Ur-Energy Inc. provided the following update on 2023 Q3 production operations and ramp up activities at Lost Creek, efforts to build their uranium sales contract book and advances at Shirley Basin, Wyoming.
Recently Produced and Barreled U3O8 Yellowcake
at the Lost Creek Production Operations and Ramp
Up Activities.
Ramp-up of operations at Lost Creek continues to progress with two new header houses in production in Mine Unit 2 (MU2): HH 2‑4 and, most recently, HH 2-5. During the quarter, we produced approximately 30,491 pounds U3O8 from area HH 2‑4. They plan to continue bringing header houses online through the remainder of 2023 and going forward based upon our production plans.
Not unexpectedly, the restart at Lost Creek has encountered both familiar and new challenges. New production areas typically come with unique start-up issues to be addressed and the continuation of mining in area MU2 is no exception. Among the more significant new challenges, however, has been recruitment and retention of employees and contractors. While they have hired nearly every operations position, the turnover rate has hampered efficient operations. They are seeing steady improvement in production activities as their growing core staff have more time on the job.
The Wyoming labor market has similarly affected their contractors. Together with the record-setting winter of 2022-2023, these labor-related issues have resulted in initial work being slowed at Lost Creek. They expect that as they retain a trained, core workforce, these inefficiencies will be overcome. They also anticipate that as the Wyoming unemployment rate stabilizes their contractors will also find long-term employees.
The Casper construction facility is fully staffed and operating as planned to allow for the construction of header houses, including electrical and instrumentation work, prior to delivery to Lost Creek. Areas HHs 2-6 and 2-7 are nearing completion, and construction is beginning on HH 2-8. Their laboratory in Casper is also fully staffed.
Supply-chain disruption continues to be a global and uranium industry issue. While most in industry continue to face procurement challenges, their advanced ordering and recycling of old equipment at Lost Creek have allowed them to largely overcome the issue with minimal delays. Ur-Energy personnel will continue to order equipment and materials well in advance and keep a close eye on lead times for critical items. They believe many of the supply-chain issues they are experiencing are also the result of labor issues.
Sale of Uranium and Sales Agreements
During the quarter, Ur-Energy personnel made their first delivery into their term contracts, with 90,000 pounds of yellowcake (U3O8) delivered to a purchaser. They received proceeds of $5.4 million. A second delivery of 90,000 pounds U3O8 is scheduled to be made in Q4 2023. Currently, their sales deliveries in 2024 are projected at 570,000 pounds U3O8, as deliveries are made into two of our three previously announced sales agreements.
As the spot and term prices of uranium increase, they have seen a dramatic increase in Requests for Proposal ("RFPs") for uranium sales from U.S., European and Asian utilities, and other global fuel buyers. We have responded to the RFPs with increasing prices commensurate with improvements in the market and recognizing the premium paid for North American production due to its geopolitical stability.
We are in advanced discussions with three companies in the global nuclear industry for additional sales commitments. We are optimistic that negotiations with all three purchasers will result in completing additional sales agreements during Q4.
The most significant of the three proposals calls for annual delivery of between 100,000 and 350,000 pounds U3O8 over a five-year period beginning in 2026; the agreement will include the option for the buyer to add up to three additional years of deliveries of 300,000 pounds U3O8 beginning in 2031. The pricing is a combination of an escalated fixed price, which is well above anticipated all-in costs of production, and market related pricing that is subject to an escalated floor and ceiling. The purchaser will have the option of a small flex to the annual delivery.
Shirley Basin Update
Based on our advanced negotiations with these nuclear fuel purchasers and the strengthening market, the Ur‑Energy Board has authorized management to proceed with additional tasks to advance Shirley Basin. They are initiating procurement of long-lead items for the Shirley Basin Project, and will advance other activities in the field, with the objective to shorten the time for construction and ramp up when the "go" decision is made by our Board for construction.
Shirley Basin is fully permitted and construction ready with a licensed wellfield capacity of one million pounds U3O8 per year. They currently estimate it will take up to 24 months to complete all procurement, development activities and construction of the satellite facility and associated first mine unit to initiate production. This estimate is based on the long lead times we are seeing for critical equipment; especially for electrical equipment. The decision to proceed with construction of the satellite and first mine unit for production operations will be considered on an ongoing basis as the uranium market and our contract book evolve.
About Ur-Energy
Ur-Energy is a uranium mining company operating the Lost Creek in-situ recovery uranium facility in south-central Wyoming. They have produced and packaged approximately 2.7 million pounds U3O8 from Lost Creek since the commencement of operations. Ur-Energy now has all major permits and authorizations to begin construction at Shirley Basin, the Company's second in situ recovery uranium facility in Wyoming and is in the process of obtaining remaining amendments to Lost Creek authorizations for expansion of Lost Creek. Ur‑Energy is engaged in uranium mining, recovery and processing activities, including the acquisition, exploration, development, and operation of uranium mineral properties in the United States. The primary trading market for Ur‑Energy's common shares is on the NYSE American under the symbol "URG." Ur‑Energy's common shares also trade on the Toronto Stock Exchange under the symbol "URE." Ur-Energy's corporate office is in Littleton, Colorado and its registered office is in Ottawa, Ontario.
FOR FURTHER INFORMATION, PLEASE CONTACT
John W. Cash, Chairman, CEO & President
720-981-4588, ext. 303
John.Cash@Ur-Energy.com
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