of Cash Flows consists of the following:

 

Cash and Cash Equivalents, and Restricted Cash

 

September 30,

2021

 

 

December 31,

2020

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

33,413

 

 

 

4,268

 

Restricted cash

 

 

7,861

 

 

 

7,859

 

 

 

 

 

 

 

 

 

 

 

 

 

41,274

 

 

 

12,127

 

 

 

Interest expense paid was $0.2 million and $0.2 million for the three months ended September 30, 2021, and 2020, respectively. Interest expense paid was $0.6 million and $0.6 million for the nine months ended September 30, 2021, and 2020, respectively. 

     

18.

Financial Instruments

 

 

 

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, restricted cash, accounts payable and accrued liabilities, and notes payable. The Company is exposed to risks related to changes in interest rates and management of cash and cash equivalents and short-term investments.

 

Credit risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, and restricted cash. These assets include Canadian dollar and U.S. dollar denominated certificates of deposit, money market accounts, and demand deposits. These instruments are maintained at financial institutions in Canada and the U.S. Of the amount held on deposit, approximately $0.5 million is covered by the Canada Deposit Insurance Corporation, the Securities Investor Protection Corporation, or the U.S. Federal Deposit Insurance Corporation, leaving approximately $40.8 million at risk on September 30, 2021, should the financial institutions with which these amounts are invested be rendered insolvent. The Company does not consider any of its financial assets to be impaired as of September 30, 2021.

 

Liquidity risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due.

 

As of September 30, 2021, the current Company’s financial liabilities consisted of accounts payable and accrued liabilities of $2.6 million.

 

As of September 30, 2021, we had $33.4 million of cash and cash equivalents. In addition to our cash position, our finished, ready-to-sell, conversion facility inventory value is immediately realizable, if necessary. We do not anticipate selling our existing finished-product inventory in the next 12 months unless it is advantageous to do so.

 

Sensitivity analysis

 

The Company has completed a sensitivity analysis to estimate the impact that a change in interest rates would have on the net loss of the Company. This sensitivity analysis shows that a change of +/- 100 basis points in interest rate would have a negligible effect on the three months ended September 30, 2021. The financial position of the Company may vary at the time that a change in interest rates occurs causing the impact on the Company’s results to vary.

 

19.

Subsequent Event

 

 

 

Subsequent to September 30, 2021, the Company issued 4.4 million common shares for sales through our At Market facility and 0.1 million common shares for warrant exercises and received $8.2 million in cash proceeds from the transactions.

 

 
23

Table of Contents

 

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

Business Overview

 

The following discussion is designed to provide information that we believe is necessary for an understanding of our financial condition, changes in financial condition, and results of our operations. The following discussion and analysis should be read in conjunction with the MD&A contained in our Annual Report on Form 10-K for the year ended December 31, 2020.

 

Incorporated on March 22, 2004, Ur-Energy is an exploration stage mining company, as that term is defined by the SEC. We are engaged in uranium mining, recovery and processing activities, including the acquisition, exploration, development and operation of uranium mineral properties in the U.S. We are operating our first in situ recovery uranium mine at our Lost Creek Project in Wyoming. Ur-Energy is a corporation continued under the Canada Business Corporations Act on August 8, 2006. Our Common Shares are listed on the TSX under the symbol “URE” and on the NYSE American under the symbol “URG.”

 

Ur-Energy has one wholly owned subsidiary, Ur-Energy USA Inc., incorporated under the laws of the State of Colorado. Ur-Energy USA Inc. has three wholly-owned subsidiaries: NFU Wyoming, LLC, a limited liability company formed under the laws of the State of Wyoming which acts as our land holding and exploration entity; Lost Creek ISR, LLC, a limited liability company formed under the laws of the State of Wyoming to operate our Lost Creek Project and hold our Lost Creek properties and assets; and Pathfinder Mines Corporation (“Pathfinder”), incorporated under the laws of the State of Delaware, which holds, among other assets, the Shirley Basin and Lucky Mc properties in Wyoming. Our material U.S. subsidiaries remain unchanged since the filing of our Annual Report on Form 10-K, dated February 26, 2021.

 

We utilize in situ recovery (“ISR”) of the uranium at our flagship project, Lost Creek, and will do so at other projects where possible. The ISR technique is employed in uranium extraction because it allows for an effective recovery of roll front uranium mineralization at a lower cost. At Lost Creek, we extract and process uranium oxide (“U3O8”) for shipping to a third-party conversion facility to be weighed, assayed and stored until sold.

 

Our Lost Creek processing facility, which includes all circuits for the production, drying and packaging of U3O8 for delivery into sales transactions, is designed and anticipated under current licensing to process up to 1.2 million pounds of U3O8 annually from the Lost Creek mine. The processing facility has the physical design capacity and is licensed to process 2.2 million pounds of U3O8 annually, which provides additional capacity, of up to one million pounds U3O8, to process material from other sources. We expect that the Lost Creek processing facility may be utilized to process captured U3O8 from our Shirley Basin Project. However, the Shirley Basin permit and license allow for the construction of a full processing facility, providing greater construction and operating flexibility as may be dictated by market conditions.

 

COVID-19

 

During the quarter, we continued to monitor updated State, Federal and public health guidance related to COVID-19 and have adapted to continuing changes in the guidance and restrictions. We have experienced no cases of COVID-19 among our staff which have had a material impact on our operations.

 

 
24

Table of Contents

    

Uranium Market Update

  

With global climate initiatives being advanced by numerous countries, there has been a great deal of support for nuclear energy in the news during Q3 and subsequent to quarter-end. Growing numbers of countries are making commitments to net-zero emissions, including on more accelerated schedules than previously announced. In the process, many nations are endorsing nuclear energy to meet such objectives. This support, and projections for sustained growth of nuclear power globally in coming years, has incentivized much investment in the fuel cycle industries, through legislative programs and private and industrial capital. These and other market influences have been accompanied by significant developments among purchasers of uranium. In addition to the financial firms, ETFs and uranium producers and developers who have purchased substantial uranium inventories in 2021, the newly formed Sprott Physical Uranium Trust began making significant purchases of uranium during Q3, as well as establishing the means in the equity markets to raise more than $1 billion for such purchases. Subsequent to quarter-end, the most recent participant in the long-term investment in uranium is the physical uranium fund formed by the Kazakhs, including Kazatomprom, the national uranium operator of Kazakhstan.  

   

The U.S. Department of Energy (“DOE”) continues its work to implement the new national uranium reserve which was established in December 2020. DOE published requests for information for stakeholders to respond with data and input to support and define the establishment of the uranium reserve. Following an extension, all such responses were due to DOE in mid-October. DOE has not yet publicly provided a timeline of the remaining process to launch the reserve.

 

In addition to the DOE uranium reserve, the Biden Administration continues to prioritize climate change initiatives and, like many other governments, has expressed an understanding that clean, carbon-free nuclear energy must be an integral part of those initiatives. Several pieces of federal legislation have been proposed which would support nuclear energy and the nuclear fuel cycle industries.

 

Mineral Rights and Properties

 

We have 12 U.S. uranium properties. Ten of our uranium properties are located in the Great Divide Basin, Wyoming, including Lost Creek. Currently, we control nearly 1,800 unpatented mining claims and three State of Wyoming mineral leases for a total of approximately 36,000 acres in the area of the Lost Creek Property, including the Lost Creek permit area (the “Lost Creek Project” or “Project”), and certain adjoining properties referred to as LC East, LC West, LC North, LC South and EN Project areas (collectively, with the Lost Creek Project, the “Lost Creek Property”). Our Shirley Basin Project, also in Wyoming, comprises more than 3,700 Company-controlled acres. Our Lucky Mc Project holds 1,800 acres in the Gas Hills Mine District, Wyoming. As set forth elsewhere in this report, we received final approvals of reclamation at the Lucky Mc project in Q3 and confirmation of the termination of the permit to mine and associated bond requirements. Our Excel gold project holds approximately 2,400 acres of mining claims in the Excelsior Mountains of Mineral County, Nevada.

  

Lost Creek Property

    

Lost Creek continues to operate at reduced production levels while we await additional positive developments in the uranium markets. The reduced production operations have allowed us to sustain operating cost reductions at Lost Creek, while continuing to conduct preventative maintenance and optimize processes in preparation for ramp up to full production rates.

   

Previously, we disclosed that such preparations included advanced planning for further development of our fully permitted Mine Unit 2 (“MU2”). Subsequent to quarter-end, we commenced a drilling and construction program for the development of the fourth header house in MU2 (HH2-4). HH 2-4, and its associated drilling and wellfield development, is expected to be complete early in 2022, at which time HH 2-4 will be ready for production. A delineation drill program to support geologic design in the following four header houses is planned for 2022 H1. Together, the two programs will significantly advance our readiness when production ramp-up occurs.

    

 
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Table of Contents

    

Applications for amendment to the Lost Creek licenses and permits were submitted in 2014 in order to include recovery from the uranium resource in the LC East Project (HJ and KM horizons) immediately adjacent to the Lost Creek Project. In 2021 Q1, the Wyoming Uranium Recovery Program (“URP”) approved the amendment to the Lost Creek source material license to include recovery from these areas. This license approval grants the Company access to six planned mine units in addition to the already licensed three mine units at Lost Creek. The approval also increases the license limit for annual plant production to 2.2 million pounds U3O8 which includes wellfield production of up to 1.2 million pounds U3O8 and toll processing up to one million pounds U3O8. The BLM previously completed its review and granted approval for this expansion at Lost Creek.

   

The Wyoming Department of Environmental Quality, Land Quality Division, continues its review of the application for amendment to the Lost Creek permit to mine which will add the LC East and KM mine units. We anticipate that the Land Quality Division review will be complete in 2021.

  

Shirley Basin Project

 

During 2021 Q2 the State of Wyoming and the EPA completed their respective reviews of our Shirley Basin Project and issued the source material license, permit to mine, and aquifer exemption for the project. These three approvals represent the final major permits required to begin construction of the Shirley Basin Project. We received BLM final approval of the project, following its NEPA review process, in 2020.

 

The Company plans three relatively shallow mining units at the project, where we have the option to build out a complete processing plant with drying facilities or a satellite plant with the ability to send loaded ion exchange resin to Lost Creek for processing. As approved, the Shirley Basin processing facility is allowed to recover up to one million pounds U3O8 annually from the wellfield. The annual production of U3O8 from wellfield production and toll processing of loaded resin or yellowcake slurry will not exceed two million pounds equivalent of dried U3O8 product.

 

Situated in an historic mining district, the project has existing access roads, power, waste disposal facility and shop buildings onsite. Because delineation and exploration drilling were completed historically, the project is construction ready. All wellfield, pipeline and header house layouts are finalized and additional, minor on-the-ground preparations were initiated in 2021 Q3. We anticipate up to nine years of production at the site.

   

Results of Operations

 

The following table provides information on our production and ending inventory of U3O8 pounds.

 

Reconciliation of Non-GAAP measures with US GAAP financial statement presentation

 

The U3O8 and cost per pound measures included in the following table 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.

 

 
26

Table of Contents

 

U3O8 Production and Ending Inventory

 

 

 

 Unit

 

 

 2020 Q4

 

 

 2021 Q1

 

 

 2021 Q2

 

 

 2021 Q3

 

 

 2021-09 YTD

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 Production

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds captured

 

lb

 

 

 

54

 

 

 

49

 

 

 

58

 

 

 

70

 

 

 

177

 

Pounds drummed

 

lb

 

 

 

6,622

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Pounds shipped

 

lb

 

 

 

-

 

 

 

15,873

 

 

 

-

 

 

 

-

 

 

 

15,873

 

Pounds purchased

 

lb

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 Ending Inventory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pounds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

lb

 

 

 

303

 

 

 

318

 

 

 

365

 

 

 

999

 

 

 

 

 

Plant inventory

 

lb

 

 

 

15,873

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

Conversion inventory - produced

 

lb

 

 

 

219,735

 

 

 

235,608

 

 

 

267,617

 

 

 

267,049

 

 

 

 

 

Conversion inventory - purchased

 

lb

 

 

 

48,750

 

 

 

48,750

 

 

 

16,741

 

 

 

16,741

 

 

 

 

 

 

 

lb

 

 

 

284,661

 

 

 

284,676

 

 

 

284,723

 

 

 

284,789

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

$ 000

 

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

 

 

 

 

Plant inventory

 

$ 000

 

 

$ 463

 

 

$ -

 

 

$ -

 

 

$ -

 

 

 

 

 

Conversion inventory - produced

 

$ 000

 

 

$ 6,083

 

 

$ 6,592

 

 

$ 7,487

 

 

$ 7,486

 

 

 

 

 

Conversion inventory - purchased

 

$ 000

 

 

$ 1,268

 

 

$ 1,268

 

 

$ 435

 

 

$ 435

 

 

 

 

 

 

 

$ 000

 

 

$ 7,814

 

 

$ 7,860

 

 

$ 7,922

 

 

$ 7,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost per Pound

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

In-process inventory

 

$/lb

 

 

$ -

 

 

$ -

 

 

$ -

 

 

$ -

 

 

 

 

 

Plant inventory

 

$/lb

 

 

$ 29.17

 

 

$ -

 

 

$ -

 

 

$ -

 

 

 

 

 

Conversion inventory - produced

 

$/lb

 

 

$ 27.68

 

 

$ 27.98

 

 

$ 27.98

 

 

$ 28.03

 

 

 

 

 

Conversion inventory - purchased

 

$/lb

 

 

$ 26.01

 

 

$ 26.01

 

 

$ 25.98

 

 

$ 25.98

 

 

 

 

 

 

 

$/lb

 

 

$ 27.45

 

 

$ 27.61

 

 

$ 27.82

 

 

$ 27.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Produced conversion inventory detail:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ad valorem and severance tax

 

$/lb

 

 

$ 0.75

 

 

$ 0.67

 

 

$ 0.59

 

 

$ 0.59

 

 

 

 

 

Cash cost

 

$/lb

 

 

$ 17.50

 

 

$ 17.28

 

 

$ 18.56

 

 

$ 18.59

 

 

 

 

 

Non-cash cost

 

$/lb

 

 

$ 9.43

 

 

$ 10.03

 

 

$ 8.83

 

 

$ 8.85

 

 

 

 

 

 

 

$/lb

 

 

$ 27.68

 

 

$ 27.98

 

 

$ 27.98

 

 

$ 28.03

 

 

 

 

 

 

During 2020, we took steps to reduce production operations at Lost Creek and adjust to the continued depressed state of the uranium markets while we awaited the recommended relief from the Working Group and further positive developments in the uranium markets. As a result, production rates at Lost Creek declined significantly since that decision was made. Pounds captured decreased nearly 80 percent during that year and will remain low until a decision to ramp up is made.

 

As of September 30, we had approximately 283,790 pounds of U3O8 at the conversion facility including 267,049 produced pounds at an average cost per pound of $28.03, and 16,741 purchased pounds at an average cost of $25.98 per pound. In April 2021, we exchanged purchased U3O8 in our inventory for an equal number of pounds of U3O8 with a trader who held Lost Creek origin pounds pursuant to an earlier agreement.

 

 
27

Table of Contents

    

Three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020

 

The following table summarizes the results of operations for the three months ended September 30, 2021, and 2020:

     

(expressed in thousands of U.S. dollars, except per share and pound data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Three months ended

 

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

9

 

 

 

-

 

 

 

9

 

Cost of sales

 

 

(1,703 )

 

 

(1,840 )

 

 

137

 

Gross profit (loss)

 

 

(1,694 )

 

 

(1,840 )

 

 

146

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

(2,585 )

 

 

(2,157 )

 

 

(428 )

Loss from operations

 

 

(4,279 )

 

 

(3,997 )

 

 

(282 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest expense

 

 

(182 )

 

 

(195 )

 

 

13

 

Warrant mark to market gain

 

 

(5,060 )

 

 

550

 

 

 

(5,610 )

Foreign exchange gain (loss)

 

 

15

 

 

 

(53 )

 

 

68

 

Other income (expense)

 

 

3

 

 

 

(1 )

 

 

4

 

Net loss

 

 

(9,503 )

 

 

(3,696 )

 

 

(5,807 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

219

 

 

 

36

 

 

 

183

 

Comprehensive loss

 

 

(9,284 )

 

 

(3,660 )

 

 

(5,624 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

(0.05 )

 

 

(0.02 )

 

 

(0.03 )

Diluted

 

 

(0.05 )

 

 

(0.02 )

 

 

(0.03 )

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 pounds sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 price per pounds sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 cost per pounds sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 gross profit per pounds sold

 

 

-

 

 

 

-

 

 

 

-

 

  

 
28

Table of Contents

    

The following table summarizes the results of operations for the nine months ended September 30, 2021, and 2020:

 

(expressed in thousands of U.S. dollars, except per share and pound data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

 

September 30,

 

 

 

2021

 

 

2020

 

 

Change

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

16

 

 

 

8,304

 

 

 

(8,288 )

Cost of sales

 

 

(5,211 )

 

 

(11,462 )

 

 

6,251

 

Gross profit (loss)

 

 

(5,195 )

 

 

(3,158 )

 

 

(2,037 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

(7,174 )

 

 

(6,446 )

 

 

(728 )

Loss from operations

 

 

(12,369 )

 

 

(9,604 )

 

 

(2,765 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest expense

 

 

(558 )

 

 

(522 )

 

 

(36 )

Warrant mark to market gain

 

 

(11,384 )

 

 

592

 

 

 

(11,976 )

Foreign exchange gain (loss)

 

 

(352 )

 

 

(46 )

 

 

(306 )

Other income (expense)

 

 

909

 

 

 

16

 

 

 

893

 

Net loss

 

 

(23,754 )

 

 

(9,564 )

 

 

(14,190 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

472

 

 

 

67

 

 

 

405

 

Comprehensive loss

 

 

(23,282 )

 

 

(9,497 )

 

 

(13,785 )

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

(0.13 )

 

 

(0.06 )

 

 

(0.07 )

Diluted

 

 

(0.13 )

 

 

(0.06 )

 

 

(0.07 )

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 pounds sold

 

 

-

 

 

 

200,000

 

 

 

(200,000 )

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 price per pounds sold

 

 

-

 

 

 

41.50

 

 

 

(41.50 )

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 cost per pounds sold

 

 

-

 

 

 

25.83

 

 

 

(25.83 )

 

 

 

 

 

 

 

 

 

 

 

 

 

U3O8 gross profit per pounds sold

 

 

-

 

 

 

15.67

 

 

 

(15.67 )

 

Sales

 

There were no sales of U3O8 in the first nine months of 2021, and we do not anticipate making any U3O8 sales in 2021. We sold 200,000 pounds of U3O8 during the nine months ended September 30, 2020, for an average price of $41.50 per pound. There were no sales in 2020 Q3. The sales were all into term contracts using purchased pounds.

  

Cost of Sales

 

Cost of sales per the financial statements includes ad valorem and severance taxes related to the extraction of uranium, all costs of wellfield and plant 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. The resulting inventoried cost per pound is compared to the NRV of the product, which is based on the estimated sales price of the product, net of any necessary costs to finish the product. Any inventory value in excess of the NRV is charged to cost of sales per the financial statements. These NRV adjustments are excluded from the U3O8 cost of sales and U3O8 cost per pound sold figures because they relate to the pounds of U3O8 in ending inventory and do not relate to the pounds of U3O8 sold during the period.

 

 
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In the three and nine months ended September 30, 2021, cost of sales per the financial statements included $1.7 million and $5.2 million, respectively, in lower of cost or NRV adjustments. With production rates held to these intentionally lower levels, virtually all production costs during 2021 will be charged to cost of sales as NRV adjustments. In the three and nine months ended September 30, 2020, cost of sales per the financial statements included $1.8 million and $6.3 million, respectively, in lower of cost or NRV adjustments.

 

All sales in 2020 were from purchased product. The weighted average purchase price was $25.83 per pound.

 

Gross Profit

 

The gross loss per the financial statements for the three and nine months ended September 30, 2021, was $1.7 million and $5.2 million, respectively. As there were no U3O8 sales during the nine months ended September 30, 2021, the losses were composed of NRV adjustments. The gross loss per the financial statements for the three and nine months ended September 30, 2020, was $1.8 million and $6.3 million, respectively. Excluding the lower of cost or NRV adjustments, the U3O8 gross profit was $3.1 million for the nine months ended September 30, 2020, which represents a gross profit margin of approximately 38 percent.

 

Operating Costs

 

Operating costs include exploration and evaluation expense, development expense, general and administration expense, and accretion expense.

 

The following table summarizes the operating costs for the three and nine months ended September 30, 2021, and 2020:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Nine months ended

 

 

 

September 30,

 

 

September 30,

 

Operating Costs

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration and evaluation

 

 

515

 

 

 

474

 

 

 

1,671

 

 

 

1,419

 

Development

 

 

583

 

 

 

284

 

 

 

1,048

 

 

 

900

 

General and administration

 

 

1,368

 

 

 

1,254

 

 

 

4,090

 

 

 

3,694

 

Accretion

 

 

119

 

 

 

145

 

 

 

365

 

 

 

433

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,585

 

 

 

2,157

 

 

 

7,174

 

 

 

6,446

 

  

Total operating costs for the three and nine months ended September 30, 2021, were $2.6 million and $7.2 million, respectively. Total operating expenses for the three and nine months ended September 30, 2020, were $2.2 million and $6.4 million, respectively. The increase in 2021 was primarily related to the payment of bonuses in 2021. There were no bonuses paid in 2020.

  

Exploration and evaluation expense consists of labor and the associated costs of the exploration, evaluation, and regulatory departments, as well as land holding and exploration costs on properties that have not reached the development or operations stage. The total expense for the three months ended September 30, 2021, and 2020 were similar. The $0.3 million increase in the nine months ended September 30, 2021, was primarily due to bonus payments in 2021, which were partially offset by savings realized from labor reductions and relocating the Casper operations office to a smaller, less expensive, office building.

 

 
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Development expense includes costs incurred at the Lost Creek Project not directly attributable to production activities, including wellfield construction, drilling, and development costs. It also includes costs associated with the Shirley Basin Project, which is in a more advanced stage. Lucky Mc, which is an historic mine site, has also been classified as a development project. During 2021 Q3, all remaining reclamation obligations on the Lucky Mc property were satisfied and the permit to mine and related bond requirements were terminated. The $0.3 million and $0.1 million increases in development expense during the three and nine months ended September 30, 2021, respectively, related to repair costs of drainage channels at Shirley Basin that were damaged by a heavy rainstorm.

  

General and administration expense relates to the administration, finance, investor relations, land, and legal functions, and consists principally of personnel, facility, and support costs. The $0.1 million and $0.4 million increases in the three and nine months ended September 30, 2021, were primarily related to the 2021 bonus payments, which were partially offset by savings realized from labor reductions in 2020.

 

Other Income and Expenses

 

Net interest expense increased slightly in 2021 because of lower interest income received from restricted cash deposit accounts as compared to 2020.

 

For the three months ended September 30, 2021, the warrant liability mark to market adjustment changed from a gain of $0.6 million in the comparable period in 2020 to a loss of $5.1 million in 2021. For the nine months ended September 30, 2021, the warrant liability mark to market adjustment changed from a gain of $0.6 million in the comparable period in 2020 to a loss of $11.4 million in 2021. As a part of the September 2018 underwritten public offering, the August 2020 registered direct offering, and the February 2021 underwritten public offering, we sold warrants that were priced in U.S. dollars. Because the functional currency of the Ur-Energy Inc. entity is Canadian dollars, a derivative financial liability was created. The liability was originally calculated, and is revalued monthly, using the Black-Scholes model as there is no active market for the warrants. Any gain or loss resulting from the revaluation of the liability is reflected in other income and expenses for the period.  During 2021, the Company’s stock price, volatility, and other factors used in the Black-Scholes model rose significantly, leading to a significant increase in the warrant liability and corresponding mark to market losses.

 

As a result of the February 2021 underwritten public offering, the Company received approximately $13.9 million in net proceeds from the offering. Because the functional currency of the Ur‑Energy Inc. entity is Canadian dollars, the entity’s USD bank account is revalued into Canadian dollars and any gain or loss resulting from changes in the currency rates is reflected in other income and expenses for the period. For the nine months ended September 30, 2021, the foreign exchange loss was primarily due to the revaluation of the Canadian entity’s USD bank account.

 

On April 16, 2020, we obtained two SBA PPP loans (one for each of our subsidiaries with U.S. payroll obligations) through the BOKF. Under the program, as modified by the Flexibility Act and SBA and Treasury rulemakings, the repayment of our loans, including interest, would be forgiven based on eligible payroll, payroll-related, and other allowable costs incurred in a twenty-four-week period following the funding of the loans. In December 2020, we applied for loan forgiveness with the BOKF. The BOKF, after reviewing the loan forgiveness applications, submitted them to the SBA for approval. The Company received notifications in 2021 Q2 that the principal amount of $893 thousand and accrued interest of approximately $10 thousand were forgiven under the terms of the PPP. This was treated as a forgiveness of debt on the Consolidated Statements of Operations for the nine-months ended September 30, 2021, and a $903 thousand gain on debt forgiveness was recognized in other income.

 

 
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Earnings (loss) per Common Share

 

The basic and diluted loss per common share for the three and nine months ended September 30, 2021, was $0.05 and $0.13, respectively. For 2020, the losses per share were $0.02 and $0.06, respectively. The diluted loss per common share is equal to the basic loss per common share due to the anti-dilutive effect of all convertible securities in periods of loss.

  

Liquidity and Capital Resources

 

Cash and cash equivalents increased $29.1 million from the December 31, 2020, balance of $4.3 million to $33.4 million as of September 30, 2021. Cash resources consist of Canadian and U.S. dollar denominated deposit accounts and money market funds. During the nine months ended September 30, 2021, we used $9.1 million for operating activities, had minimal investing activities, and generated $38.3 million from financing activities.

 

Operating activities used $9.1 million of cash for the nine months ended September 30, 2021. We spent $2.5 million on production related cash costs, operating costs consumed $5.6 million of cash, and we paid $0.6 million for interest payments on our state bond loan and $0.4 million for insurance premiums.

 

Investing activities used less than $0.1 million during the period.

 

Financing activities provided $38.3 million of cash in 2021. As described below, on February 4, 2021, we closed a $15.2 million underwritten public offering. After share issue costs, we received net proceeds of $13.9 million. During 2021, we have received net proceeds of $16.6 million through our At Market facility. We also received $7.8 million from the exercise of warrants and stock options.

 

Wyoming State Bond Loan

 

On October 23, 2013, we closed a $34.0 million Sweetwater County, State of Wyoming, Taxable Industrial Development Revenue Bond financing program loan (“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, which commenced January 1, 2014. The principal was to be payable in 28 quarterly installments, which commenced January 1, 2015. The State Bond Loan is secured by all the assets at the Lost Creek Project. As of September 30, 2021, the balance of the State Bond Loan was $12.4 million.

 

On October 1, 2019, the Sweetwater County Commissioners and the State of Wyoming approved an eighteen-month deferral of principal payments beginning October 1, 2019. On October 6, 2020, the State Bond Loan was again modified to defer principal payments for an additional eighteen months. Quarterly principal payments are scheduled to resume on October 1, 2022, and the last payment will be due on October 1, 2024.

 

Small Business Administration Loans

 

On April 16, 2020, we obtained two SBA PPP loans (one for each of our subsidiaries with U.S. payroll obligations) through the Bank of Oklahoma Financial (“BOKF”). The program was a part of the CARES Act enacted by Congress on March 27, 2020, in response to the COVID-19 (Coronavirus) pandemic. The combined loan amount was $0.9 million.

 

On June 5, 2020, the Flexibility Act became law. The Flexibility Act changes key provisions of the PPP, including maturity of the loans, deferral of loan payments, and the forgiveness of the PPP loans, with revisions being retroactive to the date of the CARES Act.

 

 
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Under the PPP, as modified by the Flexibility Act, the repayment of our loans, including interest, may be forgiven based on eligible payroll, payroll-related, and other allowable costs incurred in a twenty-four-week period following the funding of the loans. In December 2020, we applied for loan forgiveness with the BOKF. After reviewing the loan forgiveness applications, BOKF submitted them to the SBA for approval. The Company received notifications in 2021 Q2 that the principal amount of $893 thousand and accrued interest of approximately $10 thousand were forgiven under the terms of the PPP. This was treated as a forgiveness of debt on the Consolidated Statements of Operations for the nine-months ended September 30, 2021, and a $903 thousand gain on debt forgiveness was recognized in other income.

 

Universal Shelf Registration and At Market Facility

 

On May 15, 2020, we filed a universal shelf registration statement on Form S-3 with the SEC in order that we may offer and sell, from time to time, in one or more offerings, at prices and terms to be determined, up to $100 million of our Common Shares, warrants to purchase our Common Shares, our senior and subordinated debt securities, and rights to purchase our Common Shares and/or senior and subordinated debt securities. The registration statement became effective May 27, 2020, for a three-year period.

 

On May 29, 2020, we entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. (formerly, B. Riley FBR, Inc.). On June 7, 2021, we amended and restated the Sales Agreement to include Cantor Fitzgerald & Co. as a co-agent. Under the Sales Agreement, as amended, we may, from time to time, issue and sell Common Shares at market prices on the NYSE American or other U.S. market through the agents for aggregate sales proceeds of up to $50 million.

 

In 2021 through September 30, we utilized the Sales Agreement for gross proceeds of $16.6 million. In 2020 Q4, we utilized the Sales Agreement and received gross proceeds of $0.1 million.

 

2020 Registered Direct Offering

 

On August 4, 2020, the Company closed a $4.68 million registered direct offering of 9,000,000 common shares and accompanying one-half common share warrants to purchase up to 4,500,000 common shares, at a combined public offering price of $0.52 per common share and accompanying warrant, with gross proceeds to the Company of $4.68 million. After fees and expenses of $0.4 million, net proceeds to the Company were $4.3 million.

 

2021 Underwritten Public Offering

 

The Company closed on February 4, 2021, a $15.2 million underwritten public offering of 16,930,530 common shares and accompanying one-half common share warrants to purchase up to 8,465,265 common shares, at a combined public offering price of $0.90 per common share and accompanying one-half common share warrant. The gross proceeds to Ur‑Energy from this offering were approximately $15.2 million. After fees and expenses of $1.3 million, net proceeds to the Company were approximately $13.9 million.

 

Liquidity Outlook

 

As of October 27, 2021, we had $40.9 million of cash and cash equivalents including an additional $8.2 million received from ATM sales and warrant exercises which took place after September 30, 2021. In addition to our cash position, our finished, ready-to-sell, conversion facility inventory, worth $13.4 million at recent spot prices, is immediately realizable, if necessary. We do not anticipate selling our existing finished-product inventory in the next 12 months unless it is advantageous to do so.

     

  
33

Table of Contents

    

Looking Ahead

 

Global recognition of nuclear energy’s role in achieving net-zero carbon emissions continues to foster renewed interest in the uranium sector in 2021. The Paris Climate Agreement calls for net-zero carbon emissions by 2050, and certain nations are now targeting earlier realization of net-zero. The U.S. rejoined the agreement this year, and the Biden Administration continues to voice support for the nuclear industry. Japan, several member nations of the European Union, and the United Kingdom have all recently made announcements of action plans placing nuclear energy as an integral part of the climate change solution.

 

The support for nuclear energy this year has prompted financial funds and uranium ETFs, as well as uranium developers and producers, to purchase uranium inventories further supporting the uranium spot price. In July 2021, the newly formed Sprott Physical Uranium Trust began its purchases of uranium and has established the means in the equity markets to raise more than $1 billion for such purchases. Subsequent to quarter-end, the most recent participant in the long-term investment in uranium is the physical uranium fund formed by the Kazakhs. That physical fund announced plans to raise as much as $500 million for purchasing uranium. These events during Q3 and early Q4 have moved the spot price more than 70 percent over 2021 lows and uranium equities have benefited. Uranium spot prices marked a daily high of $50.50 in mid-September, before holding in the mid- and upper-$40s more recently.

  

To date in 2021, the Company has raised $46.5 million. Our cash position as of October 27, 2021, is $40.9 million. In addition to our strong cash position, we have nearly 285,000 pounds of finished, U.S. produced U3O8 inventory, worth approximately $13.4 million at recent spot prices. Our financial position provides us with adequate funds to maintain and enhance operational readiness at Lost Creek, as well as allowing us to preserve our existing inventory to sell into higher prices. To further heighten our readiness to return to production operations at Lost Creek, we commenced a drill and development program in October. Initially, we are drilling, developing  and constructing an additional header house (HH2-4) in our fully permitted MU2. We anticipate that when this work is complete, we will advance a delineation drill program in MU2 in preparation of operations beyond the fourth MU2 header house. The estimated cost of these development programs is $2.2 million.

   

We continue to diligently work to optimize processes and refine production plans to strengthen our operational readiness at Lost Creek. Our experienced Lost Creek operational staff is prepared to expand uranium production to an annualized run rate of up to 1.2 million pounds upon a “go” decision for ramp up. Our current and planned development initiatives will further enhance our operational readiness for a production ramp up, which will then include further development work in both of the first two mine units, followed by the ten additional mining areas as defined in the Lost Creek Property Preliminary Economic Assessment, as amended. Following receipt of an approved license amendment in 2021 Q2, the Lost Creek facility now has the constructed and licensed capacity to process up to 2.2 million pounds of U3O8 per year and sufficient mineral resources to feed the processing plant for many years to come.

 

Lost Creek operations can increase to full production rates in as little as nine months following a “go” decision, simply by developing additional header houses within the fully permitted MU2. The ongoing development and construction will shorten the time to production in HH2-4. Development expenses during the full period of ramp up are estimated to be approximately $14 million. These planned costs are nearly all related to MU2 drilling and header house construction of HH2-4 and beyond. Our long-tenured operational and professional staff have significant levels of experience and adaptability which will allow for an easier transition back to full operations. Among our recent hires, we have been fortunate to return three former employees to work. Having knowledgeable and experienced staff return further enhances our preparations for production. We are prepared to ramp up and to deliver future Lost Creek production inventory into new sales contracts and the national uranium reserve when markets and the implementation of the reserve permit.

  

 
34

Table of Contents

    

With all major permits and authorizations for our Shirley Basin Project now in hand, we also stand ready to construct at the mine site when market conditions warrant. We estimate up to nine years production at the project based upon the mineral resources reported in the Shirley Basin Preliminary Economic Assessment.

 

We will continue to closely monitor the uranium market, the implementation of the uranium reserve program, and other developments in the markets or from Congress, which may positively impact the uranium production industry. Until market conditions signal a decision for the return to production operations, we will focus on maintaining safe and compliant operations while continuing to enhance and leverage our operational readiness.

 

Transactions with Related Parties

    

There were no transactions with related parties during the quarter.

 

Proposed Transactions

 

A non-core, unpermitted, non-operating property held by Pathfinder is presently considered to be an asset held for sale. The Company has a plan to sell the asset and is considering an offer consisting of cash and mineral properties. The asset’s mineral property cost is shown in note 4 to the accompanying Unaudited Consolidated Financial Statements.

 

Other than the proposed transaction, as is typical of the mineral exploration, development, and mining industry, we will consider and review potential merger, acquisition, investment and venture transactions and opportunities that could enhance shareholder value. Timely disclosure of such transactions is made as soon as reportable events arise.

 

Critical Accounting Policies and Estimates

 

We have established the existence of uranium resources at the Lost Creek Property, but because of the unique nature of in situ recovery mines, we have not established, and have no plans to establish, the existence of proven and probable reserves at this project. Accordingly, we have adopted an accounting policy with respect to the nature of items that qualify for capitalization for in situ U3O8 mining operations to align our policy to the accounting treatment that has been established as best practice for these types of mining operations.

 

The development of the wellfield includes injection, production and monitor well drilling and completion, piping within the wellfield and to the processing facility and header houses used to monitor production and disposal wells associated with the operation of the mine. These costs are expensed when incurred.

 

Mineral Properties

 

Acquisition costs of mineral properties are capitalized. When production is attained at a property, these costs will be amortized over a period of estimated benefit.

 

Development costs including, but not limited to, production wells, header houses, piping and power will be expensed as incurred as we have no proven and probable reserves.

 

 
35

Table of Contents

    

Inventory and Cost of Sales

 

Our inventories are valued at the lower of cost and net realizable value based on projected revenues from the sale of that product. We are allocating all costs of operations of the Lost Creek facility to the inventory valuation at various stages of production with the exception of wellfield and disposal well costs which are treated as development expenses when incurred. Depreciation of facility enclosures, equipment and asset retirement obligations as well as amortization of the acquisition cost of the related property is also included in the inventory valuation. We do not allocate any administrative or other overhead to the cost of the product.

 

Share-Based Expense

 

We are required to initially record all equity instruments including warrants, restricted share units and stock options at fair value in the financial statements.

 

Management utilizes the Black-Scholes model to calculate the fair value of the warrants and stock options at the time they are issued. In addition, the fair value of derivative warrant liability is recalculated monthly using the Black-Scholes model with any gain or loss being reflected in the net income for the period. Use of the Black-Scholes model requires management to make estimates regarding the expected volatility of the Company’s stock over the future life of the equity instrument, the estimate of the expected life of the equity instrument and the number of options that are expected to be forfeited. Determination of these estimates requires significant judgment and requires management to formulate estimates of future events based on a limited history of actual results.

  

Off Balance Sheet Arrangements

 

We have not entered into any material off balance sheet arrangements such as guaranteed contracts, contingent interests in assets transferred to unconsolidated entities, derivative instrument obligations, or with respect to any obligations under a variable interest entity arrangement.

 

Outstanding Share Data

 

As of October 27, 2021, we had outstanding 210,820,732 Common Shares and 11,102,167 options to acquire Common Shares.

  

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Market risk

 

Market risk is the risk to the Company of adverse financial impact due to changes in the fair value or future cash flows of financial instruments as a result of fluctuations in interest rates and foreign currency exchange rates.

 

Interest rate risk

 

Financial instruments that expose the Company to interest rate risk are its cash equivalents, deposits, restricted cash and debt financing. Our objectives for managing our cash and cash equivalents are to maintain sufficient funds on hand at all times to meet day-to-day requirements and to place any amounts which are considered in excess of day-to-day requirements on short-term deposit with the Company’s financial institutions so that they earn interest.

 

 
36

Table of Contents

    

Currency risk

 

As of September 30, 2021, we maintained a balance of approximately C$1.1 million in Canadian dollars. The funds will be used to pay Canadian dollar expenses and are considered to be a low currency risk to the Company.

 

Commodity Price Risk

 

The Company is subject to market risk related to the market price of uranium. Future sales would be impacted by both spot and long-term uranium price fluctuations. Historically, uranium prices have been subject to fluctuation, and the price of uranium has been and will continue to be affected by numerous factors beyond our control, including the demand for nuclear power, political and economic conditions, governmental legislation in uranium producing and consuming countries, and production levels and costs of production of other producing companies. The average spot market price was $47.13 per pound as of October 27, 2021.

  

Item 4. CONTROLS AND PROCEDURES

 

(a) Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by this MD&A, under the supervision of the Chief Executive Officer and the Chief Financial Officer, the Company evaluated the effectiveness of its disclosure controls and procedures, as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective to ensure that information the Company is required to disclose in reports that are filed or submitted under the Exchange Act: (1) is recorded, processed and summarized effectively and reported within the time periods specified in SEC rules and forms, and (2) is accumulated and communicated to Company management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s disclosure controls and procedures include components of internal control over financial reporting. No matter how well designed and operated, internal controls over financial reporting can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met.

 

(b) Changes in Internal Controls over Financial Reporting

 

No changes in our internal control over financial reporting occurred during the nine months ended September 30, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
37

Table of Contents

       

PART II

 

Item 1. LEGAL PROCEEDINGS

 

No new legal proceedings or material developments in pending proceedings.

 

Item 1A. RISK FACTORS

 

There have been no material changes for the three months ended September 30, 2021 from those risk factors set forth in our Annual Report on Form 10-K.

 

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None

 

Item 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

Item 4. MINE SAFETY DISCLOSURE

 

Our operations and exploration activities at Lost Creek are not subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977.

 

Item 5. OTHER INFORMATION

 

None.

 

 
38

Table of Contents

    

Item 6. EXHIBITS

 

 

 

 

 

Incorporated by Reference

Exhibit
Number

 

Exhibit Description

 

Form

 

Date of
Report

 

Exhibit

 

Filed
Herewith

 

 

 

 

 

 

 

 

 

 

 

31.1

 

Certification of CEO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

31.2

 

Certification of CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

32.1

 

Certification of CEO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

32.2

 

Certification of CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

101.INS

 

Inline XBRL Instance Document

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

101.SCH

 

Inline XBRL Schema Document

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

101.CAL

 

Inline XBRL Calculation Linkbase Document

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

101.DEF

 

Inline XBRL Definition Linkbase Document

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

101.LAB

 

Inline XBRL Labels Linkbase Document

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

101.PRE

 

Inline XBRL Presentation Linkbase Document

 

 

 

 

 

 

 

x

 

 

 

 

 

 

 

 

 

 

 

104

 

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

 

 

 

 

 

 

 

x

 

 
39

Table of Contents

     

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

UR -ENERGY INC.

 

 

 

 

Date: November 1, 2021

By:

/s/ Jeffrey T. Klenda

 

 

 

Jeffrey T. Klenda

 

 

 

Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 

 

 

Date: November 1, 2021

By:

/s/ Roger L. Smith

 

 

 

Roger L. Smith

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial Officer and

 

 

 

Principal Accounting Officer)

 

 

 
40

 

 

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