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, and provides information through July 31, 2020. 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, 2019.
Incorporated on March 22, 2004, Ur-Energy is an exploration stage
mining company, as that term is defined in SEC Industry Guide 7. 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 28, 2020.
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 uranium for delivery into
sales, is designed and anticipated under current licensing to
process up to one million pounds of U3O8 annually from the
Lost Creek mine. The processing facility has the physical design
capacity to process two million pounds of U3O8 annually, which
provides additional capacity 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 application
contemplates the construction of a full processing facility,
providing greater construction and operating flexibility as may be
dictated by market conditions.
We were contractually committed to sell 200,000 pounds of
U3O8 during H1 2020, at
an average price of approximately $42 per pound. We entered into
purchase agreements for delivery of purchased product into those
contractual commitments. The average cost of the purchases was
approximately $26 per pound. We delivered a portion of those 2020
contractual commitments (33,000 pounds) in Q1, and delivered the
remaining amount (167,000 pounds) early in Q2. The Q2 sale
completed our remaining term commitment obligations.
COVID-19 (Coronavirus)
During the quarter, gathering and other restrictions continued at
various levels in Wyoming and Colorado. As certain COVID-19
(Coronavirus) restrictions have changed, we have adapted
accordingly. We continue to